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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

       
þ   Filed by the Registrant o   Filed by a Party other than the Registrant

 

Check the appropriate box:
o Preliminary Proxy Statement
o CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Under Rule 14a-12

  

CONSTELLATION ENERGY CORPORATION

(Name of Registrant as Specified In Its Charter)

 
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

   
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee paid previously with preliminary materials.
o Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 

 

 

 
 

 

 
 

Letter From the Board of Directors to Shareholders

 

 

Letter From the Board of Directors to Shareholders

 

March 14, 2023

 

Dear Fellow Shareholders:

 

We are pleased to invite you to the first Annual Meeting of Shareholders of Constellation Energy Corporation, to be held on Tuesday, April 25, 2023, at 9:00 a.m. Eastern Time using a virtual-only format via audio webcast at www.virtualshareholdermeeting.com/CEG2023.

 

We have had a successful first year as a publicly traded company since our separation from Exelon Corporation last February, and we are meeting the commitments we made to you when we launched. Guided by our mission to fight the climate crisis, Constellation had strong performance in 2022, including best-in-class nuclear operations and an industry-leading customer business. Our nuclear fleet operated 94.8 percent of the time and our retail energy business was ranked first by customers.

 

We reported solid financial and operational results, and our long-term outlook has strengthened significantly with passage of the landmark Inflation Reduction Act, which recognizes the essential role of nuclear energy in achieving the nation’s climate goals, changes the risk profile of the company and ensures the future of these assets to help achieve America’s clean energy transition. Constellation supported our communities by providing family-sustaining jobs, including the hiring of approximately 2,000 new people across our business; contributing, along with our employees, $12.5 million to charitable organizations; and volunteering 80,000 hours in the communities we serve. With the Board’s oversight, Constellation created real value for our shareholders, customers, employees and communities.

 

Accelerating the Transition to a Carbon-Free Future

 

We launched the new Constellation with a mission to lead the fight against the climate crisis. As the nation’s largest producer of clean, carbon-free energy and a leading supplier of energy products and services to customers, Constellation is uniquely positioned to drive America’s clean energy transition. We operate the nation’s largest nuclear fleet, which along with our renewable facilities, has the generating capacity to power the equivalent of more than 15 million homes, producing approximately 11% of the nation’s carbon-free energy. The reliability and resiliency of nuclear energy’s value to the grid was proven yet again this year during Winter Storm Elliott, when our operated fleet ran at full capacity, preventing rolling blackouts for the 65 million people served by our nation’s largest energy grid.

 

We are helping our customers reach their sustainability goals, and we have set our own ambitious goal of achieving 95 percent carbon-free energy by 2030 and 100 percent by 2040. In addition, we are investing in new technologies at our clean energy centers to help decarbonize other industries using clean hydrogen and providing customers with innovative sustainability solutions, including hourly carbon-free energy matching.

 

Commitment to Strong Governance and Compensation Practices

 

The Board is actively engaged with management on Constellation’s most important issues and in ensuring effective corporate governance. This engagement includes ongoing review and assessment of performance versus financial targets and corporate strategy, including focused time for detailed consideration and debate on both near-term strategic decisions and long-term goal setting, as well as cybersecurity oversight, climate and sustainability matters, and other significant opportunities and risks.

 

Last summer, the Board assessed Constellation’s governance policies and procedures and ultimately amended committee charters to strengthen oversight responsibilities for sustainability, human capital management and certain risks, and revised our bylaws to adopt proxy access provisions in line with prevailing governance standards. Also, the inaugural year of our shareholder engagement program provided the Board with invaluable feedback, which we consider as we routinely evaluate our governance and compensation practices. Our Board is actively engaged in the company’s commitment to diversity, equity and inclusion (DEI), as well as the implementation of an executive compensation program design that incentivizes our management team to achieve goals aligned with creating long-term shareholder value.

 

    Constellation Energy Corporation 2023 Proxy Statement 1
 
 

Letter From the Board of Directors to Shareholders

 

 

Diversity, Equity & Inclusion (DEI) Commitment

 

At Constellation, our commitment to DEI is not only a foundational value — it is an ethical obligation. A business imperative, DEI advances our ability to achieve our vision by attracting, retaining and advancing employees who will best understand and serve our customers, partners, and communities, and providing an inclusive workplace.

 

Constellation’s DEI commitment means eliminating barriers and creating opportunities that ensure everyone has an equal opportunity to succeed. This year, we launched a $1 million Powering Change program aimed at improving job awareness and training, providing advancement and upskilling opportunities, and breaking down employment barriers for individuals from underrepresented communities. We also signed an historic pledge with the North American Building Trades Union to increase diversity in jobs that are critical in the nation’s transition to a clean energy future.

 

Thank You

 

As we reflect on our 2022 accomplishments, we would like to recognize the contributions and impact of our former Board colleague, Rhonda Ferguson, who sadly passed away early last year. We continue to miss Rhonda’s intelligence, professional expertise and dynamic personality, and send our warmest thoughts to her beloved family and dear friends.

 

Your vote is very important to us. We encourage you to carefully read the attached proxy statement, and we ask that you support our voting recommendations.

 

Thank you for your continued support of Constellation and the Board as stewards of your investment.

 

 

2  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Notice of Annual
Meeting of Shareholders

 

 

Virtual Meeting www.virtualshareholdermeeting. com/CEG2023.

 

Tuesday, April 25, 2023
9:00 a.m., Eastern Time

 

Record Date

March 1, 2023

 

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 2023:

Our proxy statement and 2022 Annual Report are available free of charge on our website constellationenergy.com or at www.proxyvote.com.

 

 

AT THE MEETING: Shareholders as of March 1, 2023 (the “record date”) may attend the virtual Annual Meeting and vote by using the 16-digit control number found on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials that you previously received.

 

Any shareholder of record attending the Annual Meeting may vote during the meeting, at www.virtualshareholdermeeting. com/CEG2023, even if they have voted over the Internet, by telephone or returned a completed proxy card. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a valid form issued in your name from that record holder.

   

 

To Shareholders of Constellation:

 

You are invited to participate in the 2023 Annual Meeting of Shareholders of Constellation. The Annual Meeting will take place in a virtual-only format. Shareholders may begin logging into the meeting on Tuesday, April 25, 2023 at 8:45 a.m. Eastern Time.

 

Items Of Business:

 
   

1.  To elect three Class I directors

     nominated by our Board of Directors;

 

2.  To consider and act on an advisory vote regarding the approval of compensation paid to our named executive officers;

 

3.  To consider and act on an advisory vote regarding the frequency of the approval of compensation paid to our named executive officers;

4.  To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2023; and

 

5.  To transact any other business properly brought before the meeting and any adjournment or postponement thereof.

   
   

Your vote is important, and you are encouraged to vote promptly whether or not you plan to virtually attend the 2023 Annual Meeting of Shareholders.

 

This proxy statement is provided in connection with a solicitation of proxies by the Board of Directors of Constellation Energy Corporation (the “Board”) to be used at the Annual Meeting of Shareholders to be held on Tuesday, April 25, 2023 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof (the “Annual Meeting”). This proxy statement is first being provided to our shareholders on or about March 14, 2023.

     
     
Voting    
     
Online By Phone By Mail
     

Vote online at www.proxyvote.com 24 hours a day.

Prior to the Annual Meeting, visit www.proxyvote.com
and use the control number that appears on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials when you access the webpage. You may also scan your QR Barcode above Use the Internet to transmit your voting instructions.

Call toll-free 1-800-690-6903

If your shares are held in the name of a broker, bank or other nominees, follow the telephone voting instructions provided on your voting instruction card. If your shares are registered in your name, call 1-800-690-6903 and follow the telephone voting instructions. You will need the 16-digit control number that appears on your proxy card, voting instruction form or notice of Internet Availability of Proxy Materials.

If you have received a printed version of these proxy materials, complete, date, sign and mail your proxy card in the enclosed postage-paid envelope provided, or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

   
   
  BY ORDER OF THE BOARD OF DIRECTORS
 
  Arden T. Phillips
  Corporate Secretary
  March 14, 2023

 

    Constellation Energy Corporation 2023 Proxy Statement 3
 
 

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 25, 2023 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof. On or about March 14, 2023, 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” beginning on page 94 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/CEG2023

 

4  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

 

Our Annual Meeting is taking place in a virtual-only format, which provides our shareholders with comparable opportunities to vote and ask questions that they would have at an in-person meeting. For more information, please see, “Questions and Answers About the Annual Meeting” beginning on page 94 of this proxy statement.

 

What Shareholders will be Voting On

 

  Items of Business Board’s Voting Recommendation Page
1 To elect three Class I directors nominated by our Board of Directors FOR ALL 26
2 To consider and act on an advisory vote regarding the approval of compensation paid to named executive officers FOR 53
3 To consider and act on an advisory vote regarding the frequency of the approval of compensation paid to named executive officers 1-YEAR 54
4 To ratify the appointment of PricewaterhouseCoopers LLP as Constellation’s independent registered public accounting firm for 2023 FOR 89
5 To transact any other business properly brought before the meeting and any adjournment or postponement thereof.

 

We are not aware of any other business to come before the Annual Meeting.

 

How to Vote in Advance of the Meeting

If you are a shareholder on the record date, you may vote in advance of the meeting in any of the following ways:

 

 

 

    Constellation Energy Corporation 2023 Proxy Statement 5
 
 

Proxy Summary

 

Constellation’s Business Strategy

 

Constellation’s Business Strategy

 

Our business strategy is focused on the acceleration of the nation’s transition to the use of carbon-free energy, delivering for our shareholders, and meeting the climate crisis as a premier ESG company. With revenues of more than $24.4 billion in 2022 and total assets of $46.9 billion, Constellation comprises both the nation’s largest carbon-free energy producer and a leading competitive energy supplier, producing approximately 11% of the nation’s carbon-free energy and helping America transition to a clean, sustainable future. Our skilled workforce of approximately 13,370 employees nationwide is an essential component of our operations, and allows us to safely run the largest, most reliable and resilient carbon-free energy fleet in America.

We aim to serve as a strategic partner to businesses and the federal, state and local governments that are setting ambitious carbon- reduction goals and seeking long-term solutions to the climate crisis. We are a leading advocate at the federal and state levels for policies that will reduce greenhouse gas (GHG) emissions and preserve and grow clean energy1. The principles of our sustainable business strategy demonstrate our commitment to a carbon-free future while maintaining a strong balance sheet, advancing our ESG initiatives and investing in carbon-free energy solutions. Our strategy builds on these principles:

Power America’s Clean Energy Future. We will operate and grow the nation’s largest fleet of carbon-free, zero-emissions generation facilities, with world-class levels of safety, reliability and resiliency.

Expand America’s Largest Fleet of Clean Energy Centers. We will leverage and expand our state-of-the-art carbon-free energy assets by exploring co-location of customer load, direct air capture of CO2, and producing clean hydrogen and other sustainable fuels to reduce industrial emissions.

Provide Energy and Sustainability Solutions for Customers. We will provide reliable, resilient energy and deliver innovative sustainability solutions that help customers achieve their carbon-free energy goals.

Uplift and Strengthen our Communities. We will advance respect, belonging, diversity and equity by driving community investment and creating family-sustaining carbon-free energy jobs.

We are proud of our role in accelerating America’s clean energy transition through our nearly 90 percent carbon-free generation fleet consisting of nuclear, wind, solar, hydroelectric and lower-carbon natural gas assets. Our fleet has a total generation capacity of more than 32,355 megawatts (MW). Through our integrated business operations, we sell electricity, natural gas and other energy-related solutions to various types of customers, including distribution utilities, municipalities, cooperatives, and commercial, industrial, public sector, and residential customers in markets across multiple geographic regions. We serve approximately 2 million total customers, including 75% of Fortune 100 companies, and approximately 1.6 million residential customers. Headquartered in Baltimore, Maryland, Constellation has business operations in 48 U.S. states, the District of Columbia, Canada and the United Kingdom.

 

(1)The terms “clean energy” or “clean” as used in this proxy statement refer to energy generated by facilities that do not emit greenhouse gases such as carbon dioxide or other harmful pollutants like nitrogen oxides and sulfur oxides during the generation process.

 

6  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

2022 Operational Highlights and Accomplishments

 

2022 Operational Highlights and Accomplishments

 

In 2022, the Board of Directors and the senior executive leadership team were focused on establishing Constellation as an independent, publicly traded company after its separation from its former parent, Exelon Corporation. In our inaugural year, we have made achievements that support long-term value creation with industry leading total shareholder return and strong financial and operational performance. For example, we accomplished the following in 2022:

 

 

 

(1)See the reconciliation to the corresponding GAAP measures set forth in Appendix A of this proxy statement.

 

    Constellation Energy Corporation 2023 Proxy Statement 7
 
 

Proxy Summary

 

Overview of Our Board and Director Nominees

 

Overview of Our Board and Director Nominees

 

The Board of Directors is composed of a diverse mix of highly experienced individuals who oversee Constellation’s strategy and business performance. The Board is currently classified and consists of three tiers of directors. In accordance with our bylaws, the Board will be fully de-classified following the 2026 Annual Meeting of Shareholders. The Corporate Governance Committee has recommended, and the Board has nominated, Joseph Dominguez, Julie Holzrichter and Ashish Khandpur for re-election as Class I directors. Upon election, each of the Class I directors will serve a three-year term or until his or her successor is elected and qualified, or his or her earlier death, resignation or removal. All of the nominees are presently members of the Board. The Board is recommending that all three nominees be elected by shareholders.

The following table provides summary information about each of the nominees for election at the 2023 Annual Meeting as well as the seven directors that are not currently standing for re-election.

 

Name

Class

Age

Director
Since

Independent

Current Committee
Memberships
Other Current Public
Company Boards

Laurie Brlas

Former Chief Financial Officer–
Newmont Mining Corporation

III 64 2022 Audit & Risk (Chair)

•   Albemarle Corporation

•   Graphic Packaging Holding Company

•   Autoliv, Inc.

Yves C. de Balmann
Executive Partner at Bridge Growth Partners
III 75 2022 Compensation (Chair)
Corporate Governance
•   ESI Group
Joseph Dominguez
President and Chief Executive Officer–Constellation
I 60 2022   N/A None
Bradley M. Halverson  
Former Chief Financial Officer– Caterpillar Inc.
II 61 2022 Compensation
Corporate Governance

•   Sysco Corporation

•   Lear Corporation

•   Satellogic, Inc.

Charles L. Harrington
Former Chairman–
Parsons Corporation
II 64 2022

Audit & Risk
Corporate Governance (Chair)

Nuclear Oversight

•  J.G. Boswell Company

•  JBT Corporation

•   Korn Ferry

Julie Holzrichter

Chief Operating Officer–CME Group

I 54 2022 Audit & Risk
Compensation
None

Ashish Khandpur

Group President, Transportation & Electronics–3M

I 55 2022 Compensation
Corporate Governance
None

Robert J. Lawless

Former Chief Executive Officer– McCormick & Company, Inc.

III 75 2022 Corporate Governance None

Admiral John M. Richardson

Former Chief of Naval
Operations–
U.S. Navy

III 62 2022 Audit & Risk
Nuclear Oversight (Chair)

•  The Boeing Company

•  BWX Technologies, Inc.

Nneka Rimmer

Former President, Global Flavors & Extracts–McCormick & Company, Inc.

II 51 2022 Audit & Risk
Nuclear Oversigh
t
•  Energizer Holdings

 

 

 

8  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

Compensation Program Structure

 

Compensation Program Structure

 

The primary elements of our executive compensation program include fixed and variable components which are summarized below. There were no one-time equity grants issued to executives in connection with the successful separation from Exelon Corporation in February 2022.

 

 

 

Pay Element Form Shareholder Alignment and Link to Strategy
Base Salary Cash •  Fixed income at competitive, market-based levels attracts and retains top talent
Annual Incentive Plan (“AIP”) Cash •  Motivates executives to achieve key annual financial and operational goals that reflect commitment to superior operations, shareholder returns and supporting our customers and communities
Long-Term Incentive Plan (“LTIP”) Performance Shares (67% of LTIP)    Rewards executives for achieving long-term performance goals relating to strong free cash flows, disciplined capital allocation strategy, a strong investment grade balance sheet and increasing shareholder value
Restricted Stock (33% of LTIP)   Provides incentive for executives to increase shareholder value and serves as a valuable retention tool

 

CEO Compensation in 2022

The Compensation Committee and the Board approved the following compensation for the CEO.

