filings.toolsItem 11. EXECUTIVE AND DIRECTOR COMPENSATION
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Item 11. EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion & Analysis
As of December 31, 2021, CEG Parent and Constellation were wholly owned subsidiaries of Exelon Corporation and CEG Parent’s compensation committee had not yet been formed. All decisions regarding 2021 compensation of Constellation's and its subsidiaries’ named executive officers were made by the Compensation and Leadership Development Committee of the Exelon Board of Directors (referred to in this section as the “Exelon Compensation Committee”) if the executive previously served as an executive officer of Exelon, or otherwise by Exelon management. Following the distribution on February 1, 2022, the executive compensation programs, policies and practices for CEG Parent’s executive officers are subject to the review and approval of the Compensation Committee of CEG Parent’s Board of Directors (the “Company Compensation Committee”).
For purposes of this Compensation Discussion and Analysis and the following executive compensation tables, the individuals referred to as the “named executive officers” (“NEOs”) are Constellation’s principal executive officer, principal financial officer and the three most highly compensated executive officers of Constellation and its subsidiaries’ based on 2021 compensation. The compensation discussed in this section refers to legacy Exelon compensation plans.
The individuals determined to be our NEOs based on 2021 compensation are listed below. This information reflects positions and compensation during 2021 while we were held by Exelon and does not reflect the individuals who may be identified as NEOs by us in the future.
| Christopher Crane(a) | President and Chief Executive Officer, Exelon | ||||
| Joseph Dominguez(b) | President and Chief Executive Officer, Constellation | ||||
| Kenneth W. Cornew(a) | (Former) President and Chief Executive Officer, Constellation | ||||
| Daniel Eggers(c) | Executive Vice President and Chief Financial Officer, Constellation | ||||
| Bryan Wright | (Former) Senior Vice President and Chief Financial Officer, Constellation | ||||
| Bryan Hanson | Executive Vice President, Chief Generation Officer, Constellation | ||||
| James Mchugh | Executive Vice President, Chief Commercial Officer, Constellation | ||||
| David Rhoades | Senior Vice President, President and Chief Nuclear Officer |
(a)Mr. Crane was named principal executive officer of Constellation effective October 21, 2020. Mr. Cornew served as Senior Executive Vice President and Chief Commercial Officer, Exelon; President and Chief Executive Officer, Constellation through his departure on March 31, 2021.
(b)Mr. Dominguez was named as Executive Vice President and Chief Executive Officer of Constellation effective October 1, 2021.
(c)Mr. Eggers was named as Executive Vice President and Chief Financial Officer of Constellation effective October 1, 2021.
All NEOs have compensation that is structured in part like Exelon’s executive officers, based in part on overall Exelon goals as well as goals of Constellation and its subsidiaries. The Company NEOs participated in compensation programs designed to align their interests with the Company’s customers and other stakeholders.
For both the CEO and NEOs, a significant portion of their compensation is tied to the achievement of short-term and long-term financial and operational goals and is paid in the form of Exelon equity with all components except for salary being “at-risk.”
| CEO | All NEOs | |||||||||||||
| Base Salary | 10.5 | % | Base Salary | 20.3 | % | |||||||||
| Annual Incentive Plan (AIP) | 14.2 | % | Annual Incentive Plan (AIP) | 17.5 | % | |||||||||
| Long-Term Incentive Plan (LTIP) | 75.3 | % | Long-Term Incentive Plan (LTIP) | 55.0 | % | |||||||||
| Pay at Risk (AIP + LTIP) | 89.5 | % | Pay at Risk (AIP + LTIP) | 72.5 | % |
Executive Compensation Program Philosophy and Objectives
The goal of the executive compensation program is to retain and reward leaders who create long-term value by delivering on objectives that support strategic business objectives. Each element of total direct compensation is based on market data, the executive’s competencies and skills, scope of responsibilities, experience and performance, retention, succession planning and organizational structure of the business.
2021 Compensation Program Structure
The 2021 compensation program is summarized below. Primary compensation elements include fixed and variable components.
| Pay Element | Form | Shareholder Alignment | ||||||||||||
| Salary | Cash | a) Fixed income at competitive, market-based levels attracts and retains top talent. | ||||||||||||
| Annual Incentive Plans (“AIP”) | Cash | b) Motivates executives to achieve key annual financial and operational goals that reflect commitment to superior operations and supporting our customers and communities | ||||||||||||
| Long-Term Incentive Plan (“LTIP”) | Performance Shares (67% of LTIP) | c) Drives executive focus on long-term goals supporting utility growth, financial results, and capital stewardship d) Rewards relative achievement of financial goals and stock price compared to utility peers (“UTY”) over three-year period e) Aligns the interests of executives with stockholders by capping payouts if absolute TSR is negative for the prior 36-month period | ||||||||||||
| Restricted Stock (33% of LTIP) | f) Balances LTI portfolio providing executive with market competitive time-based award. |
2021 Base Salaries
Base salaries for 2021 were determined by the Exelon Compensation Committee for Messrs. Crane, Cornew and Hanson. The Exelon Compensation Committee also set the base salary for Messrs. Dominguez and Eggers following their promotion in October 2021. When evaluating whether to make any adjustments, the Exelon Compensation Committee considers a number of factors including the outcome of the annual merit review, results of the annual market assessment of executive compensation provided by the Exelon Compensation Committee’s independent compensation consultant, the need to retain experienced executives, individual performance, scope of responsibility, leadership skills and values, current compensation, internal equity, and legacy matters.
Base salaries for the remaining Constellation and subsidiary NEOs are set by the Exelon CEO. Base salaries may be adjusted (1) as part of the annual merit review or (2) based on a promotion or significant change in job scope. The Exelon CEO considers the results of the annual market assessment in addition to the following factors when contemplating a merit review: individual performance, scope of responsibility, leadership skills and values, current compensation, internal equity, and legacy matters.
In January 2021 as part of its annual merit review, the Exelon Compensation Committee recommended Mr. Crane’s base salary be increased by 1% based on the annual market assessment conducted by the independent compensation consultant, Meridian Compensation Partners, LLC. At the same time, the Exelon Compensation Committee approved a 3.6% increase in base salary for Mr. Hanson and 1% increase for Mr. McHugh. Mr. Crane approved a 1% increase in base salary for Mr. Wright. All other executives were held flat. Merit increases were effective March 1, 2021.
2021 Annual Incentive Plan (AIP) Overview and Goal Setting
AIP metrics are linked to business goals and strategic focus areas. The goal-setting process employs a multi-layer approach and analysis that incorporates a blend of objective and subjective business considerations and other analytical methods to ensure that the goals are sufficiently rigorous. Such considerations include:
Recent History - Goals generally reflect a logical progression of results from the recent past.
Relative Performance - Performance is evaluated against a relevant group of Constellation and its subsidiaries’ peers.
Strategic Aspirations - Near- and intermediate-term goals follow a trend line consistent with long-term aspirations.
Shareholder Expectations - Goals are aligned with externally communicated financial guidance and shareholder expectations.
Sustainable Sharing - Earned awards reflect a balanced degree of shared benefits between shareholders and participants.
The following process was used to determine 2021 AIP awards for each NEO:
1) Set AIP Target - Expressed as percentage of base salary. Mr. Crane’s annual incentive target was 145% and for the other NEOs, the annual incentive targets ranged from 50%-100%.
2) Determine Performance Factor - Based on various financial and operating metrics.
3) Determine Individual Performance Multiplier (IPM) – IPM measures individual performance and ranged from 50% to 110% (target of 100%). Wright and Rhoades were the only executives eligible for an IPM up to a maximum of 110%. There were no IPMs for the other NEOs. The IPMs were approved by Mr. Crane.
4) Apply Final Multiplier – Multiply the target award by the performance factor and then multiply the outcome by the IPM. Awards could range from 0% to 200% of target (target of 100%).
The following tables detail the 2021 threshold, target, and distinguished, i.e., maximum, performance goals, and the results achieved for the AIP. The Exelon Compensation Committee selected the performance metrics below as they align with the long-term business strategy. Actual results reflected below are assessed based on the operational and financial key performance indicators as assigned to each business unit.
