SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CONSTELLATION ENERGY GROUP
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CHRISTIAN H. POINDEXTER CONSTELLATION ENERGY GROUP, INC.
CHAIRMAN OF THE BOARD, PRESIDENT 250 W. PRATT STREET
AND CHIEF EXECUTIVE OFFICER BALTIMORE, MARYLAND 21201
[GRAPHIC] CONSTELLATION ENERGY GROUP(TM)
March 10, 2000
Dear Shareholder:
You are invited to attend our annual meeting of shareholders to be held
on Friday, April 28, 2000, at 10:00 a.m. in the 2nd floor conference
room, of the Gas and Electric Building, located at 39 West Lexington
Street in downtown Baltimore. Enclosed is our 1999 annual report to
shareholders for your review.
At the meeting, I will review our 1999 performance and answer
shareholder questions. In addition, shareholders will be voting on the
following business matters: the election of Class I directors, the
ratification of our independent accountants for 2000, and one
shareholder proposal.
We've enclosed a proxy card that lists all matters that require your
vote. PLEASE COMPLETE YOUR PROXY CARD AND RETURN IT PROMPTLY IN THE
PRE-ADDRESSED, POSTAGE PAID ENVELOPE PROVIDED. This will allow your
shares to be voted whether or not you plan to attend the meeting. If
you plan to be at the meeting, please check the box on your proxy card.
By returning your proxy card PROMPTLY, you may save the company the
expense of a second mailing.
The Gas and Electric Building is handicapped-accessible. In addition,
if you need any special accommodations, please indicate them on your
proxy card.
Thank you for your continued support of Constellation Energy Group,
Inc.
Sincerely,
/s/ Christian H. Poindexter
<PAGE>
[GRAPHIC] CONSTELLATION ENERGY GROUP(TM)
CONSTELLATION ENERGY GROUP, INC.
250 W. PRATT STREET
BALTIMORE, MD 21201
Notice of Annual Meeting of Shareholders
To the Owners of Common Stock of
Constellation Energy Group, Inc.:
Our annual meeting of shareholders will be held on FRIDAY, APRIL 28,
2000 at 10:00 a.m., in the 2nd floor conference room of the Gas and
Electric Building, 39 West Lexington Street, Baltimore, Maryland, to:
1. elect five Class I directors to serve for three-year terms
expiring in 2003,
2. ratify PricewaterhouseCoopers LLP as our independent accountants
for 2000,
3. vote on a shareholder proposal concerning confidential voting,
and
4. transact any other business that properly comes before the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2 AND
"AGAINST" ITEM 3.
We discuss the above business matters in more detail in the attached
Proxy Statement.
The stock transfer books will not be closed before the annual
meeting. Only common shareholders of record at the close of business on
February 22, 2000 will be entitled to vote.
David A. Brune
Secretary
March 10, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ON VOTING PROCEDURES ................................. 1
MATTERS YOU ARE VOTING ON .................................................. 3
PROPOSAL NO. 1 -- ELECTION OF CONSTELLATION ENERGY DIRECTORS ............... 4
Class I Director Nominees for Terms to Expire in 2003 .................... 4
Class II Directors Whose Terms Expire in 2001 ............................ 5
Class III Directors Whose Terms Expire in 2002 ........................... 5
Committees of the Board of Directors ..................................... 6
Directors' Compensation .................................................. 7
Certain Relationships and Transactions ................................... 7
Compensation Committee Interlocks and Insider Participation .............. 7
Security Ownership ....................................................... 9
Executive Compensation ................................................... 10
1999 Summary Compensation Table ......................................... 10
Long-Term Incentive Plan Table .......................................... 11
Pension Benefits ........................................................ 11
Severance Agreements .................................................... 13
Common Stock Performance Graph ........................................... 14
Report of Committee on Management on Executive Compensation .............. 14
PROPOSAL NO. 2 -- RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR 2000 ..................................................... 17
PROPOSAL NO. 3 -- A SHAREHOLDER PROPOSAL CONCERNING CONFIDENTIAL VOTING .... 17
SUBMISSION OF SHAREHOLDER PROPOSALS FOR NEXT YEAR .......................... 19
</TABLE>
i
TABLE OF CONTENTS
<PAGE>
CONSTELLATION ENERGY GROUP, INC.
PROXY STATEMENT
QUESTIONS & ANSWERS ON VOTING PROCEDURES
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING, AND HOW MANY VOTES DO THEY HAVE?
Common shareholders who own shares as of February 22, 2000 may vote at the
meeting. Each share has one vote. There were 149,602,816 shares of common stock
outstanding on that date.
WHEN ARE THE ENCLOSED SOLICITATION MATERIALS FIRST GIVEN TO SHAREHOLDERS?
The enclosed annual report and proxy voting form, together with this Notice of
Annual Meeting and Proxy Statement, were first sent, or given, to shareholders
on Friday, March 10, 2000.
WHAT IS A QUORUM OF SHAREHOLDERS, AND HOW MANY VOTES DOES IT TAKE TO PASS EACH
MATTER?
A quorum is the presence at the annual meeting in person or by proxy of
shareholders entitled to cast a majority of all the votes entitled to be cast.
Since there were 149,602,816 shares of common stock outstanding on February 22,
2000, 74,801,409 shares is a quorum. Broker non-votes, abstentions and
withhold-authority votes COUNT for purposes of determining a quorum. We must
have a quorum to conduct the meeting. If a quorum of shareholders is present at
the meeting, we need a plurality of all the votes cast to elect each director,
and a majority of all the votes cast to pass each of the other matters. Broker
non-votes, abstentions and withhold-authority votes DO NOT COUNT as votes cast.
HOW DO I VOTE?
You must be present, or represented by proxy, at the annual meeting in order to
vote your shares. Since many of our shareholders are unable to attend the
meeting in person, we send proxy cards to all of our shareholders.
IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
Your broker has discretion to vote only for the election of directors and
ratification of the independent accountants. Your broker cannot vote your shares
on the shareholder proposal without your instructions. You should instruct your
broker to vote your shares on this matter, following the directions your broker
provides.
WHAT IS A PROXY?
A proxy is a person you appoint to vote on your behalf. We solicit proxies so
that all common shares may be voted at the annual meeting. You must complete and
return the enclosed proxy card to have your shares voted by proxy by
Constellation Energy management.
BY COMPLETING AND RETURNING THE PROXY CARD, WHO AM I DESIGNATING AS MY PROXIES?
You will be designating Edward A. Crooke, Jerome W. Geckle, and Christian H.
Poindexter as your proxies.
HOW WILL MY PROXY VOTE MY SHARES?
Your proxies will vote according to the instructions on your proxy card. If you
complete and return your proxy card but do not indicate your vote on the
matters, your proxies will vote "FOR" Items 1 and 2 and "AGAINST" Item 3. Also,
your proxy card will give your proxies authority to vote, using their best
judgment, on any other business that properly comes before the meeting.
1 QUESTIONS & ANSWERS ON VOTING PROCEDURES
<PAGE>
HOW DO I VOTE USING MY PROXY CARD?
There are three steps.
1. Vote on each of the matters as follows:
o ITEM 1. The names of the five Class I directors to serve three-year
terms are listed on your proxy card. You have three options:
o OPTION 1. To vote for all five directors, you check the box marked
"FOR."
o OPTION 2. To vote for some of the directors and against the rest, you
check the box marked "FOR" and then draw a line through the names of
the directors that you want to vote against.
o OPTION 3. To abstain from voting for all five directors (that is, not
vote for or against any of the directors), you check the box marked
"WITHHOLD AUTHORITY."
o ITEMS 2 AND 3. You check the box "FOR," or "AGAINST," or "ABSTAIN" (to
cast no vote).
2. Sign and date your proxy card. IF YOU DO NOT SIGN AND DATE YOUR PROXY
CARD, YOUR VOTES CANNOT BE COUNTED.
3. Mail your proxy card in the pre-addressed, postage-paid envelope.
REMEMBER TO CHECK THE BOX ON YOUR PROXY CARD IF YOU PLAN TO ATTEND THE ANNUAL
MEETING.
HOW DO I REVOKE MY PROXY?
You may revoke your proxy at any time before your shares are voted at the annual
meeting by:
o notifying our Corporate Secretary, David A. Brune, in writing at 250 W.
