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Form DEF 14A Constellation Energy For: Apr 30

March 20, 2024 5:17 PM
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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. )

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

 

Check the appropriate box:
Preliminary Proxy Statement
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
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):
No fee required.
Fee paid previously with preliminary materials.
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

 

March 21, 2024

 

Dear Fellow Shareholders:

When Constellation launched two years ago, we were driven by a belief that our unique ability to reliably deliver carbon-free power in every hour of every day was the most undervalued product and service in the world.

That world has changed. Today, state and federal policies are starting to recognize the unique value our company provides, giving us the opportunity to extend the life of our nuclear clean energy centers and grow our fleet to increase our clean energy output. That recognition is also shared by the company’s customers, who come to us for help navigating increasingly volatile energy markets and seeking solutions to meeting their own ambitious climate goals. And significantly, nuclear energy now has historically high support from the public at large and is being recognized more widely for its role in addressing the climate crisis and maintaining the reliable, 24/7 energy we all depend on in our daily lives. Constellation is in a rare space, where our nation’s need for clean and reliable energy is fully aligned with the nuclear and other assets we own and our strategy to maximize their value.

Since 2022, the company has delivered a total shareholder return of 139.8% and increased the strength of our investment-grade balance sheet. In December, we authorized management to increase the company’s share repurchase plan by an additional $1 billion – bringing the total repurchase plan to $2 billion. We have grown our dividend 150% in the first two years as a stand-alone company and are confident in the company’s forecast of 10% annual base earnings per share growth through this decade. Looking ahead, we see continued opportunities to power our nation’s growing digital infrastructure with clean energy, support the decarbonization of sectors across our economy and continue expanding our carbon-free energy output.

 

Advancing a Reliable, Carbon-Free Energy Future and Serving Customers Across the U.S.

In 2023, Constellation made significant progress on our growth strategy as we continued to expand our fleet of the nation’s best-run nuclear plants through the acquisition of a partial ownership stake in the South Texas Project Electric Generation Station (STP), one of the newest and largest nuclear plants in the U.S., with an exceptional track record for safety and reliability. STP generates enough carbon-free power for two million average homes in one of the most economically dynamic regions in Texas. The STP acquisition helps advance the company’s ambitious goal of achieving 95% carbon-free energy generation by 2030 and 100% by 2040.

In a year of extreme weather and record temperatures, our generation fleet once again set the standard for our industry. We also maintained strong reliability throughout the year, continuing best-in-class nuclear operations. During summer 2023, the hottest summer on record, our carbon-free nuclear fleet ran nearly 100% of the time to provide reliable power to the equivalent of more than 16 million homes. This success demonstrates the dedication of Constellation’s people, who performed tens of thousands of tasks at our nuclear plants during spring refueling and maintenance outages designed to ensure all reactors would run uninterrupted through the peak summer heat. In addition, we began producing hydrogen at Nine Mile Point Clean Energy Center and achieved an industry record for blending clean hydrogen with natural gas at Hillabee Generating Station.

Our commercial business also performed at an extraordinary level in 2023 serving customers in 48 states and optimizing our nuclear fleet in the wholesale markets. Through this industry leading business at Constellation, we also support our customers in reaching their climate and decarbonization goals. Last year, through collaboration with Microsoft, we announced our investment in technology to help U.S. businesses match their energy use with carbon-free resources in every hour of every day, thereby helping companies transition to 100% clean electricity around the clock. Microsoft became a customer for this product at a Virginia data center and we also entered a historic agreement with ComEd, one of the nation’s largest utilities, to power all of its 54 facilities with hourly-matched carbon-free energy.

We believe building a sustainable energy future also means supporting the communities we serve through economic and workforce development, charitable giving and volunteerism. In 2023, Constellation hired more than 1,500 people and was certified as a “Great Place to Work.” We launched a $1.25 million Powering Change initiative, dedicated to breaking down employment barriers for people in underserved and underrepresented communities. We doubled the size of our charitable foundation, and our people volunteered more than 102,000 hours of service in our communities and, together with the company and the foundation, contributed more than $18 million to 4,400 charities.

 

  Constellation Energy Corporation 2024 Proxy Statement 1
 
 

Letter From the Board of Directors to Shareholders

 

 

Strengthening our Board Composition and Ensuring Strong Governance Practices

The Board remains committed to effective governance practices to ensure oversight of the most relevant and important issues and opportunities facing Constellation. As a Board, we regularly consider how each of our directors’ backgrounds, experiences and skills enable effective oversight of the company’s growth, business planning, and sustainability issues, including business risks related to cybersecurity, safety and climate change. We remain confident in our current Board composition and continue to actively search for prospective director candidates to ensure a regular process of Board refreshment. In June 2023, we welcomed Dhiaa Jamil to the Board, whose background and experience in nuclear energy is invaluable as we continue to deliver on our clean energy center strategy.