 

For 2022, 74.1% of the CEO’s total target direct compensation was in the form of long-term incentives. Consistent with our focus on aligning compensation with performance, 89.2% of our CEO’s 2022 compensation was at risk and variable.

 

In 2022, CEO base salary was increased 4.8% from $1,050,000 to $1,100,000.
The AIP target was increased from 135% to 140%.
The 2022 LTI target was set at $7,532,500.

 

    Constellation Energy Corporation 2023 Proxy Statement 9
 
 

Proxy Summary

 

Key Executive Compensation Practices

 

Key Executive Compensation Practices

 

Our executive compensation policies and programs are built upon a strong foundation of corporate governance and compensation best practices. Below is a high-level overview of certain elements of our executive compensation program.

 What We Do:    What We Don’t Do:

  Align pay for performance

  Maintain significant stock ownership requirements for Directors and Executive Officers

  Cap incentive awards and conduct an annual risk assessment of the compensation programs

  Subject change-in-control benefits to double trigger vesting

  Retain an independent compensation consultant that advises the Compensation Committee

•  Provide limited perquisites based on sound business rationale

  Subject incentive compensation awards to clawback provisions

  Review of pay equity by an independent third party

  Engage in year-round shareholder outreach

  Prohibit hedging, short sales, derivative transactions or pledging of Company stock

•  Assess our programs against peer companies and best practices

  Set appropriate levels of “stretch” in incentive targets

 

 

•  No guaranteed minimum payout of AIP or LTIP programs

  No employment agreements

  No excise tax gross-ups for change-in-control agreements

  The value of LTIP awards is not included in pension or severance calculations

  No option repricing or buyouts without stockholder approval

 

 

ESG Principles

 

We are committed to a carbon-free future while maintaining a strong balance sheet, advancing our environmental, social and governance (ESG) initiatives and investing in carbon-free energy solutions. Our ESG principles are core to our purpose and business strategy of supporting the transition to a carbon-free future. Our principles consist of these critical focus areas:

 

 

 

10  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

Sustainability

 

Sustainability

 

We provide carbon-free energy and services to help meet national climate goals and decarbonize the electric grid. Our values drive our people to function as a team and work towards our common purpose: accelerating the transition to a carbon-free future for the benefit of our customers, communities and shareholders. This purpose drives us to maintain our position as an industry leader in the production of 24/7 reliable and affordable carbon-free energy and encourages us to innovate and expand upon the carbon-free energy solutions we currently provide to businesses and communities across the United States.

 

Climate Change Commitments

 

We see the management of climate-related risks and opportunities as fundamentally intertwined with our business strategy and community engagement.

 

We have already reduced our greenhouse gas (GHG) emissions footprint by 80 percent since 2005.
We are committed to pushing even further as we accelerate the transition to a carbon-free energy future.
Our commitments start with continuing to expand the capabilities of our carbon-free energy generation and reducing our GHG emissions.

 

 

(1)Subject to policy support and technology advancements.
(2)Any emissions that cannot be technologically reduced by that time will be offset; Constellation commits to reducing methane emissions by 30% from 2020 by 2030.

 

Carbon-free, Safe and Reliable Energy

 

Many sectors of the economy are pivoting to electricity as the power source to reach their decarbonization goals, with electricity demand projected to double by 2050. We are well equipped to meet the need for carbon-free, reliable and affordable energy in the U.S. In 2020, our total emissions were lower than any major publicly traded U.S. power generator and our carbon intensity is more than four times less than our closest competitor.

 

Nuclear Fleet

 

Our nuclear fleet is well-positioned to complement the growth of renewable energy through its unparalleled grid-stabilizing generation, that provides zero-emissions power to the grid 24 hours a day, 7 days a week throughout every season of the year.
No other major form of energy production can provide this kind of around-the-clock, clean energy.
We operate our nuclear fleet at the highest possible performance standards while maintaining a clear focus on safety and leveraging best practice management models across our nuclear sites.
We have achieved a nuclear capacity factor of 94% or better every year since 2013 and have led the industry for over a decade and 14 of the last 16 years.
Production from our 21 gigawatts (GW) ownership share of 23 nuclear reactors totaled 173 terawatt hours of zero-emissions electricity in 2022, enough to power approximately 15 million homes.

 

    Constellation Energy Corporation 2023 Proxy Statement 11
 
 

Proxy Summary

 

Sustainability

 

Our Renewable Fleet

 

Constellation operates a robust fleet of renewables consisting of hydroelectric, wind and solar power which have a combined capacity of more than 2.6 GW.
We own and operate one of the nation’s largest solar power facilities in California that has a total generation capacity of 242 MW.
We also operate and have ownership interests in 27 wind projects across 10 states that have generating capacity of about 1,738 MW of electricity.
Our hydroelectric assets consist of two plants in Maryland and Pennsylvania.
The Conowingo Hydroelectric Generating Station can generate up to 572 MW of electricity, enough to power 165,000 homes, and can respond to changes in demand within 10 minutes.
Muddy Run Pumped Storage Facility can generate up to 1,070 MW of electricity by pumping water into the upper reservoir at night, when demand decreases, to power turbines during subsequent peak-demand periods.

 

Innovation and Technology Enablement

 

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.

 

Clean Energy Centers

 

Our nuclear generation facilities are carbon-free energy centers which we will leverage by exploring co-location of customer load, direct air capture of carbon dioxide, and producing clean hydrogen and other sustainable fuels to reduce industrial emissions.

 

Policy Engagement and Advocacy

 

We actively support energy policies that address the need for carbon-free energy generation in the U.S.
We are engaged in advocacy in connection with federal and state agency rulemaking and in the courts.

 

Energy Equity and Environmental Justice

 

Working within our communities, we will make environmental justice and energy equity a central focus of our actions and work to build a more equitable future for our employees, customers, business partners and community members.
Reducing the energy burden of communities is an important tenet of our focus on energy equity and environmental justice.
In 2022, we established Environmental Justice Principles to guide our efforts. For more on our approach to energy equity, please see our Environmental Justice Policy on our website at https://www.constellationenergy.com/sustainability/environment/esg-resources.htm.

 

 

 

 



 

12  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

Diversity, Equity and Inclusion (DEI)

 

Diversity, Equity and Inclusion (DEI)

 

Constellation operates in a world rich in diversity — in race, ethnicity, gender identification, sexual orientation, abilities, experiences, and thought. We know that engaging and supporting a diverse workforce at all levels of the organization is key to fostering innovation, growing an inclusive and engaged culture, and delivering strong performance.

 

Board Oversight of DEI

 

The Board of Directors is focused on building and maintaining a corporate culture that values and prioritizes diversity, equity, and inclusion, including with respect to Board composition. Diversity is, and has been, an important consideration in evaluating candidates for our Board. The Board also receives regular updates from senior management regarding the progress the company has made in achieving its overall DEI goals and objectives.

 

 

Our DEI Strategic Priorities

Strategic Talent
Sourcing

To be intentional in our sourcing efforts to attract talent and focus more effectively on diverse populations via relationships, technology, and manual efforts to increase diversity in our talent pipelines, applicant pools, interview slates and hires. We will grow our diverse candidate pool through new and unique sources including our workforce development efforts.

Workforce Development

To focus on elevating career awareness, fostering equitable access and advancing skills of workers from communities that have historically been underrepresented in the energy sector. Invest $1 million in community partners that are investing in historically underrepresented population and underserved community members to create family sustaining careers. Amplify our university, community college and technical college partnership with a focus on improving diversity within STEM majors.

Supplier Diversity

To make certified diverse and small businesses a natural part of our business environment, creating superior performance for our customers and achieving long-term growth and business success in our communities. We aim to increase Constellation spend directly with diverse suppliers as well as through non-diverse suppliers subcontracting to diverse supplies. We will expand education, dedication, and evaluation internally across Constellation functions and externally with supplier diversity councils and stakeholders.

Equity

To establish a governance structure through the DEI Center of Excellence and the creation of the DEI Advisory Board in 2022 centered around advancing diversity of thought, eliminating barriers and creating opportunities for our employees by establishing a culture of belonging.

 

    Constellation Energy Corporation 2023 Proxy Statement 13
 
 

Proxy Summary

 

Corporate Governance

 

Corporate Governance

 

Constellation is committed to maintaining the highest standards of corporate governance that promote the long-term interests of shareholders, strengthens Board and management accountability, and helps build public trust. Strong corporate governance is a fundamental aspect of our long-term sustainable business operations.

The Board provides oversight on the development and execution of our strategy, business operations and performance, enterprise risks, executive compensation, corporate citizenship, including sustainability and environmental stewardship, and governance practices.

Our Board is comprised of ten directors. All members, excluding Constellation’s President and CEO, are independent under criteria established by The Nasdaq Stock Market LLC (Nasdaq). Board membership is reviewed on an annual basis to ensure our Board members have a diverse set of characteristics, skills and experience necessary to maximize the success of our business and effectively represent shareholder interests. We also consider a diversity of backgrounds and perspectives, including with respect to age, gender, race, and specialized experience. Currently, 30% of Board members are women and 40% are deemed to be diverse under Nasdaq rules.

The Board has four standing committees. Each committee has clearly defined roles and responsibilities that are detailed in their respective charters.

   
The Audit & Risk Committee oversees and reviews the company’s financial statements, internal audit function, enterprise risk management processes and compliance with the Code of Business Conduct, and establishes procedures for complaints regarding accounting, internal accounting controls or auditing matters.
   
The Compensation Committee assists in establishing performance criteria, evaluation and compensation for the CEO and approves executive compensation programs for other executive officers. The committee also monitors and reviews leadership and succession planning for executive roles.
   
The Corporate Governance Committee reviews our environmental strategies, including climate and sustainability policies. The committee also identifies and recommends candidates for Board membership and advises on the evaluation process for the Board, its committees and directors.
   
The Nuclear Oversight Committee oversees the safe and reliable management and operation of our nuclear generating facilities. The committee also oversees compliance with policies and procedures to manage and mitigate risks associated with the security and integrity of our nuclear assets and reviews environmental, health and safety issues relating to nuclear generating facilities.
   

 

Board Governance

Our corporate governance structure is comprised of certain elements, including the following:

 

 

 

14  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proxy Summary

 

Shareholder Engagement

 

Shareholder Engagement

 

In 2022, Constellation contacted holders of nearly 80% of our outstanding shares with offers to engage. Portfolio managers and governance professionals who accepted invitations to engage included a significant cross-section of our shareholder base, representing approximately 34% of Constellation’s outstanding shares. We believe that engaging with our investors provides valuable insights for the Board and its committees into investor perspectives and priorities. During 2022, our engagement team, comprising members of the Office of Corporate Governance, Investor Relations, Sustainability, Executive Compensation, and Human Resources departments, met to discuss a wide variety of issues with investors. Topics covered in our engagement meetings included: business operations and strategy, sustainability and climate matters, executive compensation, human capital and board composition and effectiveness. The feedback received from shareholders and other stakeholder groups was shared with each Board committee and the Board, as appropriate.

 

We believe that our approach to engaging openly with our investors on topics such as environmental strategy, corporate governance, executive compensation and other issues drives increased accountability, improves decision making, and ultimately creates long-term value. We plan to generally incorporate the following elements into our shareholder engagement process going forward.

 

 

 

Responsiveness to Investor Feedback in 2022

 

Feedback from shareholders indicated that there were no desired changes to our environmental, social and governance policies and practices at this time. During our outreach in the fall and winter of 2022, we committed to conduct future engagement to continue to learn more about the priorities and issues that matter most to our shareholders.

 

    Constellation Energy Corporation 2023 Proxy Statement 15
 
 

Table of Contents

 

Proxy Summary 5
Cautionary Statements Regarding Forward-Looking Information 17
About Us 18
Proposal 1: Election of Directors 26
Our Director Nominees 27
Corporate Governance 33
Director Qualification and Nomination Criteria 33
Board Skills 34
Board Diversity 36
Board Leadership Structure 37
Board Committees 38
Director Independence 41
Board Role in Risk Oversight 42
Board Oversight of ESG 43
Board and Committee Evaluations 43
New Director Orientation 45
Director Compensation 46
Ownership of Constellation Stock 49
Process for Communicating with the Board 51
Shareholder Engagement 51
Proposal 2: Say-On-Pay: Advisory Vote on Executive Compensation 53
Proposal 3: Frequency of Future Advisory Votes on Executive Compensation 54
Compensation Committee Report 55
Compensation Discussion and Analysis 55
Summary Compensation Table 70
Grant of Plan-Based Awards 72
Outstanding Equity Awards at Year End 73
Option Exercises and Stock Vested 74
Potential Payments Upon Termination or Change in Control 77
Pay Versus Performance 82
CEO Pay Ratio 87
Report of the Audit & Risk Committee 88
Proposal 4: Ratification of PricewaterhouseCoopers LLP as Constellation’s Independent
Registered Public Accounting Firm for 2023
89
Questions and Answers About the Annual Meeting 94
Appendix A— Definitions of Non-GAAP Measures A-1

 

16  Constellation Energy Corporation 2023 Proxy Statement    
 
 

 

 

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 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, 2022, 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 EBITDA, adjusted EBITDA 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.

 

    Constellation Energy Corporation 2023 Proxy Statement 17
 
 

About Us

 

 

About Us

Headquartered in Baltimore, Maryland, Constellation is the nation’s largest producer of carbon-free energy and a leading competitive retail supplier of power and energy products and services for homes and businesses across the United States. Our carbon-free generation fleet produces enough energy to power the equivalent of approximately 15 million homes. We are helping to accelerate the nation’s transition to clean energy with more than 32,355 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydro assets and annual output that is approximately 90% carbon-free.

Already the lowest carbon emitter of any major investor-owned U.S. generator, we have set a goal to eliminate 100% of our Scope 1 and Scope 2 greenhouse gas (GHG) emissions by leveraging innovative technology and enhancing our diverse mix of hydro, wind and solar resources, paired with the nation’s largest carbon-free nuclear fleet. We produce approximately 11% of the nation’s carbon-free energy, making us an indispensable partner to businesses and state and local governments that are setting ambitious carbon- reduction goals and seeking long-term solutions to the climate crisis. Other important details about Constellation include:

Constellation is also one of the nation’s largest energy suppliers, selling electricity, natural gas and other energy-related solutions to approximately 2 million total customers, including 75% of Fortune 100 companies
We are committed to a carbon-free future while maintaining a strong balance sheet, advancing our ESG initiatives and investing in carbon-free energy solutions
As the business case for climate action builds momentum, we will continue to partner with businesses and governments committed to setting ambitious carbon-reduction goals and seeking long-term solutions to the climate crisis
Our disciplined capital allocation strategy supports a strong investment grade balance sheet and our growth investment is consistent with our corporate strategy
We will continue to build on strong, established foundations to deliver value to customers, communities, and shareholders

 

Constellation’s Value Proposition

Our value proposition is illustrated below.

 

 

18  Constellation Energy Corporation 2023 Proxy Statement    
 
 

About Us

 

Separation from Exelon

 

Separation from Exelon

On February 1, 2022, Constellation separated from Exelon as an independent publicly traded company. The separation resulted in the establishment of Exelon as the nation’s largest fully regulated transmission and distribution utility company and Constellation as the largest producer of carbon-free power paired with a leading customer-facing platform, that includes carbon- free, sustainable energy solutions.

The separation was designed to unlock strategic flexibility for each company to focus on its core business strategies to better meet evolving customer needs and stakeholder goals. The separation gave each company the financial and strategic independence to focus on its specific customer needs, while executing its core business strategy with the resources necessary to best serve customers and sustain long-term investment and operating excellence. As a result of the separation. Constellation also gained the agility to adapt to a rapidly changing energy landscape.

