The planned Constellation Energy Corp. has established a severance package for middle managers and rank-and-file workers that is far more modest than benefits senior management will receive.
The Constellation severance package, to be paid in a lump sum determined by length of service, will be paid to employees in the estimated 1,250 positions that Baltimore Gas and Electric Co. and the Potomac Electric Power Co. expect to slash after their anticipated merger in March 1997.
Under the severance plan, each employee will receive two weeks' pay for every year of service, or a minimum of eight weeks pay. Limited medical and dental benefits will also be included.
Details of the benefits package were outlined in a recent internal memorandum to employees, a copy of which was obtained by The Sun.
The plan is in sharp contrast to benefits that senior managers will receive if they are terminated in the merger, according to documents filed with the Securities and Exchange Commission earlier this month.
Under that plan, 27 top BGE and Pepco officials designated by the respective companies stand to receive a total of $15.04 million based on years of employment and position, a figure that averages out to $557,344 per employee. The smallest amount that would be paid to any single senior official is $309,284, according to the SEC documents.
By comparison, to achieve that same figure, a BGE or Pepco middle manager or rank-and-file employee with a salary of $50,000 would have to work 290 years to equal the average received by the 27 managers. The average BGE employee has 13 years' tenure.
"Of course the package isn't fair," said James Hunter, president of the International Brotherhood of Electrical Workers Local 1900, which represents some Pepco employees. "The biggest problem is the tremendous disparity."
Pepco employees represented by IBEW Local 1900 overwhelmingly approved the severance plan Dec. 15, while they also voted to extend their contract until the merger is completed or June 1998, whichever occurs first. The IBEW contract had been set to expire next June.
Mr. Hunter estimates that fewer than 100 unionized Pepco employees will be affected by the layoffs.
The severance plan does appear to be in line with what most corporations engaged in layoffs provide to rank-and-file employees and middle managers, however. Constellation also plans to provide "out-placement" services and waive reimbursement of any educational assistance.
Under Maryland law, employers do not have to provide downsized workers with any exit benefits, said Karen Napolitano, a spokeswoman for the state's Department of Labor, Licensing & Regulation.
"We did an extensive study, and feel we've come up with something that is fair and in line with other utilities that have merged and other nonutility companies," said Arthur J. Slusark, a BGE spokesman.
"The feeling here is, there's a lot of money to go around for management, but not much for the average employee," said one operator and electrician at a BGE generating plant, who asked not to be identified.
"I guess it's better than nothing, but it does seem unfair that management is taking such good care of themselves."
In all, the severance packages will cost Constellation Energy an estimated $50 million.
A selection process to decide which employees will be terminated will be announced at a later date, the memo stated.