Happy Birthday, Mr. Shattuck
Mayo A. Shattuck III, CEO of Constellation Energy, turns 55 today, according to Progressive Maryland. I wasn't able to confirm the date -- only that he turns 55 this month. In any event, it's a big time for Mr. Shattuck, and not just because he hits the double-nickel milestone. Shattuck finally becomes eligible for his fabulous, "supplemental" executive pension, worth $33 million at the end of 2008. He has had it in his grasp before, but tomorrow, if the protesters have identified his birthday correctly, he'll nail it. (Progressive Marylnd plans a "party" in front of Constellation headquarters.)
As with regular pensions, CEOs have to rack up seniority before they become eligible for retirement payouts. Unlike regular pensions, supplemental executive plans come in denominations of seven and eight figures. Unlike regular pensions, supplementals are subject to frequent tinkering and upgrades by the board to make already wealthy CEOs even more blessed. In many CEO comp packages supplemental pensions make up huge amounts of the total dough. Until a few years ago companies could hide them behind terrible disclosure rules, but the SEC finally put a stop to that. Now they're spelled out in all their glory, which over time might shame boards into downsizing the packages.
Shattuck signed on to his bonus pension when Constellation hired him as CEO in 2001. He had to put in 10 years of service and be at least 55 years old to qualify for benefits. He almost struck early paydirt in 2006. His attempted sale of Constellation to FPL Group that year would have triggered a golden parachute that included an early, lump-sum payout of the pension. (Nobody actually actually takes monthly payments from these things when they're sitting in a nursing home. As soon as they can they take the lump-sum cash, discounted to present value. The notion that these are "pensions" is a joke.)
But then public hassles over his pay prompted Shattuck to forego the early pension. Then the two companies scrapped their marriage, anyway.
According to the original timetable, Shattuck would still be two years away from completing his 10 years of service and thus not eligible for the boodle until 2011.
But last year the board, in its wisdom, decided to credit him with time he spent at Constellation as a non-executive director, thus giving him his 10 years effective earlier this year. (That was right before Constellation nearly landed in bankruptcy.) Turning 55 will complete the pension requirements for Shattuck.
His deal isn't affected by EDF Group's proposed investment in Constellation's nuclear-energy business. That doesn't trigger any kind of golden parachute. But it doesn't matter. Once he's vested, Shattuck doesn't need a trigger. Unless the board has changed his eligibility again and hasn't disclosed it, his pension parachute is now packed on his back no matter what happens.
PS. In case you're getting whiplash between this post and my pro-Constellation column in today's paper, don't. Shattuck's pay is indefensible. But it shouldn't get in the way of the state approving Constellation/EDF's plans for a new nuclear power plant at Calvert Cliffs. Blocking an $8 billion project to try to get a few million out of Constellation's CEO or a few dollars for BGE customers, as Gov. O'Malley is doing, is not an efficient investment of state resources.
Comments
Speaking of pay...didn't the Govenor increase the PSC members pay by about $40,000 (50%)annually? If we roll back those obscene increases the state would save close to $1,000,000 over four years.
Posted by: David Slater | October 7, 2009 8:08 AM
LOVED your column in today's Sun (October 7)! You absolutely nailed the irony in O'Malley's stubborn refusal to let Constellation Energy actually create jobs and possibly drive down the cost of energy. The governor's obsession with ruining Constellation is weird and would provide great fodder for the psychiatrist's couch. How long is this farce going to drag on??!! The Public Service Commission (now there's a group that is SO inappropriately named...) should be disbanded. They serve no one's interest except the governor's.