Constellation Business Strategy

We are dedicated to accelerating the nation’s transition to a clean energy future and aim to serve as a strategic partner to businesses and federal, state and local governments that are setting ambitious carbon-reduction goals and seeking long-term solutions to the climate crisis. We will be a leading advocate at the federal and local levels for policies that will reduce GHG emissions and preserve and grow clean energy.

The principles of our sustainable business strategy demonstrate our commitment to a carbon-free future while maintaining a strong balance sheet, advancing our ESG initiatives and investing in carbon-free energy solutions. Our strategy builds on four principles:

Power America’s Clean Energy Future. We will operate and grow the nation’s largest fleet of carbon-free, zero-emissions generation facilities, with world-class levels of safety, reliability and resiliency.

Expand America’s Largest Fleet of Clean Energy Centers. We will leverage and expand our state-of-the-art carbon-free energy assets by exploring co-location of customer load, direct air capture of CO2, and producing clean hydrogen and other sustainable fuels to reduce industrial emissions.

Provide Energy and Sustainability Solutions for Customers. We will provide reliable, resilient energy and deliver innovative sustainability solutions that help customers achieve their clean energy goals.

Uplift and Strengthen our Communities. We will advance respect, belonging, diversity and equity by driving community investment and creating family-sustaining clean energy jobs.

 

We are committed to reducing our GHG emissions as follows:

 

  (1)Subject to policy support and technology advancements.
  (2)Any emissions that cannot be technologically reduced by that time will be offset; Constellation also commits to reducing methane emissions by 30% from 2020 levels by 2030.

 

    Constellation Energy Corporation 2023 Proxy Statement 19
 
 

About Us

 

Constellation Business Strategy

 

Our goals are ambitious, but we begin from a position of strength. Already we are the nation’s largest producer of carbon-free energy, and nearly 90% of our generation comes from emissions-free nuclear, solar, wind and hydroelectric resources. Also, we produce nearly twice as much carbon-free energy as any other U.S. generator.

Our Nuclear Assets

Because of our always-on nuclear fleets, the country relies less on fossil fuel energy to backstop intermittent resources, reducing emissions in communities that are burdened by air pollution.

In addition, nuclear power is one of the most cost-effective forms of carbon-free electricity. Unlike other forms of carbon-free energy, the nuclear fleet operates reliably around the clock, every day of the year and through the most extreme weather, making it foundational to America’s resilient and affordable carbon-free energy future. And we can extend the life of our nuclear assets to a full 80 years, longer than any other carbon- free energy source, allowing us to deliver more reliable, emissions-free energy to the nation in the years to come.

Our nuclear fleet is well-positioned to complement the growth of renewable energy through its grid-stabilizing generation fleet, which provides zero-emissions power to the grid 24 hours a day, 7 days a week throughout every season of the year. No other form of energy production can provide this kind of around-the-clock, emissions-free energy.

We operate our nuclear fleet at the highest possible performance standards while maintaining a clear focus on safety and leveraging best practice management models across our nuclear sites.

Production from our 21 gigawatt (GW) ownership share of 23 nuclear reactors totaled 173 terawatt hours of zero-emissions electricity in 2022. Also, we have achieved a nuclear capacity factor of 94% or better every year since 2013 and have led the industry for over a decade and 14 of the last 16 years.

Our product offerings include energy efficiency, on- and off-site renewable energy and digital technology aimed at helping customers better manage their energy use and track their emissions. Our leading customer platform is ranked #1 for commercial and industrial businesses, and together with the nation’s largest carbon-free energy fleet can help build a carbon-free economy.

 

At the core of our strategy is a belief that our nuclear plants can do more than just provide carbon-free energy to the grid 24 hours a day, 7 days a week, 365 days a year. We envision them operating as clean energy centers that enable new and emerging technologies and products to decarbonize parts of the U.S. economy that, up until now, have defied easy solutions and allow us to make beneficial use of excess carbon-free energy on the grid.

We are currently pursuing multiple technologies and products that align with our business strategy and would contribute to a carbon-free transition including: carbon-free hydrogen, direct air capture and hourly carbon-free energy matching.

 

20  Constellation Energy Corporation 2023 Proxy Statement    
 
 

About Us

 

Constellation Business Strategy

 

Carbon-Free Hydrogen

While Constellation is already the nation’s largest producer of carbon-free electricity, we are also leveraging our carbon-free fleet to help decarbonize other hard to decarbonize industries. Working with the U.S. Department of Energy (DOE), Constellation is pioneering research at our Nine Mile Point Nuclear Station in upstate New York to demonstrate that hydrogen can be produced with carbon-free nuclear energy.

Sustainable fuels and other products produced with hydrogen hold the key to decarbonizing industries and processes that defy easy climate solutions, such as long-haul shipping, agriculture, steelmaking and aviation, as well as clean fertilizers that will grow sustainable foods. We are seeking to expand hydrogen production to other plants in our fleet and are exploring ways to reduce emissions at our fossil plants by blending clean hydrogen with natural gas.

Direct Air Capture

While we work toward zero-emissions, we are exploring ways to go even further. Through a separate DOE grant, we are exploring the potential for direct air capture (DAC) technology at our Byron nuclear plant in northern Illinois. While nuclear plants produce no carbon emissions, DAC technology captures carbon dioxide (CO2) directly from the atmosphere, a possible next-generation technology to combat the climate crisis. In this way, nuclear plants have the potential not only to be carbon-free, but carbon negative.

Hourly Carbon-Free Energy Matching

Matching energy demand with power generation and delivery in real time is fundamental to the design and engineering of the modern grid going back 100 years. In turn, a true clean energy grid will require enough carbon-free energy to meet demand for every hour of every day. With our nuclear fleet, Constellation is uniquely positioned to provide carbon-free energy to consumers whenever they need it, for whatever needs to be powered, wherever they are in the region. We are working towards developing an hourly carbon-free energy matching technology that will help customers across the country achieve true-zero emissions, as opposed to the current practice of annualizing renewable energy certificates. We anticipate that our hourly solution will be the most advanced, real-time carbon accounting solution of its kind, going beyond other net zero programs that aggregate carbon-free energy megawatts over time, and giving customers clearer and more accurate data on their emissions impact.

Empowering Our Communities

These and other emerging technologies hold the key to solving the climate crisis and transforming our economy. As we continue to invest in the future of our industry, we also recognize our responsibility to invest in our communities and the workforce of tomorrow. In 2022, Constellation provided $12.5 million to charitable causes, including $4.6 million from our employees. In addition to their dollars, our employees donated approximately 80,000 hours of volunteer time.

 

    Constellation Energy Corporation 2023 Proxy Statement 21
 
 

About Us

 

ESG Overview

 

ESG Overview

Our environmental, social and governance (ESG) principles are core to our purpose and business strategy of supporting the transition to a carbon-free future, and we believe these attributes make us a premier ESG company in the power sector.

Our principles consist of these critical focus areas:

 

 

Board Oversight of ESG

Our Board oversees the company’s ESG and sustainability efforts. In particular, our Board monitors our sustainability practices through oversight by the Corporate Governance Committee, which reviews our environmental strategies, including climate and sustainability policies. We also have designated leadership and team members to help advance our ESG principles, including the formation of the Constellation Sustainability Council, comprised of executives across the company. The Sustainability Council reviews sustainability policies and activities, ensures alignment with our purpose statement, reviews emerging ESG trends and makes recommendations to management on sustainability policies.

Sustainability

Our sustainability values drive our people to function as a team and work towards our common purpose: accelerating the transition to a carbon-free future for the benefit of our customers, communities and shareholders. This purpose drives us to maintain our position as an industry leader in the production of 24/7 reliable and affordable carbon-free energy and encourages us to innovate and expand upon the carbon-free energy solutions we currently provide to businesses and communities across the United States.

Climate Change Commitments

We see the management of climate-related risks and opportunities as fundamentally intertwined with our business strategy and community engagement.

We have already reduced our greenhouse gas (GHG) emissions footprint by 80% since 2005.
We are committed to pushing even further by continuing to expand the capabilities of our carbon-free energy generation and reducing our GHG emissions.

 

Carbon-free, Safe and Reliable Energy

Many sectors of the economy are pivoting to electricity as the power source to reach their decarbonization goals, with electricity demand projected to double by 2050. We are well equipped to meet the need for clean, reliable and affordable energy in the U.S., where we produce nearly as much carbon-free energy as our next two largest competitors combined. In 2020, our total emissions were lower than any major publicly traded U.S. power generator and our carbon intensity is more than four times less than our closest competitor.

 

22  Constellation Energy Corporation 2023 Proxy Statement    
 
 

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 more than 2.6 GW.
We own and operate one of the nation’s largest solar power facilities in California that has a total generation capacity of 242 MW.
We also operate and have ownership interests in 27 wind projects across 10 states that have generating capacity of about 1,738 MW of electricity.
Our hydroelectric assets consist of two plants in Maryland and Pennsylvania.
The Conowingo Hydroelectric Generating Station can generate up to 572 MW of electricity, enough to power 165,000 homes, and can respond to changes in demand within 10 minutes.
Muddy Run Pumped Storage Facility can generate up to 1,070 MW of electricity by pumping water into the upper reservoir at night, when demand decreases, to power turbines during subsequent peak-demand periods.

 

Innovation and Technology Enablement

Our culture embraces innovation to achieve a clean energy future.
We focus on three key trends or categories of technological transformation that: Decarbonization, Digitalization and Diversification.

 

Clean Energy Centers

Our nuclear generation facilities are clean energy centers which we will leverage by exploring co-location of customer load, direct air capture of carbon dioxide, and producing clean hydrogen and other sustainable fuels to reduce industrial emissions.

 

Policy Engagement and Advocacy

We actively support energy policies that address the need for carbon- free energy generation in the U.S.
We are engaged in advocacy in connection with federal and state agency rulemaking and in the courts.

 

Energy Equity and Environmental Justice

Working within our communities, we will make environmental justice and energy equity a central focus of our actions and work to build a more equitable future for our employees, customers, business partners and community members.
Reducing the energy burden of communities is an important tenet of our focus on energy equity and environmental justice.
In 2022, we established Environmental Justice Principles to guide our efforts. For more on our approach to energy equity, please see our Environmental Justice Policy on our website at https://www.constellationenergy.com/sustainability/environment/esg-resources.htm.

 

 

 

    Constellation Energy Corporation 2023 Proxy Statement 23
 
 

About Us

 

Diversity, Equity & Inclusion

 

Diversity, Equity & Inclusion (DEI)

Constellation operates in a world rich in diversity — in race, ethnicity, gender identification, sexual orientation, abilities, experiences, and thought. We know that engaging and supporting a diverse workforce at all levels of the organization is key to fostering innovation, growing an inclusive and engaged culture, and delivering strong performance.

Our employees are our greatest asset and form the foundation of our success – we cultivate a workplace culture where all individuals can grow and develop to contribute to their full potential. We are committed to recruiting, developing and supporting an innovative, diverse team of employees that reflects the communities we serve.

Board Oversight of DEI

The Board of Directors is focused on building and maintaining a corporate culture that values and prioritizes diversity, equity, and inclusion, including with respect to Board composition. Diversity is, and has been, an important consideration in evaluating candidates for our Board. The Board also receives regular updates from senior management regarding the progress the company has made in achieving its overall DEI goals and objectives.

Key Elements of Our DEI Mission

 

 

Our DEI Strategic Priorities

 

Strategic Talent Sourcing

To be intentional in our sourcing efforts to attract talent and focus more effectively on diverse populations via relationships, technology, and manual efforts to increase diversity in our talent pipelines, applicant pools, and interview slates. We will grow our diverse candidate pool through new and unique sources including our workforce development efforts.

Workforce Development

To focus on elevating career awareness, fostering equitable access and advancing skills of workers from communities that have historically been underrepresented in the energy sector. Invest $1 million in community partners that are investing in historically underrepresented populations and underserved community members to create family sustaining careers. Amplify our university, community college and technical college partnership with a focus on improving diversity within STEM majors.

Supplier Diversity

To make certified diverse and small businesses a natural part of our business environment, creating superior performance for our customers and achieving long-term growth and business success in our communities. We aim to increase Constellation spend directly with diverse suppliers as well as through non-diverse suppliers subcontracting to diverse supplies. We will expand education, dedication, and evaluation internally across Constellation functions and externally with supplier diversity councils and stakeholders.

Equity

To establish a governance structure through the DEI Center of Excellence and the creation of the DEI Advisory Board in 2022 centered around advancing diversity of thought, eliminating barriers and creating opportunities for our employees by establishing a culture of belonging. 

 

24  Constellation Energy Corporation 2023 Proxy Statement    
 
 

About Us

 

DEI Highlights

 

DEI Highlights

Powering Change: $1 million investment in workforce development community partners that are investing in underrepresented populations and underserved communities to create family sustaining careers.

 

PowerEd: Holistic engagement with educational institutions, including Historically Black Colleges and Universities (HBCUs) and other institutions impacting underserved communities to improve diversity within STEM majors.

 

Constellation Scholars: Partnerships across the country to provide scholarships specifically geared toward students with diverse backgrounds or from underserved communities looking to pursue careers in STEM.

 

Nuclear Summer Camps: Funding for high school students from underserved communities to participate in college summer camps and STEM education across six universities.

 

Trades Engagement: Partnerships and participation with various trade groups and local vocational schools to build the pipeline of individuals not historically represented within the building trades for our craft positions.

 

Constellation Diverse Business Empowerment Strategy: Education, dedication, and increased spend directly with diverse suppliers as well as through non-diverse suppliers subcontracting to diverse suppliers.

 

Employee Resource Groups (ERGs): Constellation supports nine ERGs that are open to all employees to share experiences and connect with colleagues. Over 4,000 employees participate in at least one ERG, and there are over 64 chapters spread across the company.

 

DEI Resources and Webinars: Regular communication messaging from senior leadership which reinforces our DEI values and expectations as well as DEI highlights engagement opportunities, unconscious bias training, and educational resources for employees.

 

Association Partnership and Alignment: Support local and national associations or organizations dedicated to professional development, community engagement, and advocacy for diverse populations. Constellation has also signed pledges with the CEO Action for Diversity and Inclusion, and the Human Rights Campaign.

 

Pay Equity: As a component of our commitment to equity in all of our actions and employment decisions, Constellation conducts an annual analysis on gender and racial pay equity. We also review hiring and promotion processes to neutralize any unconscious bias and embed equal pay efforts into broader enterprise-wide equity initiatives. These actions reflect our commitment to create an environment where all employees can thrive and advance as equal members of the workforce.

 

Religious Accommodations: Company policy provides for reasonable accommodation of employees’ religious practices including time and space for prayer and accommodations for religious dress/attire and dietary restrictions.

 

    Constellation Energy Corporation 2023 Proxy Statement 25
 
 

Proposal 1:

Election of Directors

We currently have a classified board structure that is being phased out over a three-year period beginning at the 2023 Annual Meeting of Shareholders. The Corporate Governance Committee has recommended, and the Board has nominated, our current Class I directors, Joseph Dominguez, Julie Holzrichter and Ashish Khandpur for re-election by shareholders as Class I directors. The initial term of the Class I directors will expire at the 2023 Annual Meeting of Shareholders. Upon re-election, each such director will serve a three-year term through 2026 or until his or her successor is elected and qualified, or his or her earlier death, resignation or removal. All of the nominees are presently members of the Board, and the Board is recommending that all three nominees be elected.

Nneka Rimmer, Bradley Halverson and Charles Harrington are Class II directors whose terms will expire at the 2024 Annual Meeting. At the 2024 Annual Meeting, the Class II directors will then be nominated to stand for re-election for a two-year term through 2026. Laurie Brlas, Yves de Balmann, Robert Lawless and John Richardson are Class III directors whose terms will expire at the 2025 Annual Meeting. At the 2025 Annual Meeting of Shareholders, the Class III directors will be nominated to stand for re-election for a one-year term through 2026. Commencing in 2026, all of our directors will stand for election each year for annual terms and following the 2026 Annual Meeting of Shareholders, our Board will no longer be divided into three classes.

