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News Release

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For Immediate Release

23 January 2006
Contact: Sam Shropshire

Annapolis Alderman Concerned About Energy Rate Hikes and Employee Layoffs
as Top Four Constellation Energy Execs Receive $78 Million Compensation Package

Annapolis Alderman Sam Shropshire is concerned about the coming huge Constellation energy rate hikes and the devastating effects they will have on Annapolis and Maryland families. 

At the Annapolis City Council meeting held Monday evening, January 9, Wayne Harbaugh and Bonnie Johansen of BGE (a Constellation Energy Company) presented testimony to the fact that the company has plans to increase the cost of energy by up to 50% for Maryland consumers.  Harbaugh and Johansen explained that through local energy assistance programs funded by contributions from individual Maryland citizens and the State of Maryland, local citizens will be able to get help in paying for their BGE/Constellation bills. 

Since that time, Shropshire says other sources from inside the company have indicated that the rate hikes will actually increase by 60% to 70% and that huge layoffs are expected soon. 

Shropshire points out that at the beginning of November, Constellation Energy Group’s board sweetened the severance agreements of Chairman and CEO Mayo A. Shattuck, and four other senior executives to increase their benefits in the event the company was sold or merged with another company.

The way Mayo Shattuck did this was by renegotiating his compensation package, which has a retention clause with a large compensation should he be terminated as CEO of Constellation Energy prior to a certain date.   The new contract gave executive assurance that the company would not terminate any of them without cause and that they would all be supremely compensated if they were terminated early.

Shattuck negotiated his package in such a way that by the terms of the merger (which he would later create) he would leave as CEO, thus triggering the package, and take a position as Chairman of the Board of the new Constellation corporation.

Shropshire says, “The ball was rolling after FPL Group, Inc. (Florida’s biggest electric utility), agreed to merge with Constellation in December, and on December 21st, Shattuck, along with president of Constellation Nuclear Services Mike Wallace, chief financial officer E. Follin Smith, and executive vice president Thomas V. Brooks received together a combined bonus compensation of $78 million dollars.”  

Shropshire says the numbers are easily located on a New York Stock Exchange website (http://www.quote.com/qc/research/insider.aspx?symbols=NYSE:CEG) and at the public online files of the US Securities and Exchange Commission at http://www.sec.gov/index.html.

“It is said that Constellation executive salaries have gone from 40 times the average wage of the workers in 1990 to 400 times the wage now,” Shropshire says.   He further indicates that according to information he received, Shattuck’s compensation is now a 1000 times the wage of the today’s average Constellation worker. 

”As alderman,” Shropshire explains, “I’m terribly concerned for many of our Annapolis senior citizens and other low-income residents who are on limited, fixed incomes.  They can’t afford higher energy costs.”  He says for the first time in their lives many of the men and women he represents will be forced to ask for public assistance in paying their energy bills.

“I don’t question the legality of what has happened here.  I just want the public to be fully informed.” he says.  “These executive compensation packages have cost the company $78 million, and in my opinion these bonuses are inappropriate at a time when Maryland men and women, who have helped build the company with their faithful monthly payments for the past 20 years are being hit with unbelievably gigantic energy rate increases.”

He also wants to know “if the rumored transfer of much of BGE’s corporate headquarters to Florida will encourage the anticipated, staggering layoffs at BGE?”

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