CEO and Direct Reports AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Weighted Performance | ||||||||||||||||||||||||||||||||
| Exelon Adjusted (non-GAAP) Operating EPS(a)(b) | $ | 2.58 | $ | 2.87 | $ | 3.44 | $ | 2.94 | 106.7 | % | 74.7 | % | ||||||||||||||||||||||||||
| CAIDI | 90 | 84 | 79 | 81 | 160.0 | % | 12.0 | % | ||||||||||||||||||||||||||||||
| SAIFI | 0.80 | 0.69 | 0.54 | 0.60 | 160.0 | % | 12.0 | % | ||||||||||||||||||||||||||||||
| Fleetwide Capacity Factor | 92.6 | % | 94.6 | % | 95.8 | % | 94.7 | % | 113.2 | % | 8.5 | % | ||||||||||||||||||||||||||
| Dispatch Match | 94.8 | % | 97.5 | % | 99.4 | % | 72.4 | % | — | % | — | % | ||||||||||||||||||||||||||
| Payout: | 107.2 | % |
ComEd Senior AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Weighted Performance | ||||||||||||||||||||||||||||||||
| Exelon Adjusted (non-GAAP) Operating EPS(a)(b) | $ | 2.58 | $ | 2.87 | $ | 3.44 | $ | 2.94 | 106.7 | % | 26.7 | % | ||||||||||||||||||||||||||
| ComEd Adjusted (non-GAAP) Operating Earnings ($M)(b) | $ | 652 | $ | 724 | $ | 833 | $ | 754 | 128.0 | % | 32.0 | % | ||||||||||||||||||||||||||
| Total ComEd Operating and Maintenance Expense ($M)(b) | $ | 1,083 | $ | 1,031 | $ | 928 | $ | 957 | 171.6 | % | 34.3 | % | ||||||||||||||||||||||||||
| Value Based Engagements | 80.0 | % | 90.0 | % | 100.0 | % | 100.0 | % | 200.0 | % | 5.0 | % | ||||||||||||||||||||||||||
| Safety Best Practices | 3 | 4 | 5 | 5 | 200.0 | % | 5.0 | % | ||||||||||||||||||||||||||||||
| SAIFI | 0.80 | 0.54 | 0.50 | 0.50 | 200.0 | % | 10.0 | % | ||||||||||||||||||||||||||||||
| CAIDI | 90 | 77 | 75 | 69 | 200.0 | % | 10.0 | % | ||||||||||||||||||||||||||||||
| Service Level | 81.5 | 90.0 | 92.1 | 89.2 | 200.0 | % | 10.0 | % | ||||||||||||||||||||||||||||||
| Customer Satisfaction Index | 7.64 | 8.09 | 8.20 | 8.18 | 181.8 | % | 9.1 | % | ||||||||||||||||||||||||||||||
| EIMA Reliability Metrics Index | 50.0 | % | 100.0 | % | 200.0 | % | 120.0 | % | 120.0 | % | 6.0 | % | ||||||||||||||||||||||||||
| Payout: | 148.1 | % | ||||||||||||||||||||||||||||||||||||
| Board Limiter Application | 120.0 | % |
Business Service Center AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Weighted Performance | ||||||||||||||||||||||||||||||||
| BSC Total Cost ($M)(b) | $ | 1,246 | $ | 1,187 | $ | 1,068 | $ | 1,111 | 164.2 | % | 164.2 | % | ||||||||||||||||||||||||||
| Payout: | 164.2 | % | ||||||||||||||||||||||||||||||||||||
| Board Limiter Application | 120.0 | % |
Constellation Corporate AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Board Limiter Application | ||||||||||||||||||||||||||||||||
| Average of Nuclear, Power, and Constellation KPIs | 50.0 | % | 100.0 | % | 200.0 | % | 118.1 | % | 118.1 | % | YES | |||||||||||||||||||||||||||
| Payout: | 100.0 | % |
Commercial Senior AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Weighted Performance | ||||||||||||||||||||||||||||||||
| Exelon Adjusted (non-GAAP) Operating EPS(a)(b) | $ | 2.58 | $ | 2.87 | $ | 3.44 | $ | 2.94 | 106.7 | % | 53.3 | % | ||||||||||||||||||||||||||
| Constellation Adjusted (non-GAAP) Operating Earnings ($M)(b) | $ | 850 | $ | 944 | $ | 1,085 | $ | 718 | — | % | — | % | ||||||||||||||||||||||||||
| Commercial Adjusted Gross Margin ($M)(b) | $ | 5,204 | $ | 5,782 | $ | 6,650 | $ | 5,567 | 81.8 | % | 20.3 | % | ||||||||||||||||||||||||||
| Payout: | 73.6 | % |
Nuclear Senior AIP Scorecard
| 2021 Goals | Threshold | Target | Distinguished | 2021 Actual Results | Unadjusted Payout as a % of Target | Weighted Performance | ||||||||||||||||||||||||||||||||
| Exelon Adjusted (non-GAAP) Operating EPS(a)(b) | $ | 2.58 | $ | 2.87 | $ | 3.44 | $ | 2.94 | 106.7 | % | 53.3 | % | ||||||||||||||||||||||||||
| Constellation Adjusted (non-GAAP) Operating Earnings ($M)(b) | $ | 850 | $ | 944 | $ | 1,085 | $ | 718 | — | % | — | % | ||||||||||||||||||||||||||
| Fleetwide Capacity Factor | 92.6 | % | 94.6 | % | 95.8 | % | 94.7 | % | 113.2 | % | 28.3 | % | ||||||||||||||||||||||||||
| Payout: | 81.6 | % |
(a)Exelon’s 2021 Adjusted EPS was $2.82. However, for purposes of determining the 2021 AIP payouts for Exelon executives, $2.94 was used, which includes the impact of ($0.12) attributed to equity investments.
(b)See definitions of Non-GAAP measures beginning on page 173.
Definition of Non-GAAP Measures
Exelon reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP) and supplements its reporting with certain non-GAAP financial measures, including adjusted (non-GAAP) operating earnings per share, earned ROE, and FFO/Debt to enhance investors’ understanding of Exelon’s performance. Our method of calculating adjusted (non-GAAP) operating earnings and operating ROE may not be comparable to other companies’ presentations.
Adjusted (non-GAAP) operating earnings per share exclude certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments from economic hedging activities, unrealized gains and losses from nuclear decommissioning trust fund investments, certain costs associated with plant retirements and divestitures, costs related to cost management programs, and other items as set forth in the table below reconciling adjusted (non-GAAP) operating earnings from GAAP earnings, which is the most directly comparable GAAP measure. Management uses adjusted (non-GAAP) operating earnings as one of the primary indicators to evaluate performance, allocate resources, set incentive compensation targets and plan and forecast future periods. We believe the measure enhances an investor’s overall understanding of period over period financial results and provides an indication of Exelon’s baseline operating performance by excluding items that are considered by management to not be directly related to the ongoing operations of the business.
The table below reconciles reported GAAP Earnings per share to adjusted (non-GAAP) operating earnings per share for 2020 (amounts may not add due to rounding).
| 2021 Exelon GAAP Earnings (Loss) Per Share | $ | 1.74 | |||
| Adjustments: | |||||
| Mark-to-market impact of economic hedging activities | (0.43) | ||||
| Unrealized gains related to nuclear decommissioning trust (NDT) funds | (0.14) | ||||
| Asset impairments | 0.41 | ||||
| Plant retirements and divestitures | 0.88 | ||||
| COVID-19 Direct Costs | 0.04 | ||||
| Separation Costs | 0.09 | ||||
| Acquisition Related Costs | 0.02 | ||||
| ERP System Implementation Costs | 0.01 | ||||
| Cost Related to Suspension of Contractual Offset | 0.15 | ||||
| Cost management program | 0.01 | ||||
| Change in environmental liabilities | 0.01 | ||||
| Asset retirement obligation | (0.04) | ||||
| Income tax-related adjustments | 0.05 | ||||
| Noncontrolling interests | 0.02 | ||||
| 2021 Exelon Adjusted (non-GAAP) Operating Earnings (Loss) Per Share | $ | 2.82 |
Earned ROE is calculated using adjusted (non-GAAP) operating earnings, reflecting all lines of business for the utility businesses (electric distribution, gas distribution, transmission), divided by average shareholder’s equity over the year. Management uses operating ROE as a measurement of the actual performance of the company’s utility business.
FFO/Debt is a coverage ratio that compares funds from operations to total debt and is a key ratio analyzed by the credit rating agencies in determining Exelon’s credit rating. An investment grade rating is critical as it increases the ability to participate in commercial business opportunities, lowers collateral requirements, creates reliable and cost-efficient access to capital markets and increases business and financial flexibility. The ratio is calculated following S&P’s current methodology. The most directly comparable GAAP measure to FFO is GAAP Cash Flow from Operations and the most directly comparable GAAP measure to Debt is Long-Term Debt plus Short-Term Borrowings. Management uses FFO/Debt to evaluate financial risk by measuring the company’s ability to service debt using cash from operations. We believe the measure enhances an investor’s overall understanding of the creditworthiness of Exelon’s operating companies.
ComEd adjusted (non-GAAP) operating earnings excludes certain costs, expenses, gains and losses and other specified items as determined appropriate by Exelon management when evaluating the performance metrics.
Constellation adjusted (non-GAAP) operating earnings excludes certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments, rate relief payments, and other items as determined appropriate by Exelon management when evaluating the performance metrics.
Commercial Adjusted Gross Margin is the total operating revenues less purchased power and fuel for the Commercial wholesale business and, for the Commercial retail services businesses, includes direct costs, and is net of any non-operating adjustments to either operating revenue or purchased power and fuel.
Utility adjusted (non-GAAP) operating earnings is the aggregate utility adjusted (non-GAAP) operating earnings, including Exelon HoldCo adjusted (non-GAAP) operating earnings.
Total ComEd Operating and Maintenance Expense excludes certain costs, expenses and other specified items as determined appropriate by Exelon management when evaluating the performance metrics.
BSC Total Costs represents Exelon Business Service Company costs, excluding certain costs, expenses and other specified items as determined appropriate by Exelon management when evaluating the performance metrics.
Due to the forward-looking nature of some forecasted non-GAAP measures, information to reconcile the forecasted adjusted (non-GAAP) measures to the most directly comparable GAAP measure may not be currently available; therefore, management is unable to reconcile these measures.
The following table shows how the formula was applied and the actual amounts awarded. The Exelon Compensation Committee applied negative discretion to limit the ComEd Senior and Business Service Center scorecards to 120% of target and the Constellation Corporate scorecard to target.
| NEO | AIP Target | AIP Target | Formulaic Performance Factor**(a)** | Individual Performance Multiplier (IPM) | Actual Award | |||||||||||||||||||||||||||
| Crane | 155.0 | % | $ | 2,024,192 | 107.2 | % | 100.0 | % | $ | 2,169,124 | ||||||||||||||||||||||
| Dominguez | 135.0 | % | 985,530 | Blend(a)(b) | 100.0 | % | 846,880 | |||||||||||||||||||||||||
| Wright | 50.0 | % | 228,769 | 100.0 | % | 105.0 | % | 240,208 | ||||||||||||||||||||||||
| Eggers | 90.0 | % | 463,450 | Blend(b)(c) | 100.0 | % | 478,698 | |||||||||||||||||||||||||
| Cornew | 100.0 | % | 234,626 | 107.2 | % | 100.0 | % | 251,425 | ||||||||||||||||||||||||
| Hanson | 85.0 | % | 616,250 | 107.2 | % | 100.0 | % | 660,374 | ||||||||||||||||||||||||
| McHugh | 80.0 | % | 530,856 | Blend(d) | 100.0 | % | 422,298 | |||||||||||||||||||||||||
| Rhoades | 80.0 | % | 547,750 | 81.6 | % | 110.0 | % | 491,841 |
(a)Mr. Dominguez actual award is prorated based on both the ComEd Senior and CEO and Directs scorecard performance based on time in each plan.
(b)The AIP targets disclosed above reflect the target as of December 31, 2021. Mr. Dominguez and Mr. Eggers awards are also based on a blend of targets and salaries based on time in each role.
(c)Mr. Eggers actual award was prorated based on both the Business Service Center and CEO and Directs scorecard performance based on time in each plan.
(d)Mr. McHugh actual award was prorated base on both the Commercial Senior and CEO and Directs scorecard performance based on time in each plan.
Long-Term Incentive Plan (LTIP) Overview & Goal Setting Process
The Exelon Compensation Committee grants long-term equity incentive awards annually at its January or February meeting. When the total target equity incentive award is determined, the value is split between RSUs (33%) and performance shares (67%).
