Letter
from Constellation’s Board of Directors
March
19, 2025
Dear
Fellow Shareholders:
As
we approach our 2025 Annual Meeting of Shareholders, the Board would like to take this opportunity to thank our world-class team
for their hard work and dedication. Their relentless execution of our strategy continues to create value for our shareholders
as we help America to meet the needs of achieving clean and reliable energy to grow our data-driven economy, protect our national
security, and accelerate the energy transition. We are immensely proud of the progress our team has made this past year and are
excited for our future as Constellation is uniquely positioned to address the growing energy needs of our customers.
Delivering
on Our Commitments
In
our first three years as a stand-alone company, we have outperformed financial expectations, and for a second consecutive
year we exceeded the top end of our revised guidance range. Our outperformance has translated into significant value creation
with Constellation delivering a total shareholder return of 362.2% through 2024 since our separation from Exelon in 2022. To
date, we have returned approximately $3 billion to shareholders through dividends and the company’s share repurchase
plan with another $1 billion of remaining authorization for additional repurchases. We have accomplished all of this while
strengthening our investment-grade balance sheet.
We
continue to find innovative ways to grow and develop the business. In September 2024, we announced the signing of a 20-year power
purchase agreement with Microsoft that will restart Three Mile Island Unit 1 and support the launch of the Crane Clean Energy
Center, which is expected to create 3,400 direct and indirect jobs and deliver more than $3 billion in state and federal taxes.
Under this agreement, Microsoft will purchase energy from the renewed plant as part of its goal to help match the power its data
centers use in the PJM region. Just a few months later, in late 2024, we were awarded more than $1 billion in combined contracts
by the U.S. General Services Administration (GSA), including a 10-year, $840 million contract to supply power to more than 13
government agencies. This contract is the largest in GSA history and, in combination with the Crane restart, is expected to add
approximately 1,100 million megawatt hours of 24/7 nuclear energy by 2028. This development reflects growing support for investments
in reliable nuclear energy that will allow Constellation to relicense and extend the lives of our critical assets, while also
underscoring growing recognition of the unique value our company provides as the country’s largest operator of nuclear plants.
Acquiring
Calpine Better Positions Constellation for the Future
In
January 2025, we announced that we entered into a definitive agreement to acquire Calpine Corporation. Calpine is the largest
U.S. producer of energy from low-emission natural gas generation and has a renewable energy portfolio which includes the
largest geothermal generation operation in the country. Together, Constellation and Calpine will have the cleanest and most
reliable generation portfolio in the U.S., with a diverse, coast-to-coast portfolio of zero and low-emission generation
assets. Also, this transaction will expand our footprint in Texas, the fastest growing market for power demand, as well as
other key strategic states.
In
addition to reinforcing our position as the country’s largest clean energy producer with the lowest carbon emissions intensity
among the top 20 power producers, this transaction combines best-in-class retail and commercial businesses with a premier customer
solutions platform, providing opportunities to serve more customers with a broader array of energy and sustainability products
while enabling greater predictability at competitive prices. The combined company will be able to create reliable energy solutions
on a larger scale, including new product offerings that can integrate nuclear, renewable, and natural gas technologies tailored
to customers’ unique needs. Accordingly, this transaction best positions Constellation and Calpine to pursue our shared
passion of powering America’s families and businesses with energy that is reliable, clean, and available whenever it is
needed.
Beyond
sharing this passion, both Constellation and Calpine have proven teams with strong cultures of safety, operating excellence, and
commitment to serving customers, communities, and the country. We are excited to work with the Calpine team, including current
president Andrew Novotny, who will bring his decades of energy expertise and leadership to Constellation and continue to lead
the Calpine business after closing. With Calpine, Constellation will increase its positive impact, serving as an economic engine
for local communities through jobs, tax payments and other economic activity. Together, we will continue our shared commitment
to supporting clean, healthy, and growing communities through workforce development, philanthropy, and community investment, including
through more than $21.1 million in combined annual foundation, corporate, and employee philanthropy, in addition to thousands
of employee volunteer hours, with a focus on economically disadvantaged communities.
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Constellation
Energy Corporation 2025 Proxy Statement |
1 |
Letter
from Constellation’s Board of Directors
Constellation
is uniquely positioned to acquire Calpine while maintaining our strong investment grade balance sheet, and we expect to return
to our target leverage ratios by the end of 2027 as a result of strong, predictable cash flows and a focused deleveraging plan.
We will acquire Calpine in a cash and stock transaction valued, as of the date of signing, at an equity purchase price of approximately
$16.4 billion and a net purchase price of $26.6 billion (after accounting for cash that is expected to be generated by Calpine
between signing and the end of 2025, as well as the value of tax attributes at Calpine). This price reflects an attractive acquisition
multiple of 7.9x 2026 EV/EBITDA for a transaction that will create significant value for Constellation’s shareholders, with
expected immediate adjusted operating earnings per share (EPS) accretion of more than 20% in 2026 and at least $2 per share of
EPS accretion in future years. The transaction is also projected to add more than $2 billion of free cash flow annually, creating
strategic capital and scale to reinvest in the business.
Providing
Robust Board Oversight and Continuous Enhancement
As
we reflect on our recent accomplishments, we would also like to thank Laurie Brlas, who retired from the Board in December 2024.
We are deeply grateful to Laurie for her many contributions, professionalism, and expertise, including her strategic and financial
insight and guidance, which were instrumental in Constellation’s performance since its successful spinoff in 2022.
To
ensure our Board continues to be effectively equipped to provide oversight of Constellation’s long-term strategy, we
regularly consider whether the near and long-term needs of the company align with our current directors’ backgrounds,
experiences, and skills. After careful review, we remain confident in our current Board composition and are excited about the
backgrounds and expertise that our newest members, Peter Oppenheimer and Eileen Paterson, provide our Board. Peter and Eileen
bring a combination of strong financial acuity, operational experience, and business leadership expertise that will help
guide Constellation through this exciting period of growth and innovation. Our recent additions reflect our continued efforts
to actively search for desirable prospective director candidates and ensure a regular governance process for Board
refreshment. We also gain valuable insights into investor perspectives and priorities through the company’s annual
shareholder engagement program, which remains an important resource as we review our governance practices, including our
commitment and actions to fully de-classify the Board following the 2026 Annual Meeting of Shareholders.
Your
Vote is Important to Us
We
thank you for your continued support of Constellation and want to stress that your vote is very important to us. We encourage
you to carefully read the attached proxy statement ahead of the Annual Meeting and ask that you support our voting recommendations.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Information
About the Annual Meeting
Throughout
this proxy statement, “Constellation”, the “Company”, “we”, “our”, or “us”
are intended to refer to Constellation Energy Corporation and its consolidated subsidiaries, unless specifically indicated otherwise.
Constellation does not incorporate into this document the contents of any website, or the documents referred to in this proxy
statement.
Distribution
of Proxy Materials: This proxy statement is provided
in connection with a solicitation of proxies by the Board of Directors of Constellation to be used at the Annual Meeting of Shareholders
to be held on Tuesday, April 29, 2025 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof. On or about
March 19, 2025, this proxy statement, along with our annual report, are being mailed or made available to shareholders.
Attendance
at the Annual Meeting: You
are invited to attend the virtual Annual Meeting, and we request that you vote on the proposals described in this proxy statement
as recommended by the Board of Directors. If you have received a printed copy of these materials by mail, you may complete, sign
and return your proxy card, or submit your proxy vote by telephone or over the Internet. If you did not receive a printed copy
of these materials by mail and are accessing them via the Internet, you may follow the instructions under the heading, “Questions
and Answers About the Annual Meeting” of this proxy statement to submit your proxy vote via the Internet or by telephone.
Also, other information about voting is provided under “Questions and Answers About the Annual Meeting.”
Every
Vote is Important: Make your vote count. Please
vote your shares promptly to ensure your representation and the presence of a quorum during the Annual Meeting. Vote your shares
now via the Internet, by telephone, or by signing, dating, and returning the proxy card or voting instruction form. If you only
received a Notice of Internet Availability of Proxy Materials, you may request a paper proxy card to submit your vote by mail,
if you prefer. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting online.
If you are a beneficial owner of shares, your broker will not be able to vote your shares with respect to the election of directors
and most of the other matters presented during the meeting, unless you have given your broker specific instructions to do so.
We strongly encourage you to vote and greatly appreciate your prompt response.
Submitting
your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option.
Asking
Questions: The
virtual meeting platform will provide shareholders with all the comparable rights as an in-person meeting.
| • | Shareholders
may submit questions for the meeting in advance at www.proxyvote.com |
| • | Shareholders
may also submit questions live during the meeting at www.virtualshareholdermeeting.com/CEG2025 |
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proxy Summary
Calpine
Acquisition
Calpine
Acquisition
On
January 10, 2025, we entered into a definitive agreement with Calpine Corporation (Calpine) pursuant to which Constellation
will acquire Calpine. Calpine is the largest U.S. producer of energy from low-emission natural gas generation and has a
renewable energy portfolio which includes the largest geothermal generation operation in the U.S. The acquisition will be
structured via a cash and stock transaction composed of 50 million shares of Constellation stock and $4.5 billion in cash,
plus the assumption of approximately $12.7 billion of Calpine net debt.
Following
the acquisition, Constellation, already the nation’s largest producer of 24/7 emissions-free electricity, will be the nation’s
leading clean energy provider, opening opportunities to serve more customers coast-to-coast with a broader array of energy and
sustainability products. Both companies have been at the forefront of America’s transition to cleaner, more reliable and
secure energy, and those shared values will guide us as we pursue investments in new and existing technologies to meet rising
demand. Together, we will be better positioned to bring accelerated investment in everything from zero-emission nuclear to battery
storage that will power our economy in a way that puts people and our environment first.
Other
strategic benefits of the transaction include:
| • | Couples
the largest producer of clean, emissions-free energy with the reliable, dispatchable
natural gas assets of Calpine, resulting in Constellation having a diverse, coast-to-coast
portfolio of zero- and low-emission generation assets and an expanded footprint in the
fastest growing area of demand for power: Following the acquisition of Calpine, Constellation
will have nearly 60 gigawatts of capacity from zero- and low-emission sources, including
nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage.
Constellation’s footprint will span the continental U.S. and include a significantly
expanded presence in Texas, the fastest growing market for power demand, as well as other
key strategic states. |
| • | Combines
best-in-class retail and commercial businesses with a premier customer solutions platform,
establishing a coast-to-coast presence and providing opportunities to serve more customers
with a broader array of energy and sustainability products to meet increasing demand:
The transaction will expand Constellation’s industry-leading customer solutions
business to position the combined company as the leading U.S. retail electricity supplier,
helping 2.5 million homes and businesses nationwide achieve their energy and sustainability
needs. The combined company will offer customers a broader array of reliable energy solutions,
including new product offerings that can integrate nuclear, renewable and natural gas technologies tailored to customers’ unique needs. Customers also will enjoy more predictability at competitive prices as a result of the two companies’ complementary generation assets, load, fuel diversity, geographies and product offerings. |
| • | Reinforces
Constellation’s position as the largest clean energy producer with the lowest carbon
emissions intensity in the U.S.: Constellation is already the top clean energy producer
in the U.S., providing 10% of the nation’s emissions-free energy. Joining Calpine
with Constellation broadens this position by increasing Constellation’s renewable
portfolio, including the Geysers facility in Northern California, the largest geothermal
generator in the U.S. |
| • | Strengthens
shared commitment to supporting clean, healthy and growing communities through workforce
development, philanthropy and community investment: Together, the combined company
will increase its positive impact, serving as an economic engine for local communities
through jobs, tax payments and other economic activity. The combined company will continue
its commitment to communities through more than $21.1 million in combined annual Foundation,
corporate and employee philanthropy, in addition to thousands of employee volunteer hours,
with a focus on economically disadvantaged communities. |
The
transaction is expected to close during the fourth quarter of 2025, subject to the satisfaction of customary closing conditions,
including certain regulatory approvals at the federal and state levels.
The
remainder of this summary and the proxy statement describe the current strategy, compensation and governance policies and structure,
etc. of Constellation as of the date of the mailing date of this proxy statement, and, therefore, does not reflect or provide
any pro forma information regarding the combination of Constellation and Calpine.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proxy Summary
Business
Strategy
Business
Strategy
In
a rapidly changing world, demand for clean and reliable power is growing. Customers and policymakers are growing increasingly
aware that America needs clean and dependable power generation to grow our data-driven economy, protect our national security,
and ensure America’s economic prosperity for future generations. With revenues of more than $23.568 billion in 2024 and
total assets of $52.926 billion, Constellation is both the nation’s largest 24/7 emissions-free energy producer and a leading
competitive energy supplier, producing approximately 10% of the nation’s emissions-free energy and helping America transition
to a clean energy future.
We
aim to serve as a strategic partner to businesses and the federal, state and local governments that are driving economic growth
by powering the data economy and new digital infrastructure. We are a leading advocate at the federal and state levels for policies
that will preserve and grow clean, reliable and secure energy. We are committed to a reliable, clean energy future while maintaining
a strong balance sheet.
Our
nearly 90% emissions-free generation fleet includes nuclear, wind, solar, hydroelectric and efficient, low-emitting natural gas
assets. Our fleet has a total generation capacity of 31,676 megawatts (MW). Through our integrated business operations, we sell
electricity, natural gas and other energy-related products and sustainable solutions to various types of customers, including
distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive
markets across multiple geographic regions.
In
the coming years, our country will need even more reliable and clean megawatts—the most important energy commodity in our
economy. Constellation is uniquely positioned to offer them to customers whether through on-site applications like digital infrastructure
projects or off-site solutions like Constellation Offsite Renewables (CORe) or hourly carbon-free energy matching.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proxy Summary
Compensation
Program Structure
Compensation
Program Structure
A
significant portion of compensation for the CEO (and other named executive officers (NEOs) listed in the compensation tables of
this proxy statement) is tied to the achievement of short-term and long-term financial and operational goals. The components of
compensation paid to our CEO (and the other NEOs), except for base salary, are “at-risk”. The table below illustrates
components for total direct compensation.