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 contingent upon acceptance of such offer of resignation by the Board if the director receives a plurality of the votes cast but fails to receive a majority of the votes cast in an election that is not a contested election. If an incumbent director receives a plurality of the votes cast, but does not receive a majority of the votes cast in an election that is not a contested election, 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 or on 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.

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.

 

 

 

26  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

Our Director Nominees

Biographies of Class I Directors with Terms Expiring at the 2023 Annual Meeting

A brief biography regarding the background and qualifications of each director nominee is provided on the following pages. Each nominee’s biographical information includes a description of the director’s experience, qualifications, attributes and skills that qualify him or her to serve on the Board of Directors.

 

 

 

Committees:

None

 

Other current public
directorships:

None

  Joseph Dominguez
President and Chief Executive
Officer — Constellation

Age: 60

Director Since: February 2022
Director Nominee

     
 

Mr. Dominguez is the President and Chief Executive Officer of Constellation. As President and Chief Executive Officer, Mr. Dominguez oversees Constellation’s carbon-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. 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.

 

Particular 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.

 

 

    Constellation Energy Corporation 2023 Proxy Statement 27
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

 

 

 

Committees:

Audit & Risk

Compensation

 

Other current public
directorships:

None

 

 

  Julie Holzrichter
Chief Operating Officer — CME Group Inc.

Age: 54

Director Since: February 2022
Independent Director Nominee

     
 

Ms. Holzrichter is Chief Operating Officer of CME Group Inc., the world’s leading derivatives marketplace. Prior to being appointed to her current role in 2014, Ms. Holzrichter held a series of roles with increasing responsibility at CME Group Inc., including senior managing director of Global Operations from 2012 to 2014; managing director, Global Operations from 2007 to 2012; and director, Operations, from 2006-2007, among others. She has led the integration of global operations for a number of multi-billion-dollar mergers and acquisitions throughout her tenure.

Ms. Holzrichter serves on the board of the National Futures Association and she is a member of the Futures Industry Association and Women in Listed Derivatives.

 

She previously served on DePaul University’s Finance Advisory Board and DePaul University’s Arditti Center for Risk Management Advisory Board.

 

 

 

 

 

 

Particular experience, attributes or skills that qualify candidate for Board membership:

Ms. Holzrichter brings substantial senior management, operational and financial experience to the Board through her long tenure of increasing responsibility with CME Group, which is a highly regulated global business. She has served as the Chief Operating Officer of CME Group since 2014 and is responsible for managing the company’s global operations and clearing and post-trade service division. Her operational, leadership, financial and technology experience provides the Board with valuable insight and expertise that is relevant to the Board’s oversight of complex financial, operational, cybersecurity, technology and investments risks that are critical to Constellation’s operations, business and growth.

 

 

 

 

 

Committees:

• Compensation

• Corporate Governance

 

Other current public
directorships:

None

  Ashish Khandpur
Group President, Transportation &
Electronics — 3M Company

Age: 55

Director Since: February 2022
Independent Director Nominee

     
 

Dr. Ashish Khandpur serves as Group President of the multi-billion Transportation & Electronics business group for 3M Company, a global corporation operating in the fields of transportation, electronics, industrial, worker safety, health care and consumer. During his 28-year career with 3M, Dr. Khandpur has held a series of roles with increasing responsibility, including Executive Vice President, Transportation & Electronics business group, from 2019 to 2021; Executive Vice President, Electronics & Energy business group, from 2017 to 2019; Senior Vice President, Research & Development and Chief Technology Officer, from 2014 to 2017, among other roles.

Dr. Khandpur is a member of the Dean’s Advisory Board, College of Science and Engineering, for the University of Minnesota and served as a trustee for the University of St. Thomas from 2017 to 2021. Dr. Khandpur also served as a director for the 3M Foundation from 2012 to 2017, and he also served as a director for 3M India in 2014.

 

 

 

 

Particular experience, attributes or skills that qualify candidate for Board membership:

Dr. Khandpur’s extensive engineering background, deep experience in complex global operations and research and development provide an invaluable perspective to the Board. Based on his 28 years of experience at 3M, Dr. Khandpur brings to the Board his unique perspectives on leadership, innovation, and new business creation through application of technology to customer or market needs and challenges. Additionally, his technological and operational experience provides the Board with valuable insight and expertise that is relevant to the Board’s oversight of complex financial, operational, cybersecurity and technology risks that are critical to Constellation’s business, operations and growth.

 

28  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proposal 1: Election of Directors

 

Current Class II Directors

 

Biographies of Continuing Class II Directors with Terms Expiring at the 2024 Annual Meeting

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 2023 Annual Meeting of Shareholders.

 

 

 

Committees:

Audit & Risk

Nuclear Oversight

 

Other current public
directorships:

•  Energizer Holdings, Inc. (since 2018)

  Nneka Rimmer
Former President, Global Flavors & Extracts —
McCormick & Company, Inc.

Age: 51

Director Since: November 2022
Independent Director

     
 

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 2019-2022; 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 boards of Wellness Pet LLC and Wheel Pros LLC, two private equity-owned consumer products companies. Additionally, Ms. Rimmer serves as a trustee of the University of Maryland, Baltimore.

 

Particular 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.

 

 

 

 

 

Committees:

• Compensation

• Corporate Governance

 

Other current public
directorships:

•  Sysco Corporation (since 2016)

  Lear Corporation (since 2020)

  Satellogic, Inc.
(since 2022)

  Bradley M. Halverson
Former Group President, Financial Products and Corporate Services and Chief Financial Officer—Caterpillar Inc.

Age: 61

Director Since: February 2022
Independent Director

     
 

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 as Group President, Financial Products and Corporate Services and Chief Financial Officer 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; an independent director and a member of the Audit and People & Compensation Committees of the board of Lear Corporation, a global automotive technology company; and an independent director and chair of the Audit Committee of the board of Satellogic, Inc., a company specializing in Earth-observation satellites.

 

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 Foundations, previously served as Chairman of the board of directors of Easterseals Central Illinois and served on the OSF St. Francis Medical Center Community Foundation Board.

 

 

Particular 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.

 

    Constellation Energy Corporation 2023 Proxy Statement 29
 
 

Proposal 1: Election of Directors

 

Current Class II Directors

 

 

 

 

Committees:

 Audit & Risk

  Corporate Governance (Chair)

 Nuclear Oversight

 

Other current public
directorships:

•  J.G. Boswell Company (Since 2015)

  JBT Corporation
(since 2021)

•  Korn Ferry (since 2022)

  Charles L. Harrington
Former Executive Chairman and Chief
Executive Officer — Parsons Corporation

Age: 64

Director Since: February 2022
Independent Director Nominee

     
 

Mr. Harrington is the former Chairman, Chief Executive Officer and President of Parsons Corporation, a technology services company in the global defense, intelligence and critical infrastructure markets. Before becoming Chairman, Mr. Harrington served as Chairman and Chief Executive Officer of Parsons from 2008 to 2021, after serving in series of positions with increasing responsibility, including Executive Vice President, Chief Financial Officer and Treasurer from 2006 to 2008; President, Commercial Technology Group, from 2003 to 2006; and President, Communications Technology Group, from 1999 to 2002, among others.

Mr. Harrington also serves as a member of the board of directors of JBT Corporation, J.G. Boswell Company, Korn Ferry and the Cal Poly Foundation. He previously served as a member of the board of directors of The AES Corporation, a global energy company, from 2013 to 2020.

 

 

 

 

 

 

 

 

 

 

 

Particular experience, attributes or skills that qualify director for Board membership:

Mr. Harrington's extensive leadership experience in operations, finance and business development that he developed while serving as Chairman and Chief Executive Officer of Parsons Corporation is important to the Board as it oversees the management of Constellation’s strategy and growth. Coupled with his financial expertise as a former Chief Financial Officer and Treasurer, along with his engineering technical expertise encompassing large infrastructure projects and nuclear projects Mr. Harrington brings a broad range of expertise to the board. His deep executive leadership experience and his prior service on the board of a large public energy company that owns utilities and global power generation assets brings to the Board significant oversight expertise.

 

 

30  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Proposal 1: Election of Directors

 

Current Class III Directors

 

Biographies of Continuing Class III Directors with Terms Expiring at the 2025 Annual Meeting

As explained above, the Board is classified until the 2026 Annual Meeting and, therefore, the following individuals who are Class III directors will not stand for re-election at the 2023 Annual Meeting of Shareholders.

 

 

 

Committees:

Audit & Risk

 

Other current public
directorships:

•  Albemarle Corporation (since 2017)

  GraphicPackaging Holding Company (since 2019)

  Autoliv, Inc. (since 2020)

  Laurie Brlas
Former Executive Vice President and Chief
Financial Officer — Newmont Mining Corporation

Age: 64

Director Since: February 2022
Independent Director

     
 

Prior to her retirement in 2016, Ms. Brlas served as Executive Vice President and Chief Financial Officer of Newmont Mining Corporation, a leading gold and copper producer with U.S. and international operations. From 2006 to 2013, Ms. Brlas served in a series of senior leadership positions at Cliffs Natural Resources, an iron ore producer, including as Executive Vice President and President, Global Operations. Prior to that, Ms. Brlas served as Senior Vice President and Chief Financial Officer of STERIS Corporation, a provider of infection prevention and other procedural products and services, from 2000 to 2006, and from 1995 to 2000 she held a series of positions with increasing responsibility with Office Max, Inc., an office products retailer. Ms. Brlas is a certified public accountant and certified management accountant.

Ms. Brlas currently serves as an independent director, Chair of the Audit & Finance Committee and a member of the Capital Investment Committee of the board of Albemarle Corporation, a global chemical manufacturer; an independent director and member of the Compensation and Management Development and Nominating and Corporate Governance Committees of Graphic Packaging Holding Company, which specializes in the design and manufacturing of packaging for commercial products; and an independent director and member of the Audit and Risk and Nominating and Corporate Governance Committees of the board of Autoliv, Inc., an automotive safety supplier. She previously served as a director of Perrigo Company plc, a global healthcare company, from 2003 to 2019, Calpine Corporation, an energy company, from 2016 to 2018 and NOVA Chemical Corporation, a plastics and chemical manufacturer, from 2008 to 2009. Ms. Brlas previously served as a member of the board of Exelon Corporation from 2018 through 2022.

 

 

Particular experience, attributes or skills that qualify director for Board membership:

Ms. Brlas has deep expertise in accounting, financial reporting and corporate finance, and has executive leadership and management experience that she brings to the Board as it oversees Constellation’s business, financing and public reporting. Ms. Brlas’ service on the board of directors of several companies also provides the Board with critical perspectives on complex financial and operational issues. Her past executive leadership experience and extensive service on the boards of publicly traded companies also provides the Board with valuable insight and expertise that is relevant to the Board’s oversight of complex financial, operational and investments risks that are critical to Constellation’s operations, business and growth.

 

 

 

 

Committees:

  Compensation (Chair)

  Corporate Governance

 

Other current public
directorships:

•  ESI Group (since 2016)

  Yves C. de Balmann
Executive Partner at Bridge Growth Partners

Age: 75

Director Since: February 2022
Independent Director

     
 

Mr. de Balmann has been an Executive Partner at Bridge Growth Partners, a private equity firm, since 2019. Mr. de Balmann served as the Co-Chairman of Bregal Investments LP, a private equity investing firm, from 2002 to 2012. Previously, he served as Vice-Chairman of Bankers Trust Corporation, where he was in charge of Global Investment Banking, until that firm’s merger with Deutsche Bank in 1999, at which time he became Co-Head of Deutsche Bank’s Global Investment Bank and Co-Chairman and Co-Chief Executive Officer of Deutsche Banc Alex. Brown from 1999 to 2001.

Mr. de Balmann currently serves as a director of ESI Group, a provider of virtual prototyping software and services, which is listed in compartment B of Euronext Paris. Previously, Mr. de Balmann served as a director of Laureate Education, Inc. and as the non-executive chairman of Conversant Intellectual Property Management. Mr. de Balmann served as a member of the board of Exelon Corporation from 2012 through 2022.

 

 

 

 

       

 

Particular experience, attributes or skills that qualify director for Board membership:

Mr. de Balmann brings extensive leadership, financial, risk management, strategic investment and mergers and acquisition experience to the Board. Through this unique experience managing a global investment bank, Mr. de Balmann provides the Board with important perspectives in managing the operations and overseeing the financial condition of Constellation. Mr. de Balmann also brings to the Board a deep understanding of the power utility and power generation businesses, having served on board of Exelon Corporation, the company’s former parent corporation, for over ten years.

 

    Constellation Energy Corporation 2023 Proxy Statement 31
 
 

Proposal 1: Election of Directors

 

Current Class III Directors

 

 

 

 

Committees:

• Corporate Governance

 

Other current public
directorships:

None

  Robert J. Lawless
Former Chairman, President and Chief Executive
Officer — McCormick & Company, Inc.

Age: 75

Director Since: February 2022
Independent Director

     
 

Mr. Lawless served as Chairman of the Board of McCormick & Company, Inc., a global leader that manufactures, markets and distributes spices, seasoning mixes, condiments and other products to the food industry from 1997 until 2009. Mr. Lawless also served as President from 1996 to 2006 and Chief Executive Officer from 1997 to 2007, after serving in a series of positions with increasing responsibility, including Chief Operating Officer; Executive Vice President; Senior Vice President – The Americas; Group Vice President – Europe; Vice President & Deputy Managing Director, International Group, among others.

Mr. Lawless previously served as a director of Constellation Energy Group from 2002 through 2012, when Constellation Energy Group merged with Exelon Corporation. He also served as a member of the board of Exelon Corporation from 2012 through 2022.

 

Mr. Lawless serves as a director for various non-profit organizations, including Operation Walk Canada and Teen Challenge Canada, and Habitat for Humanity in Fort Myers, FL as well as London, ON Canada. He previously served as a director for Baltimore Life Companies.

 

 

Particular experience, attributes or skills that qualify director for Board membership:

Mr. Lawless brings to the Board valuable experience in managing a large public company based on his service as Chairman, President and Chief Executive Officer of McCormick & Company. Mr. Lawless has significant experience in program management, finance, manufacturing, and operations. Mr. Lawless also brings to the Board his extensive leadership experience and skills in managing and operating a complex business, as well as extensive financial, international, technology, risk management and strategic planning expertise. In addition, Mr. Lawless contributes to the Board his deep understanding of the power utility and power generation businesses, having served for more than 20 years on the boards of Exelon Corporation and Constellation Energy Group.

 

 

 

 

 

Committees:

•  Audit and Risk

  Nuclear Oversight (Chair)

 

Other current public
directorships:

•  The Boeing Company (since 2019)

  BWX Technologies, Inc. (since 2020)

  Admiral John M. Richardson
Former Chief of Naval Operations — U.S. Navy

Age: 62

Director Since: February 2022
Independent Director

     
 

Admiral John Richardson (Ret.) served 37 years in the U.S. Navy, completing his service as the Chief of Naval Operations (CNO), the top officer in the Navy.  

While in the Navy, Admiral Richardson served in the submarine force. He commanded the attack submarine USS HONOLULU in Pearl Harbor, Hawaii, for which he was awarded the Vice Admiral James Bond Stockdale Inspirational Leadership Award. He went on to command at every level of the Navy.

 

Admiral Richardson served as the Director of Naval Reactors from 2012 until 2015, with responsibility for the full life-cycle, including regulatory responsibilities of more than 90 reactors operating around the world on nuclear-powered warships. After serving in this role, Admiral Richardson served as the 31st Chief of Naval Operations, the senior officer in the Navy, from 2015 until 2019. Admiral Richardson retired from the Navy in August 2019.

 

Admiral Richardson currently serves as an independent director, Chair of the Special Programs Committee and a member of the Aerospace Safety and Finance Committees of the board of The Boeing Company, an aerospace company; and as an independent director and member of the Audit and Finance and Compensation Committees of BWX Technologies, Inc., a supplier of nuclear components and fuel. Admiral Richardson served as a member of the board of Exelon Corporation from 2019 through 2022. He also serves on the boards of the Center for New American Security and the Navy League of the United States. He is a senior advisor to the Johns Hopkins University Applied Physics Laboratory.