Restricted Stock Units (“RSUs”). RSUs granted to NEOs vest ratably over a three-year period. RSUs receive dividend equivalents that are reinvested as additional RSUs and remain subject to the same vesting conditions as the underlying RSUs. RSUs are not subject to any performance metrics.
Performance Shares. Performance shares granted to NEOs in January 2021 were converted according to the methodology outlined in the Employee Matters Agreement. Awards will be earned based on performance achieved for the scorecard approved by the Constellation Committee covering the two-year period ending on December 31, 2023. The performance metrics underlying the 2019-2021 and 2020-2022 performance share awards are listed below.
| Performance share metrics | Why it is Important | |||||||
| Utility Earned ROE**(a)** (33.3%) Average utility ROE weighted by year-end rate base. Earned ROE is calculated using adjusted (non-GAAP) operating earnings, reflecting all lines of business for the utility businesses (electric distribution, gas distribution, transmission), divided by average shareholder’s equity over the year. | Measure of value created by utility businesses. Aligned with our strategy to invest in our utilities where we can earn an appropriate return. | |||||||
| Utility Net Income**(a)** (33.3%) Aggregate utility adjusted (non-GAAP) operating earnings, including Exelon hold-co net operating income (loss) | Measures financial performance of the Utilities. Aligned with our strategy to grow our regulated utility business. | |||||||
| Exelon FFO/Debt**(a)** (33.4%) Funds from operations to total debt ratio. The ratio is calculated following S&P’s current methodology. Management uses FFO/Debt to evaluate financial risk by measuring ability to service debt using cash from operations | Key ratio for determining our credit rating and thereby our access to capital. Aligned with our strategy to generate free cash and reduce debt. |
(a)See definitions of Non-GAAP measures beginning on page 173.
Setting Performance Share Targets. Performance share targets are set based on external commitments and analysis of sensitivities. The target for the Exelon FFO/Debt metric is aligned with the expectations of credit rating agencies.
Actual Targets Disclosed After Each Cycle. Actual targets used in our performance share cycles are not disclosed until each cycle is completed to safeguard the confidentiality of our long-term outlook on projected performance. This policy supports the propriety of our long-standing disclosure practices to only issue annual performance guidance as part of our financial disclosure policies.
Performance Share Awards Subject to TSR Modifier and Cap. Performance share awards are subject to a total shareholder return (“TSR”) modifier that compares Exelon’s performance relative to the performance of the UTY total return index on a point by point basis. Performance share awards are also subject to a TSR cap that will limit payouts at target if TSR is negative for the prior 36-month period.
The Exelon Compensation Committee used the following process to determine performance share targets and awards:
1) Establish Performance Share Award Target - Targets are set in January/February of the first year of the performance cycle.
2) Determine Performance Multiplier - The Performance Multiplier is based on performance achieved over the three-year cycle. Performance can range from 0% to 150% of target (target of 100%).
3) Determine TSR Modifier - Calculated by subtracting the TSR of the UTY over the three-year performance period from Exelon’s TSR for the same three-year period.
4) Calculate Final Multiplier - Calculated by multiplying the Performance Multiplier by (100% + TSR Modifier). This value is the Final Multiplier.
5) Apply Final Multiplier & TSR Cap (if applicable) - Apply the Final Multiplier to determine the number of shares issued. If Exelon’s absolute TSR for the final 12-month of the performance period is negative, payout will be capped at 100%. Awards can range from 0% to 200% of target (target of 100%) after application of the TSR modifier.
2019 – 2021 Performance and Performance Share Payout Determinations
The following table details the 2019 - 2021 threshold, target, and distinguished performance goals, and the results achieved. The performance multiplier for the 2019 - 2021 Performance Share awards was calculated to be 80.5% of target, based on the following:
| Performance Share Scorecard | |||||||||||||||||||||||||||||||||||||||||||||||
| Metric Weighting | Threshold (50%) | 75% | Target (100%) | 125% | Distinguished (150%) | Actual Score | Actual Award v. Metric Weighting | ||||||||||||||||||||||||||||||||||||||||
| Utility Earned ROE(a)(b) | 33.3 | % | 8.4% | 9.3% | 10.0% | 9.2% | 31.4 | % | |||||||||||||||||||||||||||||||||||||||
| Utility Net Income ($M)(a)(b) | 33.3 | % | $ | 1,819 | $ | 2,053 | $ | 2,213 | $ | 2,040 | 32.4 | % | |||||||||||||||||||||||||||||||||||
| Exelon FFO/Debt(a)(b) | 33.4 | % | ≥16.0% and <17.0% | ≥17.0% and <18.0% | ≥18.0% and <22.0% | ≥22.0% and <24.0% | ≥24.0% | 16.5 | % | 16.7 | % | ||||||||||||||||||||||||||||||||||||
| Committee Approved Performance: | 80.5 | % |
(a)See definitions of Non-GAAP measures beginning on page 173.
(b)The Utility Earned ROE and Utility Net Income use interpolation between threshold, target, and distinguished levels of performance whereas the FFO/Debt metric uses a “stair-step” approach with no interpolation between the performance levels.
Payout Determinations. The Exelon Compensation Committee approved a payout of 70.6%, based on 2019 - 2021 performance and the application of a TSR modifier of (12.3)% based on 2019 - 2021 TSR performance relative to the UTY total return.
The following table shows how the formula was applied and the actual amounts awarded.
| NEO | Target Shares | Performance Factor | Actual Award | |||||||||||||||||
| Crane | 155,683 | X | 70.6 | % | = | 109,928 | ||||||||||||||
| Dominguez | 15,993 | X | 70.6 | % | = | 11,293 | ||||||||||||||
| Wright | 6,907 | X | 70.6 | % | = | 4,877 | ||||||||||||||
| Eggers | 6,907 | X | 70.6 | % | = | 4,877 | ||||||||||||||
| Cornew | 41,310 | X | 70.6 | % | = | 29,169 | ||||||||||||||
| Hanson | 20,522 | X | 70.6 | % | = | 14,491 | ||||||||||||||
| McHugh | 23,707 | X | 70.6 | % | = | 16,740 | ||||||||||||||
| Rhoades | 14,861 | X | 70.6 | % | = | 10,493 |
Performance Awards Settled in Common Stock and/or Cash. Pursuant to the terms of the long-term incentive program, all NEOs that have achieved 200% or more of their stock ownership targets receive performance share award payouts in cash. Due to the timing of the separation, the Exelon Compensation Committee approved 100% cash settlement for all participants.
2021 Target Compensation for Named Executive Officers
The table below lists the target value of the compensation elements for each NEO as of December 31, 2021.
| Cash Compensation | Long-Term Incentives | |||||||||||||||||||||||||||||||||||||||||||
| NEO | Base | AIP Target | Target Total Cash | RSUs (33% of LTIP) | Performance Shares (67% of LTIP) | Target Total LTIP | Target Total Direct Compensation | |||||||||||||||||||||||||||||||||||||
| Crane | $ | 1,305,930 | 155.0 | % | $ | 3,330,122 | $ | 3,630,000 | $ | 7,370,000 | $ | 11,000,000 | $ | 14,330,122 | ||||||||||||||||||||||||||||||
| Dominguez | 1,050,000 | 135.0 | % | 2,467,500 | 2,485,725 | 5,046,775 | 7,532,500 | 10,000,000 | ||||||||||||||||||||||||||||||||||||
| Wright | 457,538 | 50.0 | % | 686,307 | 161,040 | 326,960 | 488,000 | 1,174,307 | ||||||||||||||||||||||||||||||||||||
| Eggers | 650,000 | 90.0 | % | 1,235,000 | 582,450 | 1,182,550 | 1,765,000 | 3,000,000 | ||||||||||||||||||||||||||||||||||||
| Cornew | — | — | % | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Hanson | 725,000 | 85.0 | % | 1,341,250 | 726,000 | 1,474,000 | 2,200,000 | 3,541,250 | ||||||||||||||||||||||||||||||||||||
| McHugh | 663,570 | 80.0 | % | 1,194,426 | 552,750 | 1,122,250 | 1,675,000 | 2,869,426 | ||||||||||||||||||||||||||||||||||||
| Rhoades | 700,000 | 80.0 | % | 1,260,000 | 607,200 | 1,232,800 | 1,840,000 | 3,100,000 |
Shareholder Engagement
The Exelon Compensation Committee regularly reviews executive compensation, taking into consideration input received through regular and ongoing engagement with investors. Feedback is typically solicited throughout the year in connection with the annual meeting of shareholders and the Exelon Compensation Committee’s review of the executive compensation program. The Chairs of Exelon’s Compensation and Corporate Governance Committees participated in select investor discussions in 2021. Feedback from all discussions was shared with the appropriate board committee and/or the full board. Shareholders in general expressed their approval of the ongoing executive compensation program and did not request any significant changes during our engagement conversations.
2021 Compensation Decisions – Setting Target Total Direct Compensation (“TDC”)
Setting Target TDC for Mr. Crane: The Exelon Compensation Committee is responsible for reviewing and recommending the Exelon CEO’s target total direct compensation. The CEO’s compensation is then approved by the independent members of the Exelon board. The Exelon Compensation Committee fulfills this responsibility by analyzing peer group compensation and performance data with its independent compensation consultant. The Committee also reviews the various elements of the CEO’s compensation in the context of the target TDC, which includes base salary, annual and long-term incentive target opportunities.
Setting Target TDC for Messrs. Hanson and McHugh: The Exelon Compensation Committee is also responsible for approving the executive compensation for each of Exelon’s executive officers by analyzing peer group compensation and performance data.
Setting Target TDC for the other NEOs: The Exelon CEO analyzes a variety of data to gauge market competitiveness, including peer group compensation and performance data provided by Exelon’s independent compensation consultant. TDC can vary by named executive officer based on competencies and skills, scope of responsibilities, the executive’s experience and performance, retention, succession planning and the organizational structure of the businesses (e.g., internal alignment and reporting relationships).
Role of the Compensation Consultant
As referenced earlier, the Exelon Compensation Committee retains Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consultant, to support its duties and responsibilities. Meridian provides advice and counsel on executive and director compensation matters and provides information and advice regarding market trends, competitive compensation programs, and strategies including as described below:
-
Market data for each senior executive position, including evaluating Exelon’s compensation strategy and reviewing and confirming the peer group used to prepare the market data,
-
An independent assessment of management recommendations for changes in the compensation structure,
-
Assisting management to ensure Constellation and its subsidiaries’ executive compensation programs are designed and administered consistent with the Exelon Compensation Committee’s requirements, and
-
Ad hoc support on executive compensation matters and related governance trends.