Executive
Compensation
Incentive
Pay Strongly Aligned to Stock Performance Relative to Peer Group Average and S&P 500
One
of the key objectives of our executive compensation program is to align the interests of our executives with those of our shareholders.
We believe that our compensation program reflects this objective by linking a significant portion of our executives’ pay
to the achievement of financial and strategic goals that drive shareholder value creation. As a result, our executives’
compensation varies with our performance and the market value of our common stock.
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Since 2022, we have consistently delivered robust financial results and outstanding shareholder returns. Our total shareholder return (TSR) since the separation stands at 362.61% as of December 31, 2024, significantly outperforming the S&P 500 Index at 35.42% and our peer group’s average of 53.31%. Furthermore, our one-year TSR was 92.73%, compared to 25.02% for the S&P 500 Index and an average of 22.08% for our peer group. These achievements underscore the successful implementation of our strategy and our commitment to operational excellence. |
CEO
Target Compensation
The
Compensation Committee reviews and recommends, and the Board of Directors considers and approves, the compensation of our CEO
annually, based on a comprehensive evaluation of his individual performance and our company’s performance relative to our
peers and the market. The Compensation Committee considers both quantitative and qualitative factors, such as financial results,
strategic initiatives, leadership development, succession planning, stakeholder engagement, corporate responsibility, and risk
management. The committee
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proxy Summary
Shareholder
Engagement
Shareholder
Engagement
We
believe that engaging with our investors provides valuable insights for the Board and its committees with respect to
investor perspectives and priorities. In the fall and winter of 2024, Constellation contacted shareholders holding, in the
aggregate, over 50% of our outstanding shares with offers to engage. This outreach was in addition to regular communication
between our investor relations team and shareholders (e.g., quarterly earnings calls, analyst meetings, and investor and
industry conferences). Shareholders who accepted invitations to engage represented an aggregate of approximately 25% of our
outstanding shares. The Constellation engagement team was comprised of members from our Office of Corporate Governance,
Investor Relations, Sustainability, Compensation, and Human Resources departments. The engagement team met with shareholders
to discuss a wide variety of issues, including business operations and strategy, sustainability and climate matters,
executive compensation, human capital, and board composition and effectiveness. Engaging openly with our shareholders on
these and other topics drives increased accountability, improves decision making, and ultimately creates long-term value. The
feedback received from shareholders and other stakeholders was shared with each Board committee and the Board, as
appropriate. Our shareholder engagement process is described below.
Responsiveness
to Shareholder Feedback
Our
Audit & Risk, Corporate Governance, Compensation and Nuclear Oversight committees will consider the adoption or recommend
Board approval of suggested enhancements to policies, practices, or disclosures to meet investor concerns or expectations, if
such action is deemed to be in the best interests of the company and its shareholders.
Shareholder
feedback from the 2024 engagement cycle indicated that there were no desired material changes to our sustainability and governance
policies and practices at this time. During our engagement meetings, we received generally supportive comments regarding our compensation
structure, sustainability practices, and governance structure.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Cautionary
Statements Regarding Forward-Looking Information
Cautionary
Statements Regarding Forward-Looking Information
Cautionary
Statements Regarding Forward-Looking Information
This
proxy statement contains information that may constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of
1934, as amended (Exchange Act). We intend the forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the
words “believe,” “expect,” “intend,” “estimate,” “anticipate,”
“project,” “target,” “forecast,” “aim,” “should,”
“will,” “may” and similar expressions or by using future dates in connection with any discussion of,
among other things, the proposed transaction between Constellation and Calpine Corporation, the expected closing of the
proposed transaction and the timing thereof, strategies and plans, synergies, opportunities and anticipated future
performance of the combined company, the construction or operation of new or existing facilities, operating
performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to
volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational
cash improvements, changes in global supply and demand conditions and prices for our products, statements regarding our
future strategies, products and innovations, statements regarding our greenhouse gas emissions intensity reduction goals, and
statements expressing general views about future operating results. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but
instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and
outside of our control. It is possible that our actual results and financial condition may differ, possibly materially, from
the anticipated results and financial condition indicated in these forward-looking statements. Risks and uncertainties
include, but are not limited to, the risks and uncertainties described in (a) Part I, ITEM 1A. Risk Factors, and (b) Part II,
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on
Form 10-K for the year ended December 31, 2024, and those described from time to time in our future reports filed with the
Securities and Exchange Commission.
Readers
are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this proxy statement.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially
from our historical experience and our present expectations or projections. We do not undertake any obligation to publicly release
any revision to these forward-looking statements to reflect events or circumstances after the date of this proxy statement.
Throughout
this proxy statement, we refer to certain non-GAAP measures, including adjusted Operating Earnings and free cash flow. See the
reconciliation to the corresponding GAAP measure set forth in Appendix A of this proxy statement.
References
throughout the proxy statement to “GHG emissions” refer to Scope 1 and Scope 2 emissions.
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Constellation
Energy Corporation 2025 Proxy Statement |
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About Us
Sustainability
Overview
Sustainability
Overview
Our
sustainability principles are central to our business strategy and value proposition. Our values and sustainability principles
guide us in our central purpose. We are focused on driving action in these critical focus areas:
Providing
Emissions-Free Energy
and Climate Mitigation |
C&I
Customer
Transformation |
Innovation
and
Technology Enablement |
Emissions-Free
Policy Advocacy |
Community
Empowerment |
Commitment
to Respect,
Belonging, Inclusion and Equal
Opportunity |
Strong
Corporate Governance
and Risk Management |
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Board
Oversight of Sustainability
We
embed sustainability throughout our business activities and strategy. The Board oversees sustainability issues, including, but
not limited to, evaluating business risks related to climate change, reviewing investment and divestment opportunities, holding
ongoing discussions around human capital and corporate culture, and reviewing political contributions. The Board has four standing
committees with dedicated responsibilities outlined in each, which are reviewed annually. The Board has delegated to each committee
specific aspects of our sustainability oversight.
| • | The
Corporate Governance Committee is specifically tasked with overseeing sustainability
and climate change strategies, including efforts to protect and improve the environment. |
| • | The
Audit & Risk Committee reviews SEC disclosures related to environmental and cyber
security risks and maintains oversight of the finance organization and the company’s
independent auditor. The committee also reviews the processes by which the company assesses
and manages sustainability risks as part of the broader enterprise risk management framework. |
| • | The
Nuclear Oversight Committee is specifically tasked with overseeing environmental and
safety laws, regulations and standards applicable to ownership and operation of nuclear
power facilities. This includes compliance with policies and procedures to manage and
mitigate risks associated with nuclear assets, and oversight of both cyber security risks
and environmental, health and safety issues related to nuclear generating facilities. |
| • | The
Compensation Committee is actively involved in reviewing policies related to executive
compensation, human capital and talent development, and monitoring and shaping corporate
culture. |
We
also have specific executive leaders responsible for advancing our sustainability principles. For instance, the Constellation
Sustainability Council, led by the Vice President of Sustainability, is comprised of executive representatives from key functions
within the company. The council meets four times per year to review sustainability policies and initiatives, ensure strategic
alignment, discuss emerging trends, and make informed suggestions to senior executive leadership.
Sustainability
Sustainability
and stewardship drive our business and our growth. When many states, communities and major corporations are setting ambitious
climate goals and seeking greater access to clean and reliable energy, we stand ready to meet the accelerating demand. Our business
model, coupled with investments in innovation and our close customer relationships, will continue to fuel our growth.
Our
sustainable business strategy is focused on accelerating the nation’s energy transition to a clean energy future and delivering
long-term value for our customers, communities, employees and shareholders. Our nuclear fleet, which produces approximately 10
percent of the emissions-free energy in the U.S., is a critical driver of the energy transition, providing resilient, secure and
readily dispatchable emissions-free energy. Our unique blend of reliable and clean assets enables us to meet customer demand at
every hour of every day, throughout the year. We also support the local communities in which we operate so that they share in
the economic benefits of clean energy.
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Constellation
Energy Corporation 2025 Proxy Statement |
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About Us
Sustainability
Our
Renewable Fleet
Constellation
operates a robust fleet of renewables consisting of hydroelectric, wind and solar power which have a combined capacity of almost
2.6 GW.
We
are working to efficiently capture growth opportunities within our existing fleet through wind repowering projects. In 2023, we
commenced a $350 million effort to increase the output and lifespan of our renewable energy portfolio, beginning at our Criterion
wind project in Maryland where we are repowering 28 turbines with new, state-of-the-art components that will allow us to increase
clean energy production by 79,000 MWh per year and run the project for an additional 20 years.
Innovation
Our
culture embraces innovation to achieve a clean energy future. We focus on three key trends or categories of technological transformation:
Decarbonization, Digitalization and Diversification. We collaborate with customers, suppliers, universities, governments, national
labs and startups to support innovations that will accelerate the energy transition. This includes seeking federal and state government
grants to demonstrate and deploy clean energy technologies. We also invest in and commercialize technological advancements essential
to achieve a clean and reliable energy future.
Clean
Energy Centers
Our
nuclear generation facilities are clean energy centers that we are leveraging to explore co-location of customer load,
utilization of direct air capture of carbon dioxide, and production of clean hydrogen and other sustainable fuels to reduce
industrial emissions. Each of our nuclear stations has positive benefits beyond its current use as a baseload emissions-free
energy source and provider of electricity to the electric grid. These clean energy centers can satisfy the growing demand for
clean and flexible energy. Additionally, other end users may locate their facilities adjacent to our nuclear plants—or
behind the meter—so they can take direct advantage of our clean, 24/7 emissions-free electricity. Due in part to the
increasing demand for digital infrastructure projects to fuel new technologies like artificial intelligence, major tech
companies are expected to make significant investments in large data centers over the next five years, which would lead to
increased demand for clean, reliable sources of electricity that will run 24/7. Accordingly, the co-location of data centers
with our clean energy centers may provide opportunities for additional value creation in the future. As the nucleus of the
clean energy centers, our nuclear plants will serve as a highly valued and essential energy solution well past
mid-century.
Further
Information
For
additional information regarding our sustainability strategy and program as well as a copy of our 2024 sustainability report,
please visit the company’s website at www.constellationenergy.com.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proposal
1:
Election
of Directors
We
currently have a classified board structure. In accordance with our bylaws, since the 2023 Annual Meeting of Shareholders this
structure has been in the process of being phased out over a three-year period. The election of directors at the 2025 Annual Meeting
of Shareholders will be the final election where only a single class of directors will be elected. Commencing at the 2026 Annual
Meeting of Shareholders our Board will no longer be divided into three classes and each of our directors will stand for election
annually for one-year terms.
The
Corporate Governance Committee has recommended, and the Board has nominated, our current Class III directors, Yves de Balmann,
Robert Lawless, Peter Oppenheimer, Eileen Paterson and John Richardson for re-election by shareholders as Class III directors.
The initial term of the Class III directors will expire at the 2025 Annual Meeting of Shareholders. Upon re-election, each such
director will serve a one-year term through 2026 or until their successor is elected and qualified, or his or her earlier death,
resignation or removal.
Each
director shall be elected by a plurality of the votes cast. However, under our bylaws, for any incumbent director to become a
nominee for election by the shareholders as a director, that director must tender an irrevocable offer to resign from the Board
in the event that the director receives a plurality of the votes cast but fails to receive a majority of the votes cast in an
uncontested election.
In
an uncontested election, if an incumbent director receives a plurality of the votes cast, but does not receive a majority of
the votes cast, the Corporate Governance Committee, or such other independent committee designated by the Board, must make a
recommendation to the Board as to whether to accept or reject the offer of resignation of the incumbent director, or whether
other action should be taken. The independent members of the Board will consider the Corporate Governance Committee’s
recommendation and publicly disclose the Board’s decision and the basis for that decision within 90 days from the date
of the certification of the final election results. The director not receiving a majority of the votes cast will not
participate in the Corporate Governance Committee’s recommendation or the Board’s decision regarding the offer to
resign. For this purpose, the term “a majority of the votes cast” means that the number of votes cast
“for” a director’s election exceeds the number of votes cast “against” the director’s
election. Further, a “contested election” is one in which the Corporate Secretary receives a notice that a
shareholder has nominated or intends to nominate a person for election to the Board in compliance with our bylaws and such
nomination has not been subsequently withdrawn on or prior to the tenth day before the notice of meeting is first
mailed.
A
brief statement about the background and qualifications of each nominee and each continuing director is provided on the following
pages. No director has a familial relationship to any other director, nominee for director or executive officer.
All
of the nominees are presently members of the Board, and the Board is recommending that all five nominees be elected. Each nominee
has informed the Board that he or she is willing to serve as a director. If any nominee for whom you have voted becomes unable
to serve, your proxy may be voted for another person designated by the Board. It is the intention of the proxyholders to vote
proxies for the election of the nominees named in this proxy statement, unless such authority is withheld.
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Constellation
Energy Corporation 2025 Proxy Statement |
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Proposal 1: Election of Directors
Class
I Directors
Biographies
of Continuing Class I Directors with Terms Expiring at the 2026 Annual Meeting
The
Board is classified until the 2026 Annual Meeting and, therefore, the following individuals who are Class I directors will not
stand for re-election at the 2025 Annual Meeting of Shareholders.
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Joseph
Dominguez – Non- Independent
Director
|
| President and Chief Executive Officer — Constellation |
| |
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| Age:
62 |
Director
Since:
February 2022 |
Committees:
•
None
|
Other
current public directorships:
•
KBR Inc.
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| |
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Mr.
Dominguez is the President and Chief Executive Officer of Constellation. As President and Chief Executive Officer, Mr. Dominguez
oversees Constellation’s reliable, emissions-free energy fleet of nuclear, wind, solar, hydro-electric and natural gas facilities
in 19 states, and the nation’s top competitive retail and commodities business, which provides electricity, natural gas
and other energy-related products and services to two million residential, public sector and business customers nationwide, including
more than three-fourths of the Fortune 100.
