Constellation Energy Group Inc. CEO Mayo A. Shattuck III and a dozen other executives stand to receive $72.9 million in cash if the company's merger with a Florida-based utility goes through, Constellation disclosed yesterday as it battles criticism that its executives will profit while consumers are hit with a 72 percent electricity rate increase.

As is common in corporate mergers, closing the deal with FPL Group Inc. would trigger the redemption of both stock options, which allow executives to buy stock at a set price in the future, and restricted stock, which executives get to keep after staying with a company for a specified period. Some of these stock awards have not vested. Executives would also get bonuses that had been set but not paid.

Special payouts to executives who could lose their jobs after a merger are not unusual in the upper echelons of corporations. But the merger proposal at Constellation, which owns BGE, has become a flash point in the debate over the Baltimore utility's plan to impose rate increases on residential customers.

Shattuck, a target for much of the criticism, earlier said he plans to donate after-tax proceeds from his portion of the cash payouts - about $20.6 million - to charity.

"Normally, companies aren't coming out and waving the flag as to what these payments will be," said Steven Hall, a compensation consultant in New York. "That said, and I hate to say this, but $73 million for 13 people doesn't strike me as 'Oh my god' money."

Constellation had disclosed some of the merger-related payments in previous filings with the Securities and Exchange Commission. But the latest details, revealed in a 30-page letter to state lawmakers, are far broader and involve executives whose pay normally wouldn't be subject to public scrutiny.

"We wanted to go above and beyond with lawmakers to illustrate to them that our people are paid fairly in a competitive market," said Larry McDonnell, a Constellation spokesman. "By no means are they getting any sort of windfall because of the merger."

McDonnell said that among the new disclosures, the company is granting about $15 million in retention bonuses to 220 rank-and-file employees. He said the awards were conceived to help retain employees who might look elsewhere for employment if they feel their jobs are in jeopardy. None of that money has been awarded to executive officers, the letter states.

Of the post-merger payouts, the Constellation executives would have to stay on for a year to receive about $18.9 million of the cash as part of a program to ensure their retention. Executives who stay on and whose options are cashed out would also be entitled to replacement options.

In addition to the cash payouts, the executives could be entitled to more severance, benefits and bonuses worth tens of millions of dollars if they are terminated without cause or if they leave for "good reason" within two years of the merger. Such arrangements, known as "golden parachutes," are common on Wall Street. The idea is to ensure that executives pursue mergers that benefit shareholders even if they could lose their own jobs.

Typically, Constellation executives would receive compensation and benefits as if they had worked for an additional two to three years, according to the letter. The company also would cover any excise taxes triggered by golden parachute payments.

The payouts for executives could fluctuate depending on the closing date of the merger and on Constellation's stock price, which has dropped more than 10 percent since the $10 billion deal with FPL was announced in December. To provide lawmakers an approximation of merger-related compensation, the company assumed a stock price of $52 and that the deal closes in December.

The Constellation-FPL merger is subject to approval by state and federal regulators, and lawmakers incensed over the proposed BGE rate increases have threatened to intervene. BGE is proposing higher rates as of July 1 as regulatory rate caps are to be lifted under a state plan adopted in 1999 to deregulate the industry.

Shattuck disclosed this week that Constellation and FPL have stopped merger integration activities because of uncertainty over whether the deal will be approved in Maryland. The two companies have portrayed their deal as a merger of equals, in which the combined company will have dual headquarters.

Maryland Senate President Thomas V. Mike Miller said yesterday that his staff was still poring over the information. "My initial reaction as a lay person looking at the letter is it was not clear enough in terms of what we asked either in terms of executive compensation or their profit margin," he said.

Post-merger payouts aren't considered onerous, according to compensation experts, unless they represent a significant portion of the overall deal, typically more than 3 percent.

"What this company is doing for them is not unusual and frankly not overly generous," said Don Lindner, manager of executive compensation for World at Work, a trade group for compensation professionals.

"They're basically saying that these key people have brought this company to this point where it's worth being bought or merged. They may or may not lose their jobs, and these payments are really meant to give them what they would have gotten if they had stayed and earned them out."

Shattuck, who would become chairman of the combined company, signed a three-year contract waiving any cash severance under his golden parachute. The agreement, however, doesn't leave him empty-handed.

Under the merger agreement, he would continue to run the power-trading operations that account for most of Constellation's revenue. He has signed an employment contract that ensures him a base salary and bonus of no less than $5 million next year and about $13.5 million in restricted stock at the merger's completion.

Sun reporter Andrew A. Green contributed to this article.


If the merger of Constellation and Florida-based FPL Group Inc. is complered as of Dec. 31, the executive officers of Constellation will receive cash for stock options and other benefits. Here are the top three potential payouts:


*Shattuck is expected to donate his payout to charity

$20.6* MILLION


Chairman, Constellation Energy Commodities Group, vice chairman, Constellation Energy.



Executive vice president, CFO chief administrative officer, Constellation Energy.



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