Peer Groups Used for Benchmarking 2021 Executive Compensation
Exelon uses a blended peer group for assessing our executive compensation program that consists of two sub-groups: energy services peers and general industry peers because (1) there are not enough energy services peers with size, scale and complexity comparable to Exelon to create a robust energy services-only peer group, and (2) Exelon’s market for attracting talent includes general industry peers, with key executives hired from several Fortune 100 companies. When selecting general industry peers, we look for capital asset-intensive companies with size, scale and complexity similar to Exelon, and we also consider the extent to which they may be subject to the effects of volatile commodity prices similar to Exelon’s sensitivity to commodity price volatility. Exelon evaluates its peer group on an annual basis in July and adjusts for changes with our energy and general industry peers when needed.
Exelon’s revenues are at the 64th percentile of the following blended peer group comprising 21 companies:
1) Energy Services (11 peer companies): American Electric Power Company, Inc.; Dominion Energy, Inc.; DTE Energy; Duke Energy Corporation; Edison International; Entergy Corporation; FirstEnergy Corporation; NextEra Energy, Inc.; Public Service Enterprise Group, Inc.; Sempra Energy; and The Southern Company.
2) General Industry (10 peer companies): 3M Company; Deere & Company; Delta Air Lines; General Dynamics Corporation; Honeywell International, Inc.; International Paper Company; Lockheed Martin; Marathon Petroleum Company; Northrop Grumman Corporation; and Valero Energy Corporation.
Because there is a correlation between the size of an organization and its compensation levels, market data is statistically adjusted using a regression analysis. This commonly applied technique allows for a more precise estimate of the market value of Constellation and its subsidiaries given the size and scope of responsibility for Constellation and its subsidiaries’ executive roles. Each element of NEO compensation is then compared to these size-adjusted medians of the peer group.
In preparation for the separation, a blended peer group consisting of a broad representation of energy and materials companies was used for benchmarking the assessment of 2022 compensation for named executive officers of the Company. Constellation will also evaluate its peer group on an annual basis in July and adjusts for changes with our energy and general industry peers when needed.
Constellation’s revenues are at the 64th percentile of the following blended peer group comprising 15 companies:
1) Energy Services and Independent Power Producers ("IPPs") (9 peer companies): American Electric Power Company, Inc.; Dominion Energy, Inc.; Duke Energy Corporation; Entergy Corporation; NextEra Energy, Inc.; NRG Energy, Inc.; The AES Corporation; Vistra Corp; and The Southern Company.
2) General Industry (6 peer companies): DuPont de Nemours, Inc.; International Paper Company; Kinder Morgan, Inc.; Nucor Corporation; Occidental Petroleum Corporation; and WestRock Company.
Looking Forward to 2022
Annual Incentive Plan
Based on overall company strategy, the 2022 plan design will be based 70% on a financial metric and 30% on operational metrics.
The plan design metric weightings include:
-
70% weighting on Adjusted EBITDA,
-
10% weighting on Fleetwide Capacity Factor as assessment of Nuclear operational performance,
-
10% weighting on Dispatch Match as assessment of Power operational performance, and
-
10% on Customer Satisfaction (which considers both Net Promoter Score, which measures C&I business customer loyalty, and Customer Satisfaction, which measures residential satisfaction from recent support experience).
Long-term Incentive Plan
The long-term incentive plan is aligned with the Constellation business strategy, the 2021 and 2022 PShare programs will be based on a 100% Free Cash Flow before Growth metric with a CFO/Debt negative modifier.
Stock Ownership
To strengthen the alignment of executive interests with those of Exelon’s shareholders, officers of Constellation and its subsidiaries are required to own certain amounts of Exelon common stock five years following his or her employment or promotion to a new position (six-times base salary for Mr. Crane; two to three times base salary for the other NEOs). As of the annual measurement date of June 30, 2021, all NEOs had met their stock ownership guidelines. We expect to adopt a similar stock ownership policy for officers of the Company.
Prohibition on Hedging and Pledging of Common Stock; Other Trading Requirements
Exelon requires executive vice presidents and above who wish to sell Exelon common stock to do so only through the adoption of a stock trading plan meeting the requirements of SEC Rule 10b5-1(c). This requirement is designed to enable officers with the ability to diversify holdings in an orderly manner to meet personal financial plans. Our insider trading policy includes provisions that prohibit directors and employees (including officers) and certain of their related persons (including certain family members and entities which they own a significant interest) from engaging in short sales, put or call options, hedging transactions, pledging, or other derivative transactions involving Exelon stock. We expect to adopt a similar policy for officers of the Company.
Clawback Policy
The policy provides broad discretionary ability to clawback incentive compensation when deemed appropriate. Under the policy, the Exelon board has sole discretion to recoup incentive compensation if it determines that (a) the incentive compensation was based on the achievement of financial or other results that were subsequently restated or corrected, (b) the incentive plan participant engaged in fraud or intentional misconduct that caused or contributed to the need for restatement or correction, (c) a lower incentive plan award would have been made to the participant based on the restated or corrected results, and (d) recoupment is not precluded by applicable law or employment agreements.
The Exelon board or Exelon Compensation Committee may also seek to recoup incentive compensation paid or payable to current or former incentive plan participants if, in its sole discretion, the Exelon board or Exelon Compensation Committee determines that (a) the current or former incentive plan participant breached a restrictive covenant or engaged or participated in misconduct or intentional or reckless acts or omissions or serious neglect of responsibilities that caused or contributed to a significant financial loss or serious reputational harm to Exelon or its subsidiaries regardless of whether a financial statement restatement or correction of incentive plan results was required, and (b) recoupment is not precluded by applicable law or employment agreements.
We have adopted clawback policies that are similar to those maintained by Exelon.
Risk Management Assessment of Compensation Policies and Practices
The Exelon Compensation Committee reviews Exelon’s compensation policies and practices as they relate to the risk management practices and risk-taking incentives. The Exelon Compensation Committee partners with Constellation’s enterprise risk management group to assess and validate that the controls in place continued to mitigate incentive compensation risks.
Tax Consequences
Under Section 162(m) of the Internal Revenue Code (the Code), generally NEO compensation over $1 million for any year is not deductible for United States income tax purposes. The Compensation and Leadership Development Committee believes that it must maintain flexibility in its approach to executive compensation in order to structure a program that it considers to be the most effective in attracting, motivating and retaining the Company’s key executives, and therefore, the deductibility of compensation is one of several factors considered when making executive compensation decisions.
Compensation Committee Report
The Compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis and, based on such review and discussion, the Committee recommended the Board approve the Compensation Discussion and Analysis be included in this Report.
The Compensation Committee
| Name | ||
| Yves C. de Balmann, Chair | ||
| Bradley Halverson | ||
| Julie Holzrichter | ||
| Ashish Khandpur |
Executive Compensation Tables
2021 Summary Compensation Table
| Name | Year | Salary | Bonus**(a)** | Stock Awards**(b)** | Non-Equity Incentive Plan Compensation**(c)** | Change in Pension Value and Nonqualified Deferred Compensation Earnings**(d)** | All Other Compensation**(e)** | Total | ||||||||||||||||||||||||||||||||||||||||||
| Christopher Crane | ||||||||||||||||||||||||||||||||||||||||||||||||||
| President and Chief Executive Officer, Exelon | 2021 2020 | $ 1,303,595 1,293,000 | $ __ __ | $ 11,000,019 11,000,013 | $ 2,169,124 1,897,536 | $ 1,071,663 757,754 | $ 212,977 214,500 | $ 15,757,378 15,162,803 | ||||||||||||||||||||||||||||||||||||||||||
| Joseph Dominguez | ||||||||||||||||||||||||||||||||||||||||||||||||||
| President and Chief Executive Officer, Constellation | 2021 | 752,504 | __ | 1,130,048 | 846,880 | 181,413 | 441,432 | 3,352,277 | ||||||||||||||||||||||||||||||||||||||||||
| Kenneth Cornew | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Former) President and Chief Executive Officer, Constellation | 2021 2020 | 404,100 947,189 | __ __ | 1,955,605 2,918,828 | 251,425 963,055 | 176,751 299,794 | 3,900,007 338,335 | 6,687,888 5,467,201 | ||||||||||||||||||||||||||||||||||||||||||
| Bryan Wright | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Former) Senior Vice President and Chief Financial Officer, Constellation | 2021 2020 | 456,720 450,936 | 11,438 64,723 | 488,034 488,016 | 228,769 294,455 | 149,770 123,461 | 25,315 25,975 | 1,360,046 1,447,566 | ||||||||||||||||||||||||||||||||||||||||||
| Daniel Eggers | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Vice President and Chief Financial Officer, Constellation | 2021 | 561,051 | __ | 550,024 | 478,698 | 82,699 | 48,901 | 1,721,373 | ||||||||||||||||||||||||||||||||||||||||||
| Bryan Hanson | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Vice President, Chief Generation Officer, Constellation | 2021 2020 | 720,486 686,418 | __ __ | 2,220,056 1,450,054 | 660,374 594,728 | 560,922 885,522 | 74,320 59,602 | 4,216,158 3,676,324 | ||||||||||||||||||||||||||||||||||||||||||
| James McHugh | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Vice President, Chief Commercial Officer, Constellation | 2021 2020 | 662,384 653,981 | __ 29,121 | 2,564,644 1,675,059 | 422,298 582,417 | 27,257 26,209 | 45,655 60,738 | 3,722,238 3,027,525 | ||||||||||||||||||||||||||||||||||||||||||
| David Rhoades | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President, President and Chief Nuclear Officer | 2021 | 684,254 | 44,713 | 1,500,040 | 447,128 | 652,587 | 29,780 | 3,358,502 |
(a)In recognition of their overall performance, certain NEOs received an individual performance multiplier (IPM) to their annual incentive payments or other special recognition awards. Messrs. Crane, Cornew, Hanson and McHugh were not eligible for an IPM.