Previously,
Mr. Dominguez served as Chief Executive Officer of ComEd, a subsidiary of Exelon Corporation. In that role, he was responsible
for the safe and reliable delivery of electricity to customers and oversight of the management of the electric grid for over four
million residential and business customers in Chicago and most of northern Illinois.
Prior
to joining ComEd, Mr. Dominguez served as Executive Vice President of Governmental and Regulatory affairs and Public Policy for
Exelon, where he led the development and implementation of federal, state, and regional governmental, regulatory, and public policy
strategies. Mr. Dominguez was also a partner in the law firm of White and Williams, LLP, with a broad-based litigation practice
counseling large and small corporations, institutions and government entities. Prior to joining White and Williams LLP, Mr. Dominguez
served as an Assistant U.S. Attorney in the Eastern District of Pennsylvania.
Relevant
experience, attributes or skills that qualify candidate for Board membership:
As the President and Chief Executive Officer of Constellation and through his prior experience at ComEd, Exelon and as a practicing attorney, Mr. Dominguez brings to the Board an extensive knowledge and understanding of the company's business, operations, finances, risks and strategy, as well as extensive regulatory, risk management and oversight
expertise. His diverse experience and deep knowledge of the energy industry is crucial to the company's strategic planning and operational success. As the only employee-director on the Board, Mr. Dominguez is able to provide the Board with management's view of all facets of the company, supplying the Board with invaluable information to utilize in overseeing the business and affairs of the company.
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Constellation
Energy Corporation 2025 Proxy Statement |
27 |
Proposal 1: Election of Directors
Class
II Directors
Biographies
of Continuing Class II Directors with Terms Expiring at the 2026 Annual Meeting
As
explained above, the Board is classified until the 2026 Annual Meeting and, therefore, the following individuals who are Class
II directors will not stand for re-election at the 2025 Annual Meeting of Shareholders.
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Bradley
M. Halverson – Independent
Director
|
Former Group President, Financial Products and Corporate
Services and Chief Financial Officer — Caterpillar Inc. |
| |
|
|
| Age:
64 |
Director
Since:
February 2022 |
Committees:
•
Audit & Risk (Chair)
•
Compensation
|
Other
current public directorships:
•
Sysco Corporation (since 2016)
•
Lear Corporation (since 2020)
|
| |
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|
Mr.
Halverson is the former Group President, Financial Products and Corporate Services and Chief Financial Officer of Caterpillar,
Inc., the world’s leading manufacturer of construction and mining equipment, diesel and gas engines, turbines and locomotives.
Prior to serving in that leadership role from 2013 to 2018, Mr. Halverson held a series of positions with increasing responsibility
during his 30-year tenure with the company, including: Vice President, Financial Services from 2010 to 2013; Corporate Controller,
Global Finance & Strategic Services from 2004 to 2010; and Corporate Business Development Manager, Corporate Services from
2002 to 2004, among others since joining the company in 1988.
Prior
to his work at Caterpillar, Mr. Halverson worked as Financial Reporting Manager with Rolscreen Company and, before that, he
worked in a series of roles with Price Waterhouse LLP. Mr. Halverson currently serves as: an independent director, Chair of
the Audit Committee and a member of the Compensation and Leadership Development and Executive Committees of the board of
Sysco Corporation, a food distributor; and an independent director and Chair of the Audit Committee and a member of the
People & Compensation Committee of the board of Lear Corporation, a global automotive technology company. He previously
served as an independent director and chair of the Audit Committee of the board of Satellogic, Inc., a company specializing
in Earth-observation satellites, from 2022 to 2024.
He
also served as a director for Custom Truck One Source from 2018-2021. Mr. Halverson currently serves as a member of the board
of trustees of the Easterseals Central Illinois Foundation, and previously served as Chairman of the board of directors of Easterseals
Central Illinois and a member of the OSF St. Francis Medical Center Community Foundation Board.
Relevant
experience, attributes or skills that qualify director for Board membership:
Mr. Halverson's deep expertise in accounting, financial reporting and corporate finance, and his leadership experience in the areas of executive leadership and management, corporate strategy development, mergers and acquisitions, risk management, information technology systems oversight and international business provides the Board with critical perspectives on important strategic, financial, and other public company issues. In addition, Mr. Halverson provides the
board with important insights regarding the financial services industry and financial markets that are relevant to the Board's oversight of critical financial matters.
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Constellation
Energy Corporation 2025 Proxy Statement |
29 |
Proposal 1: Election of Directors
Class
II Directors
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Nneka
Rimmer – Independent
Director
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| Former President, Global Flavors & Extracts — McCormick & Company, Inc. |
| |
|
|
| Age:
53 |
Director
Since:
November 2022 |
Committees:
•
Audit & Risk
•
Nuclear Oversight
|
Other
current public directorships:
•
Energizer Holdings, Inc. (since 2018)
|
| |
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Prior
to her retirement in 2021, Ms. Rimmer served as President, Global Flavors & Extracts, for McCormick & Company, Inc.,
a global leader that manufactures, markets and distributes spices, seasoning mixes, condiments and other products to the food
industry. Ms. Rimmer held a series of roles with increasing responsibility at McCormick & Company, including:
Senior Vice President, Business Transformation, from 2019-2020, Senior Vice President, Strategy and Global Enablement, from
2017-2019; and Senior Vice President, Corporate Strategy & Development, from 2015-2017.
Prior
to joining McCormick, Ms. Rimmer spent 15 years with Boston Consulting Group (BCG) focused on advising Fortune 100 C-Suite executives
and board directors on global growth, M&A strategy, talent development and change management. She rose to become BCG’s
first Black female partner, with leadership positions across the consumer goods and retail, public sector and strategy practices.
Ms.
Rimmer currently serves as an independent director and member of the Audit and Human Capital Committees of the board of Energizer
Holdings, Inc., a manufacturer of batteries and other products. She is also on the board of Wellness Pet LLC, a private equity-
owned consumer products company. Additionally, Ms. Rimmer serves as a trustee of the University of Maryland, Baltimore.
Relevant
experience, attributes or skills that qualify director for Board membership:
Ms. Rimmer's extensive financial, leadership and risk management skills that she developed by serving in various senior leadership roles at McCormick & Company, combined with her broad experience serving on boards and key committees of other companies, provides the Board with relevant insights and expertise when overseeing Constellation's strategy, risk management and growth. Ms. Rimmer's deep experience with identifying and driving growth opportunities through mergers, acquisitions and other strategic investments provides the Board with valuable perspectives when considering potential opportunities for growth.
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Constellation
Energy Corporation 2025 Proxy Statement |
31 |
Corporate
Governance
Constellation
and the Board are committed to maintaining the highest standards of corporate governance, which we believe are essential for sustained
success and creating long-term shareholder value. We believe our strong corporate governance practices will help us achieve our
performance goals and maintain the trust and confidence of our shareholders, employees, customers, regulators, and other stakeholders.
Director
Qualification and Nomination Criteria
Effective
oversight of Constellation’s strategic direction requires our Board of Directors to be composed of individuals with diverse
backgrounds and perspectives who possess experience, attributes, skills and core competencies important to the company. The Corporate
Governance Committee identifies and recommends director nominees for election to the Board and periodically retains a search firm
to assist with the identification of potential candidates. The Corporate Governance Committee may also consider nominees suggested
by other sources, including incumbent Board members and shareholders.
The
Corporate Governance Committee and the Board determine the appropriate mix of skills and characteristics required to meet
the needs of the Board as a whole and evaluate the qualifications of each director candidate in accordance with the criteria
described in the director qualification standards section of our Corporate Governance Principles. The Board believes that
directors should be selected so that the Board represents diverse experience at various policy-making and executive levels in
business, government, and in sectors that are relevant to the company’s business operations.
| |
In
evaluating the qualifications of director nominees, the Corporate Governance Committee considers factors including, but not
limited to, the following: |
|
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|
| |
Integrity
Embodiment
of the highest personal and professional ethics, integrity, and values |
Judgment
Possession
of an inquiring and independent mind, practical wisdom, and mature judgment |
|
| |
Industry
Background
Broad
training and experience at the policy-making level in business, government, education, technology, or other sectors relevant to the
company's business and operations |
Skills/Expertise
Expertise
that is useful to the enterprise and complementary to the background and experience of other directors |
|
| |
Diligence
Willingness
to remain current with industry and other developments relevant to Constellation’s strategic direction |
Time
Commitment
Willingness
to devote the time required to execute the duties and responsibilities of Board membership and a commitment to serve over a period
of years to develop knowledge about Constellation’s operations |
|
| |
Loyalty
Commitment
to representing the long-term interests of shareholders, customers, employees, and communities served by Constellation |
Independence
Involvement
only in activities or interests that do not conflict with responsibilities to Constellation and its shareholders |
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The
director selection criteria described above are evaluated by the Corporate Governance Committee each time a new candidate is considered
for Board membership. The Corporate Governance Committee and the Board may consider other factors they deem to be relevant to
the success of a publicly traded company operating in the energy sector. As part of the annual nomination process, the Corporate
Governance Committee reviews the qualifications of each director nominee, including currently serving Board members, and reports
its findings to the Board. On February 10, 2025, the Corporate Governance Committee determined that each Board nominee satisfied
the criteria described above and advised the Board that each of the director nominees listed under “Proposal 1: Election
of Directors” is qualified to serve on the Board.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
32 |
Corporate
Governance
Board
Leadership Structure
Board
Leadership Structure
Constellation’s
bylaws permit the members of the Board to determine the leadership structure of the Board, including whether the roles of
Board Chair and Chief Executive Officer should be performed by the same individual or whether the roles should be performed
by separate individuals. As a matter of policy, the Board believes that separation of these functions is not required, and
whether to combine the roles or not is a matter for the Board’s sole discretion, taking into consideration the current
and anticipated circumstances of the company, the skills and experiences of the individual or individuals in question, and
the leadership composition of the Board. The Board believes that it is important to retain the flexibility to make this
determination at any given point in time based on what it believes will provide the best leadership structure, considering
the needs of the company at that time. Currently, the roles of the Chief Executive Officer and Board Chair are
separated.
The
Board is committed to continued independent oversight at all times, and our Corporate Governance Principles provide that the independent
members of the Board shall select and elect a Lead Independent Director in the event the Board Chair and Chief Executive Officer
roles are held by the same individual, or the person holding the role of Board Chair is not independent under the company’s
independence standards for directors. At any time during which the position of Lead Independent Director may be required, but
is vacant due to timing considerations, the Chair of the Corporate Governance Committee will serve as the Lead Independent Director.
The
duties of the Lead Independent Director include:
| • | Assist
the Board Chair in his or her duties as requested. |
| • | Assume
the duties of the Board Chair when the Board Chair is not available to perform his or
her duties. |
| • | Call
special Board meetings as appropriate. |
| • | Lead,
in conjunction with the Corporate Governance and Compensation committees, the annual
process for evaluating the performance and compensation of the CEO and communicate to
the CEO the results of the evaluation. |
| • | If
the Board Chair is employed by the company, lead, in conjunction with the Corporate Governance
and Compensation committees, the annual process for evaluating the performance and compensation
of the Board Chair and communicate to the Board Chair the results of the evaluation. |
| • | Lead,
in conjunction with the Corporate Governance Committee, the process for annual review
and evaluation of Board and committee performance. |
| • | Preside
at executive sessions of the independent directors. |
| • | Review
Board meeting schedules, agendas, and materials and provide input to committee chairs
on committee schedules, agendas, and materials. |
| • | Serve
as principal liaison between the independent directors and management and between independent
directors and the Board Chair, when needed. |
Board
Responsibilities
Constellation’s
operations are managed by executive officers under the direction of the Board of Directors. The Board considers the interests
of all its constituencies, including: shareholders, customers, employees, and the communities we serve. The Board is committed
to ensuring that Constellation conducts business in accordance with the highest standards of ethics, integrity, and transparency.
The
Board’s responsibilities include, but are not limited to, the oversight of:
| • | the
management of the company’s business and the assessment of the company’s
business risks; |
| • | the
processes for maintaining our integrity regarding our financial statements and other
public disclosures, and compliance with laws and ethical principles; and |
| • | talent
management and succession planning for the CEO and other executives. |
The
Board also reviews and approves major financial objectives and strategic and operating plans.
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|
Constellation
Energy Corporation 2025 Proxy Statement |
36 |
Corporate
Governance
Board
Committees
The
Board discharges its responsibilities through regularly scheduled meetings as well as through telephonic meetings, actions
by written consent and other communications with management, as appropriate. The non-employee directors hold regularly
scheduled executive sessions without management. The directors spend considerable time preparing for Board and committee
meetings. Directors are expected to attend all meetings of the Board and the committees upon which they serve, and all Annual
Meetings of Shareholders. During the fiscal year ended December 31, 2024, the Board held six meetings and each of the
directors attended more than 75% of the meetings of the Board and the committees on which he or she served. Attendance at
Board and committee meetings during 2024 was 100%.
Board
Committees
Constellation
has four standing Board committees: Audit & Risk, Compensation, Corporate Governance, and Nuclear Oversight. Each committee
is comprised exclusively of independent directors.
Each
committee is governed by a charter stating its responsibilities. The charters are available on the company’s website at
www.Constellationenergy.com on the Board committees page and in print to any shareholder who requests a copy from Constellation’s
Corporate Secretary. The committee charters are regularly reviewed and updated to incorporate best practices and prevailing governance
trends.
Each
committee charter gives the committee authority and discretion to retain and terminate the services of one or more outside advisors
and consultants to assist it in performing its duties. Each committee has the sole authority to approve such advisors’ and
consultants’ fees and other retention terms, and the company funds the cost of committee advisors and consultants.
The
charters of the Audit & Risk, Compensation, Corporate Governance and Nuclear Oversight committees require that each committee
perform an annual self-evaluation, review its charter each year and meet at least four times each year.