Pratt Street, 20th Floor, Baltimore, MD 21201, that you are revoking your
proxy; or
o completing and sending in another proxy card at a later date; or
o attending the annual meeting and voting by ballot.
WHY MIGHT I RECEIVE MORE THAN ONE PROXY CARD? SHOULD I VOTE ON EACH PROXY CARD
I RECEIVE?
First, you may have various accounts with us that are registered differently,
perhaps in different names or different social security or federal tax
identification numbers. Second, you may also own shares indirectly through your
broker or our employee savings plan. Your broker or our plan trustee will send
you a proxy card for these shares. You should vote on each proxy card you
receive and mail it to the address shown on the proxy card. If employee savings
plan participants do not vote their shares, the plan trustee will vote the
shares in the same proportion as the trustee was instructed to vote shares for
which it received voting instruction cards.
CAN I VOTE BY PROXY EVEN IF I PLAN TO ATTEND THE ANNUAL MEETING?
Yes. If you vote by proxy, you do not need to fill out a ballot at the annual
meeting, unless you want to change your vote.
WHO IS SOLICITING MY PROXY, HOW IS IT BEING SOLICITED, AND WHO PAYS THE COST?
Constellation Energy, on behalf of the Board of Directors, through its
directors, officers and employees, is soliciting proxies primarily by mail.
However, proxies may also be solicited in person, by telephone or facsimile.
Georgeson Shareholder Communications, Inc., a proxy solicitation firm, will be
assisting us for a fee of approximately $13,500 plus out-of-pocket expenses.
Constellation Energy pays the cost of soliciting proxies.
QUESTIONS & ANSWERS ON VOTING PROCEDURES 2
<PAGE>
MATTERS YOU ARE VOTING ON
PROPOSAL NO. 1 ELECTION OF CONSTELLATION ENERGY DIRECTORS
The Board is divided into three classes (i.e., Class I, Class II, Class
III), with one class of directors elected at each Annual Meeting of shareholders
for a three-year term. Douglas L. Becker, J. Owen Cole, Dan A. Colussy, Edward
A. Crooke, and Michael D. Sullivan have been nominated by the Board for election
as Class I directors at the Annual Meeting for terms of three years each and
until their respective successors are duly elected and qualified. Each of the
nominated directors agrees to serve if elected. However, if for some reason one
of them is unable to accept nomination or election, your proxies will vote for
the election of another person nominated by the Board of Directors, unless the
Board reduces the number of directors. Biographical information for each of the
nominees and other information about them is presented beginning on page 4. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH DIRECTOR NOMINEE.
PROPOSAL NO. 2 RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR 2000
This proposal is to ratify our selection of PricewaterhouseCoopers LLP as
our independent accountants for 2000. See Proposal No. 2 on page 17. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL NO. 3 SHAREHOLDER PROPOSAL CONCERNING CONFIDENTIAL VOTING
A shareholder proposal concerning confidential voting and our Board of
Directors' response begin on page 17. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL.
OTHER BUSINESS MATTERS
The Board of Directors is not aware of any other business for the Annual
Meeting. However, if any:
o other matters come before the meeting that have not been timely filed by a
shareholder in accordance with the Company's advance notice provision in
its by-laws,
o of the persons named to serve as directors are unable to serve or for good
cause will not serve,
o shareholder proposal which is not in this proxy statement or on the proxy
card pursuant to Rule 14a-8 or 14a-9 of the Securities Exchange Act of
1934 is presented for action at the meeting, or
o matters concerning the conduct of the meeting are presented for action
then shareholders present at the meeting will vote on such items. If you are
represented by proxy, your proxies will vote your shares using their best
judgment.
3 MATTERS YOU ARE VOTING ON
<PAGE>
PROPOSAL NO. 1 -- ELECTION OF CONSTELLATION ENERGY DIRECTORS
CLASS I DIRECTOR NOMINEES FOR TERMS TO EXPIRE IN 2003
DOUGLAS L. BECKER, age 34, a director since April 1999, became Chairman and
Chief Executive Officer of Sylvan Learning Systems, Inc. in February 2000,
after serving as President and Co-Chief Executive Officer since 1991. He is
also Founder and Principal of Sterling Capital, LTD., an investment
company. Mr. Becker is also a director of Caliber Learning Network, Inc.
and Zapme! Corporation. Mr. Becker was a director of Baltimore Gas and
Electric Company from October 1998 to April 1999.
J. OWEN COLE, age 70, a director since April 1999, is also a director of
AllFirst Financial, Inc. (a bank holding company and formerly First Maryland
Bancorp) and AllFirst Bank (formerly The First National Bank of Maryland). At
both companies he served as Chairman of the Trust Committee from 1994 to
1997. From January 1995 to December 1996, he was Chairman of the Board of
Blue Cross and Blue Shield of Maryland, Inc. Mr. Cole was a director of
Baltimore Gas and Electric Company from 1977 to April 1999.
DAN A. COLUSSY, age 68, a director since April 1999, was Chairman of the Board
of CareFirst, Inc., the holding company for CareFirst of Maryland, Inc.
(formerly Blue Cross and Blue Shield of Maryland, Inc.) from January 1998
to December 1999. He previously was Chairman of the Board of Blue Cross and
Blue Shield of Maryland, Inc., from January 1997 to January 1998, and
Chairman-Elect in 1996. He retired as Chairman of the Board, President and
Chief Executive Officer of UNC Incorporated (aviation services) in November
1997. Mr. Colussy was a director of Baltimore Gas and Electric Company from
1992 to April 1999.
EDWARD A. CROOKE, age 61, a director since April 1999 served as Vice Chairman of
Constellation Energy from April 1999 until he retired January 1, 2000. He
also served as President and Chief Operating Officer of Baltimore Gas and
Electric Company from 1992 to 1998, Vice Chairman from 1998 to 1999 and a
director from 1988 to April 1999.
He retired as a director, Chairman of the Board, President and Chief
Executive Officer on January 1, 2000 of Constellation Enterprises, Inc., the
parent company of most of Constellation Energy's unregulated subsidiaries. He
also had served as a director of each of Constellation Enterprises, Inc.'s
direct subsidiaries and most of its indirect subsidiaries, and was Chairman
of the Board of each of the direct subsidiaries until he retired.
He is also a director of AllFirst Financial, Inc., AllFirst Bank, AEGIS
Insurance Services, Inc., Associated Electric & Gas Insurance Services,
Limited, Baltimore Equitable Society, and Corporate Office Properties
Trust.
MICHAEL D. SULLIVAN, age 60, a director since April 1999, has been Chairman of
the Board of Golf America Stores, Inc. (golf apparel retailing), since
October 1996. He was also Chairman of the Board of ProAxon International,
LLC (hair care products and restoration) from 1995 to 1997, and Jay Jacobs,
Inc. (specialty apparel retailing), from 1997 to July 1999. Additionally,
Mr. Sullivan was a director of Baltimore Gas and Electric Company from 1992
to April 1999.
He was Chief Executive Office and President of Merry-Go-Round Enterprises,
Inc. (specialty retailing) from 1982 to 1994. That company filed a
reorganization petition under Chapter XI of the Federal bankruptcy law in
January 1994 and a bankruptcy petition under Chapter VII of the Federal
bankruptcy law in March 1996, and subsequently was liquidated.
CLASS I DIRECTOR NOMINEES
FOR TERMS TO EXPIRE IN 2003 4
<PAGE>
CLASS II DIRECTORS WHOSE TERMS EXPIRE IN 2001
H. FURLONG BALDWIN, age 68, a director since April 1999, is Chairman of the
Board, President and Chief Executive Officer of Mercantile Bankshares
Corporation (a bank holding company) and Chairman of the Board and Chief
Executive Officer of Mercantile-Safe Deposit & Trust Company. He is also a
director of The St. Paul Companies, CSX Corp., Offitbank and Wills Group
LLC, and Governor of The National Association of Securities Dealers, Inc.
Mr. Baldwin was a director of Baltimore Gas and Electric Company from 1988
to April 1999.