(b)The amounts shown in this column include the aggregate grant date fair value of restricted stock unit and performance share unit awards for the 2021-2023 performance period granted January 25, 2021 and October 29, 2021. The grant date fair values of the stock awards have been computed in accordance with FASB ASC Topic 718. Note, Mr. Cornew’s award was reduced at the separation date to reflect a prorated award based on time in role during 2021. The 2020-2022 performance share award component of the stock award values depicted above are subject to performance conditions and the grant date fair value assumes the achievement of the target level of performance; however, values may be higher based on performance including the maximum total shareholder return multiplier as follows:
| Performance Share Award Value | |||||||||||
| Name | At Target | At Maximum | |||||||||
| Crane | $ | 7,370,020 | $ | 14,740,040 | |||||||
| Dominguez | 757,108 | 1,514,216 | |||||||||
| Cornew | 1,955,605 | 3,911,210 | |||||||||
| Wright | 326,989 | 653,978 | |||||||||
| Eggers | 368,518 | 737,036 | |||||||||
| Hanson | 1,474,030 | 2,948,060 | |||||||||
| McHugh | 1,122,288 | 2,244,576 | |||||||||
| Rhoades | 1,005,026 | 2,010,052 |
(c)The amounts shown in this column for 2021 represent payments made pursuant to the Annual Incentive Plan.
(d)The amounts shown in this column represent the change in the accumulated pension benefit for the NEOs from December 31, 2020 to December 31, 2021. None of the NEOs had above market earnings in a non-qualified deferred compensation account in 2021.
(e)All Other Compensation: The following table describes the incremental cost of other benefits provided in 2021 that are shown in this column.
All Other Compensation
| Name | Perquisites**(a)** | Reimbursement for Income Taxes**(b)** | Exelon Contributions to Savings Plans**(c)** | Exelon Paid Term Life Insurance Premiums**(d)** | Other**(e)** | Total | ||||||||||||||||||||||||||||||||
| Crane | $ | 128,034 | $ | — | $ | 39,113 | $ | 45,830 | $ | — | $ | 212,977 | ||||||||||||||||||||||||||
| Dominguez | 252,031 | 162,636 | 22,230 | 4,535 | — | 441,432 | ||||||||||||||||||||||||||||||||
| Cornew | 26,301 | 56,653 | 7,137 | 3,752 | 3,806,164 | 3,900,007 | ||||||||||||||||||||||||||||||||
| Wright | 12,290 | — | 8,700 | 4,325 | — | 25,315 | ||||||||||||||||||||||||||||||||
| Eggers | 28,683 | — | 16,709 | 3,509 | — | 48,901 | ||||||||||||||||||||||||||||||||
| Hanson | 42,651 | 6,536 | 21,019 | 4,114 | — | 74,320 | ||||||||||||||||||||||||||||||||
| McHugh | 22,101 | — | 19,178 | 4,376 | — | 45,655 | ||||||||||||||||||||||||||||||||
| Rhoades | 16,840 | — | 8,700 | 4,240 | — | 29,780 |
(a)Amounts reported for personal benefits provided to NEOs include: (1) transportation related benefits (including corporate aircraft, parking, spousal and family travel); and (2) other benefits (including personal financial planning, company gifts, and matching charitable contributions).
i.Amounts reported for the personal use of corporate aircraft are based on the aggregate incremental cost to Exelon and are calculated using the hourly incremental cost for flight services, including federal excise taxes, fuel charges, and domestic segment fees. Exelon’s board-approved policy on corporate aircraft usage includes spousal/domestic partner and other family member usage when appropriate. Amounts reported in this column for Mr. Crane, Mr. Dominguez and Mr. Eggers include $83,376, $17,528, $11,843 respectively for personal use of corporate aircraft. Amounts include $14,183 for spousal travel for Mr. Hanson.
ii.Amounts include the value received by Mr. Dominguez for his relocation from Illinois to Pennsylvania as Chief Executive Officer of Constellation. The value of the benefit included is $217,663 which includes closing, storage, and inspection costs. Benefits were provided for under the relocation program’s standard terms.
iii.Limited personal financial planning benefits valued at $16,840 for each executive are provided with usage values imputed as additional taxable income. Executive officers may request matching gifts to qualified charitable organizations in amounts up to $10,000 and up to $15,000 for Mr. Cornew under the Constellation Energy Group, Inc. legacy policy.
(b)Exelon provides reimbursements of tax obligations incurred when: employees are required to work outside their state of home residence and encounter double taxation in states and localities where tax credits are not permitted in home state tax filings; business-related spousal travel involves personal benefits and income is imputed to the employee and for required relocation and housing/living expenses incurred in compliance with regulatory requirements.
(c)The amounts represent the respective corporate matching contributions to the NEOs’ accounts. Each of the NEOs participated in the 401(k) Plan and the Deferred Compensation Plan. Mr. Wright and Mr. Rhoades do not participate in the Deferred Compensation Plan.
(d)Exelon provides basic term life insurance, accidental death and disability insurance, and long-term disability insurance to all employees, including NEOs. The values shown in this column include the premiums paid during 2021 for additional term life insurance policies for the NEOs and for additional supplemental accidental death and dismemberment insurance and long-term disability over and above the basic coverage provided to all employees.
(e)For Mr. Cornew, the aggregate amount includes severance payments of $3,806,164 distributed pursuant to the terms of the Senior Management Severance Plan, representing two times the sum of Mr. Cornew’s then current base salary and target annual incentive for the year of termination.
2021 Grants of Plan-Based Awards
| Estimated Possible Payouts Under Non-Equity incentive Plan Awards**(a)** | Estimated Possible Payouts Under Equity Incentive Plan Awards**(b)** | All other Stock Awards: Number of Shares or Units**(c)** | Grant Date Fair Value of Stock and Option Awards**(d)** | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold | Plan | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||
| Crane | 1/25/2021 | $ | 75,907 | $ | 2,024,192 | $ | 4,048,383 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 28,341 | 170,012 | 340,024 | $ | 7,370,020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 83,737 | 3,629,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dominguez | 10/1/2021 | 53,156 | 1,417,500 | 2,835,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 2,911 | 17,465 | 34,930 | 757,108 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 8,603 | 372,940 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cornew | 1/25/2021 | 35,683 | 951,541 | 1,903,082 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 7,520 | 45,112 | 90,224 | 1,955,605 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wright | 1/25/2021 | 57,192 | 228,769 | 457,538 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 1,257 | 7,543 | 15,086 | 326,989 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 3,715 | 161,045 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eggers | 10/1/2021 | 21,938 | 585,000 | 1,170,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 1,417 | 8,501 | 17,002 | 368,518 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 4,187 | 181,506 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hanson | 1/25/2021 | 23,109 | 616,250 | 1,232,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 5,668 | 34,003 | 68,006 | 1,474,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 16,748 | 726,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| McHugh | 1/25/2021 | 19,907 | 530,856 | 1,061,712 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 4,316 | 25,889 | 51,778 | 1,122,288 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 12,751 | 552,756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/5/2021 | 20,000 | 889,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rhoades | 1/25/2021 | 70,000 | 560,000 | 1,120,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 3,865 | 23,184 | 46,368 | 1,005,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2021 | 11,419 | 495,014 |
(a)All NEOs have annual incentive plan target opportunities based on a fixed percentage of base salaries. Under the terms of the AIP, threshold performance earns 50% of the respective target, while performance at plan earns 100% of the respective target and the maximum payout is capped at 200% of target.
i.For Messrs. Crane, Dominguez, Cornew, Eggers, and Hanson and Mr. McHugh, the possible payout at threshold for AIP was calculated at 3.8% of target based on a threshold payout of 50% for the lowest weighted metric of 7.5%.
ii.For Mr. Wright, the possible payout at threshold for AIP was calculated at 25% of target based on a threshold payout of 50% and an individual performance multiplier of 50%.
iii.For Mr. Rhoades, the possible payout at threshold for AIP was calculated at 12.5% of target based on threshold payout of 50% for the lowest weighted metric and an individual performance multiplier of 25%.
1.For additional information about the terms of these programs, see “Compensation Discussion and Analysis” above.
(b)NEOs have a long-term performance share unit target opportunity that is a fixed number of performance share units commensurate with the officer’s position. The possible payout at threshold for performance share unit awards was calculated at 16.7% of target. The possible maximum payout for performance share units was calculated at 150% of target, with an uncapped total shareholder return multiplier, capped at 200% of target. For additional information about the terms of these programs, see Compensation Discussion and Analysis and the footnotes to the Summary Compensation Table above.
(c)This column shows restricted stock unit awards made during the year. The vesting dates of the awards are provided in tickmark (b) to the Outstanding Equity Table below.
(d)This column shows the grant date fair value, calculated in accordance with FASB ASC Topic 718, of the performance share unit awards and restricted stock units granted to each NEO during 2020. Fair value of performance share unit awards granted on January 27, 2020 are based on an estimated payout of 100% of target.
2021 Outstanding Equity Awards at Year End
| Option Awards**(a)** | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options That Are Exercisable | Number of Securities Underlying Unexercised Options That Are Not Exercisable | Option Exercise or Base Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Yet Vested**(b)** | Market Value of Shares or Units of Stock That Have Not Yet Vested Based on 12/31 Closing Price $57.76**(b)** | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested**(c)** | Equity Incentive Plan Awards: Market or Payout Value or Unearned Shares, Units or Other Rights That Have Not Yet Vested**(c)** | ||||||||||||||||||||||||||||||||||||||||||
| Crane | — | — | $ | — | — | 279,511 | $ | 16,144,555 | 651,850 | $ | 37,650,856 | |||||||||||||||||||||||||||||||||||||||
| Dominguez | — | — | — | — | 68,717 | 3,969,094 | 66,964 | 3,867,841 | ||||||||||||||||||||||||||||||||||||||||||
| Wright | — | — | — | — | 12,403 | 716,397 | 28,920 | 1,670,419 | ||||||||||||||||||||||||||||||||||||||||||
| Eggers | — | — | — | — | 33,076 | 1,910,470 | 31,886 | 1,841,735 | ||||||||||||||||||||||||||||||||||||||||||
| Cornew | — | — | — | — | 29,169 | 1,684,801 | 104,990 | 6,064,222 | ||||||||||||||||||||||||||||||||||||||||||
| Hanson | — | — | — | — | 82,742 | 4,779,178 | 109,112 | 6,302,309 | ||||||||||||||||||||||||||||||||||||||||||
| McHugh | — | — | — | — | 63,028 | 3,640,497 | 99,262 | 5,733,373 | ||||||||||||||||||||||||||||||||||||||||||
| Rhoades | — | — | — | — | 72,643 | 4,195,860 | 86,332 | 4,986,536 |
(a)Non-qualified stock options were previously granted to NEOs pursuant to the Company’s long-term incentive plans. All grants are fully vested and expire on the tenth anniversary of the grant date.