The discussions Constellation held with our shareholders over the past year were an important resource as we review our governance practices and consider both near-term and long-term strategic decisions. Through these meetings, we gained valuable insights into investor perspectives and priorities with discussions that often focused on our climate strategy and sustainability- related initiatives, Board composition and risk oversight, pay-for-performance alignment, and our governance practices, including our commitment to fully de-classify the Board following the 2026 Annual Meeting of Shareholders.

 

Your Vote is Important to Us

As we approach our 2024 Annual Meeting of Shareholders, we want to stress that 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.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 2
 
 

Notice of Annual
Meeting of Shareholders

 

To Shareholders of Constellation:

You are invited to participate in the 2024 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 30, 2024 at 8:45 a.m. Eastern Time.

Items Of Business:

 
   

1.  To elect four Class II 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 ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2024; and

 

4.  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 2024 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 30, 2024 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 21, 2024.

     
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 the QR Barcode on the form you receive 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.

Virtual Meeting
www.virtualshareholdermeeting.com/CEG2024.

Tuesday, April 30, 2024
9:00 a.m., Eastern Time

Record Date
March 6, 2024

 
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 30, 2024:
Our proxy statement and 2023 Annual Report are available free of charge on our website constellationenergy.com or at www.proxyvote.com.
 

AT THE MEETING: Shareholders as of March 6, 2024 (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/CEG2024, 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.

 

 

   

BY ORDER OF THE BOARD OF DIRECTORS

 

 

Arden T. Phillips
Corporate Secretary
March 21, 2024

 

  Constellation Energy Corporation 2024 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 30, 2024 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof. On or about March 21, 2024, 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 95 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/CEG2024

 

  Constellation Energy Corporation 2024 Proxy Statement 4
 
 

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 95 of this proxy statement.

 

What Shareholders will be Voting On

 

  Items of Business Board’s Voting Recommendation Page
1 To elect four Class II directors nominated by our Board of Directors   FOR ALL 23
2 To consider and act on an advisory vote regarding the approval of compensation paid to named executive officers   FOR 54
3 To ratify the appointment of PricewaterhouseCoopers LLP as Constellation’s independent registered public accounting firm for 2024   FOR 90
4 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:

     
     
     
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 the QR Barcode on the form you receive 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 to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

  Constellation Energy Corporation 2024 Proxy Statement 5
 
 

Proxy Summary

 

Constellation’s Business Strategy

Constellation’s Business Strategy

In a rapidly changing world, demand for clean, reliable power generation is growing. Customers and policymakers are growing increasingly aware that America needs clean and dependable power generation to grow our data-driven economy, protect our national security, and transition to a carbon-free future. With our unmatched clean, reliable generation portfolio, Constellation is uniquely placed to help our country and our customers meet their economic growth and sustainability goals. With revenues of more than $24.9 billion in 2023 and total assets of $50.8 billion, Constellation is both the nation’s largest carbon-free energy producer and a leading competitive energy supplier, producing approximately 10% of the nation’s carbon-free energy and helping America transition to a clean, sustainable future.

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 driving economic growth by powering the data economy and new digital infrastructure. We are a leading advocate at the federal and state levels for policies that will reduce greenhouse gas (GHG) emissions and preserve and grow reliable, clean energy.1 The principles of our sustainable business strategy demonstrate our commitment to a carbon-free future while maintaining a strong balance sheet. 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 clean energy assets by co-locating with data centers, exploring direct air capture of CO2, and, if supported by policy, producing clean hydrogen and other sustainable fuels to reduce industrial pollution.

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, and drive community investment and create family-sustaining clean energy jobs for all.

Our nearly 90% carbon-free generation fleet consists of nuclear, wind, solar, hydroelectric and lower-carbon natural gas assets. Our fleet has a total generation capacity of 33,094 megawatts (MW). Through our integrated business operations, we sell electricity, natural gas and other energy-related products and sustainable solutions to various types of customers, including distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive markets across multiple geographic regions.

In the coming years, our country will need even more reliable, clean megawatts—the most important energy commodity in our economy. Constellation is uniquely positioned to offer them to customers whether through on-site applications like digital infrastructure projects and hydrogen (with the right policy support) or off-site solutions like CORe or hourly matched carbon free energy.

 

(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.