 

 

 

Particular experience, attributes or skills that qualify director for Board membership:

Admiral Richardson brings deep expertise to the Board in the areas of safety, regulation and oversight of complex, high-risk systems, as well as extensive crisis management and national security experience. Admiral Richardson’s experience leading the U.S. Navy as well as his expertise in nuclear oversight and operational excellence brings invaluable knowledge to the Board and richly informs his leadership of the Nuclear Oversight Committee. Admiral Richardson also brings desired knowledge of the nuclear energy and cybersecurity threats, as well as valued experience with the demands and challenges associated with managing large organizations from his service as Chief of Naval Operations and other senior leadership positions in the U.S. Navy.

 

32  Constellation Energy Corporation 2023 Proxy Statement    
 
 

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 diverse individuals who possess attributes 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 evaluates the qualifications of each director candidate in accordance with the criteria described in the director qualification standards section of our Corporate Governance Principles. Though the Board does not have a formal policy regarding the consideration of diversity in identifying nominees for director, directors should be selected so that the Board represents diverse experience at various policy making and executive levels in business, government, education and in industries that are relevant to the company’s business operations. The Board considers the term “diversity” to include differences of viewpoint, professional experience, veteran status, education, age, nationality, skill and other individual qualities and attributes that contribute to board heterogeneity as well as differences in race and gender.

  

 

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 such other factors it deems 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 6, 2023, the Corporate Governance Committee determined that each Board member 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 2023 Proxy Statement 33
 
 

Corporate Governance

 

Board Skills

 

Board Skills

The Corporate Governance Committee conducts regular reviews of a skills matrix to ensure that the Board continues to be comprised of members with the appropriate set of skills, qualifications and experiences. Our skills matrix includes the following skills and attributes:

 

 

34  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Corporate Governance

 

Board Skills Matrix

 

Board Skills Matrix

The following matrix identifies the five most prominent skills and attributes that each director brings to their service to Constellation’s Board and committees. While each independent director possesses numerous skills and attributes, we believe identifying the five most prominent skills and attributes provides a much more meaningful presentation of the key contributions and value of each director. Based on his role as President and Chief Executive Officer, we believe Mr. Dominguez possesses all the skills listed below.

 

 

    Constellation Energy Corporation 2023 Proxy Statement 35
 
 

Corporate Governance

 

Board Diversity

 

Board Diversity

The matrix below summarizes certain self-identified gender identity and demographic diversity attributes of our Board as required by Nasdaq. Each of the categories and the information listed in the table below has the meaning set forth in Nasdaq Listing Rule 5605(f) and is being presented in compliance with Nasdaq’s disclosure format. Each director was asked to self- identify their race/ethnicity, gender identity, disability, military experience, and/or LGBTQ+ identity.

Board Diversity Matrix as of March 14, 2023

 

 

Total number of Directors

 

 

Female

 

 

Male

 

Non-
Binary

Did Not
Disclose
Gender
Gender Identity 3 7
Demographic Background        
African American or Black 1
Alaskan Native or Native American
Asian (other than South Asian)
South Asian 1
Hispanic or Latinx 1
Native Hawaiian or Other Pacific Islander
White 2 5
Two or More Races/Ethnicities 1
Directors identifying as LGBTQ+
Directors who did not disclose demographic background

Directors who are military veterans: 2

       
Directors who identify as Middle Eastern: 1        

 

We believe that the composition of our Board complies with the standards for diverse board composition under Nasdaq Listing Rule 5605(f). Under the Nasdaq board diversity rule, we are required to have, or explain why we do not have, at least two members of our Board who are diverse, including at least one diverse director who self-identifies as female and at least one director who self-identifies as an underrepresented minority or LGBTQ+. Nasdaq defines “diverse” to mean female, under- represented minority, or LGBTQ+, and defines “under-represented minority” to mean an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities.

 

36  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Corporate Governance

 

Board Leadership Structure

 

Board Leadership Structure

Constellation’s bylaws permit the independent 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 for the company, taking into account the needs of the company at that time. Currently, the roles of the Chief Executive Officer and Board Chair are separated. The Board believes that this leadership structure ensures independent oversight and promotes the Board’s ability to effectively represent the best interests of all shareholders.

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 shall 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 of 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.

 

    Constellation Energy Corporation 2023 Proxy Statement 37
 
 

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, 2022, the Board held five 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 2022 averaged 100%. The 2023 Annual Meeting of Shareholders will be our first Annual Meeting since we became a publicly traded company in February 2022.

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 Board-approved 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. The committee has the sole authority to approve such advisors’ and consultants’ fees and other retention terms, and the company funds the cost of the committee’s advisors and consultants.

Committee Membership as of March 1, 2023

 

Director Audit and Risk Compensation Corporate
Governance
Nuclear Oversight

de Balmann

 
Brlas      

Dominguez(1)

Halverson

 

Harrington

Holzrichter

   

Khandpur

 

Lawless

 

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.

 

38  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Corporate Governance

 

Board Committees

 

Audit & Risk Committee

The Audit & Risk Committee’s duties and responsibilities include:

reviewing and discussing with management and the 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 oversight of the work of 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.

 

The charter requires the Audit & Risk Committee to perform an annual self-evaluation, review its charter each year and meet at least four times each year or more frequently as the committee chair deems appropriate. During the fiscal year ended December 31, 2022, the Audit & Risk Committee held six meetings.

The charter also requires the Audit & Risk Committee to be composed 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. Brlas, Ms. Rimmer and Mr. Harrington each quality 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; including as it pertains to diversity, equity and inclusion;
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.

 

The Compensation Committee charter requires the committee to perform an annual self-evaluation, review its charter each year and meet at least four times each year. During the fiscal year ended December 31, 2022, 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 and the 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 2022.

 

    Constellation Energy Corporation 2023 Proxy Statement 39
 
 

Corporate Governance

 

Corporate Governance Committee

 

Meridian provides various executive compensation services to the Compensation Committee, which generally include advising the Compensation Committee on the principal aspects of our executive compensation program and changing industry practices and providing market information and analysis regarding the competitiveness of our program design.

During 2022, Meridian performed several services, including the following:

provided presentations on executive compensation trends, and 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 2022. 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.

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 outside 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
Review succession planning and make recommendations to the Board for the positions of Board Chair, Chief Executive Officer, and President.

 

The Corporate Governance Committee charter requires the committee to perform an annual self-evaluation, review its charter each year and meet at least four times each year. During the fiscal year ended December 31, 2022, the Corporate Governance Committee held four meetings. The charter also requires the Corporate Governance Committee to be composed of three or more independent non-employee directors.

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.

 

The charter requires the Nuclear Oversight Committee to perform an annual self-evaluation, review its charter each year and meet at least four times each year. During the fiscal year ended December 31, 2022, the Nuclear Oversight Committee held four meetings. Each meeting of the Nuclear Oversight Committee is held at one of our nuclear facility sites.

 

40  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Corporate Governance

 

Director Independence

 

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 2022 and all nominees for election, other than Mr. Dominguez as Constellation’s President and Chief Executive Officer, has a material relationship with the company and has affirmatively determined that each non-employee director is independent according to these independence standards.

The Board also 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 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 also 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 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. There were no related person transactions identified for 2022.

Bylaw and Charter Amendments

In July 2022, the Board conducted an assessment of the company’s governance practices compared against the voting policies of proxy advisory firms and various institutional investors, and the governance practices of a select group of peers and other large public companies. The results of the assessment indicated that our governance practices and policies were in line with our peers and generally accepted best practices. However, following the assessment, the Board deemed it to be in the best interests of the company to adopt certain amendments to our charters and bylaws.

Specifically, the Board made amendments to the bylaws to implement “proxy access” to allow a shareholder, or group of up to twenty shareholders, owning at least three percent of the company’s outstanding capital stock continuously for at least three years, to nominate and include in the company’s proxy materials for an annual meeting of shareholders, director nominees constituting up to the greater of two nominees or twenty percent of the Board, provided that the shareholder(s) and the director nominee(s) satisfy the requirements set forth in the bylaws.

Also, the Board revised the charters to the Audit & Risk, Compensation and Corporate Governance committees to clarify and enumerate responsibilities regrading: sustainability (Corporate Governance), human capital management (Compensation) and risk management (Audit & Risk).

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, evaluation, and additional matters such as succession planning, executive stock ownership requirements, and our recoupment policy. The Corporate Governance Principles were initially adopted on February 1, 2022 and are reviewed periodically to reflect evolving governance trends and to remain aligned with the needs of the company and its stakeholders.

The full text of the Corporate Governance Principles, bylaws, the charters for each of the Board committees, and the Code of Business Conduct are available on our website, www.constellationenergy.com. 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

 

    Constellation Energy Corporation 2023 Proxy Statement 41
 
 

Corporate Governance

 

Board Role in Risk Oversight

 

Board Role in Risk Oversight

 

The Board has broad responsibility to provide oversight of significant risks primarily through direct engagement with management and through delegation of ongoing risk oversight responsibilities to committees of the Board. Any risk oversight area not allocated to a committee remains with the Board. Each Board committee reports regularly to the Board on discussions of enterprise risks for which it is responsible. Reports provided by senior leadership, as well as third-party experts, support oversight of the key risks delegated to each committee and the full Board.

 

 

 

42  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Corporate Governance

 

Enterprise Risk Management

 

Enterprise Risk Management

 

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 Enterprise Risk Management (“ERM”) team 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 tasked with identifying and evaluating the most significant risks of the business and the actions needed to manage and mitigate those risks. Also, the senior executives of the business unit discuss risks with the Audit & Risk Committee.

 

Constellation assesses and mitigates our environmental risk as part of both the risk program and the ISO 14001:2015 Environmental Management System.

 

Board Oversight of ESG

 

The Board is actively engaged on a wide range of environmental, social and governance (ESG) issues at both the committee and full Board levels.

 

The Audit and Risk Committee reviews SEC disclosures related to environmental risks as well as maintaining oversight of the finance organization and independent auditor’s commitments to diverse teams.
The Compensation Committee is actively involved in reviewing policies related to talent development and DEI, monitoring and shaping corporate culture, and evaluating potential ESG metrics for the compensation programs.
The Corporate Governance Committee is specifically tasked with overseeing sustainability and climate change strategies and efforts to protect and improve the environment.
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.
The full Board oversees ESG issues, including, but not limited to: evaluating business risks related to climate change; reviewing investment and divestment opportunities related to climate risks; holding ongoing discussions around diversity and corporate culture; and reviewing corporate philanthropy and political contribution reports.

 

Director Retirement Policy

 

Each non-employee director must retire 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 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 Evaluations

 

Our Board seeks to operate with the highest degree of effectiveness, supporting a dynamic boardroom culture of independent thought and has initiated a strong evaluation process for the Board and Board committees.

 

    Constellation Energy Corporation 2023 Proxy Statement 43
 
 

Corporate Governance

 

Annual Board Self-Evaluation Process

 

Annual Board Self-Evaluation Process

 

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 considers recommendations from the Corporate Governance Committee on the process and criteria to be used for Board and committee evaluations. The Corporate Governance Committee oversees and approves the annual formal board evaluation process.

 

1 Evaluation Questionnaires Board members complete written questionnaires focusing on the performance of the full Board, including, but not limited to:
   

  Overall Board performance and areas of focus including strategic and business issues, challenges, and opportunities

  Board meeting logistics

  CEO, senior management, and director succession planning

  Board Committee structure and composition

  Board culture and composition

  Management engagement with the Board and Committees

  Quality of materials provided to the directors

2 Discussion of Results A summary of the Board assessment results is provided to the Corporate Governance Committee and Board for review and discussion.
3 Implement Change Based on Feedback The Board develops plans to take actions based on the results, as appropriate.

  

2022 Outcome:The Board’s current structure, composition, and effectiveness were deemed to be very strong in light of consistently collaborative interactions.

 

Annual Committee Self-Evaluation Process

 

All of the Board’s standing committees conduct annual self-assessments of their performance and take into consideration the following:

 

1 Evaluation Questionnaires Committee members complete written questionnaires focusing on the performance of each committee including, but not limited to:
   

  Whether committee members possess the right skills and experiences or whether additional education or training is required

  The sufficiency of committee charters

  Whether there are sufficient meetings covering the right topics

  Whether meeting materials and presenters are effective, among other matters

2 Discussion of Results A summary of all committee assessment results is provided to the respective committees, the Corporate Governance Committee, and Board for review and discussion.
3 Implement Change Based on Feedback The Board and each of its committees develop plans to take actions based on the results, as appropriate.

  

2022 Outcome:The committees of the Board determined that they each were functioning effectively and efficiently and in a manner to properly perform the duties and responsibilities required of each committee.

 

Future Self-Evaluation Process Considerations

 

Based on the relatively short period of operation as a Board since the company’s separation from Exelon in February 2022, the Board deemed it appropriate to evaluate its effectiveness using written evaluations. Going forward, the Board will consider the best method of determining and evaluating its effectiveness (e.g., incorporating one-one-one interviews conducted by the Board Chair and Corporate Governance Committee Chair).

 

44  Constellation Energy Corporation 2023 Proxy Statement    
 
 

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 directors to effectively discharge 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 cost for any director who wishes to attend external programs and seminars on topics relevant to their service as directors.

 

Ethics and Compliance

 

Constellation is committed to maintaining a robust, comprehensive 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 compliance with its regulatory obligations and is the primary resource for ethics advice and interpretation of the Code of Business Conduct and Supplier Code of 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 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 all Constellation 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 strictly prohibits any form of 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.

 

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 helpline that allows employees, contract workers, suppliers, and the public to report ethics concerns and potential legal or regulatory violations and to pose questions. The helpline 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 with Government Affairs four companywide 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.

 

    Constellation Energy Corporation 2023 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 initial annual retainers for non-employee directors as well as additional fees paid to the independent chair and committee chairs were set prior to our separation from Exelon in February 2022. Following the separation, our non-employee director compensation program was subject to the review and approval of our Board upon the recommendation of the Corporate Governance Committee.

 

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 2022. 

 

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.

 

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.

 

46  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Director Compensation

 

Equity Compensation

 

Equity Compensation

 

A significant portion of director compensation is provided in the form of equity to align the interests of directors with the interests of shareholders. In 2022, Constellation’s non-employee directors received deferred stock units (DSUs) valued at $155,000 that were granted quarterly in arrears. DSUs are credited to a notional account maintained on the books of the company at the end of each calendar quarter based upon the closing price of Constellation common stock on the day the quarterly dividend is paid. DSUs earn dividend equivalents which are reinvested in the deferred stock accounts as additional stock units. The account balance of DSUs will be settled in shares of Constellation common stock and will be distributed in a lump sum or in annual installments based on each director’s election. Directors may opt to receive their DSUs upon reaching age 65, age 72, or upon their departure from the Board.

 

The table below sets forth the amount of DSUs held by each non-employee director as of December 31, 2022. The balances reported include additional DSUs accumulated as dividend equivalents.

 

Name Total Deferred Stock Units
(#)
de Balmann(1) 95,241
Brlas 15,465
Halverson 2,023
Harrington 2,023
Holzrichter 2,023
Khandpur 2,023
Lawless(1) 100,639
Richardson 11,907
Rimmer 286
Total All Directors 231,630

 

(1)For Messrs. de Balmann and Lawless the balance also includes DSUs granted under the legacy Constellation Energy Group, Inc. Deferred Compensation Plan for directors that will be settled in cash on a 1 for 1 basis.

 

Impact of Separation from Exelon

In connection with the separation from Exelon, in lieu of receiving Constellation shares upon separation on February 1, 2022, the deferred stock unit accounts for Ms. Brlas and Messrs. de Balmann, Lawless and Richardson, who each served on the Board of Directors of Exelon Corporation, were credited with an additional number of Constellation DSUs to ensure that the total dollar value of each director’s DSU account would remain the same as of pre- and post-separation.

 

Director Stock Ownership Requirement

 

Our Corporate Governance Principles, adopted February 1, 2022, include a director share ownership requirement of five times the annual cash retainer. All directors are required to meet the minimum stock ownership requirement within five years of their initial election to the Board. Deferred stock units as well as common shares beneficially owned directly or indirectly, including shares held in trust, are counted towards meeting the stock ownership guidelines.

