Constellation Energy Group, which narrowly avoided bankruptcy last year, negotiated a deal with France's largest utility ensuring senior managers would receive up to $32 million in long-term performance and retention incentives during the next two years.
The move comes as the Baltimore company, which agreed to sell half of its nuclear power business to Electricite de France for $4.5 billion, has laid off hundreds of workers, slashed its stockholder dividend and is seeking rate increases for its BGE customers.
If the deal closes, EDF has agreed to pay the difference between awards the managers earn based on meeting company performance goals and the long-term incentives for which they're eligible. About 135 senior managers would have received those full payments immediately had the original deal with billionaire Warren Buffett gone through. In December, Constellation terminated its sale to Buffett's MidAmerican Energy Holdings Co. in favor of EDF's bid.
"I can't tell you the number of people who have called me, having trouble with their utility bills," said state Sen. George Della Jr., a Baltimore Democrat. "It's sad to think that we had a great utility here in the state of Maryland, and to reward someone for bringing the company to the brink of bankruptcy and then giving them a ... bonus, that's beyond reason to me."
Constellation's board members decided that about 120 senior managers across the company's units would receive the payouts that they would have gotten under the MidAmerican deal, said spokesman Rob Gould. He insisted that the payouts are not bonuses because they represent long-term performance and not the past year's results.
But the board has not made a similar commitment to guarantee the full incentives to the company's dozen or so executive officers, including Chairman and Chief Executive Officer Mayo A. Shattuck III.
"Their long-term payout will be based solely on company performance and the board's discretion," Gould said.
He said the company saw a need to "retain key Constellation Energy senior managers" as it entered into a nuclear venture with EDF.
"To address this concern, Constellation Energy negotiated a compensation framework for critical senior managers that would ensure their long-term compensation potential under an EDF joint venture would be no less than it might have been under a MidAmerican merger," Gould said last night.