 

  Constellation Energy Corporation 2024 Proxy Statement 6
 
 

Proxy Summary

 

2023 Operational Highlights and Accomplishments

2023 Operational Highlights and Accomplishments

In 2023, we continued to build upon prior year achievements that support long-term value creation with outstanding total shareholder return and strong financial and operational performance. For example, we accomplished the following in 2023:

 

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

 

  Constellation Energy Corporation 2024 Proxy Statement 7
 
 

Proxy Summary

 

Our Board and Director Nominees

Our Board and Director Nominees

The Board of Directors is composed of a 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, Bradley Halverson, Charles Harrington, Dhiaa Jamil and Nneka Rimmer for re-election as Class II directors. Upon election, each of the Class II directors will serve a two-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 four nominees be elected by shareholders.

The following table provides summary information about each of the nominees for election at the 2024 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 66 2022 Audit & Risk (Chair)
Corporate Governance

•    Albemarle Corporation

•    Graphic Packaging Holding Company

•    Autoliv, Inc.

Yves C. de Balmann
Executive Partner at Bridge Growth Partners
III 77 2022 Compensation (Chair) Corporate Governance      None
Joseph Dominguez
President and Chief Executive Officer–Constellation
I 61 2022   N/A      None
Bradley M. Halverson
Former Chief Financial Officer–Caterpillar Inc.
II 62 2022 Compensation Corporate Governance

•    Sysco Corporation

•    Lear Corporation

•    Satellogic, Inc.

Charles L. Harrington
Former Chairman– Parsons Corporation
II 65 2022

Audit & Risk Corporate
Governance (Chair)

Nuclear Oversight

•    J.G. Boswell Company

•    JBT Corporation

•    Korn Ferry

Julie Holzrichter

Chief Operating Officer–CME Group

I 56 2022 Audit & Risk Compensation      None

Dhiaa Jamil

Former Chief Operating Officer–Duke Energy

II 67 2023 Compensation Nuclear Oversight      None

Ashish Khandpur

President and Chief Executive Officer–Avient Corporation

I 56 2022 Compensation Corporate Governance •    Avient Corporation

Robert J. Lawless

Former Chief Executive Officer–McCormick & Company, Inc.

III 77 2022 Corporate Governance      None

Admiral John M. Richardson

Former Chief of Naval Operations–U.S. Navy

III 63 2022

Audit & Risk Corporate Governance

Nuclear Oversight (Chair)

•    The Boeing Company

•    BWX Technologies, Inc.

Nneka Rimmer

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

II 52 2022 Audit & Risk
Nuclear Oversight
•    Energizer Holdings, Inc.

 

 

 

(1)In June 2023, the gender diversity percentage decreased from 30% to 27% when Mr. Jamil was appointed to the Board, see page 38 of this proxy statement for more information.

 

  Constellation Energy Corporation 2024 Proxy Statement 8
 
 

Proxy Summary

 

Compensation Program Structure

 

Compensation Program Structure

 

A significant portion of compensation for the CEO (and other named executive officers (NEOs) listed in the compensation tables of this proxy statement) is tied to the achievement of short-term and long-term financial and operational goals. The components of compensation paid to our CEO (and the other NEOs), except for base salary, are “at-risk”. The table below illustrates components for total direct compensation.

 

 

Chief Executive Officer Compensation

The Compensation Committee reviews and recommends, and the Board of Directors considers and approves, the compensation of our CEO annually, based on a comprehensive evaluation of his individual performance and our company’s performance relative to our peers and the market. The Compensation Committee considers both quantitative and qualitative factors, such as financial results, strategic initiatives, leadership development, succession planning, stakeholder engagement, corporate responsibility, and risk management. The committee also benchmarks the CEO’s compensation against independent peer group data provided by an external consultant, to ensure that the compensation is competitive, reasonable, and aligned with shareholder interests.

 

 

Given the effectiveness of the CEO’s leadership in driving strong financial results, superior shareholder returns, strategic growth, and operational success, the committee recommended that the CEO’s compensation for fiscal year 2023 should be competitive with market median of the peer group which is reflected in the 2023 pay decisions above.

CEO Incentive Pay Strongly Aligned to Stock Performance Relative to Peer Group Average and S&P 500

One of the key objectives of our executive compensation program is to align the interests of our executives with those of our shareholders. We believe that our compensation program reflects this objective by linking a significant portion of our executives’ pay to the achievement of financial and strategic goals that drive shareholder value creation. As a result, our executives’ compensation varies with our performance and the market value of our common stock.

 

  Constellation Energy Corporation 2024 Proxy Statement 9
 
 

Proxy Summary

 

Key Executive Compensation Practices

 

 

Since our separation from our former parent company, Exelon Corporation, in February 2022, we have delivered strong financial results and superior shareholder returns. Our total shareholder return (TSR) since separation was 139.8% as of December 31, 2023, compared to 8.3% for the S&P 500 Index and an average of 14.4% for our peer group. Our one-year TSR was 37.2%, compared to 26.3% for the S&P 500 Index and an average of 12.5% for our peer group. These results reflect the successful execution of our strategy and operational excellence.