Committee
Membership as of March 1, 2025
| Director |
Audit
and Risk |
Compensation |
Corporate
Governance |
Nuclear
Oversight |
| de
Balmann |
|
|
✔ |
|
| Dominguez(1) |
— |
— |
— |
— |
| Halverson |
|
✔ |
|
|
| Harrington |
✔ |
|
|
|
| Holzrichter |
✔ |
✔ |
|
|
| Jamil |
|
✔ |
|
✔ |
| Khandpur |
|
✔ |
✔ |
|
| Lawless |
|
|
✔ |
|
| Oppenheimer |
✔ |
✔ |
|
|
| Paterson |
|
|
✔ |
✔ |
| Richardson |
✔ |
|
✔ |
|
| Rimmer |
✔ |
|
|
✔ |
=
Chair of Committee
| (1) | Mr.
Dominguez, our President and CEO, is not a member of these committees, however, he attends
all committee meetings and provides input and insight, as appropriate. |
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
37 |
Corporate
Governance
Board
Committees
Committee
Membership Appointments
The
Board regularly reviews committee composition to ensure that the skills represented on each committee are appropriate in light
of the company’s stage of development and emerging governance trends. Following the retirement of Ms. Brlas in December
2024, Mr. Halverson was appointed Chair of the Audit & Risk Committee. Based on a review of their background and expertise,
Mr. Oppenheimer was appointed to the Audit & Risk and Compensation committees, and Ms. Paterson was appointed to the Nuclear
Oversight and Corporate Governance committees following their election to the Board in December 2024.
Audit
& Risk Committee
The
Audit & Risk Committee’s duties and responsibilities include:
| • | reviewing
and discussing with management and the company’s independent registered public
accounting firm matters related to the annual audited financial statements, quarterly
financial statements, earnings press releases and the accounting principles and policies
applied; |
| • | considering
and reviewing with management and the independent registered public accounting firm matters
related to the company’s internal controls over financial reporting; |
| • | reviewing
the responsibilities, staffing and performance of the company’s internal audit
function; |
| • | reviewing
issues that arise with respect to the company’s compliance with legal or regulatory
requirements and corporate policies dealing with business conduct; |
| • | appointing,
compensating, retaining, and overseeing the company’s independent registered public
accounting firm, while possessing the sole authority to approve all audit engagement
fees and terms as well as all non-audit engagements with such firm; and |
| • | reviewing
the policies and processes established by management to identify, assess, monitor, manage
and control the company’s material strategic, financial, operational, regulatory,
reputational and other risks and risk exposures. |
During
the fiscal year ended December 31, 2024, the Audit & Risk Committee held five meetings.
The
charter also requires the Audit & Risk Committee membership to be comprised of three or more directors that satisfy the independence
requirements for membership on the Audit & Risk Committee.
Our
Board has determined that each of the Audit & Risk Committee’s members satisfy the applicable independence and
other requirements of Nasdaq and the SEC for audit committees and that Ms. Rimmer, Mr. Halverson, Mr. Harrington and Mr.
Oppenheimer each qualify as an “audit committee financial expert” as defined under applicable SEC rules.
Compensation
Committee
The
Compensation Committee’s duties and responsibilities include:
| • | assisting
the Board in the establishment of performance criteria, evaluation, and compensation
setting for the Chief Executive Officer; |
| • | electing
and approving the compensation of “executive officers” as defined under Rule
3b-7 of the Securities Exchange Act of 1934; |
| • | overseeing
leadership development and succession planning policies and criteria for executive officer
level positions; |
| • | overseeing
the plans and programs under which short and long-term incentives are awarded to executive
officers and approving performance goals and awards under these plans; |
| • | reviewing
and approving employment agreements, severance, and change in control or similar plans
or agreements, and payments to be made thereunder to any executive officer; |
| • | reviewing
and discussing with management human capital management matters; |
| • | reviewing
and discussing with management the Compensation Discussion and Analysis (“CD&A”)
for inclusion in the company’s proxy statement and determine whether to recommend
to the Board the inclusion of the CD&A in the proxy statement; and |
| • | causing
the Compensation Committee Report to be prepared for inclusion in the annual proxy statement. |
During
the fiscal year ended December 31, 2024, the Compensation Committee held four meetings. The charter also requires the Compensation
Committee to be composed of three or more independent non-employee directors.
The
Compensation Committee has retained Meridian Compensation Partners, LLC (Meridian) as its consultant to assist it in evaluating
executive compensation. Meridian reports directly to the Compensation Committee. The Compensation Committee retains sole authority
to hire the consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and
terminate its engagement. A representative of Meridian attended all meetings of the Compensation Committee in 2024.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
38 |
Corporate
Governance
Board
Committees
Meridian
provides various executive compensation consulting services to the Compensation Committee, which generally include advising the
Compensation Committee on the principal aspects of our executive compensation program, changing industry practices and providing
market information and analysis regarding the competitiveness of our program design.
During
2024, Meridian performed several services, including the following:
| • | provided
presentations on executive compensation trends, best practices and recent developments; |
| • | prepared
competitive assessments by position for each element of compensation and for compensation
in the aggregate; |
| • | reviewed
drafts and commented on the CD&A and related compensation tables for the proxy statement; |
| • | reviewed
the peer group used for compensation purposes and recommended changes, if appropriate;
and |
| • | attended
executive sessions of the Compensation Committee. |
Meridian
provided no services to management during 2024. The Compensation Committee has assessed the independence of Meridian pursuant
to Nasdaq listing standards and SEC rules and concluded that no conflict of interest exists that would prevent Meridian from
serving as an independent consultant to the Compensation Committee.
Compensation
Committee Interlocks and Insider Participation
During
2024, none of the company’s executive officers served on the board of directors of any entities whose executive officers
serve on the Compensation Committee or our Board. No current member of the Compensation Committee was an executive officer or
employee of the company during 2024 or at any time, and no member had any relationship with the company that would require disclosure
under the SEC rules.
Corporate
Governance Committee
The
Corporate Governance Committee’s duties and responsibilities include:
| • | reviewing
the company’s strategies and efforts to protect and improve the quality of the
environment, including, but not limited to the company’s climate change and sustainability
policies and programs; |
| • | identifying
and evaluating nominees for director and selecting, or recommending that the Board select,
the director nominees for the next Annual Meeting; |
| • | annually
evaluating and recommending to the Board the appropriate size and composition of the
Board; |
| • | periodically
reviewing and making recommendations to the Board on the compensation of non-employee
directors; |
| • | taking
a leadership role in shaping the corporate governance practices of the company; |
| • | periodically
reviewing and making recommendations to the Board regarding revisions to the company’s
Corporate Governance Principles; |
| • | reviewing
and approving any transaction between the company and any related person in accordance
with the company’s Related Person Transactions Policy; and |
| • | reviewing
succession planning and making recommendations to the Board for the positions of Board
Chair, Chief Executive Officer, and President. |
The
charter also requires the Corporate Governance Committee to be composed of three or more independent non-employee directors. During
the fiscal year ended December 31, 2024, the Corporate Governance Committee held four meetings.
Nuclear
Oversight Committee
The
Nuclear Oversight Committee’s duties and responsibilities include oversight of management’s administration of:
| • | the
safety and reliability of the company’s nuclear facilities, with a principal focus
on nuclear safety; |
| • | compliance
with laws, regulations, and standards related to nuclear generation safety and operations; |
| • | compliance
with environmental and safety laws, regulations, and standards applicable to ownership
and operation of nuclear power facilities; |
| • | the
establishment of, and compliance with, policies and procedures to manage and mitigate
risks including cybersecurity risks, associated with the security and integrity of the
company’s nuclear operations and assets; and |
| • | the
operation of the company’s nuclear facilities and the overall organizational effectiveness
of nuclear operations. |
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
39 |
Corporate
Governance
Director
Independence
During
the fiscal year ended December 31, 2024, the Nuclear Oversight Committee held four meetings. Three of the meetings of the Nuclear
Oversight Committee were held at three separate nuclear facility sites and one meeting was held at the company’s three nuclear
plants located in Upstate New York over the course of two days.
Director
Independence
The
Board has incorporated the Nasdaq and SEC independence standards into the company’s independence standards contained in
our Corporate Governance Principles. The Board has affirmatively determined that none of the non-employee directors who served
on the Board in 2024, nor any of the nominees for election, has a material relationship with the company. The Board also has affirmatively
determined that each non-employee director is independent according to the independence standards in the Corporate Governance
Principles.
The
Board has determined that all members of the Audit & Risk Committee are independent within the definitions of independence
of both Nasdaq listing standards and the SEC standards for audit committee members. The Board has affirmatively determined that
each member of the Audit & Risk Committee: (i) did not accept directly or indirectly any consulting, advisory, or other compensatory
fee from the company or any of its subsidiaries; (ii) was not an affiliated person of the company or any of its subsidiaries;
and therefore (iii) satisfied the Nasdaq independence standards for audit committee members.
The
Board has determined that all members of the Compensation Committee are independent within the definitions of independence
of both Nasdaq listing standards and the SEC standards for compensation committee members. The Board has affirmatively
determined that each member of the Compensation Committee: (i) has no material relationship to the company which would impair
such director’s ability to be independent from management in connection with the duties of a compensation committee
member; (ii) was not an affiliated person of the company or any of its subsidiaries; and therefore (iii) satisfied the Nasdaq
independence standards for compensation committee members.
Corporate
Governance Principles
Our
standards of corporate governance are outlined in our Corporate Governance Principles, which in conjunction with our articles
of incorporation, bylaws, Board committee charters and related policies and practices, form the framework for the effective governance
of the company. The Corporate Governance Principles address matters including the Board’s responsibilities and role, Board
structure, director selection, self-evaluations and additional matters such as succession planning and executive stock ownership
requirements. The Corporate Governance Principles are reviewed periodically to incorporate evolving governance trends and to remain
aligned with the needs of the company and its stakeholders.
We make certain corporate governance documents available on our website, www.constellationenergy.com, including the Corporate Governance Principles, bylaws, the charters for each of the Board committees, and the Code of Business
Conduct. These materials are also available in print to any person,
without charge, upon written request to:
Corporate
Secretary
Constellation Energy Corporation
1310 Point Street
Baltimore,
MD 21231-3380
Communicating
with the Board
Shareholders
and other interested persons can communicate with any director or the independent directors as a group by writing to them at Constellation
Energy Corporation, Attn: Office of the Corporate Secretary, 1310 Point Street Baltimore, Maryland 21231- 3380. The Corporate
Secretary will review communications initially and transmit a summary of substantial or material issues to directors, excluding
transmittal of any communications that are commercial advertisements, other forms of solicitation, or general shareholder or customer
service matters.
Related
Person Transactions
Constellation
has adopted a written policy on the review, approval or ratification of transactions with related persons, which is overseen
by the Corporate Governance Committee and is available on our website. The policy provides that the Corporate Governance
Committee will review any proposed, existing, or completed transactions in which the amount involved exceeds $120,000 and in
which any related person had, has, or will have a direct or indirect material interest. In general, related persons are
directors and executive officers and their immediate family members, as well as shareholders beneficially owning 5% or more
of Constellation’s outstanding stock as defined in SEC rules. Related person transactions that are in, or not
inconsistent with, the best interests of Constellation are approved by the Corporate Governance Committee and reported to the
Board. Related person transactions are disclosed in accordance with applicable SEC and other regulatory requirements. There
were no related person transactions identified in 2024.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
40 |
Corporate
Governance
Enterprise
Risk Management
Enterprise
Risk Management
Our
Board maintains oversight of the company’s enterprise risk program, including with respect to commodity markets, market
design, enterprise security (physical and cyber), operating risks and financial performance. Managing business risks of all types,
from strategic, operational, financial, and regulatory risks to global risks like climate change, is central to Constellation’s
business. Our Chief Risk Officer leads the enterprise risk management (“ERM”) team which is responsible for coordinating
Constellation’s risk management program. The program incorporates the Three Lines of Defense Model of governance developed
by the Institute of Internal Auditors, and is designed to anticipate strategic and emerging risks, integrate risk into business
planning, minimize unexpected performance variances, and support growth initiatives within Constellation’s risk appetite.
The
ERM team works collaboratively with business teams to help them identify and assess risks, and to better understand how to manage
risks and establish tolerances that allow for growth while staying within our risk appetite. It also provides an enterprise-wide
view of risks and risk management practices. Regular risk assessments deepen our understanding of risks, enable effective action
to mitigate risks and strengthen our risk culture. We align our key risk indicators with our risk appetite and industry-leading
practices. Successful risk management requires participation from internal teams across our businesses and the ERM team, which
is tasked with identifying and evaluating the most significant risks of the business and the actions needed to manage and mitigate
those risks. We assess and mitigate our environmental risk as part of both the risk program and the ISO 14001:2015 Environmental
Management System.
The
diagram above summarizes the process by which risks are assessed and discussed with the Board and/or the relevant Board
committees. As described in the diagram, business units conduct risk assessments routinely throughout the year and key risk
factors outside of tolerance are reported quarterly to the Board or committee owning the risk. Individual enterprise risks
are presented to the Audit & Risk Committee as needed, but no less than once a year. Annually, each enterprise risk is
evaluated, and its inherent / residual risk (both probability and severity) is assessed for updated placement on the
enterprise risk heat map. We maintain a “bow-tie” analysis, centered on potential risk events. As part of the
analysis, prevention controls and mitigations regarding an underlying threat are evaluated and the related containment
controls and actions, and potential risk impacts are reviewed. The results of this analysis, for individually selected risks,
are reported to the Audit & Risk Committee as needed. The ERM team is in the process of evaluating and evolving the
Enterprise Risk Management framework which may adjust the approach and methods described above.
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42 |
Corporate
Governance
Board
and Committee Self-Evaluations
Cybersecurity
Risk
We
have implemented processes for assessing, identifying and managing material risks from cybersecurity threats to the company, including
governance at the Board level and executive management accountability for the execution of our cyber risk management strategy
and the controls designed to protect our operations. In order to effectively oversee cybersecurity risk management practices,
our Board has delegated direct oversight of cybersecurity risks to its Nuclear Oversight and Audit & Risk committees. The
Nuclear Oversight Committee is tasked with overseeing compliance with policies and procedures to manage and mitigate cybersecurity
risks associated with our nuclear assets. The Audit & Risk Committee oversees policies and processes established by management
to identify, assess, monitor, manage and control the company’s material strategic, financial, operational, regulatory, business
unit, reputational and other risks, including technology and cyber risks.