 

2023 Compensation

 

The compensation for non-employee directors as well as additional fees paid to the independent chair and committee chairs were set prior to our separation from Exelon in February 2022. Following the separation, our non-employee director compensation program was subject to the review and approval of our Board upon the recommendation of the Corporate Governance Committee. In 2023, neither the Corporate Governance Committee nor the Board recommended or made changes to the non-employee director compensation program. In 2023, the non-employee director compensation program will be reviewed to determine whether any changes to the program are warranted.

 

    Constellation Energy Corporation 2023 Proxy Statement 47
 
 

Director Compensation

 

2022 Director Compensation

 

2022 Director Compensation

 

The following table summarizes the compensation paid for each of our non-employee directors who served as a member of the Board and its committees in 2022.

 

Name Fees Earned or
Paid in Cash
($)(1)
  Stock
Awards
($)(2)
  All Other
Compensation
($)(3)
  Total
Compensation
($)
de Balmann(3) 132,514   155,000   8,621   296,135
Brlas 137,083   155,000     292,083
Ferguson 30,536   32,642     63,178
Halverson 114,236   141,653     255,889
Harrington 141,155   141,653     282,808
Holzrichter 114,236   141,653     255,889
Khandpur 114,236   141,653     255,889
Lawless(3) 306,650   155,000   16,711   473,185
Richardson(3) 150,792   155,000   2,460   308,252
Rimmer 20,720   25,693     46,413

 

(1)Annual Board and committee retainers including any amounts voluntarily deferred into the Director Deferred Compensation Plan.
(2)The aggregate award value in the “Stock Awards” column for each director represents four quarterly awards representing a grant date fair value under FASB ASC Topic 718 of $56.25, $57.26, $83.19 and $86.21 for the first through fourth quarters. See Note 20 “Stock Based Compensation Plans” of the Consolidated Financial Statements contained in our 2022 Form 10-K for an explanation of the assumptions made in valuing these awards.
(3)Amounts reported in this column include contributions made by Constellation in honor of Board service or by the Constellation Foundation to qualified not-for-profit organizations under Constellation’s matching gift program. Constellation’s matching gift program provides up to $15,000 per year in contributions to match those made by directors. No matching contributions were paid in fiscal year 2022 by Constellation. For Messrs. de Balmann, Lawless and Richardson the amount shown includes $8,621, $6,359 and $2,460, respectively, for the reimbursement of additional income tax due in connection with spousal travel on corporate aircraft. For Mr. Lawless the amount shown also includes $10,352 which represents the aggregate incremental cost incurred by Constellation for his approved personal use of corporate aircraft.

 

48  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Ownership of Constellation Stock

 

Stock Ownership of Directors and Executive Officers

 

The following table shows the ownership of Constellation common stock as of March 1, 2023, by each director and each named executive officer in the Summary Compensation Table, later in this proxy statement, and for all directors and executive officers as a group. The shares owned by directors and executive officers, both individually and as a group, constitute less than 1% of the total number of shares of common stock outstanding.

 

  Shares
Owned
Directly or
Indirectly(1)
Shares
Underlying
Options
Exercisable
Within 60 Days
Total Shares
Beneficially

Owned
Non-Employee Directors
de Balmann 96,079 0 96,079
Brlas 15,465 0 15,465
Halverson 2,023 0 2,023
Harrington 2,023 0 2,023
Holzrichter 2,023 0 2,023
Khandpur 2,023 0 2,023
Lawless 149,462 0 149,462
Richardson 11,907 0 11,907
Rimmer 286 0 286
Named Executive Officers
Dominguez 75,610 0 75,610
Eggers 18,381 0 18,381
Hanson 27,521 0 27,521
Koehler 13,149 0 13,149
McHugh 19,249 0 19,249
Directors & Executive Officers as a group (8 individuals) 465,672 0 465,672

 

(1)Includes any shares as to which the individual has sole or shared voting or investment power, directors’ deferred stock units granted under the Constellation deferred stock unit plan along with accumulated units from automatic dividend reinvestment, officers’ RSUs and deferred shares held in the Stock Deferral Plan, and directors’ and officers’ phantom shares held in a non-qualified deferred compensation plan which will be settled in cash on a 1 for 1 basis upon retirement or termination. Total includes shares held by all directors and NEOs as well as Constellation executive officers listed in Item 10, “Directors, Executive Officers and Corporate Governance” in Constellation’s 2022 Annual Report on Form 10-K filed on February 16, 2023.

 

    Constellation Energy Corporation 2023 Proxy Statement 49
 
 

Ownership of Constellation Stock

 

Other Significant Owners of Constellation Stock

 

Other Significant Owners of Constellation Stock

 

Shown in the table below are those owners who are known to Constellation to hold more than 5% of its outstanding common stock. This information is based on the most recent Schedule 13G (or Schedule 13G/A) filings made with the Securities and Exchange Commission.

 

Name and address of beneficial owner Shares
Beneficially

Owned
Percentage
of class
The Vanguard Group(1)
100 Vanguard Blvd., Malvern, PA 19355
38,376,259 11.75%
FMR LLP(2)
245 Summer Street
Boston, MA 02210
24,872,706 7.6%
BlackRock, Inc.(3)
55 East 52nd Street, New York, NY 10055
24,968,484 7.6%
Capital International Investors(4)
333 South Hope Street, 55th Fl, Los Angeles, CA 90071
24,465,202 7.5%
State Street Corporation(5)
State Street Financial Center, 1 Lincoln Street, Boston, MA 02111
18,377,969 5.63%

 

(1)The Vanguard Group disclosed in its Schedule 13G/A filed on February 9, 2023 that it has sole voting power over 0 shares, shared voting power over 433,456 shares, sole dispositive power over 37,091,996 shares, and shared dispositive power over 1,284,263 shares.

 

(2)FMR LLP or Fidelity Institutional Asset Management, disclosed in its Schedule 13G filed on February 9, 2023 that it has sole voting power over 22,780,354 shares, shared voting power over 0 shares, sole dispositive power over 24,872,706 shares, and shared dispositive power over 0 shares.

 

(3)BlackRock, Inc. disclosed in its Schedule 13G filed on February 7, 2023 that it has sole voting power over 22,602,900 shares, shared voting power over 0 shares, sole dispositive power over 24,968,484 shares, and shared dispositive power over 0 shares.

 

(4)Capital International Investors disclosed in its Schedule 13G filed on February 13, 2023 that it has sole voting power over 24,384,741 shares shared voting power over 0 shares, sole dispositive power over 24,465,202 shares, and shared dispositive power over 0 shares.

 

(5)State Street Corporation disclosed in its Schedule 13G filed on February 8, 2023 that it has sole voting power over 0 shares, shared voting power over 15,140,956 shares, sole dispositive power over 0 shares, and shared dispositive power over 18,335,301 shares.

 

50  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Communicating with the Board

 

Process for Communicating with the Board

 

Process for 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 Board has instructed the Corporate Secretary to review communications initially and transmit a summary to the directors and to exclude from transmittal any communications that are commercial advertisements, other forms of solicitation, general shareholder service matters, or individual service or billing complaints (although all communications will be available to the directors upon request). Under the Board policy, the Corporate Secretary will forward to the directors any communication raising substantial issues. All communications are available to the directors upon request.

Shareholders may also report an ethics concern with the Constellation Ethics Hotline by calling (1-844-927-2282). You may also report an ethics concern via email to EthicsOffice@Constellation.com.

 

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 for 2022.

 

Shareholder Engagement

We believe that engaging with our investors provides valuable insights for the Board and its committees into investor perspectives and priorities. During 2022, Constellation’s engagement team, comprising members of the Office of Corporate Governance, Investor Relations, Sustainability, Executive Compensation, and Human Resources departments, met to discuss a wide variety of issues with investors.

In 2022, Constellation contacted the holders of nearly 80% of our outstanding shares with offers to engage. Portfolio managers and governance professionals that accepted the invitation to engage included a significant cross-section of our shareholder base, representing approximately 34% of Constellation’s outstanding shares.

The feedback received from shareholders and other stakeholder groups is shared with each Board committee and the Board, as appropriate, on a regular basis throughout the year. 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 relating to new issues or emerging trends if such action is deemed to be in the best interests of the company and its shareholders.

 

    Constellation Energy Corporation 2023 Proxy Statement 51

 
 

Shareholder Engagement

 

Shareholder Engagement

 

We believe that our approach to engaging openly with our investors on topics such as environmental strategy, corporate governance, executive compensation, and other human capital management issues drives increased accountability, improves decision making, and ultimately creates long-term value. We plan to generally incorporate the following elements into our shareholder engagement process going forward.

 

 

 

52  Constellation Energy Corporation 2023 Proxy Statement    

 
 

Proposal 2:

Say-On-Pay: Advisory Vote on Executive Compensation

 

We are seeking an advisory vote to approve the compensation of our named executive officers for 2022.

 

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 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 2023 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 2023 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the 2022 Summary Compensation Table and the other related tables and disclosure.

 

 

 

    Constellation Energy Corporation 2023 Proxy Statement 53
 
 

Proposal 3:

Frequency of Future Advisory Votes on Executive Compensation

 

In addition to providing shareholders with the opportunity to cast a non-binding advisory vote on compensation paid to our named executive officers in Proposal No. 2 in accordance with SEC rules, Constellation is also required to provide its shareholders with the opportunity to cast an advisory vote to determine the frequency of future advisory shareholder votes on compensation paid to the named executive officers. By voting on this Proposal No. 3, shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every one, two or three years.

After careful consideration, the Compensation Committee and the Board believe that an annual frequency (i.e., every year) is the optimal frequency for the advisory vote on compensation of our named executive officers. We believe this frequency will continue to enable our shareholders to vote, on an advisory basis, on the most recent executive compensation information that is presented in our proxy statement, leading to more meaningful and timely communication between Constellation and our shareholders on the compensation of our named executive officers.

Shareholders are not voting to approve or disapprove the Board’s recommendation. Instead, you may cast your vote on your preferred voting frequency by choosing any of the following four options with respect to this proposal: “1 year,” “2 years,” “3 years,” or “abstain.”

This say-on-frequency vote is advisory, and therefore not binding on Constellation, the Board, or the Compensation Committee. However, the Board and the Compensation Committee value the opinions expressed by shareholders and will consider the option that receives the highest number of votes cast as the frequency that is preferred by our shareholders when determining the frequency of future advisory votes on compensation of our named executive officers.

 

 

 

54  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section and, based on such review and discussion, the committee recommended that the Board approve the inclusion of the Compensation Discussion and Analysis in this report.

 

  Compensation Committee  
  Yves C. de Balmann, Chair  
  Bradley Halverson  
  Julie Holzrichter  
  Ashish Khandpur  

 

The foregoing Compensation 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 Compensation Committee Report by reference therein.

 

Compensation Discussion and Analysis
                     
Executive Summary   55   Compensation Programs   60   Executive Compensation Policies   68
2022 Business Highlights   56   2022 Target Total Direct Compensation for NEOs   60   Clawback Policy   68
Executive Compensation Program Philosophy and Objectives   57   2022 Base Salaries   61   Risk Management Assessment of Compensation Policies and Practices   69
Compensation Program Structure   57   2022 Annual Incentive Plan   61        
Chief Executive Officer Compensation   58   Sustainable Sharing   62   Tax and Accounting Implications   69
Legacy Exelon Awards   58   Long-Term Incentive Plan   64   Tax Consequences   69
Shareholder Engagement   59   Role of the Independent Compensation Consultant   67   Accounting for Stock-Based Compensation   69
Executive Compensation Best Practices   59   2022 Executive Compensation Peer Groups   67        

 

Executive Summary

 

For purposes of this Compensation Discussion and Analysis and the related executive compensation tables, the individuals referred to as the “named executive officers” or “NEOs” are Constellation’s President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and the three most highly compensated executive officers of Constellation based on fiscal year 2022 compensation.

Specifically, the individuals determined to be our NEOs based on 2022 compensation are:

 

Joseph Dominguez   President and Chief Executive Officer
Daniel Eggers   Executive Vice President and Chief Financial Officer
Bryan C. Hanson   Executive Vice President and Chief Generation Officer
Michael R. Koehler   Executive Vice President and Chief Administration Officer
James McHugh   Executive Vice President and Chief Commercial Officer

 

    Constellation Energy Corporation 2023 Proxy Statement 55

 
 

Compensation Committee Report

 

Executive Summary

 

 

(1)See the reconciliation to the corresponding GAAP measures set forth in Appendix A of this proxy statement.

 

56  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

Role of Exelon in Compensation

The Compensation and Leadership Development Committee of the Exelon Board of Directors (the “Exelon Compensation Committee”) considered an external analysis when establishing certain elements of Constellation’s executive compensation program including plan design, market median compensation and the prospective compensation peer group for consideration by the Compensation Committee of Constellation’s Board of Directors (the “Compensation Committee”). These analyses and recommendations were efficiently transitioned to the Compensation Committee through the strategic development of the Constellation Board which included four former members of the Exelon Board of Directors. Decisions regarding the conversion of legacy Exelon awards to Constellation awards for the named executive officers were made by the Exelon Compensation Committee prior to the separation of the two companies.

Following the separation in February 2022, the executive compensation programs, policies and practices for Constellation’s executive officers became subject to the review and approval of the Compensation Committee.

 

Executive Compensation Program Philosophy and Objectives

The goal of the executive compensation program is to facilitate the recruitment, retention and reward of executives who create long-term value by delivering on objectives that support strategic business objectives. Each element of total direct compensation is based on:

 

 

 

Compensation Program Structure

Our executive compensation program which includes fixed and variable components is summarized below. There were no one-time equity grants issued to executives as a result of the successful separation from Exelon.

 

Pay Element Form Shareholder Alignment and Link to Strategy
Base Salary Cash •   Fixed income at competitive, market-based levels attracts and retains top talent
Annual Incentive Plan (AIP) Cash •   Motivates executives to achieve key annual financial and operational goals that reflect commitment to superior operations, shareholder returns and supporting our customers and communities
Long-Term Incentive Plan (LTIP) Performance Shares
(67% of LTIP)
•   Rewards executives for achieving long-term performance goals relating to strong free cash flows, disciplined capital allocation strategy, a strong investment grade balance sheet and increasing shareholder value
Restricted Stock
(33% of LTIP)
•   Provides incentive for executives to increase shareholder value and serves as a valuable retention tool

 

    Constellation Energy Corporation 2023 Proxy Statement 57
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

A significant portion of compensation for the CEO and NEOs 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 the NEO’s total direct compensation. Total direct compensation is equal to annual base salaries, plus annual cash incentives and long-term non-equity and equity incentive compensation, excluding non-recurring special purpose grants.

 

 

 

Chief Executive Officer Compensation

CEO compensation for 2021 was largely reflective of promotional pay decisions determined by the Exelon Compensation Committee when Mr. Dominguez was appointed the CEO of Constellation. The pay decisions were made after considering peer group data provided by the independent consultant to the Exelon Compensation Committee. Consideration was given to the competitive positioning of pay relative to peers considering his tenure as the CEO of a public company while emphasizing pay-at-risk in determining the 2022 compensation.

The Compensation Committee and the Board approved the following compensation for the CEO, positioning the CEO’s total direct compensation reasonably for a CEO of a new independent publicly traded company:

 

2022 base salary was increased 4.8% from $1,050,000 to $1,100,000.
AIP target was increased from 135% to 140%.
2022 LTIP target was set at $7,532,500.

 

In consideration of adjustments to 2022 compensation, the Compensation Committee received peer group data and considered transitional knowledge shared from the Exelon Compensation Committee; individual performance; scope of responsibility; leadership skills and values; current compensation; internal equity; and legacy matters. The Compensation Committee will continue to annually assess the executive compensation programs and amount of pay relative to performance.

 

Legacy Exelon Awards

The Exelon Compensation Committee was required to make decisions on the terms of outstanding unvested awards, including how performance was to be measured, what the continued vesting requirements would be, and what stock price methodology would be used for the conversion of unvested equity.