JAMES T. BRADY, age 59, a director since May 1999, is the Managing Director -
Mid-Atlantic of Ballantrae International, Ltd., a management consulting
firm, and the former secretary of the Maryland Department of Business &
Economic Development where he served from 1995 to 1998. He was also a
managing partner for Arthur Andersen LLP from 1985 to 1995. Mr. Brady is a
director of McCormick & Company, Inc., AllFirst Financial, Inc. and
AllFirst Bank. Mr. Brady also was a director of Constellation Enterprises,
Inc. from July 1998 to May 1999.
BEVERLY B. BYRON, age 67, a director since April 1999, served as a Maryland
Congresswoman in the United States House of Representatives from 1978 to
1992. She is also a director of CareFirst, Inc., the holding company for
CareFirst of Maryland, Inc. (formerly Blue Cross and Blue Shield of
Maryland, Inc.), Farmers & Mechanics Bank and Logistics Management
Institute. Mrs. Byron was a director of Baltimore Gas and Electric Company
from 1993 to April 1999.
JAMES R. CURTISS, age 46, a director since April 1999, is a partner in the law
firm of Winston & Strawn. From 1988 to 1993, he served as a Commissioner of
the United States Nuclear Regulatory Commission. He is also a director of
Cameco Corporation. Mr. Curtiss was a director of Baltimore Gas and
Electric Company from 1994 to April 1999.
JEROME W. GECKLE, age 70, a director since April 1999, retired as Chairman of
the Board of PHH Corporation (vehicle, relocation, and management services)
in 1989. He is also a director of AllFirst Financial, Inc. and AllFirst
Bank. Mr. Geckle was a director of Baltimore Gas and Electric Company from
1980 to April 1999.
GEORGE L. RUSSELL, JR., age 70, a director since April 1999, has been an
Attorney at Law in the law firm of Peter G. Angelos since January 1, 2000.
Prior to that, Mr. Russell was Senior Counsel in the law firm of Piper &
Marbury L.L.P. He is also Chairman of the Board of Directors of the Federal
Reserve Bank of Richmond - Baltimore Branch. Mr. Russell was a director of
Baltimore Gas and Electric Company from 1988 to April 1999.
CLASS III DIRECTORS WHOSE TERMS EXPIRE IN 2002
ROGER W. GALE, age 53, a director since May 1999, is President and Chief
Executive Officer for PHB Hagler Bailly. From 1988 to April 1999 he served
as President for the Washington International Energy Group. Both companies
provide energy consulting services. Mr. Gale also was a director of
Constellation Enterprises, Inc. from March 1998 to May 1999 and a director
of Constellation Holdings, Inc. from January 1995 to March 1998.
DR. FREEMAN A. HRABOWSKI III, age 49, a director since April 1999, has been
President of the University of Maryland Baltimore County since 1993. He is
also a director of the Baltimore Equitable Society, McCormick & Company,
Inc., and Mercantile Bankshares Corporation. Dr. Hrabowski was a director
of Baltimore Gas and Electric Company from 1994 to April 1999.
CLASS II DIRECTORS
5 WHOSE TERMS EXPIRE IN 2001
<PAGE>
NANCY LAMPTON, age 57, a director since April 1999, is Chairman and Chief
Executive Officer of American Life and Accident Insurance Company of
Kentucky. She is also a director of Brinly-Hardy Corporation, Duff & Phelps
Utility Income Fund, and Radkowsky Thorium Power Corporation (designers of
non-proliferative fuel for nuclear energy needs). Additionally, she is an
advisor of Bank One Kentucky. Ms. Lampton was a director of Baltimore Gas and
Electric Company from 1994 to April 1999.
ADM. CHARLES R. LARSON, age 63, a director since April 1999, served as
Superintendent of the U.S. Naval Academy from 1994 until he retired in 1998
with more than 40 years naval service. He also was Commander-in-Chief of the
U.S. Pacific Command from 1991 to 1994. He serves as a director of EDGE
Technologies, Inc. Admiral Larson was a director of Baltimore Gas and
Electric Company from October 1998 to April 1999.
CHRISTIAN H. POINDEXTER, age 61, has been Chairman of the Board, Chief Executive
Officer, President and Director since 1999, and has been Baltimore Gas and
Electric Company's Chairman of the Board and Chief Executive Officer since
1993, President since March, 1998, and director since 1988. He is also a
director of Constellation Enterprises, Inc., the parent company for most of
Constellation Energy Group's unregulated businesses, Constellation Nuclear
Group, LLC, and Constellation Power Source, Inc.
He is also trustee of Johns Hopkins University, and a director of Johns
Hopkins Medicine Board, U.S. Naval Academy Foundation, Mercantile Bankshares
Corporation, Mercantile-Safe Deposit & Trust Company, Baltimore Life
Companies, and Nuclear Electric Insurance Limited.
MAYO A. SHATTUCK III, age 45, a director since May 1999, has been Co-Chairman
and Co-Chief Executive Officer of DB Alex. Brown, LLC and Deutsche Banc
Securities, Inc. since June 1999. From 1997 to June 1999, he was Vice
Chairman of Bankers Trust Corporation. From 1991 to 1997, Mr. Shattuck was
President and Chief Operating Officer and a Director of Alex. Brown Inc.,
which merged with Bankers Trust in September 1997. Mr. Shattuck also was a
director of Constellation Enterprises, Inc. from March 1998 to May 1999,
and a director of Constellation Holdings, Inc. from January 1994 to March
1998.
COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE COMMITTEE: Has limited powers to act on behalf of the Board between
meetings of the Board. May not declare dividends, authorize the issuance of
stock (unless the Board has already given general authorization for such
issuance), recommend to shareholders any action requiring shareholder
approval, amend the by-laws, or approve mergers or share exchanges that do
not require shareholder approval. Mr. McGowan, who is retiring as of April
27, 2000, is chairperson, and Messrs. Baldwin, Brady, Crooke, Hrabowski,
Poindexter and Russell are members. The committee did not meet in 1999.
AUDIT COMMITTEE: Oversees Constellation Energy's auditing, accounting,
financial reporting and internal control functions, recommends
Constellation Energy's independent accounting firm and reviews their
services. All members are non-employee directors. The committee met 4 times
in 1999. Mr. Cole is Chairperson, and Messrs. Becker, Brady and Russell are
members.
COMMITTEE ON NUCLEAR POWER: Monitors safety and performance at the Calvert
Cliffs Nuclear Power Plant. The committee met 4 times in 1999. Mr. Curtiss
is Chairperson, and Mrs. Byron, Mr. Larson and Mr. McGowan, who is retiring
as of April 27, 2000, are members.
COMMITTEE ON MANAGEMENT: Considers and recommends to the Board nominees for
officers and nominees for election as directors, including nominees
recommended by shareholders. Makes recommendations concerning directors'
and officers' compensation. All members are non-employee directors. The
committee met 7 times in 1999. Mr. Geckle is Chairperson, and Messrs. Cole,
Colussy, Shattuck and Sullivan are members.
COMMITTEES OF THE BOARD OF DIRECTORS 6
<PAGE>
A shareholder who wishes to recommend a nominee for director should submit
the recommendation in writing to the Corporate Secretary, Constellation
Energy Group, Inc., 250 W. Pratt Street, 20th Floor, Baltimore, MD 21201.
COMMITTEE ON WORKPLACE DIVERSITY: Provides input on setting goals and
developing strategies to achieve employee diversity. Oversees the
implementation of the strategies and evaluates results. The committee met 1
time in 1999. Mrs. Byron is Chairperson, and Messrs. Gale and Hrabowski and
Ms. Lampton are members.
LONG RANGE STRATEGY COMMITTEE: Oversees the development and appropriateness of
Constellation Energy's long range strategic goals. Reviews major
regulatory, environmental and public policy issues and technology advances
which may affect operations. The committee met 3 times in 1999. Mr. Baldwin
is Chairperson, and Messrs. Becker, Colussy, Crooke, Curtiss, Gale, Geckle,
Larson, Shattuck, Sullivan and Ms. Lampton are members.
DIRECTORS' COMPENSATION
The Board met 10 times for regularly scheduled meetings in 1999. Each of
the nominees, with the exception of Mr. Becker, attended 75% or more of the
total number of meetings of the Board and of any committees on which the nominee
served.
