Thursday, March 19, 2009

Electricite de France Must Kill Constellation Bonuses

Maybe Electricite de France is not aware of how radioactive the 'bonus' issue right now. If they did, they would not get close to agreeing to bonuses for Constellation executives. The Center has given EdF good advice in the past and they should take our advice now: Kill the Bonuses (by any means necessary). Under the pending purchase agreement between Constellation and EDF, the French utility has agreed to pay up to $19 million in performance awards covering 2007-2009 and up to $13 million for 2008-2010. The 120 senior managers would be eligible for $7.8 million and $5.7 million for those respective periods.

The is reporting that:

Constellation Energy Group, which narrowly avoided bankruptcy last year, negotiated a deal with France's largest utility ensuring senior managers would receive up to $32 million in long-term performance and retention incentives during the next two years. The move comes as the Baltimore company, which agreed to sell half of its nuclear power business to Electricite de France for $4.5 billion, has laid off hundreds of workers, slashed its stockholder dividend and is seeking rate increases for its BGE customers. I f the deal closes, EDF has agreed to pay the difference between awards the managers earn based on meeting company performance goals and the long-term incentives for which they're eligible. About 135 senior managers would have received those full payments immediately had the original deal with billionaire Warren Buffett gone through [Center opposed the deal]. In December, Constellation terminated its sale to Buffett's MidAmerican Energy Holdings Company in favor of EDF's bid.
EdF cannot have full ownership or control of a U.S. nuclear plant because it is a foreign entity under federal law. The deal is subject to approval by the Nuclear Regulatory Commission and the Committee on Foreign Investment in the United States. EdF has to realize that this bonus deal could threaten the entire nuclear plant partnership deal because local, state, and federal politicians are on the warpath for their constituents over a similar AIG bonus arrangement. They will surely aim their attention at EdF and Constellation is this bonus proposal stands. Don't do it. We want EdF to build a new nuclear plant at Calvert Cliffs. That is our primary interest in addition to bonuses are simply not feasible in the current economic climate.

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