Our
SVP, Chief Information Officer and VP, Chief Information Security Officer, in conjunction with the Legal department, provide regular
reports to the Board and committees regarding our operational and information technology programs and systems and risks, along
with key risk indicators to track performance of the cybersecurity program. For example, the Chief Information Officer and the
Chief Information Security Officer provide quarterly reports to the Board regarding the effectiveness of particular aspects of
the cybersecurity program.
Emergent
cybersecurity incidents or events are reported to the full Board between scheduled meetings on an ad hoc basis following the
exercise of our incident response and crisis management protocols which were revised and enhanced in 2023, in part, to enable
the company to comply with recently adopted SEC cybersecurity disclosure requirements. As a critical infrastructure owner/
operator, the cybersecurity of our critical assets is regularly inspected by regulatory agencies, including the U.S. Nuclear
Regulatory Commission and the North American Electric Reliability Corporation. Also, the risk and maturity of our enterprise
cyber security program, including our alignment with the National Institute of Standards and Technology (NIST) Cyber Security
Framework, is periodically assessed by independent third parties. Our external auditor, as part of the company’s annual
SOX controls audit, also reviews the effectiveness of the enterprise cyber program.
We
provide company-wide training under our cybersecurity program. As part of the training, all employees and contractors with electronic
access to the company’s network are required to complete security awareness training within 30 days of hire and on annual
basis thereafter. The training familiarizes personnel with cybersecurity risks, how to identify and report threats (including
phishing attacks), and reinforces behavioral expectations as outlined by company policy. Additional training is required for individuals
with elevated access or performing specialized roles.
Director
Retirement Policy
Each
non-employee director must tender their resignation from the Board at or before the next Annual Meeting of Shareholders
following the director’s 80th birthday. The Board has full discretion to decline a tendered resignation if it
determines, based on the recommendation of the Corporate Governance Committee, that it is in the best interests of the
company and its shareholders to extend the director’s continued service for an additional period of time. The Board has
not established term limits for director service, but relies instead on the mandatory retirement age and annual Board
self-evaluations to assure a regular process of Board refreshment. The Board believes term limits could deprive the Board of
the valuable contributions of experienced directors who have extensive knowledge of the company and its
operations.
Board
and Committee Self-Evaluations
Our
Board seeks to operate with the highest degree of effectiveness, supports a dynamic boardroom culture of independent thought,
and has initiated a strong self-evaluation process for the Board and its committees.
Annual
Board Self-Evaluations
The
Board conducts an annual self-assessment of its performance and effectiveness. The process is coordinated by the Board Chair and
the chair of the Corporate Governance Committee and incorporates recommendations from other Board members. The Corporate Governance
Committee oversees and approves the format and framework to be used for Board and committee self-evaluations. In 2024, the Board
and its committees utilized a different electronic platform (provided by Nasdaq) to increase the efficiency of collecting and
assessing director input. The platform was more user-friendly and produced detailed aggregated reports that outlined consensus
opinions and conclusions. The annual self-evaluations follow the process outlined below.
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Constellation
Energy Corporation 2025 Proxy Statement |
43 |
Corporate Governance
New
Director Orientation
New
Director Orientation
Comprehensive
director orientation is overseen by the Corporate Governance Committee and administered by the Corporate Secretary. The
orientation program is tailored to the needs of each new director depending on his or her level of experience serving on
other boards and knowledge of the company or energy industry. Materials provided to new directors include information on the
company’s vision and strategic direction, financial matters, corporate governance practices, Code of Business Conduct,
risk management framework, and other key policies and practices. The onboarding process includes a series of one-on-one
meetings with members of senior management and their staff for deep-dive briefings on business units. New directors are also
invited to tour various company facilities, depending on their orientation needs and preferences.
Continuing
Director Education and Site Visits
Constellation
provides continuing education opportunities for incumbent directors on subjects that aid in their development and assist in the
effective discharge of their duties, including, compliance and corporate governance developments, business-specific learning opportunities,
and briefing sessions on topics that present special risks and opportunities to the company. The Corporate Governance Committee
may recommend committee member rotation if it determines that rotation would enhance a director’s education.
Continuing
director education is provided during portions of Board and committee meetings and is focused on topics necessary to enable the
Board to effectively consider issues before them at that time (such as new regulatory or accounting standards). Education may
take the form of presentations from senior leadership or other subject matter experts within the company, presentations from external
advisors, or “white papers” which are deep dives into timely subjects or topics.
Directors
are also invited from time to time to tour facilities. During these visits, directors are able to interact directly with employees
staffing key functions. Additionally, directors may attend educational seminars and programs sponsored by external organizations.
The company covers the costs related to the attendance of any such external programs and seminars.
Ethics
and Compliance
Constellation
is committed to maintaining a robust, comprehensive corporate ethics and compliance program and recognizes that an effective program
must constantly evolve in the face of changing risks. Constellation’s Ethics and Compliance office provides governance and
oversight of the company’s corporate compliance program and is the primary resource for ethics advice and interpretation
of the Code of Business Conduct. Our Ethics and Compliance office conducts various risk assessments to help identify compliance
risks and assess controls for those risks. It works with business teams on the appropriate design, implementation, and testing
of controls for various compliance obligations. Also, our Chief Ethics and Compliance Officer has a direct reporting relationship
to the Audit & Risk Committee.
We
maintain a detailed Code of Business Conduct, applicable to all employees, officers, and directors across the enterprise and a
Supplier Code of Conduct, which is based on the Code of Business Conduct principles and applies to Constellation supply managed
suppliers, including contractors, consultants, and vendors. The Code of Business Conduct sets out our core values—which
include acting with integrity—and addresses a wide range of topics, including conflicts of interest, workplace conduct,
safety, protecting confidential information and other company assets, and bribery and corruption. The Code of Business Conduct
highlights the importance of speaking up and that retaliation for raising in good faith questions or concerns about potential
violations of the Code of Business Conduct or compliance with applicable laws and regulations is not tolerated.
Generally,
all employees and certain contract workers must participate in annual Code of Business Conduct training. Additionally, non-represented
employees are required to complete an annual certification disclosing potential conflicts of interest and affirming their understanding
of the Code of Business Conduct. Completion of the training and certifications is tracked.
We
maintain a 24-hour ethics Help Line that allows employees, contract workers, suppliers, and the public to pose questions and report
ethics concerns and potential legal or regulatory violations. The Help Line has both a phone and web portal option and reporters
have the option to remain anonymous. The Ethics and Compliance office oversees the intake, investigation, and resolution of reports
of potential compliance violations and violations of the Code of Business Conduct and Supplier Code of Conduct.
We
also maintain involvement in four company-wide policies that relate to oversight of employee and company interactions with public
officials. The policies include various controls and guidance, and employees in various positions are trained on the requirements
of the policies. Among other things, the policies require tracking and review of certain requests, referrals, and recommendations
from public officials and regular reporting to the Audit & Risk Committee of such requests, referrals and recommendations.
Shareholders
may report an ethics concern with the Constellation Ethics Help Line by calling 1-844-927-2282 or by email to EthicsOffice@Constellation.com.
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Constellation
Energy Corporation 2025 Proxy Statement |
45 |
Director
Compensation
Constellation’s
director compensation program 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
Corporate Governance Committee is responsible for reviewing and making recommendations to the Board regarding its non-employee
director compensation program. The committee is authorized to engage outside advisors and consultants in connection with its review
and analysis of director compensation. The committee takes various factors into consideration, including responsibilities of directors
generally, Board and committee leadership roles such as the Board Chair and Committee Chairs, as well as the form and amount of
compensation paid to directors at comparable companies.
The
non-employee director compensation program is comprised of cash and equity components. The Board targets total compensation to
be at the median level of compensation paid to directors at the peer group of companies used to determine executive compensation.
Cash
Fees
Each
non-employee director receives an annual cash retainer for his or her service on the Board, as well as additional cash retainers
if he or she serves as the Board Chair or as the chair of a committee. Directors serving in multiple leadership roles will receive
incremental compensation for each role. The following table lists the cash retainer amounts in effect during fiscal year 2024.
Role |
Annual
Cash
Retainer
$ |
| Non-Employee
Director |
$125,000 |
| Board
Chair |
200,000 |
| Committee
Chairs: |
| Audit
and Risk Committee |
25,000 |
| Compensation
Committee |
20,000 |
| Corporate Governance
Committee |
20,000 |
| Nuclear
Oversight Committee(1) |
20,000 |
(1)
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.
Under
the Director Deferred Compensation Plan, 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.
Additionally,
directors who serve as members of any special committee receive fees of $5,000 per quarter for as long as the committee continues
to meet or is necessary.
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Constellation
Energy Corporation 2025 Proxy Statement |
46 |
Proposal
2:
Say-On-Pay:
Advisory Vote on Executive Compensation
We
are seeking an advisory vote to approve the 2024 compensation of our named executive officers.
This
proposal, known as a say-on-pay proposal, gives our shareholders the opportunity to express their views on the compensation of the company’s
named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation
of the named executive officers and the compensation philosophy, policies and practices described in this proxy statement.
The
say-on-pay vote is advisory, and therefore not binding on Constellation, the Compensation Committee, or the Board of Directors. However,
the Board and Compensation Committee value the opinions of the company’s shareholders and will take the results of the vote into
consideration when evaluating the executive compensation program and making future decisions regarding the compensation of our named
executive officers.
Our
Board invites you to review the “Compensation Discussion and Analysis” section and the compensation tables and other compensation
related disclosures included in this proxy statement.
As
discussed in the “Compensation Discussion and Analysis” section of this proxy statement, our Board believes that the company’s
executive compensation program, practices and policies drive performance, and align our executives’ interests with those of our
shareholders. Accordingly, you may vote to approve or not approve the following advisory resolution on the compensation of the named
executive officers at the 2025 Annual Meeting.
Our
Board recommends that you vote FOR the following advisory resolution:
RESOLVED,
that the company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in
the company’s proxy statement for the 2025 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation
Discussion and Analysis, the 2024 Summary Compensation Table and the other related tables and disclosure.
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Energy Corporation 2025 Proxy Statement |
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Compensation Discussion and Analysis
2024 Base Salaries
2024
Base Salaries
In
February 2024, the Compensation Committee determined the base salary of each NEO (other than the CEO) as part of its annual review of
executive compensation. When evaluating whether and to what degree to make any adjustments, the Compensation Committee considered a number
of factors, including:
| • | Competitive
posture based on the annual market analysis of executive compensation; |
| • | Need
to retain experienced executives; |
| • | Facilitation
of transitional knowledge; |
| • | Rewarding
for individual performance and leadership skills; |
| • | Recognizing
scope of responsibility; and |
| • | Maintaining
appropriate internal equity. |
For
the CEO’s base salary, the Compensation Committee makes recommendations considering market data, evolving responsibilities of the
position, and individual performance, which are reviewed and approved by the independent directors of the Board. Based on this input,
the Compensation Committee recommended, and the Board approved, a 16.7% increase to Mr. Dominguez’s base salary on February 5,
2024. The increase became effective on March 1, 2024.
Effective
March 1, 2024, the Compensation Committee approved increases in base salaries for Messrs. Eggers, Hanson, and McHugh and Ms. Barrón
as detailed in the table below.
| |
2024 Salary |
2023 Salary |
Percentage
Increase |
| Dominguez |
$1,400,000 |
$1,200,000 |
16.7% |
| Eggers |
734,850 |
710,000 |
3.5% |
| Hanson |
879,750 |
850,000 |
3.5% |
| McHugh |
732,123 |
707,366 |
3.5% |
| Barrón |
717,152 |
692,900 |
3.5% |
2024
Annual Incentive Plan
The
Annual Incentive Plan (AIP) is designed to promote the achievement of critical financial and operational goals that are aligned with
our business plan and drive shareholder value. For the 2024 AIP, the Compensation Committee approved financial goals related to operating
net income (weighted 70%) and operational goals based on customer satisfaction (weighted 10%), fleetwide capacity factor (weighted 10%),
dispatch match (weighted 7%), and renewable energy capture (weighted 3%). The Compensation Committee most heavily weighed the financial
metric to align the interests of executives with shareholders. Based on achieved performance, AIP payouts may range from 50% to 200%
of an NEO’s target incentive opportunity. However, if threshold performance is not achieved with respect to a specific performance
metric, no payout would be earned for that metric. The Compensation Committee may exercise its discretion to adjust awards otherwise
earned under the AIP; however, no such discretion was exercised in 2024.
The
pie chart below summarizes the performance metrics and their respective weights. In addition, each NEO’s annual incentive target
opportunity expressed as a percentage of their base salary is summarized below. The Compensation Committee determined each NEO’s
AIP target as part of its annual review of executive compensation after considering the same factors as those considered for base salaries.
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Constellation
Energy Corporation 2025 Proxy Statement |
58 |
Compensation Discussion and Analysis
Long-Term Incentive Plan
Long-Term
Incentive Plan (LTIP)
Our
long-term incentive structure aligns pay with performance and our company’s business. The Compensation Committee grants PShares
and RSUs annually at its February meeting. For 2024, the Compensation Committee determined each NEO’s total target long-term incentive
value based on competitive market data and other factors that are discussed under the heading “Setting Target Compensation for
NEOs” in the executive summary of this Compensation Discussion and Analysis.
Each
NEO’s 2024 LTIP value was allocated between grants of RSUs (33%) and PShares (67%), as described in the chart below.
| |
RSUs
(33% of LTIP) |
PShares
(67% of LTIP) |
| Dominguez |
27,278 |
55,381 |
| Eggers |
7,274 |
14,769 |
| Hanson |
7,534 |
15,296 |
| McHugh |
5,196 |
10,549 |
| Barrón |
5,196 |
10,549 |
2024–2026
Restricted Stock Units (RSUs)
In
February 2024, the Compensation Committee approved the grant of RSUs for each NEO. RSUs vest ratably over a three-year period. During
the vesting period, RSUs receive dividend equivalents that are reinvested as additional RSUs which remain subject to the same vesting
conditions as the underlying RSUs. RSUs are not subject to any performance metrics. On each vesting date, the number of RSUs that vest
is settled in a like number of shares of our common stock, less applicable taxes, provided that the NEO was continuously employed by
the company through the vesting date.