We do not pay directors who are also employees of Constellation Energy or
its subsidiaries for their service as directors. In 1999, non-employee directors
received the following compensation:
o $1,250 fee for each regular, committee or special Board meeting
attended
o directors may defer receipt of some or all of their fees
o $26,000 annual retainer, and a $3,500 annual retainer for each
committee chairperson
o half of these retainers are invested in deferred stock units
(explained below), and directors may elect to invest some or all of
the other half of their retainers in deferred stock units
o reasonable travel expenses to attend the meetings
Deferred stock units are bookkeeping entries that track the performance of
Constellation Energy common stock and are not actual shares of stock. The
bookkeeping entries reflect Constellation Energy common stock price changes,
dividends, stock splits and other capital changes. At the end of their Board
service, directors receive cash based on the value of their deferred stock
units.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
One of our directors, George L. Russell, Jr., was Senior Counsel at the
law firm of Piper & Marbury L.L.P. during 1999. Constellation Energy and
certain subsidiaries paid fees to this firm for legal services rendered in
1999.
One of our directors, James R. Curtiss, is a partner at the law firm of
Winston & Strawn. Baltimore Gas and Electric Company paid fees to this firm for
legal services rendered in 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Christian H. Poindexter, Chairman of the Board, President and Chief
Executive Officer of Constellation Energy, serves on the Compensation Committee
of Mercantile Bankshares Corporation. H. Furlong Baldwin, a
7 DIRECTORS' COMPENSATION
<PAGE>
director of Constellation Energy, is Chairman of the Board, President and Chief
Executive Officer of Mercantile Bankshares Corporation.
The Company and certain of its subsidiaries maintain a banking relationship
with Mercantile-Safe Deposit and Trust Company, of which Mr. Baldwin is
Chairman, President and Chief Executive Officer. As of December 31, 2000 letters
of credit issued on behalf of the Company and certain of its subsidiaries were
outstanding in the amount of $3,247,506. The letters of credit were obtained on
competitive terms and in the ordinary course of business.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION 8
<PAGE>
SECURITY OWNERSHIP
STOCK OWNERSHIP OF FIVE PERCENT BENEFICIAL OWNERS
To the knowledge of the Board, the only person beneficially owning 5% or
more of Constellation Energy common stock was:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS TITLE BENEFICIAL PERCENT
OF BENEFICIAL OWNER OF CLASS OWNERSHIP OF CLASS
- -------------------------------------------------------------------------------------- -------------- ------------ ---------
<S> <C> <C> <C>
Capital Research and Common Stock 11,100,000(1) 7.4%
Management Company
333 South Hope Street
Los Angeles, CA 90071
(1) According to Schedule 13G dated February 10, 2000, Capital Research and
Management Company has sole dispositive power with respect to 11,100,000
shares of Constellation Energy common stock.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows as of January 21, 2000 the beneficial ownership
of Constellation Energy common stock of each director, the five executive
officers shown in the SUMMARY COMPENSATION TABLE on page 10, and all directors
and executive officers as a group. If the individual participates in
Constellation Energy's Shareholder Investment Plan, Long-Term Incentive Plan or
Employee Savings Plan, those shares are included. Each of the individuals listed
in the table, as well as all directors and executive officers as a group,
beneficially owned less than 1% of Constellation Energy's outstanding common
stock. None of them beneficially own shares of any other class of our or any
subsidiaries' equity securities.
<CAPTION>
BENEFICIAL OWNERSHIP DEFERRED
NAME (SHARES OF COMMON STOCK) STOCK UNITS
- ----------------------------------------- -------------------------- ------------
<S> <C> <C>
H. Furlong Baldwin ................... 750 4,792
Douglas L. Becker .................... 300 1,022
James T. Brady ....................... 300 1,099
Beverly B. Byron ..................... 1,500 1,768
J. Owen Cole ......................... 5,041 1,768
Dan A. Colussy ....................... 1,500 3,293
Edward A. Crooke ..................... 85,950 446
James R. Curtiss ..................... 300 3,393
Robert E. Denton ..................... 40,745
Roger W. Gale ........................ 300 1,414
Jerome W. Geckle ..................... 7,790 506
Frank O. Heintz ...................... 27,008
Freeman A. Hrabowski, III ............ 550 3,117
Nancy Lampton ........................ 3,394 1,558
Charles R. Larson .................... 300 1,066
Christian H. Poindexter .............. 131,043
George L. Russell, Jr. ............... 2,094 3,117
Mayo A. Shattuck, III ................ 300 2,793
Charles W. Shivery ................... 59,188
Michael D. Sullivan .................. 1,500 1,558
All Directors and Executive Officers
as a Group (24 Individuals) ......... 463,952 32,710
</TABLE>
9 SECURITY OWNERSHIP
<PAGE>
EXECUTIVE COMPENSATION
1999 SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION (1)
---------------
LONG-TERM
INCENTIVE PLAN ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) PAYOUT ($) (2) COMPENSATION ($)(3)
- -------------------------------------------- ------ ------------ ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Christian H. Poindexter 1999 677,233 550,125 583,074 87,870
Chairman of the Board, President 1998 638,333 178,626 -0- 72,258
& Chief Executive Officer 1997 608,533 -0- 425,436 52,283
Edward A. Crooke 1999 467,033 316,200 403,651 68,977
Retired Vice Chairman of 1998 441,867 123,772 -0- 56,435
Constellation Energy Group, Inc. and 1997 420,667 -0- 298,799 40,658
retired Chairman of the Board, President
and Chief Executive Officer of
Constellation Enterprises, Inc.
Charles W. Shivery 1999 259,167 372,060 1,614,517 34,116
Chairman of the Board, President, 1998 240,767 366,240 -0- 21,113
& Chief Executive Officer 1997 233,900 55,000 151,856 13,982
of Constellation Power Source, Inc.
Robert E. Denton 1999 283,767 162,000 244,934 40,816
Executive Vice President -- Generation 1998 272,733 64,983 -0- 28,791
of Baltimore Gas and Electric Company 1997 248,533 -0- 178,917 18,786
Frank O. Heintz 1999 281,300 162,000 216,543 31,607
Executive Vice President -- 1998 243,067 70,888 -0- 16,200
Utility Operations of Baltimore Gas 1997 189,433 -0- 52,621 9,227
and Electric Company
NOTES TO SUMMARY COMPENSATION TABLE:
(1) The following executives held shares of performance-based restricted stock
listed below at December 31, 1999:
<CAPTION>
SHARES MARKET VALUE
-------- -------------
<S> <C> <C>
C. H. Poindexter 29,379 $852,007
E. A. Crooke 20,666 $599,317
C. W. Shivery 21,867 $634,144
R. E. Denton 13,377 $387,936
F. O. Heintz 13,377 $387,936
</TABLE>
During the performance period, dividends on performance-based restricted
stock are accumulated and used to purchase additional shares that are
reflected in the above share numbers and market values. The market value for
the shares held is based on the closing price per share for Constellation
Energy common stock as listed in THE WALL STREET JOURNAL. Additional
performance-based restricted stock was granted early in 2000 as described in
the LONG-TERM INCENTIVE PLAN TABLE section on page 11.
(2) The amounts were paid in Constellation Energy common stock for the
applicable three-year performance periods.
(3) For 1997, 1998 and 1999, the amounts in the ALL OTHER COMPENSATION column
include Constellation Energy's matching contributions under its savings
plans, and the interest on the cumulative corporate funds used to pay annual
premiums on policies providing split-dollar life insurance benefits
(calculated at the Internal Revenue Service's blended rate). For 1998 and
1999, the amounts also include a contribution by Constellation Energy to a
trust securing the executives' supplemental pension benefits. A breakdown of
the 1999 amounts in the ALL OTHER COMPENSATION column is shown at the top of
page 11.
EXECUTIVE COMPENSATION 10
<PAGE>
<TABLE>
<CAPTION>
SPLIT SUPPLEMENTAL
MATCHING DOLLAR PENSION TRUST
CONTRIBUTIONS AMOUNTS CONTRIBUTION TOTAL
--------------- --------- ------------- -------
<S> <C> <C> <C> <C>
C. H. Poindexter $20,050 $54,146 $13,674 $87,870
E. A. Crooke $13,825 $41,478 $13,674 $68,977
C. W. Shivery $ 7,700 $12,742 $13,674 $34,116
R. E. Denton $ 8,450 $18,692 $13,674 $40,816
F. O. Heintz $ 8,385 $ 9,548 $13,674 $31,607
LONG-TERM INCENTIVE PLAN TABLE
The Committee on Management, early in 2000, made grants of restricted
Constellation Energy common stock under the Long-Term Incentive Plan. Grants
under this plan were not made during 2000 to Mr. Crooke (because he retired on
January 1, 2000). The grants are subject to both performance and time
contingencies.