At separation, the Exelon Compensation Committee wanted to ensure that participants at each company received equitable treatment and that the value of the award immediately before the separation and immediately after the separation for each company was maintained. The Exelon Compensation Committee intended to maintain the character of the existing awards as either service-based or performance-based. The retention and stability aspects of the awards were sustained by maintaining the vesting schedules of the original awards.

Prior to the separation of Constellation from Exelon, the Exelon Compensation Committee approved and deemed the performance for the 2020–2022 performance share (“PShare”) award to be earned upon separation at 104.98%. The 2020–2022 Exelon PShare award held immediately prior to separation was replaced with a substitute Constellation restricted stock unit (RSU) award under the Constellation Stock Plan at a number of shares that maintained the value of the award immediately before the separation. The award was subject to continued vesting to maintain its retention effectiveness.

 

58  Constellation Energy Corporation 2023 Proxy Statement    

 
 

Compensation Discussion and Analysis

 

Executive Summary

 

The 2021–2023 PShare award target number of shares was converted into target Constellation shares at the date of separation based on the separation value ratio with an adjustment based on the Exelon TSR multiplier for the period ending December 31, 2021. A Constellation scorecard aligned with the Constellation business strategy was established with the design discussed under the long-term incentive program section of this Compensation Discussion and Analysis.

The separation value ratio used to convert outstanding unvested Exelon awards to Constellation awards utilized the five-day volume-weighted average stock price (VWAP) before and after the separation. The Exelon pre-separation share price of $56.81 was based on the VWAP for five days prior to the separation. The Constellation post-separation share price of $51.16 was based on the VWAP for five days after the separation.

 

Shareholder Engagement

The Compensation Committee reviews executive compensation, taking into consideration input received through engagement with investors. In 2022, we invited shareholders owning approximately 80% of our outstanding stock to engage. Shareholders holding an aggregate of approximately 34% of our common stock accepted the invitation. We engaged with these shareholders regarding the company’s business strategy, corporate governance policies, sustainability, human capital management, and compensation practices. In general, shareholders did not note any significant concerns with Constellation’s executive compensation programs. Going forward, feedback from shareholders will be solicited at appropriate times during the year including in connection with the annual meeting of shareholders and the Compensation Committee’s review of the executive compensation program.

Given that Constellation first became a publicly traded company in 2022, our first shareholder advisory vote on executive pay (“say-on-pay”) will occur during our 2023 Annual Meeting of Shareholders. We believe the say-on-pay advisory vote provides shareholders an important opportunity to provide feedback on our executive compensation programs. The Compensation Committee intends to take into account the outcome of this vote and feedback obtained through engagement when evaluating the company’s executive compensation programs.

 

Executive Compensation Best Practices

 

 What We Do:    What We Don’t Do:

  Align pay for performance

  Maintain significant stock ownership requirements for Directors and Executive Officers

  Cap incentive awards and conduct an annual risk assessment of the compensation programs

  Subject change-in-control benefits to double trigger vesting

  Retain an independent compensation consultant advises the Compensation Committee

•  Provide limited perquisites based on sound business rationale

  Subject incentive compensation awards to clawback provisions

  Review of pay equity by an independent third party

  Engage in year-round shareholder outreach

  Prohibit hedging, short sales, derivative transactions or pledging of Company stock

•  Assess our programs against peer companies and best practices

  Set appropriate levels of “stretch” in incentive targets

 

 

•  No guaranteed minimum payout of AIP or LTIP programs

  No employment agreements

  No excise tax gross-ups for change-in-control agreements

  The value of LTIP awards is not included in pension or severance calculations

  No option repricing or buyouts without stockholder approval

 

 

    Constellation Energy Corporation 2023 Proxy Statement 59
 
 

Compensation Discussion and Analysis

 

Compensation Programs

 

Compensation Programs

The goal of the executive compensation program is to recruit, retain and reward leaders who create long-term shareholder value through delivering on goals that support strategic business objectives. Our approach to setting each NEO’s 2022 target compensation is described below.

 

2022 Target Total Direct Compensation for NEOs

 

  Setting Target Compensation
for Executive Officers
  Setting Target Compensation for the
Chief Executive Officer
 

•   The Compensation Committee was responsible for overseeing the development and administration of the executive compensation program for executive officers (other than the CEO).

•   The Compensation Committee sets each executive officer’s compensation based on its analysis of peer group compensation and performance data with input from its independent compensation consultant.

•   Total direct compensation varied by NEO based on consideration such as: competencies and skills, scope of responsibilities, experience, individual and corporate performance, retention, succession planning and the organizational structure of the businesses.

•   Every year, the Compensation Committee will review each element of the executive officers’ compensation, including base salary, and annual and long-term incentive target opportunities.

 

•   The CEO’s compensation was approved by the independent members of the Board, based on the recommendations of the Compensation Committee and consideration of the Exelon Compensation Committee’s setting of the CEO’s pre-separation 2022 compensation package.

•   The Compensation Committee developed its recommendation of CEO compensation for approval by the Board, based on its review of the CEO’s pre- separation compensation package considering peer group compensation and performance data and advice from its independent compensation consultant.

•   Every year, the Compensation Committee will review each element of CEO compensation, including base salary, and annual and long-term incentive target opportunities.

 

The table below shows each NEO’s 2022 total direct compensation and each element of compensation.

 

  Cash Compensation   Long-Term Incentives  

 

NEO

 

Base Salary

 

AIP
Target

 

Target
Total Cash

 

 

RSUs
(33%)

Performance
Shares
(67%)

 

Target
Total LTIP

Target
Total Direct Compensation
Dominguez $1,100,000 140% $ 2,640,000   $2,485,725 $ 5,046,775 $ 7,532,500 $10,172,500
Eggers $   666,250 90% $ 1,265,875   $   582,450 $ 1,182,550 $ 1,765,000 $  3,030,875
Hanson $   750,000 90% $ 1,425,000   $   759,000 $ 1,541,000 $ 2,300,000 $  3,725,000
Koehler $   743,125 80% $ 1,337,625   $   394,350 $    800,650 $ 1,195,000 $  2,532,625
McHugh $   680,159 80% $ 1,224,286   $   552,750 $ 1,122,250 $ 1,675,000 $  2,899,286
                   

On February 7, 2022, Mr. Hanson also received a $1,400,000 retention-related award that is not included in the above table. This award is comprised of time-based restricted stock units subject to three-year cliff vesting on the anniversary date.

On March 1, 2022, Mr. Koehler also received a $1,500,000 retention-related award that is not included in the above table. This award is comprised of time-based restricted stock units with a grant date value of $900,000 subject to four-year cliff vesting and a $600,000 cash retention which is payable ratably at 25% on each anniversary date over a four-year period.

 

60  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

2022 Base Salaries

 

2022 Base Salaries

In February 2022, the Compensation Committee determined each NEO’s base salary as part of its annual review of executive compensation. When evaluating whether to make any adjustments, the Compensation Committee considered a number of factors, including: the results of the annual market assessment of executive compensation provided by its independent compensation consultant; the need to retain experienced executives; transitional knowledge; individual performance; scope of responsibility; leadership skills and values; current compensation; internal equity; and legacy matters.

For the CEO’s base salary, the Compensation Committee makes recommendations which are reviewed and approved by the independent directors of the Board. On February 7, 2022, the Compensation Committee recommended a 4.8% increase to Mr. Dominguez’s base salary. The Board approved the increase which became effective on February 7, 2022.

Effective March 1, 2022, the Compensation Committee approved a 3.45% increase in base salaries for Mr. Hanson and 2.5% increases in base salaries for Messrs. Eggers, Koehler, and McHugh, as detailed in the table below.

 

NEO Base Salary
December 31,
2021
Base Salary
March 1,
2022
Dominguez $ 1,050,000 $ 1,100,000
Eggers $    650,000 $    666,250
Hanson $    725,000 $    750,000
Koehler $    725,000 $    743,125
McHugh $    663,570 $    680,159

 

2022 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 2022 AIP, the Compensation Committee approved financial goals related to adjusted EBITDA (weighted 70%) and operational goals based on customer satisfaction (weighted 10%), dispatch match (weighted 10%) and fleetwide capacity factor (weighted 10%). The Compensation Committee most heavily weighted 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.

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 each NEO’s 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.

 

 

 

    Constellation Energy Corporation 2023 Proxy Statement 61

 
 

Compensation Discussion and Analysis

 

Goal Setting

 

Goal Setting

The executive compensation goal-setting process employs a multi-layer approach and analysis that incorporates a blend of objective and subjective business considerations and other analytical methods to ensure that the goals are sufficiently rigorous. Such considerations include:

 

 

 

Financial Performance Measures. Tying a portion of the AIP to adjusted EBITDA aligns pay outcomes of our senior executives with the interests of shareholders.

When setting financial goals, the Compensation Committee reviews our long-term financial plan, as well as the current economic and regulatory environment.
The target is calibrated with our publicly announced guidance range and considers industry comparisons to establish the threshold, target, and maximum performance levels.
For 2022, our adjusted EBITDA guidance range was $2,355 million and $2,755 million with the adjusted EBITDA target set at the middle of the guidance range at $2,555 million.

 

62  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

Operational Performance Measures

 

Operational Performance Measures. Operational target metrics for 2022 were set at challenging levels with “distinguished” performance set at “best-ever” levels that outperform the historical achievement of our company metrics for Dispatch Match and Fleetwide Capacity Factor. Similarly, “distinguished” levels for customer satisfaction (measured through Net Promoter score and CSAT, each equally weighed) must exceed highest rolling 12-month score within the last three years. Stretch performance levels are set to motivate employees to strive for continuous improvement. As part of its goal-setting process, the Compensation Committee reviews previous targets and performance to appropriately align the threshold, target, and maximum goals with expected performance.

The following table details the 2022 threshold, target, and distinguished or maximum performance goals and the results achieved. The company performance multiplier for the 2022 AIP was approved at 132.00% of target, based on the following assessment results.

 

  Threshold Target Distinguished 2022
Actual
Results
Unadjusted
Performance
as % of Target
Weighted
Performance
Adjusted EBITDA in millions
(After Incentive Payout)
$2,172 $2,555 $2,938 $2,667 129.23% 90.46%
Fleetwide Capacity Factor
(Nuclear)
92.707% 94.707% 95.84% 95.118% 136.01% 13.60%
Dispatch Match
(Power)
93.2% 95.9% 99.4% 98.4% 171.43% 17.14%
Net Promoter Score
(C&I Customer Loyalty)
38.22 55.83 60.28 58.74 165.39% 8.27%
CSAT
(Residential Customer Satisfaction)
84.08 85.34 86.29 84.09 50.40% 2.52%
        Payout% 132.00%

 

The following table shows how the formula was applied and the actual amounts awarded. The AIP targets presented below are prorated based on salary and the AIP payouts were made on February 28, 2023 and March 15, 2023.

NEO

AIP Target %

AIP Target

Formulaic Performance
Factor

Actual
Award

Dominguez 140% $1,527,579 132.00% $2,016,404
Eggers    90% $   597,262 132.00% $   788,386
Hanson   90% $   669,043 132.00% $   883,137
Koehler   80% $   592,157 132.00% $   781,647
McHugh   80% $   541,982 132.00% $   715,417

 

    Constellation Energy Corporation 2023 Proxy Statement 63
 
 

Compensation Discussion and Analysis

 

Long-Term Incentive Plan

Long-Term Incentive Plan (LTIP)

Our long-term incentive pay structure aligns pay with performance and our company’s business strategy. The pay structure also motivates and rewards executives for long-term shareholder value creation. The Compensation Committee grants long-term equity incentive awards annually at its January or February meeting. For 2022, 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 Executive Officers” in the executive summary of this Compensation Discussion and Analysis. The LTIP value is allocated between grants of RSUs (33%) and PShares (67%) to our NEOs, as described in the chart below.

 

NEO

RSUs
(33% of LTIP)
PShares
(67% of LTIP)
Dominguez 48,588 98,647
Eggers 11,385 23,115
Hanson 14,836 30,122
Koehler 7,709 15,650
McHugh 10,805 21,937

 

2022 – 2024 Restricted Stock Units

RSUs. In February 2022, the Compensation Committee approved the grant of RSUs for each NEO, which vest ratably over a three- year period. During the vesting period, RSUs receive dividend equivalents that are reinvested as additional RSUs and 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 through the vesting date.

 

2022 – 2024 Performance Share Program

PShares. In February 2022, the Compensation Committee approved the grant of PShares for each NEO, which are earned over the three-year period ending December 31, 2024. 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. The performance metrics underlying the 2022 – 2024 PShare awards and the formula used to determine the earned incentive award are described below.

 

64  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

Goal Setting Process

Goal Setting Process    
     
PShare Metrics   Link to Long-Term Shareholder Value
     
Free Cash-Flow before Growth    
"Free Cash Flow" as used by the company is Cash From Operations net of Cash From Investing (e.g., capital expenditures or Capex). Free Cash Flow is adjusted for certain non-recurring and other items to calculate Free Cash Flow before Growth. These adjustments include items such as non-recurring Capex, growth Capex, and collateral. For compensation purposes only, Free Cash Flow before Growth is adjusted to exclude impacts of changes in working capital.   Aligned with our strategy to deliver strong free cash flows, optimized through industry-leading operations
     
CFO/Debt    
"CFO/Debt" is a general term referring to the Moody’s CFO Pre-WC/ 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-WC (the numerator). Debt is the sum of Notes Payable and Total Long-term Debt from the Balance Sheet. Debt is also adjusted based on guidance from Moody’s to calculate Adjusted Debt (the denominator). This metric aims to measure the creditworthiness of the company.  

Aligned with our strategy to deliver on a disciplined capital allocation strategy and the maintenance of a strong investment grade balance sheet

 

 

Setting PShare Targets. PShare targets are set based on external commitments and analysis of sensitivities at the beginning of the performance period. The target for the CFO/Debt metric is aligned with the expectations of credit rating agencies.

Actual Targets Disclosed After Each Cycle. Actual targets used in our PShare cycles are not disclosed until each cycle is completed to safeguard the confidentiality of our long-term outlook on projected performance. This policy supports the propriety of our long- standing disclosure practices to only issue annual performance guidance as part of our financial disclosure policies.

 

Legacy Exelon 2020–2022 PShare Payout Determinations

Prior to the separation of Constellation from Exelon, the Exelon Compensation Committee approved and deemed the performance for the 2020–2022 PShare award to be earned upon separation at 104.98%. The 2020–2022 PShare award held immediately prior to separation was replaced with a substitute Constellation RSU award under the Constellation Stock Plan at a number of shares that maintained the value of the award immediately before the separation and immediately after. The award was subject to continued vesting to maintain retention power.

The spin value ratio used to convert outstanding unvested Exelon awards to Constellation awards utilized the five-day volume- weighted average stock price (VWAP) before and after the separation. The Exelon pre-separation share price of $56.81 was based on the volume-weighted average stock price (VWAP) for five days prior to the separation. The Constellation post-separation share price of $51.16 was based on the VWAP for five days after the separation. Utilization of this process achieved the goal of maintaining the value of the award immediately before the separation and immediately after.

    Constellation Energy Corporation 2023 Proxy Statement 65
 
 

Compensation Discussion and Analysis

 

Looking Forward to 2023

 

The following table illustrates how the legacy Exelon PShare awards were substituted with Constellation RSUs. The PShares for the 2020–2022 were initially granted on January 27, 2020 and vested on January 30, 2023.

 

Named Executive Officer

Pre-Separation
Target Units

Earned
Units @
104.98%

 

Pre-Separation
Value (Based on VWAP through 2/1/2022 @$56.81)

Post-
Separation
Earned Units
(Based on VWAP
through 2/8/2022
@ $51.16)

 

Post-
Separation
Value

Vested Value
(Based on
Stock Price
through
1/30/2023
@ $82.40)

Dominguez 16,017 16,185 $   955,240 18,672 $   955,240 $ 1,538,541
Eggers 7,442 7,813 $   443,834 8,675 $   443,834 $    714,855
Hanson 20,553 21,577 $1,225,763 23,959 $1,225,763 $ 1,974,255
Koehler 13,801 14,488 $   823,080 16,088 $   823,080 $ 1,325,680
McHugh 23,742 24,924 $1,415,952 27,677 $1,415,952 $ 2,280,580

 

PShare Awards Settled in Common Stock and/or Cash. Pursuant to the terms of the long-term incentive program, all NEOs that have achieved 200% or more of their stock ownership targets receive PShare award payouts in cash.

