Md. Attorney General to Probe Constellation Chief's Pay Package

In a move reflecting the national uproar over executive compensation, two Maryland senators are calling for the state's attorney general to investigate whether the chief executive of Baltimore-based Constellation Energy should have received last year more than $15 million in salary and bonuses and millions of dollars more in other perks.

The senators are also asking Attorney General Douglas F. Gansler (D) to determine whether state law was violated when Constellation decided last year to add millions of dollars to the retirement fund of chief executive Mayo A. Shattuck III, giving him credit for 2 1/2 years of service when he allegedly was not working for the company.

If so, the senators say they want Gansler to rule on whether regulators can seek to return some of the money and whether the General Assembly can restrict executive compensation at the company.

Gansler's spokeswoman, Raquel Guillory, said the attorney general plans to investigate the matter and issue an opinion in several weeks.

"We're talking about tens of millions of dollars in compensation for one individual whose company's performance has been abysmal," Sen. Jamie B. Raskin (D-Montgomery) said yesterday. Raskin joined Sen. James Brochin (D-Baltimore County) in writing a letter to Gansler this week.

The company, which operates Baltimore Gas and Electric, "is a public utility," Raskin added. "Ratepayers and shareholders have a role in making sure there is no unlawful waste of assets [occurring] at the company."

Constellation's most recent proxy statement said the company paid Shattuck $15.3 million in salary and bonuses in 2008. The proxy also says that the value of Shattuck's supplemental retirement plan rose $10 million and that his accumulated benefit was $33 million.

Nevertheless, a company official said, the government has no say over compensation.

"Apparently, the senators are unaware that federal securities law places compensation squarely in the hands of a company's shareholders and its board of directors," Constellation spokesman Robert L. Gould said in a statement. "This is a puzzling and disturbing vendetta against a single company and a single individual and one has to ask: What is this the start of and where are they going with it?"

The Obama administration, responding to concerns that some of the billions of dollars in federal bailout money would be used for excessive bonuses for executives, earlier this month named a "compensation czar" to regulate salaries at seven firms receiving government money.

The initiative also seeks to give shareholders and the Securities and Exchange Commission more oversight in setting executive compensation at all publicly traded companies.

Gould pointed out that the company, without government intervention, determined that Shattuck this year would get a 49 percent pay cut, which reduced his compensation to $7.8 million. "Without question, our board acted definitively this year in rejecting bonuses to our top executives, including our CEO, demonstrating pay for performance works," he said.

Constellation had $19.8 billion in revenue in 2008, down from $21.2 billion in 2007. The company's adjusted earnings were $3.57 a share in 2008, down from $4.60 a share in 2007.