For each named executive, performance will be measured over a three-year
period based on Constellation Energy share price growth at the end of the
performance period. A minimum award will be earned if a specified average share
price is achieved at the end of the performance period, progressing to a maximum
award if a higher specified average share price is achieved at the end of the
performance period. All specified share price goals are higher than the fair
market value on the date of grant. Restricted shares granted were equal to the
number of shares of Constellation Energy common stock that will be earned if
"target" performance is achieved.
For all named executives, all or a portion of these restricted shares will
be forfeited if performance is below target at the end of the performance
period. Additional shares will be awarded if performance is above target at the
end of the performance period. However, the total shares awarded will not exceed
the maximum noted in the table below.
During the performance period, dividends on restricted shares will be
accumulated and reinvested in additional shares. At the end of the performance
period, actual dividends awarded will be based upon performance and paid in
Constellation Energy common stock (except that the recipients may elect to have
a portion of the shares withheld to satisfy tax withholding requirements).
Dividend equivalents from the date of the grant will be paid in stock for any
additional shares that are awarded. Shares earned through reinvested dividends
are not counted toward the maximum award limit.
The table below shows the restricted shares granted in 2000.
<CAPTION>
PERFORMANCE
NAME PERIOD MINIMUM TARGET MAXIMUM
- -------------------- ------------ --------- -------- --------
<S> <C> <C> <C> <C>
C. H. Poindexter 3 years 17,000 34,000 51,000
C. W. Shivery 3 years 7,000 14,000 21,000
R. E. Denton 3 years 4,500 9,000 13,500
F. O. Heintz 3 years 4,500 9,000 13,500
</TABLE>
PENSION BENEFITS
The table on page 12 shows annual pension benefits payable at normal
retirement to executives, including the individuals named in the SUMMARY
COMPENSATION TABLE on page 10. Normal retirement is available beginning at age
62. At normal retirement, pension benefits are computed at 60% of total final
average salary plus bonus for Mr. Poindexter, at 55% for Messrs. Shivery and
Denton, and at 52% for Mr. Heintz.
11 EXECUTIVE COMPENSATION
<PAGE>
When Mr. Crooke retired January 1, 2000, in connection with a corporate
restructuring that resulted in elimination of his job, he had not attained
normal retirement age. However, his pension benefits were computed at 60% of
total final average salary plus bonus as a result of the job elimination and in
recognition of his service as Vice Chairman of Constellation Energy Group, Inc.
and Chairman of the Board, President and Chief Executive Officer of
Constellation Enterprises, Inc.
<TABLE>
<CAPTION>
PERCENTAGE OF FINAL AVERAGE SALARY AND
BONUS
---------------------------------------
TOTAL FINAL
AVERAGE SALARY AND BONUS 52% 55% 60%
- -------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 300,000 $156,000 $165,000 $180,000
325,000 169,000 178,750 195,000
350,000 182,000 192,500 210,000
375,000 195,000 206,250 225,000
400,000 208,000 220,000 240,000
450,000 234,000 247,500 270,000
475,000 247,000 261,250 285,000
500,000 260,000 275,000 300,000
550,000 286,000 302,500 330,000
600,000 312,000 330,000 360,000
625,000 325,000 343,750 375,000
650,000 338,000 357,500 390,000
700,000 364,000 385,000 420,000
750,000 390,000 412,500 450,000
800,000 416,000 440,000 480,000
850,000 442,000 467,500 510,000
900,000 468,000 495,000 540,000
925,000 481,000 508,750 555,000
950,000 494,000 522,500 570,000
Salary and bonus used to compute pension benefits are calculated in the
same manner as shown in the SUMMARY COMPENSATION TABLE on page 10. There is no
offset of pension benefits for social security or other amounts. Compensation
used to compute pension benefits for the individuals named in the SUMMARY
COMPENSATION TABLE as of December 31, 1999 is as follows:
<CAPTION>
<S> <C>
C. H. Poindexter $929,446
E. A. Crooke $642,560
C. W. Shivery $465,526
R. E. Denton $363,514
F. O. Heintz $301,069
</TABLE>
Constellation Energy has a program to secure the supplemental pension
benefits for each executive officer, and a program to secure deferred
compensation of each executive officer, including those listed in the SUMMARY
COMPENSATION TABLE on page 10. These programs do not increase the amount of
supplemental pension benefits or deferred compensation. To provide security,
accrued supplemental pension benefits and deferred compensation are funded
through a trust at the time they are earned. An executive officer's accrued
benefits in the supplemental pension trust become vested when any of these
events occur: retirement eligibility; termination, demotion or loss of benefit
eligibility without cause; a change of control of Constellation Energy followed
within two years by the executive's demotion, termination or loss of benefit
eligibility; or
EXECUTIVE COMPENSATION 12
<PAGE>
reduction of previously accrued benefits. As a result of becoming vested, the
executive would be entitled to a payout of the vested amount from the
supplemental pension trust at the later of age 55 or employment termination. An
executive's benefits under the deferred compensation plan always are fully
vested and are payable at employment termination. Any payments to these trusts
are included in the SUMMARY COMPENSATION TABLE in the "All Other Compensation"
column.
SEVERANCE AGREEMENTS
Constellation Energy has severance agreements with Messrs. Poindexter,
Shivery, Denton, Heintz and three other key employees. Mr. Crooke's severance
agreement terminated effective with his retirement on January 1, 2000. The
severance agreements provide benefits if (1) there is a change in control of
Constellation Energy, and (2) within two years of the change in control, the
executive's employment is terminated without cause, or the executive resigns for
good reason.
The severance agreements provide benefits equal to two times the sum of (1)
the executive's annual base salary and (2) the average of the executive's two
highest annual incentive awards paid in the last five years. These payments are
made in 24 equal monthly installments beginning on the first day of the month
after employment ceases.
For an executive who is ineligible to retire, the agreements also provide
retirement, medical and dental benefits computed assuming the executive: (1) is
the greater of age 55 or the executive's actual age; (2) has the greater of 10
years of service or actual service plus 3; and (3) has satisfied the minimum
service eligibility requirements for these benefits, and further provide for
continued life insurance benefits.
For an executive who is eligible to retire, the agreements also provide
retirement benefits computed assuming the executive has the greater of 10 years
of service or actual service, and without any penalty for early retirement, and
medical and dental benefits based on the same terms as any retiree who is at
least age 65 with the greater of 20 years of service or actual service. Further,
for purposes of other benefit plans, the executive will be treated as retiring
at Constellation Energy's request.
As a result of Mr. Crooke's January 1, 2000 retirement in connection with a
corporate restructuring that resulted in the elimination of his job, and in
recognition of his service as Vice Chairman of Constellation Energy Group, Inc.
and Chairman of the Board, President and Chief Executive Officer of
Constellation Enterprises, Inc., he received a severance package. His severance
benefits include a $1,476,417 lump sum severance payment equal to the total of
(1) two times the sum of (a) annual base salary plus, (b) average of the two
highest annual bonus percentages earned during the preceding five years
multiplied by the prior year's final annual salary, and (2) payment toward the
cost of health coverage computed assuming retirement at age 65 with 35 years of
service. He also receives a 60% pension benefit as described on page 12, without
reduction for early receipt. Mr. Crooke received a 1999 short-term incentive
payment (as shown in the Bonus column of the SUMMARY COMPENSATION TABLE on page
10), and a 1997-1999 long-term incentive award payment (as shown in the
Long-Term Compensation, Long-Term Incentive Plan Payout column of the SUMMARY
COMPENSATION TABLE on page 10). He will also be entitled to a prorata payout of
any earned performance-based restricted stock award for the 1998-2000 and
1999-2001 performance periods.
13 EXECUTIVE COMPENSATION
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
The following graph assumes $100 was invested on December 31, 1994 in BGE
stock until April 30, 1999 and in Constellation Energy common stock since then,
the S&P 500 Index and the Dow Jones Electric Utilities Index. Total return is
computed assuming reinvestment of dividends.