(b)The amount shown includes unvested restricted stock unit awards and the performance share award earned for the performance period beginning January 1, 2019 and ending December 31, 2021, which vested on January 28, 2022. The unvested restricted stock unit awards are composed of the final third of the award made in January 2019, which vested on January 6, 2022; two-thirds of the award made in January 2020, half of which vested on January 6, 2022 and half of which will vest on the date of the Constellation Compensation Committee’s first regular meeting in 2023; and the full award granted on January 25, 2021, one-third of which vested on January 6, 2021 and one-third of which will vest on the date of each of the Constellation’s Compensation Committee’s first regular meetings in 2023 and 2024, respectively. All RSU awards accrue additional shares through automatic dividend reinvestment. For Mr. Dominguez, Eggers, Hanson, and Rhoades the amount shown includes grants of 10,000, 20,000, 40,000 and 40,000 restricted stock units awarded on January 29, 2018, which vest on January 6, 2022. For Mr. Dominguez, the amount also includes a 30,000 grant awarded on August 1, 2018, which will vest on August 1, 2022. For Mr. McHugh, the amount includes 20,000 restricted stock units awarded on April 5, 2021, which will vest on April 5, 2025. All shares are valued at $57.76, the closing price on December 31, 2021.
(c)The amount shown includes the target performance share awards granted on January 27, 2020 for the performance period ending December 31, 2022 and the target performance share awards granted on January 25, 2021 for the performance period ending December 31, 2023. These target awards have been increased to reflect the highest level of performance for the period, 200%. All shares are valued at $57.76, the closing price on December 31, 2021.
2021 Option Exercises and Stock Vested
| Option Awards | Stock Awards**(a)** | ||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | |||||||||||||||||||
| Crane | 285,000 | $ | 4,068,888 | 198,406 | $ | 8,600,892 | |||||||||||||||||
| Dominguez | 16,000 | 233,214 | 21,709 | 941,104 | |||||||||||||||||||
| Wright | — | — | 9,374 | 406,365 | |||||||||||||||||||
| Eggers | — | — | 8,918 | 386,578 | |||||||||||||||||||
| Cornew | 70,000 | 393,280 | 56,065 | 2,430,438 | |||||||||||||||||||
| Hanson | — | — | 27,854 | 1,207,488 | |||||||||||||||||||
| McHugh | — | — | 32,635 | 1,414,729 | |||||||||||||||||||
| Rhoades | — | — | 20,171 | 874,399 |
(a)Share amounts are composed of the following tranches of prior awards that vested on January 25, 2021: the performance share awards granted for the performance period of January 1, 2018 through December 31, 2020; the final third of the
RSU awards granted in January 2018, the second third of the RSU awards granted in February 2019 and the first third of the RSU awards granted in January 2020. All of these awards were valued at $43.35 upon vesting.
Pension Benefits
The plans below were sponsored by Exelon Corporation as of December 31, 2021, and that as of February 1, 2022 Constellation established mirror pension plans to maintain the same benefits described below for NEOs.
Exelon sponsors the Exelon Corporation Retirement Program, a defined benefit pension plan that includes the Service Annuity System (SAS), a traditional pension plan covering NEOs who commenced employment prior to January 1, 2001 and the Cash Balance Pension Plan (“CBPP”), an account-based plan covering eligible NEOs hired between January 1, 2001, and February 1, 2018, and certain NEOs who previously elected to transfer to the CBPP from the SAS. Exelon also sponsors the Pension Plan of Constellation Energy Group, Inc. (“CEG Pension Plan”), which covers certain legacy Constellation Energy Group, Inc. employees. It includes a traditional pension formula for employees hired before January 1, 2000, and a pension equity formula (“PEP”) for employees hired thereafter or who elected to participate in that formula. The Retirement Program and CEG Pension Plan are intended to be tax-qualified under Section 401(a) of the Internal Revenue Code.
Service Annuity System (“SAS”)
For NEOs participating in the SAS, the annuity benefit payable at normal retirement age is equal to the sum of 1.3% of the participant’s earnings as of December 25, 1994, reduced by a portion of the participant’s Social Security benefit as of that date, plus 1.6% of the participant’s highest average annual pay, multiplied by the participant’s years of credited service (up to a maximum of 40 years). Pension-eligible compensation for the SAS’s Final Average Pay Formula includes base pay and annual incentive awards. Benefits under the SAS are vested after five years of service.
The “normal retirement age” under the SAS is 65. The plan also offers an early retirement benefit prior to age 65, which is payable if a participant retires after attainment of age 50 and completion of 10 years of service. The annual pension payable under the plan is determined as of the early retirement date, reduced by 2% for each year of payment before age 60 to age 58, then 3% for each year before age 58 to age 50. In addition, under the SAS, the early retirement benefit is supplemented prior to age 65 by a temporary payment equal to 80% of the participant’s estimated monthly Social Security benefit. The supplemental benefit is partially offset by a reduction in the regular annuity benefit.
Cash Balance Pension Plan (“CBPP”)
For NEOs who participate in the CBPP, a notional account is established for each participant, and the account balance grows as a result of annual benefit credits and annual investment credits. NEOs who transferred from the SAS to the CBPP also have a frozen transferred SAS benefit and received a “transition” credit based on age, service and compensation at the time of transfer. When the CBPP was initially established in 2001, it provided an annual benefit credit of 5.8% of an employee’s base pay and annual incentive award for the year, and an annual investment credit based on the average of that year’s S&P 500 stock index return and the 30-year Treasury rate for the month of November (subject to 4% minimum). The benefit credit percentages and investment credit rates have been subsequently modified periodically pursuant to U.S. Treasury Department guidance on cash balance plans. NEO participants in the CBPP currently receive an annual benefit credit ranging from 7.0% to 10.5% (depending on length of service) of base salary and annual incentive award, and an annual investment credit based on the third segment spot rate of interest on long-term investment grade corporate bonds for the month of November of the year credited (subject to a 4% minimum). Benefits vest after three years of service and are payable in an annuity or a lump sum at any time following termination of employment. Apart from the benefit credits and the vesting requirement, years of service are not relevant to a determination of accrued benefits under the CBPP.
In 2019, Exelon and its subsidiaries also provided a one-time Transition Benefit Credit to all CBPP participants in recognition of the transition to a fully fixed income investment credit rate. The amount of the credit ranged from 0% to 30.5% of 2018 annualized base pay, based on years of service as of December 31, 2007.
Pension Plan of Constellation Energy Group, Inc. (CEG Pension Plan)
For NEOs who participate in the PEP, a lump sum benefit amount is computed based on covered earnings multiplied by a total credit percentage. Covered earnings are equal to the average of the highest three of the last five twelve-month periods’ base pay plus annual incentive awards. The total service credit percentage is equal to the sum of the credit percentages based on the following formula: 5% per year of service through age 39, 10% per year of service from age 40 to age 49, and 15% per year of service after age 49. No benefits are available under the PEP until a participant has at least three years of vesting service. Benefits payable under the PEP are paid as an annuity unless a participant elects a lump sum within 60 days after separation.
Supplemental Management Retirement Plan (“SMRP”) and Constellation Energy Group, Inc. Benefits Restoration Plan (“CEG BRP”)
All NEOs participate in either the SMRP or the CEG BRP. The SMRP and CEG BRP provides supplemental benefits to the benefits provided under the tax-qualified Retirement Program and CEG Pension Plan, respectively, for individuals whose annual compensation exceeds the limits imposed under the Internal Revenue Code. Under the terms of the SMRP and the CEG BRP, participants are provided the amount of benefits they would have received under the SAS, CBPP or PEP but for the application of the Internal Revenue Code limits.
Up to two years of service credits may be provided under the SMRP and the CEG BRP upon a qualifying termination of employment under severance or change in control agreements or awards that are intended to make up for lost pension benefits from another employer.
The amount of the change in the pension value for each of the NEOs is the amount included in the Summary Compensation Table above. The present value of each NEO’s accumulated pension benefit is shown in the following tables. The present value for CBPP participants is the account balance.
2021 Pension Benefits
| Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit | Payments During Last Fiscal Year | ||||||||||||||||||||||
| Crane | SAS | 23.26 | $ | 1,679,097 | $ | — | ||||||||||||||||||||
| SMRP(a) | 33.26 | 20,422,595 | — | |||||||||||||||||||||||
| Dominguez | CBPP | 19.35 | 566,202 | — | ||||||||||||||||||||||
| SMRP | 19.35 | 964,583 | — | |||||||||||||||||||||||
| Cornew | CBPP | 27.59 | 1,028,889 | 891,646 | ||||||||||||||||||||||
| SMRP | 27.59 | 2,404,519 | 2,730,689 | |||||||||||||||||||||||
| Wright | PEP | 18.33 | 558,125 | — | ||||||||||||||||||||||
| CEG BRP | 18.33 | 991,191 | — | |||||||||||||||||||||||
| Eggers | CBPP | 5.76 | 115,954 | — | ||||||||||||||||||||||
| SMRP | 5.76 | 224,926 | — | |||||||||||||||||||||||
| Hanson | SAS | 33.30 | 2,478,250 | — | ||||||||||||||||||||||
| SMRP | 33.30 | 6,719,224 | — | |||||||||||||||||||||||
| McHugh | CBPP | 18.79 | 340,737 | — | ||||||||||||||||||||||
| SMRP | 18.79 | 367,949 | — | |||||||||||||||||||||||
| Rhoades | SAS | 32.55 | 2,428,880 | — | ||||||||||||||||||||||
| SMRP | 32.55 | 5,411,360 | — |
(a)Based on discount rates prescribed by the SEC proxy disclosure guidelines, Mr. Crane's non-qualified Supplemental Management Retirement Plan (SMRP) present value is $20,422,595. Based on lump sum conversion interest rates defined for immediate distributions under the non-qualified plan, the comparable lump sum amount applicable for service through December 31, 2021 is $32,455,156. Note that, in any event, payments made upon termination may be delayed by six months in accordance with U.S. Treasury Department guidance.
