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Goodbye Golden Parachute

Posted by: Nanette Byrnes on December 15, 2009

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, 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.”

Reader Comments

Thomas Huynh

December 19, 2009 10:14 AM

The answer to the question of accepting an over-sized Golden Parachute in the midst of public outrage correlates to how much the person's dignity is worth to him or her. Apparently Mr. Shattuck's is worth a lot. But most of his peers, it is very very cheap.

Thomas Huynh, founder


March 28, 2010 7:41 AM

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