Posted by: Sandra | October 7, 2009 10:52 AM
Certainly, with this economic downturn, our state’s leaders should be thinking about how to restore well-paying jobs in Maryland communities. But claiming a new nuclear reactor as a jobs program is simply ludicrous. At a cost of $10 billion, if the plant adds 450 full-time jobs in Calvert County, that’s a cost of $2 million per job! Marylanders would get a lot more job-creation bang for our buck if Constellation pursued real clean energy like wind and solar, and got on track to meeting the state’s energy efficiency goal, which BGE, like all Maryland utilities is woefully behind on reaching. A recent UMass study leads us to believe that $10 billion in clean energy investment could generate 167,000 jobs in Maryland . And unlike specialized jobs in the nuclear industry, most of the jobs created through clean-energy investments will be in the same areas that people work in today. Constructing wind farms creates jobs for sheet metal workers, machinists, and truck drivers. Increasing buildings’ energy efficiency through retrofitting requires roofers, insulators, and building inspectors.
Gov. O'Malley and the PSC are right to investigate this deal to determine if it's in the best interest of ratepayers.
Posted by: Johanna Neumann | October 7, 2009 11:49 AM
Nice to see the current Governor is letting the PSC do what the PSC was created to do, look out for the public interest not the corporate interest. Not like the last guy who forced the PSC's hand and gave us a 72% electric bill increase. I hope this Governor's PSC has the guts to keep us from facing another huge rate increase.
Posted by: Steve | October 7, 2009 6:05 PM
I wish we could put your column from today's paper up on a billboard in Annapolis! The way that O'Malley continues to block the Constellation/EDF deal is clearly biased, misguided and very unfortunate for the Marylanders like me who actually WANT the economic conditions of our state to improve!
Posted by: Camey | October 7, 2009 6:26 PM
You MaryPirg people kill me with your wind and solar fantasies. Why don't you tell everyone how much land 1600 megawatts of solar will take up - 4 times the amount slated for the nuke plant. And the source is only 20-25% efficient so multiply it by another 4 to equal the output of the nuke reactor. Wind and solar are clearly part of an overall strategy but only as supplemental sources. The wind doesn't always blow and the sun doesn't always shine. Baseload baby.
And as for your preference on how the money is spent, IT'S NOT YOUR GODDAMNED MONEY because you sure as hell aren't a Constellation stockholder.
And lastly, you know damn well BGE is one of the leaders nationally among utilities with efficiency programs. Why don't you try telling the truth one time - you'll find it refreshing, as will I.
Posted by: Big Mike | October 7, 2009 11:56 PM
First of all, I am the first to agree that the governor is acting like a spoiled, self-promoting ninny in regard to the CEG/EDF deal. He will push the citizens under a bus to get re-elected. That said however, didn't the PSC already approve the building of Calvert Cliffs 3? They are now reviewing the EDF deal. As far as the PSC is concerned, those are 2 seaparate issues. It's CEG and EDF that are linking them together as one. That is what O'Smelly and the PSC will say when the PSC rejects the deal.
Also - let's try to keep a civil tongue.
Posted by: mikez12 | October 8, 2009 12:20 PM
My apologies - civil discourse is necessary for effective dialogue.
The EDF/CE deal is linked to the project economically. CE will not be in position to move forward alone. Yes, the PSC approved the Certificate of Public Neccessity and Convenience. They determined the peoject met a need for the state and all necessary environmental and developmental impact issues would be satisfied. Just one regulatory process step among many.
One likely scenario - the PSC issues their order w/conditions CE/EDF will not or cannot accept, effectively killing the deal. The Gov/PSC will be able to say they didn't stop the deal, the companies walked away from it. While that will be factually true, we will all know the real reason why.
Posted by: BigMike | October 8, 2009 12:57 PM
I believe the PSC will issue a 3,000 page order that will inexplicably condition approval of the deal to the actor Tony Curtis, the 1971 graduating class of Northern High School and cocktail wieners. No one will understand the ruling - including the PSC. The governor will squint into the setting sun, tie loosened, sleeves rolled-up and declare victory for working families while hailing the independent judgment of the PSC. CEG will issue a statement that they need more time to study the ruling. And the French – after finally abandoning the deal, the reactor and the state of Maryland – will finally begin to understand the comic genius of Jerry Lewis.
Posted by: mikez12 | October 9, 2009 5:53 AM