 

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 comprehensive 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:

 

 

Providing Carbon-Free Energy
and Climate Mitigation

 

C&I Customer
Transformation

 

Innovation and
Technology Enablement

 

 

Carbon-Free
Policy Advocacy

 

 

Equity and Community
Empowerment

 

Commitment to Diversity,
Equity and Inclusion

 

 

Strong Corporate Governance
and Risk Management

           

 

  Constellation Energy Corporation 2024 Proxy Statement 10
 
 

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. 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.

 

 

Please see the “About Us—Sustainability” section later in this proxy statement for more information regarding our sustainability efforts and strategy.

 

  Constellation Energy Corporation 2024 Proxy Statement 11
 
 

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, sustainability and environmental stewardship, and governance practices.

Our Board is comprised of eleven 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, and specialized experience. Currently, 27% of Board members are women and 45% are ethnically and/or racially diverse.

 

 

Board Governance

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

     

Independent Board Chair

Chief Executive Officer and Board Chair roles are separate

Committee Independence

100% of our committees are comprised of independent directors

Director Stock Ownership

Robust ownership requirements
(i.e., 5x annual cash retainer)

Board Self-Evaluations

Annual evaluations for full Board which includes director interviews

Outside Board Service Limit

Maximum of 3 other public company Boards (CEO may only serve on the Board of one other public company)

Mandatory Director Retirement

By the annual meeting of shareholders following a director’s 80th birthday

Committee Self-Evaluations

Annual evaluations for each committee

Succession Planning

Annual evaluation of management succession and leadership

Governance Assessment

Annual review/assessment of governance policies

Enterprise Risk

Board oversight of enterprise risk,

overseen by the Audit & Risk Committee

Executive sessions

Regular executive sessions of independent directors meeting without management

De-classification of Board

Annual elections for all directors after 2026 annual meeting of shareholders

 

  Constellation Energy Corporation 2024 Proxy Statement 12
 
 

Proxy Summary

 

Shareholder Engagement

Shareholder Engagement

We believe that engaging with our investors provides valuable insights for the Board and its committees into investor perspectives and priorities. In October 2023, Constellation contacted holders of over 60% of our outstanding shares with offers to engage. This outreach was in addition to regular communication between our investor relations team and shareholders (e.g., quarterly earnings calls, analyst meetings, and investor and industry conferences). Shareholders who accepted invitations to engage represented approximately 32% of our outstanding shares. The Constellation engagement team was comprised of members from our Office of Corporate Governance, Investor Relations, Sustainability, Compensation, and Human Resources departments. The engagement team met with shareholders to discuss a wide variety of issues, including business operations and strategy, sustainability and climate matters, executive compensation, human capital, and board composition and effectiveness. Engaging openly with our shareholders on these and other topics drives increased accountability, improves decision making, and ultimately creates long-term value. The feedback received from shareholders and other stakeholders was shared with each Board committee and the Board, as appropriate. Our shareholder engagement process is described below.

 

 

Responsiveness to Shareholder Feedback

Our Audit & Risk, Corporate Governance, Compensation and Nuclear Oversight committees will consider the adoption or recommend Board approval of suggested enhancements to policies, practices, or disclosures to meet investor concerns or expectations, if such action is deemed to be in the best interests of the company and its shareholders.

Shareholder feedback from the 2023 engagement cycle indicated that there were no desired material changes to our environmental, social and governance policies and practices at this time. During our engagement meetings, we received generally supportive comments regarding our compensation structure, sustainability goals, and governance structure. However, as shown below, we received feedback on how to further enhance our disclosures and compensation practices, which we promptly acted on. We are committed to conducting future engagement to continue to learn more about the evolving priorities and issues that matter most to our shareholders.

 

What We Heard   How We Acted
     

•   Shareholders requested more disclosure regarding our Board’s oversight of enterprise risk and risk management.

 

•   Shareholders expressed a desire for the company to include a total shareholder return (TSR) component in our long-term incentive program.

 

•   We expanded our discussion of the Board’s role in the oversight of risk in this proxy statement (see pages 44–46).

 

•   In February 2024, the Compensation Committee amended the long-term incentive program to include a TSR component beginning with 2024 award grants (see pages 58–59 and 67 for more information). The Compensation Committee and Board believe that this change is responsive to our shareholders and will enhance the balance and rigor of our long-term incentive program while reinforcing our pay-for-performance philosophy.