Deferred Compensation Programs
Exelon Corporation Deferred Compensation Plan
The Exelon Corporation Deferred Compensation Plan is a non-qualified plan that permits the NEOs to defer certain cash compensation to facilitate tax and retirement planning. The Deferred Compensation Plan also permits Constellation and its subsidiaries to credit related matching contributions that would have been contributed to the Exelon Corporation Employee Savings Plan (the Exelon’s tax-qualified 401(k) plan) but for the applicable limits under the Internal Revenue Code.
Exelon Corporation Employee Savings Plan
The Employee Savings Plan is intended to be tax-qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Exelon maintains the Employee Savings Plan to attract and retain qualified employees, including the NEOs, and encourage retirement savings, which under the Plan may be supplemented by Constellation and its subsidiaries’ matching contributions. Constellation and its subsidiaries maintain the excess matching feature of the Deferred Compensation Plan to enable highly compensated employees to save for retirement to the extent they otherwise would have, were it not for the limits established by the IRS.
Once participants in the Employee Savings Plan reach their statutory contribution limit during the year, their elected payroll contributions and Constellation and its subsidiaries’ matching contribution will be credited to their accounts in the Deferred Compensation Plans. The investment options under the Deferred Compensation Plan consist of a basket of investment fund benchmarks substantially the same as those funds available through the Employee Savings Plan. Deferred amounts represent unfunded, unsecured obligations of Constellation and its subsidiaries.
2021 Nonqualified Deferred Compensation
| Name | Executive Contributions in 2021**(a)** | Registrant Contributions in 2021**(b)** | Aggregate Earnings in 2021**(c)** | Aggregate Withdrawals/ Distributions | Aggregate Balance at 12/31/21**(d)** | |||||||||||||||||||||||||||
| Crane | $ | 108,828 | $ | 32,648 | $ | 562,085 | $ | — | $ | 3,050,967 | ||||||||||||||||||||||
| Dominguez | 22,549 | 13,530 | 8,420 | — | 82,658 | |||||||||||||||||||||||||||
| Cornew | — | — | 156,163 | — | 995,173 | |||||||||||||||||||||||||||
| Wright | — | — | — | — | — | |||||||||||||||||||||||||||
| Eggers | 13,698 | 8,219 | 27,671 | — | 111,790 | |||||||||||||||||||||||||||
| Hanson | 36,250 | 13,594 | 20,649 | — | 266,604 | |||||||||||||||||||||||||||
| McHugh | 17,972 | 63,753 | 32,743 | — | 183,610 | |||||||||||||||||||||||||||
| Rhoades | — | — | — | — | — |
(a)The full amount shown for executive contributions is included in the base salary figures for each NEO shown above in the Summary Compensation Table.
(b)The full amount shown under registrant contributions is included in Constellation and its subsidiaries’ contributions to savings plans for each NEO shown above in the All Other Compensation Table.
(c)The amount shown under aggregate earnings reflects the NEOs’ gain or loss based upon the individual allocation of his notional account balance into the basket of mutual fund benchmarks. These gains or losses do not represent current income to the NEO and have not been included in any of the compensation tables shown above.
(d)For all NEOs the aggregate balance shown includes those amounts, both executive contributions and registrant contributions, that have been disclosed either as base salary as described in tickmark (a) or as Constellation and its subsidiaries’ contributions under all other compensation as described in tickmark (b) for the current fiscal year ending December 31, 2021.
Potential Payments upon Termination or Change in Control
Each NEO is entitled to compensation in the event his or her employment terminates or upon a change in control. The Exelon Compensation Committee adopted changes to severance and change in control benefits effective in 2020, with the amount of benefits payable being contingent upon a variety of factors, including the circumstances under which employment terminates.
Severance Benefits
NEOs are entitled to certain payments and benefits in connection with a termination of employment other than for cause (which generally includes refusal to perform duties, willful or reckless acts or omissions, commission of a
felony, a material violation of the Code of Business Conduct, or any breach of a restrictive covenant) or disability or resignation for good reason (which generally includes certain reductions in salary, demotions or material reductions in the NEO’s position or duties) as provided for in the Senior Management Severance Plan (“SMSP”).
The “Severance Period” is 24 months after termination of employment for Messrs. Crane, Dominguez, Hanson and Mr. McHugh. The Severance Period for Mr. Wright is 18 months. The Severance Period for Messrs. Eggers and Rhoades is 15 months. Benefits under the Plan include the following items.
| Severance Pay | Continued payment of base salary for the applicable Severance Period | ||||
| Annual Incentive | Target annual incentive awards for the applicable Severance Period and a pro-rated annual incentive award for the year in which the termination of employment occurs. | ||||
| Equity Awards | 1. RSUs: Unvested awards are prorated based on date of termination and vest 2. LTIP (including performance shares): Prorated portion vests based on actual performance; payable at the time provided for in the award terms 3. Stock Options: Outstanding awards are exercisable to the extent the award was exercisable on the date of termination and may be exercised until the earlier of 90 days from termination date or expiration date of award. | ||||
| SMRP Benefits | Benefit equal to the amount payable under the SMRP determined as if the SMSP benefit were fully vested and the severance pay constituted covered compensation for purposes of the SMSP. | ||||
| Retirement Benefits | If applicable, benefits equal to the actuarial equivalent present value of any non-vested accrued benefit under Exelon’s qualified defined benefit retirement plan. All current NEOs are fully vested. | ||||
| Insurance, Health and Welfare Benefits | Life, disability, accident, health and other welfare benefit coverage continues during the severance pay period on the same terms and conditions applicable to active employees, followed by retiree health coverage if applicable.(a) | ||||
| Financial Planning | Outplacement and financial planning services for at least 12 months. |
(a)Executives are eligible for retirement benefits, including retiree health coverage, if they are at least 55 years old and have completed at least 10 years of service.
Payments under the SMSP are subject to reduction by Exelon to the extent necessary to avoid imposition of excise taxes imposed by Section 4999 of the Internal Revenue Code on excess parachute payments or under similar state or local law.
Change in Control Benefits
NEOs are eligible for certain benefits upon certain involuntary terminations or a resignation for “good reason” (which generally includes certain reductions in compensation and benefits, reductions in position, duties or responsibilities, relocations or breaches by the company of the SMSP) in connection with a change in control of Exelon Corporation. Pursuant to the terms of his separation agreement, Mr. Cornew is not eligible for change in control benefits.
Under the SMSP, a “change in control” includes any of the following: (a) when any person or group acquires 20% of Exelon’s then outstanding common stock or of voting securities; (b) the incumbent members of the Exelon board (or new members nominated by a majority of incumbent directors) cease to constitute at least a majority of the members of the Exelon board; (c) consummation of a reorganization, merger or consolidation, or sale or other disposition of at least 50% of Exelon’s operating assets (excluding a transaction where Exelon shareholders retain at least 60% of the voting power); or (d) upon shareholder approval of a plan of complete liquidation or dissolution.
If the executive resigns for good reason or his or her employment is terminated by Exelon other than for cause or disability, during the period commencing 90 days before a change of control or during the 24-month period following a change in control, the executive is entitled to the benefits outlined below.
| Severance Pay | The executive receives 2.99 times base salary (2.0 times for Mr. Wright and 1.5 times from Mr. Eggers and Mr. Rhoades) to be paid in substantially equal regular payroll installments. | ||||
| Annual Incentive | Target annual incentive award for a period of 2.99 years (2.0 times for Mr. Wright and 1.5 times from Mr. Eggers and Mr. Rhoades) after termination of employment and a pro-rated annual incentive award for the year in which the termination of employment occurs. | ||||
| Equity Awards | 1. RSUs: Unvested awards vest 2. LTIP (including performance shares): Prorated portion vests based on actual performance; payable at the time provided for in the award terms 3. Stock Options: Outstanding awards are immediately exercisable and may be exercised until the earlier of 5 years from termination date or expiration date of award. | ||||
| SMRP Benefits | Benefit equal to the amount payable under the SMRP determined as if (1) the executive had 18 additional months (2.99 years for Mr. Crane, Mr. Dominguez, and Mr Hanson; 2.0 times for Mr. Wright) of age and years of service and (2) the severance pay constituted covered compensation for purposes of the SMRP. | ||||
| Retirement Benefits | Benefits equal to the actuarial equivalent present value of any non-vested accrued benefit under Exelon’s qualified defined benefit retirement plan. All current NEOs are fully vested. | ||||
| Insurance, Health and Welfare Benefits | Life, disability, accident, health and other welfare benefit coverage continues during the severance pay period on the same terms and conditions applicable to active employees, followed by retiree health coverage if applicable.(a) | ||||
| Financial Planning | Outplacement and financial planning services for at least 12 months. |
(a)Executives are eligible for retirement benefits, including retiree health coverage, if they are at least 55 years old and have completed at least 10 years of service.
2021 Estimated Value of Benefits to be Received Upon Retirement
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOs, except Mr. Cornew, assuming they retired as of December 31, 2021. As of December 31, 2021, Mr. Eggers and Mr. McHugh had not reached the minimum age required to be eligible for retirement benefits. These payments and benefits are in addition to the present value of the accumulated benefits from each NEO’s qualified and non-qualified pension plans shown in the tables within the Pension Benefit section and the aggregate balance due to each NEO that is shown in the tables within the Deferred Compensation section.
| Name | Cash Payment**(a)** | Value of Unvested Equity Awards**(b)** | Total Value of All Payments and Benefits**(c)** | |||||||||||||||||
| Crane | $ | 2,169,000 | $ | 37,613,000 | $ | 39,782,000 | ||||||||||||||
| Dominguez | 847,000 | 3,864,000 | 4,711,000 | |||||||||||||||||
| Cornew | — | — | — | |||||||||||||||||
| Wright | 240,000 | 1,669,000 | 1,909,000 | |||||||||||||||||
| Eggers | 470,000 | — | 470,000 | |||||||||||||||||
| Hanson | 660,000 | 5,969,000 | 6,629,000 | |||||||||||||||||
| McHugh | 422,000 | — | 422,000 | |||||||||||||||||
| Rhoades | 492,000 | 4,631,000 | 5,123,000 |
(a)Under the terms of the 2021 AIP, a pro-rated actual incentive award is payable upon retirement based on the number of days worked during the year of retirement. The amount above represents the executive’s 2021 annual incentive payout after Company/business unit performance was determined.
(b)Includes the value of the executives’ unvested performance share awards granted in 2019, 2020 and 2021 assuming target performance and the accelerated portion of the executives’ RSU awards that, per applicable awards terms, would vest upon retirement. The value of the shares is based on Exelon’s closing stock price on December 31, 2021 of $57.76.