 

Looking Forward to 2023

Consideration of PShare Result Adjustments Due to the Russia-Ukraine War

 

In December 2022, the Compensation Committee began discussing the impact of the Russia-Ukraine war on our incentive programs. During 2022, management, in consultation with the Board, made the strategic decision to contractually procure nuclear fuel supply beyond our Russian contracts adequate to meet our fleet’s operating needs through 2028, at which point additional capacity is expected in the market. To accommodate this strategic decision, the company projected an additional $1.1 billion in fuel purchases beyond what was originally contemplated in the long-range plan that will either replace Russian supplies or serve as future fuel needs. These additional purchases are an inventory timing issue that will be consumed in future years and are not an additional permanent use of cash.

Although the 2021-2023 and 2022-2024 PShares still had one and two years remaining, respectively, the Compensation Committee recognized that this unexpected cash outlay will have a significant impact on our Free Cashflow before Growth metric that serves as the primary metric in our PShare program, given that cash outlay was not contemplated nor could have been reasonably foreseen, when the goals for the 2021-2023 and 2022-2024 PShare cycles were both approved. The Compensation Committee began the process of considering whether an adjustment to the metric goal related to Free Cash Flow before Growth would be appropriate, noting that:

the Russia-Ukraine war is an extraordinary adverse event, the scope of which could not have reasonably been foreseen;
disruption of Russia’s nuclear fuel processing and enrichment capabilities by sanctions or state actions is likely to cause a reduced availability of nuclear fuel supply;
presently, 40% of the global capacity for these services come from Russia and the Russian supply accounts for approximately 20% of the US fuels supply;
the strategic need to build a surplus of uranium inventory was not, nor could have foreseeably been, anticipated at the time cash flow targets were established;
inclusion of the cost of the nuclear fuel surplus in the assessment of PShare performance could disincentivize strategic decisions that mitigate extraordinary risk; and
an adjustment to the metrics would better reflect the reality of the current operating environment and what is in the best interest of shareholders and controllable by senior executives.

 

66  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

Independent Compensation Consultant

 

The Compensation Committee determined to wait for the conclusion of the performance periods, when the full impact of the decision to build a surplus of uranium would be known, to make any adjustments to PShares results or payouts. This is consistent with the provisions of our long-term Incentive plan, which provides that the Compensation Committee, in its sole discretion, may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual or non- recurring events affecting the company or its financial statements or changes in law or accounting principles. The Compensation Committee will consider what is in the best interest of shareholders when making its final decision on PShare payouts.

 

Role of the Independent Compensation Consultant

The Compensation Committee retains Meridian Compensation Partners (“Meridian”), 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 2022, 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.

 

2022 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 look for 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 intends to evaluate its peer group on an annual basis and adjusts the peer group for changes with our energy and general industry peers when needed.

 

 

    Constellation Energy Corporation 2023 Proxy Statement 67
 
 

Compensation Discussion and Analysis

 

Stock Ownership

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). As of March 1, 2023, all NEOs are on pace to meet their stock ownership guidelines.

 

Prohibition on Hedging and Pledging of Common Stock; Other Trading 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

We have a clawback policy that provides broad discretionary ability to clawback incentive compensation when deemed appropriate. Under the policy, the Board has sole discretion to recoup incentive compensation if it determines that: (a) the incentive compensation was based on the achievement of financial or other results that were subsequently restated or corrected; (b) the incentive plan participant engaged in fraud or intentional misconduct that caused or contributed to the need for restatement or correction; (c) a lower incentive plan award would have been made to the participant based on the restated or corrected results; and (d) recoupment is not precluded by applicable law or employment agreements.

The Board or Compensation Committee may also 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. We are aware that the SEC has adopted certain rules directing the securities exchanges to require clawbacks policies for listed companies and we will comply with the final Nasdaq rules once they are approved by the SEC.

68  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Compensation Discussion and Analysis

 

Tax and Accounting Implications

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 2022, 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.

 

Tax and Accounting Implications

Tax Consequences

Under Section 162(m) of the Internal Revenue Code (the Code), NEO compensation over $1 million for any year is not generally deductible for United States income tax purposes. The Compensation Committee believes that it must maintain flexibility in its approach to executive compensation to structure a program that it considers to be the most effective in attracting, motivating and retaining the company’s key executives, and therefore, the deductibility of compensation is one of several factors considered when making executive compensation decisions.

 

Accounting for Stock-Based Compensation

Stock-based compensation represents costs related to stock-based awards granted to employees and members of the Board. Constellation recognizes stock-based compensation based upon the estimated fair value of the awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date, and continues throughout the requisite service period or, for certain share-based awards, until the employee becomes retirement eligible, if earlier. Compensation cost is recognized as expense or capitalized as a component of property, plant, and equipment.

    Constellation Energy Corporation 2023 Proxy Statement 69
 
 

Executive Compensation Tables

 

Summary Compensation Table

Summary Compensation Table

 

Name Year Salary(a) Bonus(b) Stock Awards(c)

Non-Equity Incentive Plan

Compensation(d)

Change in Pension Value and Nonqualified Deferred Compensation Earnings(e) All Other Compensation(f) Total
Joseph Dominguez              
President and Chief Executive Officer 2022 $1,090,972 $6,699,193 $2,016,404 $385,830 $246,683 $10,439,082
  2021     752,504 1,130,048      846,880   181,413    441,432     3,352,277
Daniel Eggers                
Executive Vice President and Chief Financial Officer 2022     663,316 1,569,750       788,386   120,179      73,211     3,214,842
  2021    561,051    550,024      478,698     82,699      48,901     1,721,373
Bryan C. Hanson              
Executive Vice President and Chief Generation Officer 2022    745,486 3,445,564       883,137    283,564      5,357,751
  2021    720,486 2,220,056         660,374   560,922     74,320     4,236,158
  2020    686,418 1,450,054       594,728   885,522      59,602      3,676,324
Michael R. Koehler              
Executive Vice President and Chief Administration Officer 2022    679,436 $600,000 1,962,864       781,647   156,258      68,388     4,248,593
James McHugh              
Executive Vice President and Chief Commercial Officer 2022    677,164 1,489,761       715,417   538,434      71,476     3,492,252
  2021    662,384 2,564,644       422,298     27,257     45,655     3,722,238
  2020     653,981   29,121 1,675,059       582,417      26,209      60,738      3,027,525
(a)The amounts shown represent base salaries.
(b)On March 1, 2022, Mr. Koehler received a cash retention award of $600,000. The award will pay out in four equal installments over four years. In recognition of their overall performance, certain NEOs received an individual performance multiplier (IPM) to their annual incentive payments in prior years. NEOs are not eligible for IPMs in the 2022 Annual Incentive Plan.
(c)The amounts shown in this column represent the aggregate grant date fair value of restricted stock unit and performance share unit awards granted in the year indicated, with such grant date fair values prepared in accordance with ASC Topic 718. The values set forth for the performance shares above reflect the vesting of such awards based on the probable outcome of target levels, however, values may be higher based on performance with maximum values shown below. For a discussion of threshold, target and maximum levels of vesting on these awards, see “2022–2024 Performance Share Program” in the Compensation Discussion and Analysis section of this proxy statement. For information regarding the valuation assumptions used in computing grant date fair value, refer to note 20 - “Stock-Based Compensation Plans” in the Notes to Constellation’s Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

 

  Performance Share Award Value

Name

At Target

At Maximum

Dominguez 4,488,439 8,976,878
Eggers 1,051,733 2,103,466
Hanson 1,370,551 2,741,102
Koehler   712,075 1,424,150
McHugh   998,134 1,996,268

 

(d)The amounts shown in this column for 2022 represent payments made pursuant to the Annual Incentive Plan.
(e)The amounts shown in this column represent the change in the accumulated pension benefit for the NEOs from December 31, 2021 to December 31, 2022. None of the NEOs had above market earnings in a non-qualified deferred compensation account in 2022. The “Change in Pension Value & Nonqualified Deferred Compensation Earnings” for Mr. Hanson is shown as zero, though the actual change is negative.
(f)The following table describes the aggregate incremental cost of perquisites and other personal benefits provided in 2022 that are included in the amount reported in the All Other Compensation column. The aggregate incremental cost is for the 11-month period beginning with Constellation’s separation from Exelon.

 

70  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Executive Compensation Tables

 

2022 All Other Compensation

2022 All Other Compensation

 

Name Perquisites(a) Reimbursement
for Income
Taxes(b)
Constellation
Contributions to
Savings Plans(c)
Constellation
Paid Executive
LTD Premiums(d)
Other(e) Total
Dominguez $157,982 $9,650 $65,500 $4,157 $9,394 $246,683
Eggers    28,688   1,650   39,656  3,217            73,211
Hanson  233,870   2,048   43,875  3,771        —   283,564
Koehler    16,007      471   43,994  4,785    3,131     68,388
McHugh    27,495       —   39,970  4,011        —     71,476

 

(a)Amounts reported for personal benefits provided to NEOs include: (1) transportation related benefits (including the use of aircraft and the company’s cars and drivers as well as spousal and family travel); and (2) other benefits (including limited personal financial planning benefits, comprehensive executive health physicals, relocation assistance and matching charitable contributions) for the 11-month period beginning with Constellation’s separation from Exelon and ending on December 31, 2022.

 

i.Amounts reported for the personal use of company aircraft are based on the aggregate incremental cost to Constellation which is calculated using the hourly incremental cost for flight services. Certain NEOs are also entitled to limited personal use of company cars and drivers including for the purpose of commuting to work locations. The aggregate incremental cost to Constellation that is reported is calculated using the estimated hourly incremental costs which includes the rate for the driver and various maintenance costs. Amounts reported in this column for Mr. Dominguez and Mr. Hanson include $82,205 and $180,617 for personal use of company aircraft, respectively. Amounts reported in this column for Messrs. Dominguez, Hanson, and Eggers include $5,604, $1,190, and $1,696 for personal use of company cars and drivers, respectively. The aircraft usage includes spousal/domestic partner and other family members usage. The incremental amounts reported for spousal and family travel on company aircraft include $29,679, $2,088, and $11,788 for Messrs. Dominguez, Eggers, and Hanson, respectively.
ii.Amounts include the aggregate incremental value of relocation costs received by Mr. Dominguez and Mr. Hanson which were provided for under Constellation’s Relocation Program and the cost of temporary housing totaling $20,084 and $6,859, respectively. For Mr. Dominguez, these expenses were incurred as part of his move from Illinois to Pennsylvania coinciding with becoming Constellation’s President and Chief Executive Officer.
iii.Limited personal financial planning benefits valued at $15,410 were provided for each NEO. Executive officers may request matching gifts to qualified charitable organizations in amounts up to $10,000. Comprehensive Executive Health Physicals are provided with the aggregate incremental cost ranging from $5,000 to $7,500 depending on service provider.
(b)Constellation provides reimbursements of tax obligations incurred when: employees are required to work outside their state of home residence and encounter double taxation in states and localities where tax credits are not permitted in home state tax filings, when business-related spousal travel involves personal benefits and income is imputed to the employee, and for required relocation and housing/living expenses incurred in compliance.
(c)The amounts represent the respective corporate matching contributions to the NEOs’ accounts. Each of the NEOs participated in the 401(k) Plan and the Deferred Compensation Plan.
(d)Constellation provides basic term life insurance, accidental death and disability insurance, and long-term disability insurance to all employees, including NEOs. The values shown in this column include the premiums paid during 2022 for additional long-term disability coverage for the NEOs.
(e)The amounts in this column represent cash dividend equivalents that were earned and paid on unvested retention RSU awards that subsequently vested in March (Koehler) and August (Dominguez) of 2022. For details, see the Options Exercised and Stock Vested table below.
    Constellation Energy Corporation 2023 Proxy Statement 71
 
 

Executive Compensation Tables

 

Grants of Plan-Based Awards

 

Grants of Plan-Based Awards

 

    Estimated Possible Payouts Under Non-
Equity Incentive Plan Awards(a)
  Estimated Possible Payouts Under Equity Incentive Plan Awards(b)
Name Grant Date Threshold Target Maximum   Threshold Target Maximum

All other Stock

Awards: Number of Shares or Units(c)

Grant Date Fair Value of Stock and Option Awards(d)
Dominguez 2/7/2022 $38,189 $1,527,579 $3,055,158            
  2/7/2022         36,993 98,647  197,294   $4,488,439
  2/7/2022                 48,588   2,210,754
Eggers 2/7/2022   14,932      597,262 1,194,524            
  2/7/2022           8,668 23,115    46,230     1,051,733
  2/7/2022            11,385     518,018
Hanson 2/7/2022   16,726      669,043 1,338,086            
  2/7/2022         11,296 30,122    60,244      1,370,551
  2/7/2022                 45,224    2,075,013
Koehler 2/7/2022   14,804      592,157 1,184,314            
  2/7/2022           5,869 15,650    31,300       712,075 
  2/7/2022                   7,709      350,760
  3/1/2022                  18,833      900,029
McHugh 2/7/2022   13,550      541,982 1,083,964            
  2/7/2022           8,226 21,937    43,874        998,134
  2/7/2022                  10,805      491,628

 

(a)All NEOs have annual incentive plan target opportunities based on a fixed percentage of base salaries. Under the terms of the AIP, threshold performance earns 50% of the respective target, while performance at plan earns 100% of the respective target, and the maximum payout is capped at 200% of target. For 2022, the possible payout at threshold for AIP was calculated at 2.5% of target based on a threshold payout (50%) of the lowest weighted metric of 5%. The AIP targets are based on time spent at each base salary for the year and/or AIP target when applicable. For additional information about the terms of this program, see “Compensation Discussion and Analysis” above.

 

(b)NEOs have a long-term performance share unit target opportunity that is a fixed number of performance share units which is commensurate with the officer’s position. The possible payout at threshold for performance share unit awards was calculated at 37.50% of target. The possible maximum payout for performance share units was calculated at 200% of target. For additional information about the terms of these programs, see “Compensation Discussion and Analysis” and the footnotes to the Summary Compensation Table above.

 

(c)This column shows restricted stock unit awards (including retention restricted stock units awards) made during the year. The vesting dates of the awards are provided in footnote (b) to the Outstanding Equity Table below.

 

(d)This column shows the grant date fair value, calculated in accordance with FASB ASC Topic 718, of the performance share unit awards and restricted stock units granted to each NEO during 2022. Fair value of performance share unit awards granted on February 7, 2022, are based on an estimated payout of 100% of target.
72  Constellation Energy Corporation 2023 Proxy Statement    
 
 

Executive Compensation Tables

 

Outstanding Equity Awards at Year End

 

Outstanding Equity Awards at Year End

 

 

Option Awards

 

Stock Awards

Name Number of
Securities
Underlying
Unexercised
Options
That Are
Exercise

Number of
Securities
Underlying
Unexercised
Option That
Are Not
Exercisable

Options
Exercise
or Base
Price
Option
Expiration
Date
  Number of
Shares or
Units
of Stock
That
Have Not Yet
Vested(a)(b)(c)

Market Value of
Shares

or Units of
Stock That Have
Not Yet Vested
Based on 12/30
Closing Price

$86.21(a)(b)(c)

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Yet Vested(a)(d)
Equity Incentive
Plan Awards:
Market or
Payout Value or
Unearned
Shares, Units or
Other Rights
That Have Not
Yet Vested
Based on 12/30
Closing Stock
Price(a)(d)
Dominguez   77,448 $6,676,792 245,069 $21,127,398
Eggers   24,847   2,142,060   69,484     5,990,216
Hanson   86,513   7,458,286 153,258   13,212,372
Koehler   51,229   4,416,452   72,466     6,247,294
McHugh