[GRAPH APPEARS HERE]
CEG S&P 500 DJEUI
"1994" 100.00 100.00 100.00
"1995" 137.07 137.58 131.57
"1996" 136.45 169.17 132.86
"1997" 184.67 225.61 168.05
"1998" 176.30 290.08 192.24
"1999" 175.54 351.12 161.85
REPORT OF COMMITTEE ON MANAGEMENT ON EXECUTIVE COMPENSATION
COMMITTEE ON MANAGEMENT
The Committee on Management is responsible for executive compensation
policies. We also approve all compensation plans and recommend to the Board of
Directors specific salary amounts and other compensation awards for individual
executives. All of our Committee members are outside directors.
PHILOSOPHY
We design compensation policies to encourage executives to manage
Constellation Energy and its subsidiaries (collectively, the company) in the
best long-term interests of shareholders and to allow the company to attract and
retain executives best suited to lead it in a changing industry. We have
retained an outside executive compensation consultant since 1993. He provides
information and advice on a regular basis. In addition, internal compensation
analysts (certified by the American Compensation Association) use published
survey data, outside consultants, and other resources to make recommendations to
us.
Our Committee determined that the relevant labor market in 1999 for
Constellation Energy and Baltimore Gas and Electric Company executives is the
utility industry. Utilities used for comparison in 1999 were electric utilities
and combination electric/gas utilities, analyzed using regression analysis to
account for Constellation Energy's size. We believe these utilities best
represent the portion of the executive labor market in which Constellation
Energy competes. Most of these utilities are included in the Dow Jones Electric
Utilities Index
COMMON STOCK PERFORMANCE GRAPH 14
<PAGE>
shown on the Performance Graph on page 14. For non-regulated subsidiary
executives, we used labor market data from various industries that are similar
to their respective businesses.
The elements of executive compensation are:
o base salary,
o short-term incentive awards, and
o long-term incentive awards.
The Committee's philosophy is that base salary should approximate the
median level of the relevant labor market. Base salary and short-term incentive
awards should approximate the median level of the relevant labor market for
average performance, and the 75th percentile for superior performance. Long-term
incentive awards for superior performance should bring total compensation to
approximately the 75th percentile of the labor market. As described below,
corporate and/or subsidiary business performance are among the criteria we use
in determining base salary, and are key components in determining both
short-term and long-term incentive awards.
Beginning in 2000 in light of deregulation in the utility industry, we will
expand comparisons beyond the utility industry to the broader energy services
industry and move toward a general industry comparison for incentive
compensation.
ANNUAL CASH COMPENSATION
BASE SALARY. We used survey data and the Committee's 1999 philosophy
mentioned above to determine base salary range increases for Mr. Poindexter and
the other named executives in 1999.
We determined base salary increases during 1999 for Mr. Poindexter and the
other named executives taking into account 1998 corporate and subsidiary
business performance, each executive's position in the salary range, individual
performance, and the corporate response to changes in the energy industry and
the regulatory environment. We did not assign specific weights to the various
factors. Mr. Poindexter's base salary increase of 6.3% maintained his position
in the middle third of his salary range.
SHORT-TERM INCENTIVES. Bonus payments to Mr. Poindexter and other named
executives represent the short-term incentive component of executive
compensation. The Committee based the 1999 short-term incentives for Messrs.
Poindexter, Crooke, Denton and Heintz on two factors that were weighted equally:
corporate financial performance and the executives' business plan performance.
In evaluating the corporate financial performance factor, the Committee
recognized that earnings from operations increased 12.7% over 1998. The
Committee also evaluated the 1999 corporate financial performance by adjusting
the reported earnings to reflect the impact of non-recurring items stemming from
the deregulation of electric generation. This resulted in corporate financial
performance at a level greater than the maximum for this factor in 1999. The
Committee also took into account a subjective assessment of business plan
performance, which included Calvert Cliffs Nuclear Power Plant receiving the
highest rating given by the Institute of Nuclear Power Operations, the Maryland
PSC approving BGE's electric deregulation settlement plan, BGE's fossil and
nuclear plants combining to set an all-time generation record for the second
consecutive year, and Constellation Power Source being named the top power
marketer in the U.S. by PHB Hagler Bailly. Mr. Shivery's 1999 short-term
incentive was based on Constellation Power Source financial performance weighted
at 75% and his business plan performance weighted at 25%. Mr. Shivery's bonus
payment was based on Constellation Power Source's 1999 net income, which was
significantly greater than target level, and a subjective assessment of his
business plan performance. Constellation Power Source more than quadrupled its
1998 contribution to Constellation Energy's earnings to $0.23 per share for
1999, increased its asset base by $235 million, increased its market share
REPORT OF COMMITTEE ON MANAGEMENT
15 ON EXECUTIVE COMPENSATION
<PAGE>
in high-growth areas, and captured a significant share of the standard offer
service in New England. The bonus payments are shown in the SUMMARY COMPENSATION
TABLE on page 10.
LONG-TERM INCENTIVES
The Constellation Energy Long-Term Incentive Plan will be in effect until
2005. The Plan allows various types of awards keyed to corporate performance,
including performance shares and restricted stock subject to performance-based
contingencies. Performance-based restricted stock with three-year performance
periods was granted under the Plan in 1997, 1998, 1999 and 2000 to the named
executives (except Mr. Crooke who retired on January 1, 2000 and consequently
did not receive a 2000 grant). The performance period for the 1997 grants ended
in 1999 and the award payouts are described below. The 1998 and 1999 grants are
shown in footnote 1 to the SUMMARY COMPENSATION TABLE. The 2000 grants are shown
on the LONG-TERM INCENTIVE PLAN table on page 11. The awards are subject to
forfeiture if performance criteria are not satisfied or if the executive's
employment terminates for certain reasons during the applicable performance
period.
1999 AWARD PAYOUTS. The named executives earned awards of Constellation
Energy common stock under the Constellation Energy Long-Term Incentive Plan,
based on the 1997-1999 performance period. Awards for Messrs. Poindexter,
Crooke, Denton and Heintz were above target based on Constellation Energy total
shareholder return during the three-year performance period at the 70th
percentile, which exceeded the target of the 62.5th percentile. Mr. Denton and
Mr. Heintz were also awarded additional shares reflecting their higher-level
executive responsibilities due to their promotions during the performance
period.
For Mr. Shivery's award, two factors were established: Constellation Power
Source (CPS) performance based on a business value appreciation formula,
utilizing CPS cumulative net income, book value, and derived market value
weighted at 75%, and Constellation Energy total shareholder return weighted at
25%. Since the business value appreciation formula is intended to measure a
surrogate market value, no maximum award amount was established. Mr. Shivery's
award was significantly above target level, reflecting CPS' emergence during
this particular three-year performance period as a leader in the power marketing
business, and Constellation Energy total shareholder return above target level.
All awards included Constellation Energy stock purchased with dividends
accumulated on award shares throughout the performance period. These awards to
the named executives are shown in the column of the SUMMARY COMPENSATION TABLE
on page 10 titled Long-Term Compensation, Long-Term Incentive Plan Payout.
1998, 1999, AND 2000 GRANTS. For the 1998 and 1999 grants, Constellation
Energy total shareholder return is the only performance criterion for Messers.
Poindexter, Crooke, Denton, and Heintz. For the 1998 and 1999 grants for Mr.
Shivery, the performance criteria are Constellation Power Source performance,
based on a business value appreciation formula, and Constellation Energy total
shareholder return.
The performance criterion for the 2000 grants for all named executives is
growth in share price. The award payout can range from a minimum award if a
specified average share price is achieved at the end of the performance period,
progressing to higher award payouts for higher average share prices achieved at
the end of the performance period. All specified share price goals are higher
than the fair market value on the date of grant.