2024–2026
Performance Share (PShare) Program
In
February 2024, the Compensation Committee approved the grant of PShares for each NEO. PShares are earned over the three-year period ending
December 31, 2026, based on our achievement against free cash flow before growth goals and relative TSR performance, subject to a negative
modifier that is based on credit ratings. Based on achieved performance, the number of PShares earned at the end of the performance period
may range from 50% to 200% of an NEO’s target PShares. However, if threshold performance is not achieved with respect to a specific
performance metric, no payout would be earned for that metric. PShares receive dividend equivalents that are reinvested as additional
PShare awards which remain subject to the same vesting and performance conditions as the underlying award.
Pursuant
to the terms of the long-term incentive program, NEOs who have achieved 200% or more of their stock ownership target receive PShare awards
settled in cash. PShare awards are settled 50% in cash and 50% in stock for NEOs that have not achieved 200% or more of their stock ownership
target. Reinvested dividends are settled in the same form as the underlying award.
The
performance metrics underlying the 2024 – 2026 PShare awards and the formula used to determine the earned PShare award are described
below.
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Energy Corporation 2025 Proxy Statement |
62 |
Compensation Discussion and Analysis
2022-2024 Performance Share Program Payout Determination
2022–2024
Performance Share Program Payout Determination
The
Constellation Compensation Committee approved the performance scale aligned to the Constellation business strategy below in 2022. Based
on achieved performance, the Constellation Compensation Committee approved the 2022–2024 PShare payout at 200% of target.
LTI
Metrics (2022–2024 LTIP Performance and Payout Determinations)
| |
-25%
Modifier |
-15%
Modifier |
-5%
Modifier |
No
Modifier |
Actual
Results |
Modifier |
| CFO/Debt |
<22.5% |
>=22.5%<25.0% |
>=22.5%<27.5% |
>=27.5% |
>=27.5% |
Not
Applicable |
| |
|
|
|
|
|
|
| Stair-step
approach, no interpolation between points. |
The
table below shows the determination of the number of PShares earned under the 2022-2024 PShares award. The awards vested on February
10, 2025.
| NEO |
PShare Target |
Formulaic
Performance Factor |
Actual Award |
| Dominguez |
98,647 |
200% |
197,294 |
| Eggers |
23,115 |
200% |
46,230 |
| Hanson |
30,122 |
200% |
60,244 |
| McHugh |
21,937 |
200% |
43,874 |
| Barrón |
17,418 |
200% |
34,836 |
Role
of the Independent Compensation Consultant
The
Compensation Committee retains Meridian Compensation Partners, 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, but not limited to, the following:
| |
• | Market
data for each senior executive position, including evaluating Constellation’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’s executive compensation programs are designed and
administered consistent with the Compensation Committee’s requirements, and |
| |
• | Ad
hoc support on executive compensation matters and related governance trends. |
The
Compensation Committee will annually review the compensation, performance, and independence of Meridian and approve the firm’s
fees and other retention terms. In December 2024, the Compensation Committee assessed the independence of Meridian and concluded that
it is independent and that no conflict of interest exists that would prevent Meridian from serving as an independent consultant to the
Compensation Committee.
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Energy Corporation 2025 Proxy Statement |
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Compensation Discussion and Analysis
2024 Executive Compensation Peer Groups
2024
Executive Compensation Peer Groups
Constellation
uses a blended peer group that consists of energy services peers, independent power producers (“IPPs”), and general industry
peers for assessing our executive compensation program and the competitive positioning of our NEO’s compensation. We utilize this
method because (1) there are not enough energy services and IPPs peers with size, scale and complexity comparable to Constellation to
create a robust peer group, and (2) Constellation’s market for attracting talent includes general industry peers, with key executives
hired from several Fortune 100 companies. When selecting general industry peers, we consider capital asset-intensive companies with size,
scale and complexity similar to Constellation, and we also consider the extent to which they may be subject to the effects of volatile
commodity prices similar to Constellation’s sensitivity to commodity price volatility. Constellation evaluates its peer group on
an annual basis and adjusts the peer group for changes with our energy and general industry peers when needed.
Due
to the correlation between the size of an organization and its compensation levels, market data is statistically adjusted using a
regression analysis. Utilizing this commonly applied technique allows for a more precise estimate of the market value of
Constellation given the size and scope of responsibility for Constellation’s executive roles. Each element of executive
compensation is then compared to these size-adjusted medians of the peer group. This peer group, in part, is also used to assess
program design practices.
Stock
Ownership
To
strengthen the alignment of executive interests with those of shareholders, executive officers are required to own certain amounts of
Constellation common stock five years following his or her employment or promotion to a new position (six-times base salary for Mr. Dominguez;
three times base salary for the other NEOs). All NEOs have met their stock ownership requirement.
The
following types of shares are taken into consideration to satisfy the ownership requirements:
| |
• | shares
owned outright by the executive or their immediate family, in street name or held in trust, |
| |
• | net
shares from vested Long-Term Performance Share Unit Awards (PShares), |
| |
• | shares
from Restricted Stock Unit Awards that are granted but not vested, and |
| |
• | shares
held in the deferred compensation program or in retirement plan accounts. |
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Energy Corporation 2025 Proxy Statement |
65 |
Compensation Discussion and Analysis
Prohibition on Hedging and Pledging of Common Stock; Other Trading Requirements
Insider
Trading Policy; Prohibition on Hedging and Pledging of Common Stock; Other Trading Requirements
Constellation
has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors,
officers and employees. A copy of our insider trading policy can be found as Exhibit 19-1 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2024. In addition, with regard to the company’s trading in its own securities, it is the
company’s policy to comply with the federal securities laws and the applicable exchange listing requirements.
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 Constellation stock.
Clawback
Policy
The
Board has adopted two recoupment (aka “clawback”) policies. One clawback policy applies only to SEC Section 16 executive
officers (which includes, but is not limited to, our CEO and the other NEOs), the other policy applies to all employees (including
the Section 16 executive officers) that receive incentive-based compensation. The policy applicable to Section 16 executive officers
is compliant with the clawback rules and requirements adopted by the SEC and Nasdaq in 2023. Under this policy, the Board is
required to recoup, from current or former Section 16 executive officers, any incentive-based compensation that was erroneously
awarded during the three years preceding the date of any accounting restatement that is required due to material non-compliance with
any financial reporting requirement under applicable U.S. federal securities laws. The other clawback policy provides our Board
wider discretionary authority to recoup incentive compensation. Under this broader clawback policy, the Board or Compensation
Committee may seek to recoup incentive compensation paid or payable to current or former incentive plan participants if, in its sole
discretion, the Board or 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 Constellation 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.
Risk
Management Assessment of Compensation Policies and Practices
The
Compensation Committee reviews Constellation’s compensation policies and practices as they relate to the company’s risk management
practices and risk-taking incentives. In 2024, our Enterprise Risk Management group applied the enterprise risk management policy and
framework to the compensation risk assessment process to assess and validate that the controls in place continued to mitigate incentive
compensation risks.
Following
this assessment, which was reviewed by the independent compensation consultant, the Compensation Committee believes that the risks arising
from the company’s compensation policies and practices are not reasonably likely to have a material adverse effect on Constellation.
In this regard, the Compensation Committee considered the following compensation program features, which balance the degree of risk taking:
| |
• | the
AIP includes multiple incentive performance measures with a balance of financial and non-financial
metrics; |
| |
• | long-term
incentives include multiple vehicles and performance metrics and three-year overlapping performance
periods that are aligned with long-term stock ownership requirements; |
| |
• | incentive
metrics, performance goals, and capital allocation require multiple approval levels and oversight; |
| |
• | total
compensation pay mix includes effective and market aligned balance of short and long-term
incentive compensation elements; |
| |
• | incentive
compensation is balanced by formulaic and discretionary funding; |
| |
• | short
and long-term incentive awards contain award caps or modifiers; |
| |
• | reasonable
change-in-control and severance benefits are within common market norms; |
| |
• | clawback
provisions exceed regulatory mandates; and |
| |
• | consistent
and meaningful stock ownership requirements create sustained and consistent ownership stakes. |
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Energy Corporation 2025 Proxy Statement |
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Benefit Plans
Pension Benefits
Benefit
Plans
Pension
Benefits
Constellation
sponsors the Constellation Retirement Program, a defined benefit pension plan that includes the Commonwealth Edison Company Constellation
Service Annuity System (SAS), a traditional pension plan covering NEOs who commenced employment prior to January 1, 2001, and the Constellation
Cash Balance Pension Plan (CBPP), an account-based plan covering eligible NEOs hired between January 1, 2001, and February 1, 2018. The
Constellation Retirement Program is tax-qualified under Section 401(a) of the Internal Revenue Code.
Commonwealth
Edison Company Constellation Service Annuity System (SAS)
Only
one NEO (Mr. Hanson) participates in the SAS. Under the SAS, the annuity benefit payable at normal retirement age is equal to the sum
of 1.25% of the participant’s earnings as of December 25, 1994, reduced by a portion of the participant’s earned 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.
“Normal
retirement age” under the SAS is 65 and the plan also offers early retirement benefits, which are payable if a participant retires
after attainment of age 50, but before attainment of age 65 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, 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.
Constellation
Cash Balance Pension Plan (CBPP)
Four
NEOs (Messrs. Dominguez, Eggers, and McHugh and Ms. Barrón) participate in the CBPP. Under 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.
When the CBPP was initially established in 2001, it provided an annual benefit credit of 5.75% 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 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 of 7% of base salary and annual incentive award, and an annual
investment credit based on either 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) or the second segment spot rate of interest on long-term investment
grade corporate bonds for the month of November of the year credited (subject to a 3.8% minimum), depending on length of service.
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.
A
one-time transition benefit credit as of December 31, 2018 was provided 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.
Constellation
ceased offering the SAS to all new entrants as of January 1, 2009, and the CBPP was closed to all new entrants as of January 1, 2023.
Instead, an annual enhanced non-discretionary 401(k) contribution is provided for new employees not eligible for pension benefits.
Constellation
Supplemental Management Retirement Plan (SMRP)
All
NEOs participate in the SMRP which provides supplemental benefits to the benefits provided under the tax-qualified Constellation Retirement
Program for individuals whose annual compensation exceeds the limits imposed under the Internal Revenue Code. Under the terms of the
SMRP, participants are provided the amount of benefits they would have received under the SAS or CBPP, as applicable, but for the application
of the Internal Revenue Code limits. The SMRP offers a lump sum as an optional form of payment. Tax benefits are provided for SMRP participants
when FICA and state taxes are not imposed on qualified
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
72 |
Benefit Plans
Constellation Supplemental Management Retirement Plan (SMRP)
pension
plan benefits, but are imposed on non-qualified retirement benefits, such as those provided under the SMRP. Constellation provides these
tax benefits in order to equalize the tax treatment of non-qualified benefits to those received under qualified plans. These tax benefits
are provided to all participants in the SMRP (currently over 165, approximately 50% of which are executives (i.e., Vice President level
or above)).
For
participants in the SAS, the SMRP lump sum includes the value of the marital annuity, death benefits and other early retirement subsidies
at a designated interest rate. The interest rate applicable for distributions to participants in the SAS in 2024 is 4.15%. For participants
in the CBPP, the lump sum is the value of the non-qualified account balance. The values of the lump sum amounts do not include the value
of any pension benefits covered under the tax-qualified pension plans, and the methods and assumptions used to determine the non-qualified
lump sum amount are different from the assumptions used to generate the present values shown in the tables of benefits to be received
upon retirement, termination due to death or disability, involuntary separation not related to a change in control, or upon a qualifying
termination following a change in control which appear later in this proxy statement.
Since
2004, the provision of additional years of credited service to executives was ended under the SMRP for any period in which services are
not actually performed, except that up to two years of service credits may be provided under the SMRP upon a qualifying termination of
employment under severance or up to 2.99 years of service under change in control agreements, and performance-based awards or awards
that are intended to make up for lost pension benefits from another employer. Service credits previously available under employment,
change in control or severance agreements or arrangements (or any successor arrangements) are not affected.
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 Pension Benefits table below. A portion of 2022 accumulated pension
benefit were accrued under Exelon, prior to February 1, 2022. The assumptions used in estimating the present values include the following:
pension benefits are assumed to begin at each participant’s earliest unreduced retirement age; the SMRP lump sum amounts for SAS
participants are determined using the rate of 4.78% as of December 31, 2024, at the assumed retirement age; the account balances for
CBPP participants are assumed to grow at the annual investment credit rate of 5.52% or 5.84% as of December 31, 2024, depending on length
of service, to the assumed retirement age; the lump sum amounts are discounted from the assumed retirement date at the applicable discount
rates of 5.17% as of December 31, 2023 and 5.66% as of December 31, 2024; and the applicable mortality tables.
| Name |
Plan
Name |
Number of Years
Credited Service |
Present Value of
Accumulated Benefit |
| Dominguez |
CBPP |
22.35 |
$749,542 |
| SMRP |
22.35 |
2,157,587 |
| Eggers |
CBPP |
8.76 |
204,876 |
| SMRP |
8.76 |
572,160 |
| Hanson |
SAS |
36.30 |
2,563,708 |
| SMRP |
36.30 |
12,136,111 |
| McHugh |
CBPP |
21.79 |
606,108 |
| SMRP |
21.79 |
1,108,490 |
| Barrón |
CBPP |
14.47 |
403,367 |
| SMRP |
14.47 |
730,829 |
| (a) | Mr.