 

  Constellation Energy Corporation 2024 Proxy Statement 13
 
 

Table of Contents

 

Table of Contents

Table of Contents

Proxy Summary 5
Cautionary Statements Regarding Forward-Looking Information 15
About Us 16
Proposal 1 : Election of Directors 23
Our Director Nominees 24
Corporate Governance 35
Director Qualification and Nomination Criteria 35
Board Skills 36
Board Diversity 38
Board Leadership Structure 39
Board Committees 40
Director Independence 43
Board Role in Risk Oversight 44
Cybersecurity Risk 46
Board and Committee Self-Evaluations 46
Ethics and Compliance 48
Director Compensation 49
Ownership of Constellation Stock 52
Proposal 2: Say-On-Pay: Advisory Vote on Executive Compensation 54
Compensation Committee Report 55
Compensation Discussion and Analysis 55
Executive Compensation Tables 71
Summary Compensation Table 71
Grant of Plan-Based Awards 73
Outstanding Equity Awards at Year End 74
Option Exercises and Stock Vested 75
Benefit Plans 76
Pension Benefits 76
Potential Payments Upon Termination or Change in Control 78
Pay Versus Performance 83
CEO Pay Ratio 88
Report of the Audit & Risk Committee 89
Proposal 3: Ratification of PricewaterhouseCoopers LLP as Constellation’s Independent Registered Public Accounting Firm for 2024 90
Additional Information 93
Questions and Answers About the Annual Meeting 95
Appendix A— Definitions of Non-GAAP Measures A-1

 

  Constellation Energy Corporation 2024 Proxy Statement 14
 
 

Cautionary Statements Regarding Forward-Looking Information

 

Cautionary Statements Regarding Forward-Looking Information

Cautionary Statements Regarding Forward-Looking Information

This proxy statement contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” “should,” “will,” “may” and similar expressions or by using future dates in connection with any discussion of, among other things, the 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, 2023, 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 2024 Proxy Statement 15
 
 

About Us

 

About Us

About Us

Headquartered in Baltimore, Maryland, Constellation is the nation’s largest producer of reliable, 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 16 million homes. We are helping to grow America’s economy and accelerate the nation’s transition to clean energy with 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydro assets and annual output that is approximately 90% carbon-free.

 

 

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 16
 
 

About Us

 

ESG Overview

ESG Overview

Our ESG principles are central to our business strategy and value proposition. Our values and ESG principles guide us in our central purpose. We are focused on driving action in these critical focus areas:

 

 

Providing Carbon-Free Energy
and Climate Mitigation

 

C&I Customer
Transformation

 

Innovation and
Technology Enablement

 

 

Carbon-Free
Policy Advocacy

 

 

Equity and Community
Empowerment

 

Commitment to Diversity,
Equity and Inclusion

 

 

Strong Corporate Governance
and Risk Management

           

Board Oversight of ESG

We embed ESG throughout our business activities and strategy. The 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 political contributions. The Board has four standing committees with dedicated responsibilities outlined in each, which are reviewed annually. The Board has delegated to each committee specific aspects of our ESG oversight.

The Corporate Governance Committee is specifically tasked with overseeing sustainability and climate change strategies, including efforts to protect and improve the environment.
The Audit & Risk Committee reviews SEC disclosures related to environmental and cyber security risks and maintains oversight of the finance organization and the company’s independent auditor. The committee also reviews the processes by which the company assesses and manages ESG-related risks as part of the broader enterprise risk management framework.
The Nuclear Oversight Committee is specifically tasked with overseeing environmental and safety laws, regulations and standards applicable to ownership and operation of nuclear power facilities. This includes compliance with policies and procedures to manage and mitigate risks associated with nuclear assets, and oversight of both cyber security risks and environmental, health and safety issues related to nuclear generating facilities.
The Compensation Committee is actively involved in reviewing policies related to executive compensation, human capital and talent development and DEI, monitoring and shaping corporate culture and evaluating potential ESG metrics for compensation programs.

 

We also have specific executive leaders responsible for advancing our ESG principles. For instance, the Constellation Sustainability Council, led by the Vice President of Sustainability and Climate Strategy, is comprised of executive representatives from key functions within the company. The Council meets four times per year to review sustainability policies and initiatives, ensure strategic alignment, discuss emerging ESG trends, and make informed suggestions to senior executive leadership.

 

Sustainability

Sustainability is at our core and our values provide a common foundation for our work as a premier sustainability company and proven leader in producing and supplying reliable, clean, carbon-free energy.

Our sustainable business strategy is built on four key strategic principles: powering America’s reliable, carbon-free energy future, expanding America’s largest fleet of clean energy centers, uplifting and strengthening our communities, and providing energy and sustainability solutions for customers.