REPORT OF COMMITTEE ON MANAGEMENT
ON EXECUTIVE COMPENSATION 16
<PAGE>
POLICY CONCERNING $1 MILLION DEDUCTION LIMITATION
Section 162(m) of the Internal Revenue Code limits to $1 million the tax
deduction of public companies for compensation paid to their chief executive
officers and the four other most highly compensated executive officers. There
are several exemptions to Section 162(m), including one for qualified
performance-based compensation. To be qualified, performance-based compensation
must meet various requirements, including shareholder approval. Our Committee's
general intent is to design and administer the executive compensation programs
in a manner that will preserve the deductibility of compensation payments to
executive officers. However, this goal is secondary in importance to achievement
of the companies' compensation philosophy discussed earlier in this report,
including managing Constellation Energy and its subsidiaries in the best
long-term interests of shareholders. Our Committee believes that the potential
increased tax liability is of insufficient magnitude to warrant alteration of
the present compensation system, which is achieving the desired compensation
objectives, while retaining the flexibility of our Committee to exercise
judgement in assessing an executive's performance.
Jerome W. Geckle, Chairman Mayo A. Shattuck, III
J. Owen Cole Michael D. Sullivan
Dan A. Colussy
PROPOSAL NO. 2 -- RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR 2000
PricewaterhouseCoopers LLP has been Constellation Energy's independent
accountants since 1941. A member of PricewaterhouseCoopers LLP will be at the
annual meeting and will have the opportunity to make a statement and answer
appropriate questions.
PricewaterhouseCoopers LLP audited Constellation Energy's 1999 consolidated
financial statements and Constellation Energy's transfer agent functions. As
part of its audit function, they also reviewed Constellation Energy's 1999
annual report to shareholders and various filings with the Securities and
Exchange Commission and Federal Energy Regulatory Commission. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL NO. 3 -- A SHAREHOLDER
PROPOSAL CONCERNING
CONFIDENTIAL VOTING
We have been advised by The Trust for the International Brotherhood of
Electrical Workers' Pension Benefit Fund, 1125 Fifteenth St. N.W., Washington,
D.C. 20005, owners of common stock with a market value of at least $2,000, that
the following proposal will be presented for action at the annual meeting.
The Board of Directors' objection follows the shareholder proposal.
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
17 AS INDEPENDENT ACCOUNTANTS FOR 2000
<PAGE>
The following proposal is presented word-for-word:
CONSTELLATION ENERGY GROUP, INC.
SHAREHOLDER PROPOSAL CONCERNING
CONFIDENTIAL VOTING
BE IT RESOLVED: That the shareholders of Constellation Energy
("Company"), recommend that our Board of Directors take the steps necessary
to adopt and implement a policy of CONFIDENTIAL VOTING at all meetings of
its shareholders, which includes the following provisions:
1.That the voting of all proxies, consents and authorizations be
secret, and that no such document shall be available for examination
nor shall the vote or identity of any shareholder be disclosed except
to the extent necessary to meet the legal requirements, if any, of the
Corporation's state of incorporation; and
2.That the receipt, certification and tabulation of such votes shall
be performed by independent election inspectors.
SUPPORTING STATEMENT:
---------------------
It is the proponents' belief that it is vitally important that a system
of CONFIDENTIAL PROXY VOTING be established at the Company. Confidential
balloting is a basic tenet of our political electoral process ensuring its
integrity. The integrity of corporate board elections should also be
protected against potential abuses given the importance of corporate
policies and practices to corporate owners (stockholders) and our national
economy.
The implementation of a CONFIDENTIAL VOTING SYSTEM would enhance
shareholder rights in several ways. First, in protecting the
confidentiality of the corporate ballot, shareholders would feel free to
oppose management nominees and issue positions without fear of retribution.
This is especially important for professional money managers whose business
relationships can be jeopardized by their voting positions.
A second important benefit of CONFIDENTIAL VOTING would be to invigorate
the corporate governance process at the Corporation. We believe that
shareholder activism would be promoted within the Corporation. It is our
belief that shareholders empowered with a free and protected vote would be
more active in the proposing of corporate policy resolutions and alternate
board candidates.
Finally, it is our belief that the enhancement of the proxy voting
process would change the system where too often shareholders vote "with
their feet," not with their ballots. This change would help to develop a
long-term investment perspective where corporate assets could be deployed,
and used in a more effective and efficient manner.
THE VAST MAJORITY OF MAJOR CORPORATIONS HAVE ADOPTED A CONFIDENTIAL VOTING
POLICY AND IT'S TIME FOR THE CONSTELLATION ENERGY TO JOIN THEM.
WE URGE YOU TO VOTE FOR THIS PROPOSAL.
---
BOARD OF DIRECTORS' OBJECTIONS TO THE PROPOSAL ON CONFIDENTIAL VOTING
Constellation Energy firmly believes that its current policy for proxy
solicitation and tabulation provides the confidentiality necessary to satisfy
its overall shareholder base. A more restrictive confidential voting policy
would substantially limit the freedom of communication between shareholders and
Constellation Energy.
SHAREHOLDER PROPOSAL CONCERNING
CONFIDENTIAL VOTING 18
<PAGE>
Constellation Energy's existing proxy solicitation system allows
shareholders the freedom to choose whether to vote on a confidential basis. A
shareholder who wants anonymity and confidentiality may hold shares in street
name through a bank, broker, or other nominee who cannot disclose the names of
the shareholder without the shareholder's permission. Shares held by employees
in Constellation Energy's employee savings plan are held in trust and voted by
the plan trustee. Constellation Energy has no access to the voting instructions
employees provide to the trustee.
Shareholders who choose not to vote on a confidential basis may openly
communicate with management. Large institutional shareholders use their votes on
particular issues to send messages to management. Other shareholders use proxy
cards to write comments to management. The Board of Directors must be able to
use these extremely valuable sources of information to learn the viewpoints of
its shareholders.
A more restrictive confidential voting policy would impair Constellation
Energy's ability to contact shareholders on issues that are important to
Constellation Energy's success. The Board of Directors must be able to clarify
directly with shareholders issues of importance to Constellation Energy and
shareholders, and when necessary to counter false statements in proxy contests.
Constellation Energy may need to contact shareholders who have not voted their
proxies to encourage them to vote on important issues. Constellation Energy also
may need to contact shareholders whose proxy cards are not correctly completed,
so that their shares will be voted as they intended. Contact with shareholders
is critical in these situations so that the Board of Directors can proceed in
the best interest of Constellation Energy and all of its shareholders, and a
more restrictive confidential voting policy would limit the Board of Directors'
ability to do this.
The proponent argues that confidential voting is necessary to ensure the
integrity of Board elections and protect shareholders from retribution. This is
a farfetched notion for corporate governance and has no historical basis at
Constellation Energy. Constellation Energy is a good corporate citizen as many
long-time shareholders know, and has always conducted its shareholder
solicitations in a fair and equitable manner, without any threat of retribution.
Further, contrary to the proponent's claim that shareholder activism would be
promoted with confidential voting, it has not been the experience of
Constellation Energy that its shareholders are reluctant to communicate with
management because of the absence of confidential voting. Activist shareholders
want management to know who they are and what they stand for.
Constellation Energy's existing proxy solicitation system encourages open
communication with shareholders. It permits confidentiality for those who desire
it, but does not mandate it for all shareholders, and has been a valuable tool
to help the Board of Directors and management successfully run Constellation
Energy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE ON THE PROXY CARD.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR NEXT YEAR
For Inclusion in Next Year's Proxy Statement. Any Constellation Energy
shareholder who wants to include a proposal in the proxy statement for the 2001
annual meeting must deliver it so we receive it by November 10, 2000.
For Presentation at the Next Annual Meeting. Any Constellation Energy
shareholder who wants to present a proposal at the 2001 annual meeting must
deliver it so we receive it by December 22, 2000. Proposals not received by this
date may not be presented at the annual meeting.
Any proposals must be sent, in writing, to the Corporate Secretary,
Constellation Energy Group, Inc., 250 W. Pratt Street, 20th Floor, Baltimore,
MD 21201. Proposals will not be accepted by facsimile.
SUBMISSION OF SHAREHOLDER PROPOSALS
19 FOR NEXT YEAR
<PAGE>
TEAR HERE ALONG PERFORATION
- --------------------------------------------------------------------------------
[LOGO] CONSTELLATION CONSTELLATION ENERGY GROUP, INC.
ENERGY GROUP P. O. BOX 1642, BALTIMORE, MARYLAND 21203-1642
COMMON STOCK PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - APRIL 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE VOTE AND SIGN ON THE REVERSE SIDE AND RETURN IN THE ENCLOSED ENVELOPE.
The undersigned appoints Edward A. Crooke, Jerome W. Geckle and Christian H.