Hanson’s non-qualified Supplemental Management Retirement Plan (SMRP) present value is $12,136,111. 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, 2024 is $13,820,126. Note that, in any event, payments made upon termination may be delayed by six months in accordance
with U.S. Treasury Department guidance. |
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
73 |
Potential Payments Upon Termination or Change in Control
Severance Benefits
Potential
Payments Upon Termination or Change in Control
The
amount of benefits payable upon termination or a change in control is contingent upon a variety of factors, including the circumstances
under which employment terminates.
Severance
Benefits
The
NEOs are entitled to certain payments and benefits in connection with a termination of employment other than for cause (which generally
includes 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), 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 Constellation Senior Management Severance
Plan (“SMSP”).
The
“Severance Period” is 24 months after termination of employment for all NEOs. Benefits under the SMSP 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 |
Retiree
Eligible(a) |
1.
RSUs: Unvested awards accelerate vesting
2.
LTIP (including performance shares): Prorated portion vests based on actual performance; payable at the time provided for in the
award terms. |
| Non-Retiree
Eligible |
1.
RSUs: Unvested awards are prorated based
on date of termination and accelerate vesting
2.
LTIP (including performance shares): Prorated portion vests based on actual performance; payable at the time provided for in the
award terms. |
| 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 Constellation’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.(b) |
| Financial
Planning |
Outplacement
and financial planning services for at least 12 months. |
| (a) | Executives
are considered retiree eligible for equity awards, if they are at least 55 years old and have completed at least 10 years of service. |
| (b) | Executives
are eligible for retiree medical, if they are at least 50 years old and have completed at
least 10 years of service. |
Payments
under the SMSP are subject to reduction by the company 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
The
NEOs are eligible for 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 the company.
Under
the SMSP, a “change in control” includes any of the following: (a) when any person or group acquires 20% of
Constellation’s then outstanding common stock or of voting securities; (b) the incumbent members of the Constellation Board
(or new members nominated by a majority of incumbent directors) cease to constitute at least a majority of the members of the
Constellation Board; (c) consummation of a reorganization, merger or consolidation, or sale or other
disposition of at least 50% of Constellation’s operating assets (excluding a transaction where Constellation shareholders
retain at least 60% of the voting power); or (d) upon shareholder approval of a plan of complete liquidation or
dissolution.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
75 |
CEO Pay Ratio
CEO Pay Ratio
CEO
Pay Ratio
CEO
Pay Ratio
As
required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and item 402(u) of Regulation S-K, we are providing the following
information regarding the ratio of the annual total compensation of our median employee to the annual total compensation of Mr. Joseph
Dominguez, our President and Chief Executive Officer (CEO). We consider the pay ratio specified below to be a reasonable estimate, calculated
in a manner that is consistent with the requirements of 402(u) of Regulation S-K.
For
2024:
| • | the
annual total compensation of the employee who represents our median compensated employee
(other than our CEO) was $188,677; and |
| • | the
annual total compensation of our CEO, as reported in the Summary Compensation Table included
above was $16,216,964. |
Based
on this information, for 2024, the annual total compensation of our CEO was approximately 86 times the annual total compensation for
the median employee from all employees (other than the CEO).
The
rules governing the CEO Pay Ratio allow for utilization of the same individual for a 3-year period, provided that employee is actively
employed at the company. As such, we used the same individual identified in 2022 that was included in the compilation of our CEO pay
ratio as reported in the 2023 proxy statement. The methodology utilized to identify that person is described below.
On
December 31, 2022, the employee population consisted of 13,504 employees of which nine were located in England and six were located in
Canada. We chose to exclude these 15 employees from our determination of the “median employee”, as permitted under SEC rules,
given the small number of non-U.S. employees as compared to our overall employee population. Upon identifying the employee population
to be included, we consistently applied the compensation measure of 2022 W-2 Box 1 wages to identify the median employee. Once identified,
the annual total compensation for that employee was calculated using the same methodology used in compiling the Summary Compensation
Table in this proxy statement. The ratio is a reasonable estimate calculated in accordance with the requirements of Item 402(c)(2)(x)
of Regulation S-K.
The
comparability of pay ratios across companies may be constrained because SEC regulations allow flexibility in determining the pay ratio
approach.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
84 |
Audit
& Risk Committee Report
Management
has primary responsibility for preparing our financial statements and establishing effective internal controls over financial reporting.
PricewaterhouseCoopers LLP (PwC), our independent auditor for the year ended December 31, 2024, is responsible for auditing those financial
statements and expressing an opinion on the conformity of our audited financial statements with generally accepted accounting principles
and on the effectiveness of our internal controls over financial reporting based on criteria established in 2013 by the Committee of
Sponsoring Organizations of the Treadway Commission.
The
Audit & Risk Committee has reviewed and discussed with management and PwC the company’s audited financial statements for
the year ended December 31, 2024, including the critical accounting policies applied by the company in the preparation of these
financial statements and PwC’s evaluation of our internal control over financial reporting. The Audit & Risk Committee has
also discussed with PwC the matters required to be discussed pursuant to PCAOB standards and had the opportunity to ask PwC
questions relating to such matters. PwC has provided to the Audit and Risk Committee the written disclosures and PCAOB-required
letter regarding its communications with the Audit and Risk Committee concerning independence, and the Audit & Risk Committee
has discussed the independent audit firm’s independence with PwC.
In
reliance on these reviews and discussions and other information considered by the committee in its judgment, the Audit & Risk Committee
recommended to the Board, and the Board approved, that the audited financial statements be included in our Annual Report on Form 10-K
for the year ended December 31, 2024, for filing with the SEC.
MEMBERS
OF THE AUDIT AND RISK COMMITTEE
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
Brad Halverson (Chair)
Charles Harrington
Julie Holzrichter
Peter Oppenheimer
John Richardson
Nneka Rimmer |
The
foregoing Audit & Risk Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by
reference into any other filing of Constellation under the Securities Act, or the Exchange Act, except to the extent that Constellation
specifically incorporates the Audit & Risk Committee Report by reference therein.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
85 |
Proposal
3:
Ratification
of PricewaterhouseCoopers LLP as Constellation’s Independent Registered Public Accounting Firm for 2025
The
Audit & Risk Committee and the Board of Directors have determined that the retention of PricewaterhouseCoopers LLP (PwC) as the
independent registered public accounting firm is in the best interests of the company and its shareholders based on the Audit &
Risk Committee’s level of satisfaction with the quality of services provided by PwC and consideration of factors described
below. PwC has served as independent auditor since our separation from Exelon in February 2022 and served as independent auditor of
our company as a subsidiary of Exelon since 2001. The Audit & Risk Committee believes that PwC’s tenure as
Constellation’s independent registered public accounting firm when Constellation was a part of Exelon’s consolidated
financial statements is a benefit to audit quality, given PwC’s experience with the company and knowledge of the business as
well as the effectiveness of their audit plans, which build on that established knowledge. Because of PwC’s familiarity, the
firm has developed and implemented efficient and innovative audit processes, enabling the provision of services for fees considered
by the Audit & Risk Committee to be competitive and the ability to focus on the risks that are significant to the company and
its industry.
Although
it is not required to do so, the Board is submitting the Audit & Risk Committee’s retention of PwC as the company’s independent
registered public accounting firm for ratification by shareholders at the meeting to ascertain the view of our shareholders regarding
such selection. In the event the shareholders do not ratify this appointment, the Audit & Risk Committee will reconsider its selection,
but still may determine that the appointment of PwC as the company’s independent registered public accounting firm is in the best
interests of the company and its shareholders. Even if the appointment is ratified by the shareholders, the Audit & Risk Committee,
in its discretion, may appoint a different independent registered public accounting firm at any time during the year if the Audit &
Risk Committee determines that such a change would be in the best interests of the company and its shareholders.
Evaluation
of the Independent Registered Public Accounting Firm
The
Audit & Risk Committee regularly considers the independence, qualifications, compensation, and performance of its independent registered
public accounting firm. The Audit & Risk Committee utilizes an evaluation framework developed by management to assist with the Audit
& Risk Committee’s annual assessment of the independent audit firm, which includes assessment of the following:
| • | quality
of the independent audit firm and audit process |
| • | level
of service provided by the independent registered public accounting firm |
| • | alignment
with Constellation’s core values; and |
| • | good
faith negotiation of fees |
Results
of the assessment were provided to the Committee for its annual review and determination of whether to retain PwC as our independent
auditor for 2025.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
86 |
Proposal 3: Ratification of PricewaterhouseCoopers LLP as Constellation's Independent Registered Public Accounting Firm for 2025
Critical Audit Matters
Critical
Audit Matters
In
conformance with Public Company Accounting Oversight Board rules, the Audit & Risk Committee reviewed and discussed with PwC the
critical audit matter arising from the current period audit of Constellation’s financial statements. Critical audit matters
(CAMs) are defined to be any matter arising from the audit of the financial statements that was communicated or required to be
communicated to the Audit & Risk Committee and that: 1) relate to accounts or disclosures that are material to the financial
statements and 2) involve especially challenging, subjective, or complex audit judgment. The Audit & Risk Committee concurred
with PwC’s assessment and identification of the CAM contained in its Audit Report included within Constellation’s 2024
Annual Report on Form 10-K.
Fees
Subject to Pre-Approval Policy
Pursuant
to the Audit & Risk Committee’s pre-approval policy, the committee pre-approves all audit and non-audit services to be provided
by the independent registered public accounting firm considering the nature, scope, and projected fees of each service as well any potential
implications for independent registered public accounting firm independence. The policy specifically sets forth services that the independent
auditor is prohibited from performing by applicable law or regulation. Further, the Audit & Risk Committee may prohibit other services
that in its view may compromise, or appear to compromise, the independence and objectivity of the independent registered public accounting
firm. Predictable and recurring audit and permitted non-audit services will be considered for pre-approval by the Audit & Risk Committee
on an annual basis.
For
any services not covered by these initial pre-approvals, the Audit & Risk Committee has delegated authority to the Audit & Risk
Committee Chair to pre-approve any audit or permitted non-audit service with fees in amounts less than $500,000. Services with fees exceeding
$500,000 require full Audit & Risk Committee pre-approval. The Audit & Risk Committee receives quarterly reports on the actual
services provided by and fees incurred with the independent registered public accounting firm. No services were provided pursuant to
the de minimis exception to the pre-approval requirements contained in the SEC’s rules.
Independent
Auditor Fees
The
following table presents the fees for professional services rendered by PwC for the audit of Constellation’s annual financial statements
for the years ended December 31, 2023 and December 31, 2024, and fees billed for other services provided during those periods. The fees
include amounts related to the year indicated, which may differ from amounts billed.
| |
Year Ended December 31, |
| (in
thousands) |
2023 |
2024 |
| Audit
Fees(1) |
$10,
625 |
$10,568 |
| Audit
Related Fees(2) |
1,843 |
1,350 |
| Tax
Fees(3) |
1,020 |
1,267 |
| All
Other Fees(4) |
10 |
5 |
| Total: |
$
13,498 |
$13,190 |
| (1) | Audit
fees include financial statement audits and reviews under statutory or regulatory requirements
and services that generally only the auditor reasonably can provide, including SEC financial
statement audits and reviews, review of documents filed with the SEC, issuance of comfort
letters and consents for debt issuances and other attest services required by statute or
regulation. |
| (2) | Audit
related fees consist of assurance and related services that are traditionally performed by
the principal auditor and are reasonably related to the performance of the audit or review
of the financial statements or other assurance services to comply with contractual requirements,
financial accounting, or reporting and control consultations. |
| (3) | Tax
fees consist of tax compliance, planning and advice services, including tax return preparation,
refund claims, tax payment planning, assistance with tax audits and appeals, advice related
to mergers and acquisitions and transactions, or requests for rulings or technical advice
from tax authorities. |
| (4) | All
other fees consist of system implementation quality assurance services and accounting research
software license cost. |
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
88 |
Additional
Information
Shareholder
Proposals for the 2026 Annual Meeting of Shareholders
The
submission deadline for shareholder proposals to be included in our proxy materials for the 2026 Annual Meeting of Shareholders pursuant
to Rule 14a-8 under the Exchange Act is November 19, 2025, except as may otherwise be provided in Rule 14a-8. All such proposals must
be in writing and should be sent to Constellation Energy Corporation, c/o Office of the Corporate Secretary, 1310 Point Street, Baltimore,
MD 21231-3380.
Advance
Notice Procedures for the 2026 Annual Meeting of Shareholders
In
accordance with our bylaws, any shareholder who intends to submit a proposal outside of the Rule 14a-8 process, or nominate a person
for election to the Board, at the 2026 Annual Meeting of Shareholders must, in addition to complying with applicable laws and
regulations and the requirements of our bylaws, provide written notice to the Corporate Secretary at the address noted above, no
earlier than December 30, 2025, and no later than January 29, 2026.
Please
refer to the full text of our advance notice bylaw provisions for additional information and requirements. In addition, shareholders
who intend to solicit proxies in support of director nominees other than our director nominees must comply with the requirements of Exchange
Act Rule 14a-19(b) and the applicable provisions of our bylaws.
In
order to be eligible to require that the company include an eligible shareholder nominee in Constellation’s proxy materials for
the 2026 Annual Meeting of Shareholders pursuant to Section 3.17 of our bylaws, an eligible shareholder must provide, in proper form
and within the times specified, a nomination notice and the required information specified in the bylaws. To be considered timely, the
notice must be delivered to Constellation no earlier than November 30, 2025, and no later than December 30, 2025. Please refer to the
full text of our proxy access bylaw provision for additional information and requirements.
Constellation
will not consider any proposal or nomination that does not comply with the requirements of applicable laws and regulations and our bylaws.
Our bylaws may be amended from time to time. Please review the bylaws posted on our website to determine if any changes to the shareholder
proposal or nomination process or other requirements have been made.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
89 |
Appendix
A
Definitions
of Non-GAAP Measures
Constellation
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 Operating Earnings, Free Cash Flows before Growth, and CFO/Debt
to enhance investors’ understanding of Constellation’s performance. As discussed in this proxy statement, these measures
are used in our compensation program to determine the achievement of certain performance metrics and the payout of awards to our executives.