(c)Estimate of total payments and benefits based on a December 31, 2021 retirement date.
2021 Estimated Value of Benefits to be Received Upon Termination due to Death or Disability
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOs, except Mr. Cornew, assuming employment is terminated due to death or disability as of December 31, 2021. These payments and benefits are in addition to the present value of the accumulated benefits from the NEOs’ qualified and non-qualified pension plans shown in the tables within the Pension Benefit section and the aggregate balance due to each NEO that is shown in tables within the Deferred Compensation section.
| Name | Cash Payment**(a)** | Value of Unvested Equity Awards**(b)** | Total Value of All Payments and Benefits**(c)** | |||||||||||||||||
| Crane | $ | 2,169,000 | $ | 37,613,000 | $ | 39,782,000 | ||||||||||||||
| Dominguez | 847,000 | 6,175,000 | 7,022,000 | |||||||||||||||||
| Cornew | — | — | — | |||||||||||||||||
| Wright | 240,000 | 1,669,000 | 1,909,000 | |||||||||||||||||
| Eggers | 470,000 | 2,949,000 | 3,419,000 | |||||||||||||||||
| Hanson | 660,000 | 8,279,000 | 8,939,000 | |||||||||||||||||
| McHugh | 422,000 | 6,910,000 | 7,332,000 | |||||||||||||||||
| Rhoades | 492,000 | 6,942,000 | 7,434,000 |
(a)Under the terms of the 2021 AIP, a pro-rated actual incentive award is payable upon death or disability based on the number of days worked during the year of termination. The amount above represents the executives’ 2021 annual incentive payout after Company/business unit performance was determined.
(b)Includes the value of the executives’ unvested performance share awards granted in 2019, 2020, and 2021 assuming target performance and the accelerated portion of the executives’ RSU awards that, per applicable awards terms, would vest upon death or disability. The value of the shares is based on Exelon’s closing stock price on December 31, 2021 of $57.76.
(c)Estimate of total payments and benefits based on a December 31, 2021 termination due to death or disability.
2021 Estimated Value of Benefits to be Received Upon Involuntary Separation Not Related to a Change in Control
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOs assuming they were terminated as of December 31, 2021 under the terms of the SMSP. These payments and benefits are in addition to the present value of the accumulated benefits from the NEOs’ qualified and non-qualified pension plans shown in the tables within the Pension Benefit section and the aggregate balance due to each NEO that is shown in the tables within the Deferred Compensation section.
| Name | Cash Payment**(a)** | Retirement Benefit Enhancement**(b)** | Value of Unvested Equity Awards**(c)** | Health and Welfare Benefit Continuation**(d)** | Perquisites and Other Benefits**(e)** | Total Value of All Payments and Benefits**(f)** | ||||||||||||||||||||||||||||||||
| Crane | $ | 8,829,000 | $ | 1,825,000 | $ | 37,613,000 | $ | 117,000 | $ | 40,000 | $ | 48,424,000 | ||||||||||||||||||||||||||
| Dominguez | 5,782,000 | 395,000 | 5,911,000 | 47,000 | 40,000 | 12,175,000 | ||||||||||||||||||||||||||||||||
| Cornew | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Wright | 1,269,000 | 142,000 | 1,669,000 | 26,000 | 40,000 | 3,146,000 | ||||||||||||||||||||||||||||||||
| Eggers | 2,014,000 | 108,000 | 2,227,000 | 25,000 | 40,000 | 4,414,000 | ||||||||||||||||||||||||||||||||
| Hanson | 3,343,000 | 1,612,000 | 8,234,000 | 41,000 | 40,000 | 13,270,000 | ||||||||||||||||||||||||||||||||
| McHugh | 2,811,000 | — | 3,787,000 | 45,400 | 40,000 | 6,683,400 | ||||||||||||||||||||||||||||||||
| Rhoades | 2,067,000 | 2,113,000 | 6,897,000 | 28,000 | 40,000 | 11,145,000 |
(a)Represents the estimated cash severance benefit equal to the severance multiple times the sum of the executive’s (i) current base salary and (ii) the annual incentive award at target, plus a pro-rated annual incentive award for the year in which termination occurs. The amount above represents the executives’ 2021 annual incentive payout after Company/business unit performance was deter.
(b)Represents the estimated retirement benefit enhancement that consists of a one-time lump sum payment based on the actuarial present value of a benefit under the non-qualified pension plan assuming that the severance pay period was
taken into account for purposes of vesting, and the severance pay constituted covered compensation for purposes of the non-qualified pension plan.
(c)Includes the value of the executives’ unvested performance shares, which will vest upon termination at the actual level earned and awarded (it is assumed the 2019, 2020, and 2021 performance shares are earned at target) and the accelerated portion of the executives’ RSUs that would vest upon an involuntary separation not related to a change in control. The value of the shares is based on Exelon’s closing stock price on December 31, 2021 of $57.76.
(d)Estimated costs of healthcare, life insurance, and long-term disability coverage which continue during the severance period.
(e)Estimated costs of outplacement and financial planning services for up to 12 months for all NEOs.
(f)Estimate of total payments and benefits based on a December 31, 2021 termination date.
2021 Estimated Value of Benefits to be Received Upon a Qualifying Termination following a Change in Control
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOs, except Mr. Cornew, assuming they were terminated upon a qualifying change in control as of December 31, 2021. These payments and benefits are in addition to the present value of accumulated benefits from the NEOs’ qualified and non-qualified pension plans shown in the tables within the Pension Benefit section and the aggregate balance due to each NEO that is shown in tables within the Deferred Compensation section.
| Name | Cash Payment**(a)** | Retirement Benefit Enhancement**(b)** | Value of Unvested Equity Awards**(c)** | Health and Welfare Benefit Continuation**(d)** | Perquisites and Other Benefits**(e)** | Potential Scaleback | Total Value of All Payments and Benefits**(f)** | |||||||||||||||||||||||||||||||||||||
| Crane | $ | 12,126,000 | $ | 2,854,000 | $ | 37,613,000 | $ | 175,000 | $ | 40,000 | $ | — | $ | 52,808,000 | ||||||||||||||||||||||||||||||
| Dominguez | 8,225,000 | 590,000 | 6,175,000 | 70,000 | 40,000 | — | 15,100,000 | |||||||||||||||||||||||||||||||||||||
| Cornew | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Wright | 1,613,000 | 266,000 | 1,669,000 | 35,000 | 40,000 | — | 3,623,000 | |||||||||||||||||||||||||||||||||||||
| Eggers | 2,323,000 | 130,000 | 2,949,000 | 30,000 | 40,000 | (380,000) | 5,092,000 | |||||||||||||||||||||||||||||||||||||
| Hanson | 4,670,000 | 2,640,000 | 8,279,000 | 61,000 | 40,000 | — | 15,690,000 | |||||||||||||||||||||||||||||||||||||
| McHugh | 3,993,000 | — | 6,910,000 | 68,000 | 40,000 | (323,000) | 10,688,000 | |||||||||||||||||||||||||||||||||||||
| Rhoades | 2,382,000 | 3,177,000 | 6,942,000 | 34,000 | 40,000 | (1,023,000) | 11,552,000 |
(a)Represents the estimated cash severance benefit equal to the change in control severance multiple times the sum of the executive’s (i) current base salary and (ii) the annual incentive award at target, plus a pro-rated annual incentive award for the year in which termination occurs. The amount above represents the executives’ 2021 annual incentive payout after Company/business unit performance was determined.
(b)Represents the estimated retirement benefit enhancement that consists of a one-time lump sum payment based on the actuarial present value of a benefit under the non-qualified pension plan assuming that the respective severance pay constituted covered compensation for purposes of the non-qualified pension plan.
(c)Includes the value of the executives’ unvested performance shares, which will vest upon termination at the actual level earned and awarded (it is assumed the 2019, 2020, and 2021 performance shares are earned at target) and the accelerated portion of the executives’ RSUs that would vest upon a qualifying termination following a change in control. The value of the shares is based on Exelon’s closing stock price on December 31, 2021 of $57.76.
(d)Estimated costs of healthcare, life insurance and long-term disability coverage which continue during the severance period.
(e)Estimated costs of outplacement and financial planning services for up to 12 months for all NEOs.
(f)Estimate of total payments and benefits based on a December 31, 2021 termination date.
Director Compensation
The Company did not pay any compensation to directors in 2021 due to the fact that the separation from Exelon was not completed until February 1, 2022. Following the distribution, the Company’s non-employee director compensation program is subject to the review and approval of the Company’s board upon the recommendation of the Corporate Governance Committee. The director compensation program for the Company is designed to enable ongoing attraction and retention of highly qualified directors and to address the time, effort, expertise and accountability required of active board membership.
The non-employee director compensation program comprises cash and equity components. The following chart shows the initial annual retainers for non-employee directors as well as additional fees paid to the independent chair and committee chairs. Directors serving in multiple leadership roles will receive incremental compensation for each role.
| Role | Cash | Deferred Stock Units | Total | |||||||||||||||||
| All Directors (base retainer) | $ | 125,000 | $ | 155,000 | $ | 280,000 | ||||||||||||||
| Independent Board Chair | 200,000 | — | 200,000 | |||||||||||||||||
| Audit Committee Chair | 25,000 | — | 25,000 | |||||||||||||||||
| Compensation Committee Chair | 20,000 | — | 20,000 | |||||||||||||||||
| Governance Committee Chair | 20,000 | — | 20,000 | |||||||||||||||||
| Nuclear Oversight Committee Chair(a) | 20,000 | — | 20,000 |
(a)All members of the Nuclear Oversight Committee, including the chair, receive a $20,000 retainer.
Directors do not receive additional compensation for attending regularly scheduled board or committee meetings. All board fees are paid quarterly in arrears. New directors joining the board receive a prorated fee for the quarter based on the date of their election.
Directors may elect to defer any portion of cash compensation into a non-qualified multi-fund deferred compensation plan. Under the plan, each director has an unfunded account where the dollar balance can be invested in one or more of several mutual funds. Fund balances are settled in cash and may be distributed in a lump sum or in annual installment payments upon a director reaching age 65, age 72, or upon departure from the board.
Deferred stock units earn dividend equivalents which are reinvested in the deferred stock accounts as additional stock units. The account balance of deferred stock units will be settled in shares of the Company common stock and may be distributed in a lump sum or in annual installments upon reaching age 65, age 72, or upon a director’s departure from the board.
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