Poindexter (or a majority of them or their substitutes, or one acting alone in
the absence of the others), as proxies, with power to each to appoint a
substitute and to revoke the appointment of such substitute, to vote all shares
of common stock of Constellation Energy Group, Inc. which the undersigned is
entitled to vote at the annual meeting to be held on April 28, 2000, and at any
adjournments thereof, in the manner specified on the reverse side of this card
with respect to each item identified thereon (as set forth in the Notice of
Annual Meeting and Proxy Statement), and in their discretion on any shareholder
proposal omitted from this proxy and such other business as may properly come
before the annual meeting.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AT THE ANNUAL
MEETING IN THE MANNER SPECIFIED. IF NO SPECIFICATION IS MADE, VOTES WILL BE CAST
"FOR" ITEMS 1 & 2 AND "AGAINST" ITEM 3 ON THE REVERSE OF THIS CARD.
(OVER)
<PAGE>
THIS IS YOUR PROXY CARD
TEAR HERE, VOTE, SIGN
AND RETURN IN THE PRE-ADDRESSED
POSTAGE PAID ENVELOPE
TEAR HERE ALONG PERFORATION
- --------------------------------------------------------------------------------
A VOTE "FOR" ITEMS 1 & 2 IS RECOMMENDED.
1. THE ELECTION OF 5 CLASS I DIRECTORS FOR A TERM TO EXPIRE IN 2003
[ ] FOR all nominees, except as [ ] WITHHOLD AUTHORITY
lined through below. (TO VOTE (ABSTAIN) from voting
AGAINST ANY OR ALL NOMINEES FOR ALL nominees.
LINE THROUGH THEIR NAMES.)
D. L. BECKER J. O. COLE D. A. COLUSSY
E.A. CROOKE M.D. SULLIVAN
2. RATIFICATION OF FOR AGAINST ABSTAIN
PRICEWATERHOUSECOOPERS LLP [ ] [ ] [ ]
AS INDEPENDENT ACCOUNTANTS
FOR 2000
A VOTE "AGAINST" ITEM 3 IS RECOMMENDED.
3. SHAREHOLDER PROPOSAL [ ] [ ] [ ]
CONCERNING CONFIDENTIAL
VOTING
[ ] Please check this box if you plan to attend the 2000 annual meeting.
Please sign below, exactly as name appears at left. Joint owners should EACH
sign. Attorneys, executors, administrators, trustees and corporate officials
should give title or capacity in which they are signing.
Signature Date
------------------------------------ --------------------------
Signature Date
------------------------------------ --------------------------
CONSTELLATION ENERGY GROUP, INC.
<PAGE>
CONSTELLATION ENERGY GROUP, INC.
EMPLOYEE SAVINGS PLAN
T. Rowe Price Trust Company, Trustee of the Employee Savings Plan, has not
received a Voting Instructions Card for the 2000 meeting for the shares that you
hold in the Plan. After receipt of the properly executed Voting Instructions
Card, the Trustee will vote as directed by your instructions. However, due to a
recent change in the Trust Agreement, even if you do not send in a signed Voting
Instructions Card, the Trustee will vote your shares in the same proportion as
the Trustee was instructed to vote shares for which it received Voting
Instruction Cards.
We appreciate the support of our shareholders and encourage you to vote your
Employee Savings Plan shares, regardless of the size of your holdings. We have,
therefore, enclosed a second Voting Instructions Card so that you can vote your
shares. Whether or not you plan to attend the meeting, please complete the
Voting Instructions Card and return it to the Trustee in the envelope provided
by APRIL 21, 2000.
Our initial mailing to you included a proxy statement. If you would like to
receive a duplicate copy, please contact one of our shareholder representatives
in metropolitan Baltimore at 410-783-5920, within Maryland at 1-800-492-2861,
outside Maryland at 1-800-258-0499.
Richard D. Honaker
Plan Administrator
<PAGE>
CONSTELLATION ENERGY GROUP, INC.
TO PARTICIPANTS IN THE
EMPLOYEE SAVINGS PLAN (THE PLAN)
The enclosed Notice of Annual Meeting of Shareholders, Proxy Statement, and
Voting Instructions Card for the Annual Meeting of Shareholders, to be held on
April 28, 2000, are being furnished to you by Constellation Energy Group, Inc.
(Constellation Energy) on behalf of T. Rowe Price Trust Company, Trustee under
the Plan.
In accordance with the Plan and the Trust Agreement between Constellation Energy
and the Trustee, you may instruct the Trustee how to vote the shares of common
stock held for you under the Plan. Therefore, please complete the enclosed
Voting Instructions Card and return it in the accompanying envelope by April 21,
2000.
After receipt of the properly executed Voting Instructions Card, the Trustee
will vote as directed by your instructions. However, due to a recent change in
the Trust Agreement even if you do not send in a signed Voting Instructions
Card, the Trustee will vote your shares in the same proportion as the Trustee
was instructed to vote shares for which it received Voting Instruction Cards.
Each participant in the Plan who is a holder of record of other shares of
Constellation Energy stock will receive, separately, a proxy card and
accompanying proxy material to vote the shares of common stock registered in his
or her name.
Richard D. Honaker
Plan Administrator
<PAGE>
-Please fold and detach card at perforation before mailing.-
CONFIDENTIAL VOTING INSTRUCTIONS TO TRUSTEE
PLEASE VOTE AND SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED ENVELOPE
These Voting Instructions are requested in conjunction with a proxy solicitation
by the
BOARD OF DIRECTORS OF CONSTELLATION ENERGY GROUP.
TO: T. ROWE PRICE TRUST COMPANY, AS TRUSTEE UNDER THE CONSTELLATION ENERGY GROUP
EMPLOYEE SAVINGS PLAN
I hereby instruct T. Rowe Price Trust Company, as Trustee under the
Constellation Energy Group Employee Savings Plan (Plan), to vote, by proxy, all
shares of common stock of Constellation Energy Group (Company) allocated to me
under the Plan at the annual meeting of the shareholders of Constellation Energy
to be held on April 28, 2000, and at any adjournments thereof, in the manner
specified on the reverse side of this form with respect to each item identified
thereon (as set forth in the Notice of Annual Meeting and Proxy Statement), and
Edward A. Crooke, Jerome W. Geckle and Christian H. Poindexter, in their
discretion, shall vote in person on any shareholder proposal omitted from this
proxy and such other business as may properly come before the annual meeting.
The Trustee will vote the shares represented by the Voting Instructions Card if
properly signed and received by April 21, 2000. IF NO INSTRUCTIONS ARE SPECIFIED
ON A SIGNED CARD, THE SHARES REPRESENTED THEREBY WILL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF CONSTELLATION ENERGY:
"FOR" ITEMS 1 & 2 AND "AGAINST" ITEM 3. In accordance with the Trust Agreement,
if you do not vote your shares, the Trustee will vote them for you in the same
proportion as the Trustee was instructed to vote shares for which it received
Voting Instruction Cards.
(over)
<PAGE>
From:
----------------
First Class Mail
T. ROWE PRICE RETIREMENT PLAN SERVICES, INC. U.S. Postage
Constellation Energy Group PST PAID
P.O. Box 17215 Baltimore, MD
Baltimore, MD 21297-0354 Permit #250
----------------
-Please fold and detach card at perforation before mailing.-
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW.
<TABLE>
<CAPTION>
<S> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 & 2. FOR all nominees
listed at left, except as WITHHOLD
1. THE ELECTION OF 5 CLASS I DIRECTORS FOR A TERM TO EXPIRE IN 2003. lined through (to vote AUTHORITY
AGAINST any or all (ABSTAIN) from
D. L. Becker, J. O. Cole, D. A. Colussy, E. A. Crooke, M. D. Sullivan nominees line through voting for all nominees
their names.) listed at left.
[ ] [ ]
2. RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT FOR AGAINST ABSTAIN
ACCOUNTANTS FOR 2000 [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3.
3. SHAREHOLDER PROPOSAL CONCERNING CONFIDENTIAL VOTING [ ] [ ] [ ]
CONSTELLATION ENERGY GROUP, INC.
Date: _________________________
Please sign below, exactly as your name appears to the left.
------------------------------------------------------------
------------------------------------------------------------
SIGNATURE
</TABLE>
(over)