Adjusted EBITDA is not a standardized financial measure and may not be comparable to other companies’ presentations.
Adjusted
Operating Earnings exclude certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments
from economic hedging activities and fair value adjustments related to gas imbalances and equity investments, decommissioning related
activity, asset impairments, certain amounts associated with plant retirements and divestitures, pension and other post-employment benefits,
non-service credits, and other items as set forth in the table below.
Adjusted
(non-GAAP) Operating Earnings for the twelve months ended December 31, 2024 does not include the following items that were included
in our reported GAAP Net Loss:
| (in
millions) |
| GAAP
Net Income Attributable to Common Shareholders |
$3,749 |
| Unrealized
(Gain) Loss on Fair Value Adjustments (net of taxes $346) |
($1,026) |
| Plant
Retirements and Divestitures (net of taxes $9) |
$28 |
| Decommissioning-Related
Activities (net of taxes $244) |
($50) |
| Pension
& OPEB Non-Service (Credits) Costs (net of taxes $2) |
$5 |
| Separation
Costs (net of taxes $3) |
$9 |
| ERP
System Implementation Costs (net of taxes $3) |
$8 |
| Change
in Environmental Liabilities (net of taxes $22) |
$65 |
| Income
Tax-Related Adjustments |
($52) |
| Acquisition-Related
Costs (net of taxes $2) |
$6 |
| Noncontrolling
Interests |
($7) |
| Adjusted
(non-GAAP) Operating Earnings |
$2,735 |
Free
Cash Flow before Growth is adjusted cash flows from operations, which primarily includes net cash flows from operating activities
and collection of deferred purchase price related to a revolving accounts receivable arrangement, less capital expenditures for maintenance
and nuclear fuel, non-recurring capital expenditures related to separation and enterprise resource program implementation, changes in
collateral, net merger and acquisitions, and equity investments and other items. For compensation purposes only, Free Cash Flow before
Growth is adjusted to exclude impacts of changes in working capital.
CFO/Debt
is a general term referring to the Moody’s CFO Pre-Working Capital/Debt credit metric. CFO or Cash From Operations is taken
from the GAAP Cash Flow Statement. CFO is adjusted for working capital, nuclear fuel capital, and other items based on guidance from
Moody’s to calculate CFO Pre-Working Capital (the numerator). Debt (the denominator) is the sum of Notes Payable and Total Long-term
Debt from the Balance Sheet, as adjusted based on guidance from Moody’s.
Due
to the forward-looking nature of some forecasted non-GAAP measures, information to reconcile the forecasted adjusted (non-GAAP) measures
to the most directly comparable GAAP measure may not be currently available; therefore, management is unable to reconcile these measures.
|
|
Constellation
Energy Corporation 2025 Proxy Statement |
A-1 |
Pay vs Performance Disclosure - USD ($)
|
12 Months Ended |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Disclosure - Pay vs Performance Disclosure |
|
|
|
|
|
|
|
|
|
|
| |
|
|
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs3 |
|
Value
of Initial Fixed $100
Investment Based On: |
|
| Year |
Summary
Compensation
Table Total for
PEO1 |
Compensation
Actually Paid
to PEO2 |
Average
Compensation
Actually Paid
to Non-PEO
NEOs4 |
Total
Shareholder
Return5 |
S&P
500
Industrials
Total
Shareholder
Return6 |
Net
Income
(millions)7 |
Adjusted
Operating
Earnings
(millions)8 |
| (a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
| 2024 |
$16,216,964 |
$72,182,266 |
$5,146,423 |
$16,482,948 |
$462 |
$136 |
$3,749 |
$2,735 |
| 2023 |
15,185,385 |
30,945,947 |
5,221,424 |
11,798,444 |
240 |
116 |
1,623 |
2,034 |
| 2022 |
10,439,082 |
23,640,761 |
4,078,360 |
11,598,514 |
175 |
98 |
(160) |
1,335 |
|
|
|
| Named Executive Officers, Footnote [Text Block] |
|
The
dollar amounts reported in column (b) are the amounts of total compensation reported for
Mr. Dominguez (our President and Chief Executive Officer) for each corresponding year in
the “Total” column of the Summary Compensation Table. Refer to the Summary Compensation
Table above.
|
|
|
| Peer Group Issuers, Footnote [Text Block] |
|
The
peer group used for this purpose is the following published industry index: S&P 500 Industrials.
|
|
|
| PEO Total Compensation Amount |
|
$ 16,216,964
|
$ 15,185,385
|
$ 10,439,082
|
| PEO Actually Paid Compensation Amount |
|
72,182,266
|
30,945,947
|
23,640,761
|
| Non-PEO NEO Average Total Compensation Amount |
[1],[2] |
5,146,423
|
5,221,424
|
4,078,360
|
| Non-PEO NEO Average Compensation Actually Paid Amount |
[3] |
$ 16,482,948
|
11,798,444
|
11,598,514
|
| Adjustment to Non-PEO NEO Compensation Footnote [Text Block] |
|
The
dollar amounts reported in column (d) represent the average of the amounts reported for the
NEOs as a group (excluding Mr. Dominguez) in the “Total” column of the Summary
Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr.
Dominguez) included
for purposes of calculating the average amounts in 2023 and 2024 are Messrs. Eggers, Hanson and McHugh and Ms. Barrón. The names
of each of the NEOs (excluding Mr. Dominguez) included for purposes of calculating the average amounts in 2022 are Messrs. Eggers, Hanson,
Koehler, and McHugh.
|
|
|
| Compensation Actually Paid vs. Total Shareholder Return [Text Block] |
|
Compensation
Actually Paid and Cumulative TSR
As
demonstrated by the following graph, the amount of compensation actually paid to Mr. Dominguez and the average amount of
compensation actually paid to NEOs as a group (excluding Mr. Dominguez) is aligned with the company’s TSR for the year
presented in the table. The alignment of compensation actually paid with the company’s cumulative TSR over the period
presented is a result of having a significant portion of the compensation actually paid to Mr. Dominguez and to the other NEOs
comprised of equity awards. As described in more detail in the “Compensation Discussion and Analysis” section, the
company targets that approximately 75% of the value of total compensation awarded to the CEO and 63% of the value of total
compensation awarded to other NEOs be comprised of equity awards, including restricted stock units and performance-based restricted
stock units.
Pay Versus Performance
|
|
|
| Compensation Actually Paid vs. Net Income [Text Block] |
|
Compensation
Actually Paid, Net Income and Adjusted Operating Earnings
As
demonstrated by the following tables, the amount of compensation actually paid to Mr. Dominguez and the average amount of
compensation actually paid to NEOs as a group (excluding Mr. Dominguez) is generally aligned with the company’s net income and
Adjusted Operating Earnings performance over the post-separation results presented in the table. While the company does not use net
income as a performance measure in the overall executive compensation program, the measure of net income is the GAAP measure used to
reconcile to the Adjusted Operating Earnings measure, which the company does use when setting goals in our short-term incentive
compensation program. While the company uses numerous financial and non-financial performance measures for the
purpose of evaluating performance for our compensation programs, we have determined that Adjusted Operating Earnings is the
financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise
required to be disclosed in the table) used by the company to link compensation actually paid to NEOs, for the most recently
completed fiscal year, to company performance. As described in more detail in the “Compensation Discussion and Analysis”
section, approximately 15% of the value of total compensation awarded to the CEO and 18% of the value of total compensation awarded
to other NEOs is comprised of amounts determined under the short-term incentive compensation program.
|
|
|
| Compensation Actually Paid vs. Company Selected Measure [Text Block] |
|
|
|
|
| Total Shareholder Return Vs Peer Group [Text Block] |
|
Cumulative
TSR of Constellation and Cumulative TSR of the Peer Group
As
demonstrated by the graph below, our cumulative TSR over the two years since becoming a publicly traded company presented in the table
was 139.8%, while the cumulative TSR of the peer group presented for this purpose, the S&P 500 Industrials, was 15.55% over the years
presented in the table. Constellation’s cumulative TSR outperformed the S&P Industrials, during the period presented in the
table, representing the company’s superior financial performance as compared to the companies comprising the S&P 500 Industrials
peer group. For more information regarding our performance and the companies that the Compensation Committee considers when determining
compensation, refer to the “Compensation Discussion and Analysis” section above.
|
|
|
| Tabular List [Table Text Block] |
|
As
described in greater detail in the “Compensation Discussion and Analysis” section, the company’s executive compensation
program reflects an alignment to shareholder interest. The metrics that the company uses for both our long-term and short-term incentive
awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The
most important financial performance measures used by the company to link executive compensation actually paid to the NEOs, for the most
recently completed fiscal year, to the company’s performance are as follows:
| • | Adjusted
Operating Earnings |
| • | Free
Cash Flow before Growth |
| • | Fleetwide
Capacity Factor |
|
|
|
| Total Shareholder Return Amount |
[4] |
$ 462
|
240
|
175
|
| Peer Group Total Shareholder Return Amount |
[5] |
136
|
116
|
98
|
| Net Income (Loss) Attributable to Parent |
[6] |
$ 3,749,000,000
|
$ 1,623,000,000
|
$ (160,000,000)
|
| Company Selected Measure Amount |
|
2,735,000,000
|
2,034,000,000
|
1,335,000,000
|
| PEO Name |
|
Mr. Dominguez
|
|
|
| Measure [Axis]: 1 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
Adjusted
Operating Earnings
|
|
|
| Non-GAAP Measure Description [Text Block] |
|
Adjusted
Operating Earnings exclude certain costs, expenses, gains and losses and other specified
items, including mark-to-market adjustments from economic hedging activities and fair value
adjustments related to gas imbalances and equity investments, decommissioning related activity,
asset impairments, certain amounts associated with plant retirements and divestitures, pension
and other post-employment benefits, non-service credits, and other items as set forth in
Appendix A. While the company uses numerous financial and non-financial performance measures
for the purpose of evaluating performance for the company’s compensation programs,
the company has determined that Adjusted Operating Earnings is the financial performance
measure that, in the company’s assessment, represents the most important performance
measure (that is not otherwise required to be disclosed in the table) used by the company
to link compensation actually paid to the company’s NEOs, for the most recently completed
fiscal year, to company performance.
|
|
|
| Measure [Axis]: 2 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
Free
Cash Flow before Growth
|
|
|
| Measure [Axis]: 3 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
CFO/Debt
|
|
|
| Measure [Axis]: 4 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
Fleetwide
Capacity Factor
|
|
|
| Measure [Axis]: 5 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
Dispatch
Match
|
|
|
| Measure [Axis]: 6 |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Measure Name |
|
Customer
Satisfaction
|
|
|
| PEO [Member] | Reported Value Of Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[7] |
$ (10,500,172)
|
$ (10,000,025)
|
$ (6,699,193)
|
| PEO [Member] | Equity Award Adjustments [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[8] |
66,848,557
|
26,114,450
|
20,167,014
|
| PEO [Member] | Reported Change In The Actuarial Present Value Of Pension Benefits [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[9] |
(519,424)
|
(471,090)
|
(385,830)
|
| PEO [Member] | Pension Benefit Adjustments [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[10] |
136,341
|
117,227
|
119,688
|
| PEO [Member] | Year End Fair Value Of Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
16,184,529
|
19,636,100
|
17,991,666
|
| PEO [Member] | Y O Y Change In Fair Value Of Outstanding And Unvested Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
50,397,019
|
6,513,919
|
|
| PEO [Member] | Fair Value As Of Vestin Date Of Equity Awards Granted And Vested [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
2,175,348
|
| PEO [Member] | Change In Fair Value Of Equity Awards Granted In Prior Years That Vested In Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
267,009
|
(35,569)
|
|
| PEO [Member] | Fair Value At End Of Prior Year Of Equity Awards That Failed To Meet Vesting Conditions In Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| PEO [Member] | Value Of Dividends Or Other Earnings Paid On Stock Or Option Awards Not Otherwise Reflected In Fair Value Or Total Compensation [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| PEO [Member] | Service Cost [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
136,341
|
117,227
|
119,688
|
| PEO [Member] | Prior Service Cost [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| Non-PEO NEO [Member] | Change In Fair Value Of Equity Awards Granted In Prior Years That Vested In Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
487,277
|
115,037
|
|
| Non-PEO NEO [Member] | Average Reported Value Of Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
(2,425,098)
|
(2,103,855)
|
(2,116,985)
|
| Non-PEO NEO [Member] | Average Equity Award Adjustments [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[11] |
14,291,773
|
9,598,297
|
9,735,277
|
| Non-PEO NEO [Member] | Average Reported Change In Actuarial Present Value Of Pension Benefits [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
(660,445)
|
(1,027,335)
|
(203,718)
|
| Non-PEO NEO [Member] | Average Pension Benefit Adjustments [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
[12] |
130,294
|
109,912
|
105,580
|
| Non-PEO NEO [Member] | Average Year End Fair Value Of Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
3,737,952
|
4,444,809
|
9,469,938
|
| Non-PEO NEO [Member] | Year Over Year Average Change In Fair Value Of Outstanding And Unvested Equity Awards [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
10,066,545
|
5,038,451
|
|
| Non-PEO NEO [Member] | Average Fair Value As Of Vesting Date Of Equity Awards Granted And Vested In Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
265,339
|
| Non-PEO NEO [Member] | Average Fair Value At End Of Prior Year Of Equity Awards That Failed To Meet Vesting Conditions In Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| Non-PEO NEO [Member] | Average Value Of Dividends Or Other Earnings Paid On Stock Or Option Awards Not Otherwise Reflected In Fair Value Or Total Compensation [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| Non-PEO NEO [Member] | Average Service Cost [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
130,294
|
109,912
|
105,580
|
| Non-PEO NEO [Member] | Average Prior Service Cost [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| Adjustment to Compensation Amount |
|
|
|
|
| Peo 1 [Member] |
|
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
|
| PEO Total Compensation Amount |
[13] |
16,216,964
|
15,185,385
|
10,439,082
|
| PEO Actually Paid Compensation Amount |
[14] |
$ 72,182,266
|
$ 30,945,947
|
$ 23,640,761
|
|
|