 

  Constellation Energy Corporation 2024 Proxy Statement 17
 
 

About Us

 

Sustainability

We are the nation’s largest producer of reliable, clean, carbon-free energy, enhancing grid resiliency with our diverse generation portfolio, including the nation’s largest nuclear fleet, and producing approximately 10 percent of the carbon-free energy in the U.S. Our generation fleet, which includes nuclear, hydroelectric, wind, solar and natural gas facilities, has an annual output that is 90 percent carbon-free, and generates enough clean energy to power the equivalent of more than 16 million homes.

Climate Change Commitments

We are committed to operating our business in a socially responsible, sustainable manner by reducing our GHG emissions and as industry leaders, we are committed to accelerating the transition to a clean, carbon-free energy future. Currently, we are developing a roadmap for achieving our climate goals which will include implementation plans and recommendations for tracking progress. This roadmap will put us on a path to achieving our climate commitments while continuing to supply the country with affordable and reliable carbon-free power.

Clean Electricity Supply: We commit that our own electricity generation will be 95% carbon-free by 2030 and 100% carbon-free by 2040.(1)
Operational Emissions Reduction: We plan to reduce operations driven emissions by 100% by 2040.(2) Any emissions that cannot be technologically reduced will be offset. In the interim, we will reduce carbon emissions by 65% by 2030. Also, we commit to reducing methane emissions by 30% by 2030, aligning Constellation with the Global Methane Pledge.
Clean Customer Transformation: Prior to the end of 2022, we successfully delivered on our commitment to provide 100% of our C&I customers with customer-specific information on their GHG impact for facilities contracting for power and gas supply from Constellation.

 

Carbon-free, Safe and Reliable Energy

Constellation owns 23,570 MW of carbon-free power generation, including our nuclear fleet that provides clean and dispatchable energy for the electric grid. By providing clean, safe, affordable and reliable energy and expanding the use of our generation fleet to decarbonize other sectors, we are well-positioned to help grow America’s data-driven economy, meet the increasing demand for sustainable solutions, and deliver long-term value to our shareholders.

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. According to the annual Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the U.S. report, an independent analysis based on publicly reported 2021 air emissions data, we are the nation’s largest producer of clean, carbon-free energy with the lowest rate of carbon dioxide emissions among the 20 largest private, investor-owned power producers in the U.S. for the 10th consecutive year. The report showed that the next cleanest company among the group of 20 had more than four-and-a-half times the rate of carbon dioxide emissions (lbCO2e/MWh) as Constellation.

 

 

 

(1)Subject to policy support and technology advancements.
(2)From a 2020 baseline.

 

  Constellation Energy Corporation 2024 Proxy Statement 18
 
 

About Us

 

Sustainability

Our Nuclear Fleet

Nuclear generation is the backbone of America’s energy system and will be even more important as demand for clean, reliable energy grows. No other company in America produces more nuclear energy, safely and efficiently, than Constellation. Constellation owns and operates 21 nuclear reactors in the Mid-Atlantic, Northeast, and Midwest. We also have an ownership interest in four additional reactors with a combined generating capacity of nearly 4,945 MWs, including the partial ownership stake we acquired in the South Texas Project Electric Generating Station in June 2023. South Texas Project is a 2,645 MW dual-unit nuclear plant located about 90 miles southwest of Houston with enough generating capacity to power two million homes, on average. In 2023, we also authorized an investment of $800 million in upgrades to increase the capacity of our Braidwood and Byron Generating Stations in Illinois by approximately 135 MWs.

As a clean, carbon-free and highly reliable power source, nuclear is an essential part of the solution to combat climate change. Increasingly, federal and global legislative bodies are recognizing nuclear as a source of clean, carbon-free energy that can be relied upon to operate during times when customer demand is at its peak. Nuclear energy emits no GHGs or criteria air pollutants, such as nitrogen oxides (NOX), sulfur dioxide (SO2), particulate matter (PM) or mercury. Constellation’s nuclear fleet is the nation’s largest and produces reliable baseload generation, staying online approximately 95% of the time. It is also capable of continuing to operate for many decades to come. With second license renewals from the Nuclear Regulatory Commission, the nation’s nuclear fleet can operate for another 39 years, longer than any wind or solar resource on the grid or built in the next decade.

Nuclear produces more energy for the same amount of installed capacity than any other generation source. It operates 24 hours per day, 365 days per year, even in extreme cold or heat. It is the backbone of our nation’s energy grid. This is not theoretical. Through the Polar Vortex in 2014, Winter Storm Uri in 2021, Winter Storm Elliott in 2022, and numerous other once-in-a-hundred-year events that have happened in recent years, nuclear has kept the system running when other resources have not been available.

