On Dec. 9 something rather unusual happened: a well-paid executive voluntarily cut his own compensation. The CEO of Baltimore-based Constellation Energy, Mayo A. Shattuck III, took a pass on the golden parachute his contract entitled him to, an event so rare, footnoted.org compared it to sighting a unicorn.
Constellation has had a roller-coaster 18 months: the utility almost went bankrupt, then was on the verge of being saved by famed investor Warren Buffett, before striking a deal with a French partner to pursue a nuclear power deal. That became mired in its own series of regulatory hurdles, but is now moving forward.
Shattuck’s pay became a bit of a cause celebre as events unfolded, with Maryland Governor Martin O’Malley raising questions about the $87 million payout Shattuck would get after a change in control of the company. Shattuck told the Baltimore Sun that he understood the brouhaha. “Compensation became a big issue in the context of the collapse of the banks,” he said. “It’s a hot-button issue in an environment where it naturally strikes people as a contrast that leads to a lot of acrimony.”
Shattuck’s not the only CEO to take a nip to the Parachute. Black & Decker’s Nolan D. Archibald recently made a similar move, footnoted points out. But don’t jump to the conclusion that a wholesale re-think is under way. The threat to their golden exit packages is part of what got AIG executives in a tizzy recently. And Ross Perot Jr. who just orchestrated the sale of his company, Perot Systems, to Dell Computers got a severance payment of $3.9 million, which included a gross-up of $1.1 million to cover taxes. (This for losing the role of Chairman.) Small change compared to the $952.4 million he and his family, their foundation and a few other connected entities made selling their stock to Dell, but not too small to pass up it seems.
As the leader of a business that has to get its rates approved by a public board, Shattuck, may naturally be a little more sensitive to public opinion. As his spokesman told a local television station: “It’s just the right thing.”
How can you manage smarter? Bloomberg Businessweek contributors synthesize insights from the brightest business thinkers, critique the latest management trends, and comment on leaders in the news.