"We're absolutely sensitive to our customers and their concerns over higher-than-normal bills," Constellation spokesman Rob Gould said. "But this is a very different and unrelated issue and does not involve BGE customer dollars."
If the deal closes, EDF would pay the difference between what the senior executives would have earned based on company performance and what they would have gotten under a Buffett buyout.
The sale to Buffett would have triggered "change-in-control" payments for executives, including early payouts of long-term performance incentives at a high level. It's a common practice used to ensure that management works in the best interest of shareholders.
"Everybody found that in the same filing where Constellation was arguing there was no change of control for regulatory purposes, there was a change of control for bonuses," said Democratic state Sen. Jim Rosapepe, who co-sponsored legislation to end the 1999 state law that deregulated the energy industry. "Again, it undermines their credibility."
State energy regulators have asked Constellation executives to reconcile their argument that the EDF deal would not result in a change of control while the French utility has agreed to make payouts as if it would.
The Maryland Public Service Commission is investigating whether the deal would have substantial influence over BGE.
In response, Constellation general counsel Charles Berardesco said EDF will not have control over what amounts may be paid to executives, according to written testimony submitted to the PSC.
EDF has agreed to pay up to $19 million in performance awards covering 2007-2009 and up to $13 million for 2008-2010, according to the purchase agreement between Constellation and EDF and documents submitted to the PSC.
About 120 senior managers would be eligible for $7.8 million and $5.7 million for those respective periods, Gould said. While the actual incentive amount has yet to be determined, the payout averages about $113,000 per employee during the two performance periods.
No executive officer, including Chairman and Chief Executive Officer Mayo A. Shattuck III, has been guaranteed the incentives they would have received under the Buffett deal. It will be up to the board of directors' discretion, Gould said.
The payouts would not be made until next February and February 2011, Gould said, adding that an employee must be working for Constellation at the end of the performance period to be eligible for any payout.