In terms of sustainability, safety, waste management, or long-lived durability, nuclear offers benefits that no other generation resource can. Its importance continues to grow as customers increasingly look for large quantities of firm, clean megawatts that can run 24/7. That’s why Constellation is proud to be the best operator of nuclear plants in America.

Our Renewable Fleet

Constellation operates a robust fleet of renewables consisting of hydroelectric, wind and solar power which have a combined capacity of almost 2.6 GW.

We operate five solar facilities in the West and Mid-Atlantic for a total of 268 MW. Our solar facility in California is one of the largest solar photovoltaic projects in the state, with 3.8 million panels. The facility has a generating capacity of 242 MW producing enough clean, renewable electricity to avoid approximately 425,000 metric tons of carbon dioxide emissions per year.
We also operate and have ownership interests in 27 wind projects across 10 states that have generating capacity of about 735 MW of electricity.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 19
 
 

About Us

 

Sustainability

The Conowingo Hydroelectric Generating Station is a clean, run-of-river hydroelectric facility that can generate up to 497 MW of electricity, enough to power approximately 165,000 homes, and can respond to changes in demand within 10 minutes.
Muddy Run Pumped Storage Facility is a pumped storage hydroelectric facility that can generate up to 1,058 MW of electricity by pumping water into the upper reservoir at night, when demand decreases, to power turbines during subsequent peak-demand periods.
The Conowingo and Muddy Run hydroelectric assets provide much needed load-leveling power to the Mid-Atlantic region.

 

We are working to efficiently capture growth opportunities within our existing fleet through wind repowering projects. In 2023, we commenced a $350 million effort to increase the output and lifespan of our renewable energy portfolio, beginning at our Criterion wind project in Maryland where we are repowering 28 turbines with new, state-of-the-art components that will allow us to increase clean energy production by 79,000 MWh per year and run the project for an additional 20 years.

Innovation

Our culture embraces innovation to achieve a clean energy future. We focus on three key trends or categories of technological transformation: Decarbonization, Digitalization and Diversification. We collaborate with customers, suppliers, universities, governments, national labs and startups to support innovations that will accelerate the energy transition. This includes seeking federal and state government grants to demonstrate and deploy clean energy technologies. We also invest in and commercialize technological advancements essential to achieve a clean, carbon-free energy future. Our commitment to innovation, investments in applied technology projects, policy engagement and advocacy work help us to live our values as a climate champion.

Clean Energy Centers

Our nuclear generation facilities are clean energy centers that we are leveraging to explore co-location of customer load, utilization of direct air capture of carbon dioxide, and production of clean hydrogen and other sustainable fuels to reduce industrial emissions. Each of our nuclear stations has positive benefits beyond its current use as a baseload carbon-free energy source and provider of electricity to the electric grid. These clean energy centers can satisfy the growing demand for clean and flexible energy while producing clean hydrogen. Additionally, other end users may locate their facilities adjacent to our nuclear plants—or behind the meter—so they can take direct advantage of our clean, 24/7 carbon-free electricity. Due in part to the increasing demand for digital infrastructure projects to fuel new technologies like artificial intelligence, major tech companies are expected to make significant investments in large data centers over the next five years, which would lead to increased demand for clean, reliable sources of electricity that will run 24/7. Accordingly, the co-location of data centers with our clean energy centers may provide opportunities for additional value creation in the future. As the nucleus of the clean energy centers, our nuclear plants will serve as a highly valued and essential climate solution well past mid- century—the target date for achieving a zero-carbon economy.

Further Information

For additional information regarding our sustainability strategy and program as well as a copy of our 2023 sustainability report, please visit the company’s website at www.constellationenergy.com.

 

  Constellation Energy Corporation 2024 Proxy Statement 20
 
 

About Us

 

Diversity, Equity & Inclusion (DEI)

Diversity, Equity & Inclusion (DEI)

Constellation operates in a world rich in diversity including, among other things, race, ethnicity, religious belief and practice, gender identification, sexual orientation, disability, life experience, age, socioeconomic status, experience and thought. Constellation engages in equal opportunity in the workforce and does not discriminate in its employment decisions. We recognize that engaging and supporting a diverse and inclusive workforce at all levels of the company is key to fostering innovation, growing an 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 strive to recruit, develop and support an innovative, diverse team of employees that uplifts and strengthens our communities.

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 and equal opportunity for all. The Board 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
       
Integrating diversity, equity and inclusion as a business imperative and core value Providing a workspace where we respect one another, that creates a sense of belonging, and in which each employee can grow and contribute at their greatest potential
       
Attracting, retaining and advancing employees who will best understand and serve our vision, values, customers, partners, and communities Creating and fostering an inclusive purchasing environment while building an ecosystem of sustainable relationships; expanding opportunities; and cultivating the growth of diverse businesses, including small businesses, which add value to Constellation and our communities.
       

 

Our DEI Strategic Priorities
     
Strategic
Talent Sourcing
To be intentional in our sourcing efforts to attract qualified talent including from diverse populations via relationships, technology, and inclusive practices. We will strive to increase the diversity of our candidate pool through new and unique sources, including our workforce development effort.
     
Workforce Development

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

     
Business/Supplier Diversity To drive value through creating an inclusive supply chain that enables, equips, and empowers diverse businesses, including small businesses, to thrive in our marketplace. To be recognized for empowering a supplier ecosystem that fosters economic inclusion, and drives top and bottom-line growth through innovation, competition, and supply chain stability.
     
Equity and
Belonging

To eliminate barriers to participation and create opportunities for all employees by establishing a culture of inclusion and belonging by leveraging the efforts of the Diversity, Equity and Inclusion Center of Excellence. We also regularly conduct DEI training offered for all employees.

     

 

  Constellation Energy Corporation 2024 Proxy Statement 21
 
 

About Us

 

DEI Highlights

DEI Highlights

Since we began operating as a stand-alone public company in 2022, we have implemented and/or accomplished the following:

Powering Change: $1.25 million investment in workforce development community organizations 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) Hispanic serving institutions, minority-serving institutions and technical schools and other organizations to improve diversity within STEM majors.
Constellation Scholars: Work with colleges and non-profit organizations to provide financial support for institutions to offer scholarships specifically geared toward students with varied backgrounds looking to pursue careers in STEM.
Building Trades Diversity Pledge and Engagement: Historic pledge with unions and contractors to help eliminate bias, foster inclusion, and increase diversity in the building trades among populations that have not historically worked in the energy industry. Work and participate with trade groups and local vocational schools to provide exposure, knowledge, and equal access to careers.
Business/Supplier Diversity: Received the Most Committed Energy Corporation for Diversity and Inclusion Award from the Maryland Washington Minority Contractors Association (MWMCA), and in 2023, named a Supply Chain Diversity Leader, which recognized our support of over 20,000 jobs at small and diverse suppliers in 2022.
Employee Resource Groups (ERGs): Support of nine ERGs that are open to all employees in order to allow employees opportunities to share experiences and connect with colleagues. Over 5,000 employees participate in at least one ERG, and there are over 67 chapters throughout the company.
DEI Resources, Training and Webinars: Regular internal messaging from senior executive leadership which reinforces our DEI values and expectations as well as DEI highlights, engagement opportunities, and educational resources for employees. Additional resources include: ongoing training for new hires and other employees, experimental learning, and a DEI webinar series on emerging topics.
Association Relationships and Alignment: Support of local and national organization programs dedicated to professional development, community engagement, and advocacy for diverse populations. We have made pledges to several organizations such as CEO Action for Diversity and Inclusion, DisabilityIN, Equal by 30, DEI PACE, Parity Pledge, and the Human Rights Campaign Business Coalition for the Equality Act.
Pay Equity: We conduct analyses on gender and racial pay equity. We also provide training and review hiring and promotion processes to avoid unconscious bias and include equal pay efforts in broader company-wide equity initiatives. These actions help to create an environment where all employees can thrive and advance as equal members of the workforce.
Religious Accommodations: Our company’s policies provide for reasonable accommodation for employees’ religious practices and observances including time and space for prayer and accommodations for religious dress/attire and dietary restrictions.
2023 Great Place to Work Certification: In 2023, we were Certified™ by Great Place to Work®. In a survey of approximately 5,000 employees, 81% of those who responded said that Constellation is a great place to work – about 24 points higher than the average U.S. company.

 

  Constellation Energy Corporation 2024 Proxy Statement 22
 
 

Proposal 1:

Election of Directors

We currently have a classified board structure that is being phased out over a three-year period which began at the 2023 Annual Meeting of Shareholders. The Corporate Governance Committee has recommended, and the Board has nominated, our current Class II directors, Bradley Halverson, Charles Harrington, Dhiaa Jamil and Nneka Rimmer for re-election by shareholders as Class II directors. The initial term of the Class II directors will expire at the 2024 Annual Meeting of Shareholders. Upon re-election, each such director will serve a two-year term through 2026 or until their successor is elected and qualified, or his or her earlier death, resignation or removal. 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 in the event that the director receives a plurality of the votes cast, but fails to receive a majority of the votes cast in an uncontested election.

In an uncontested election, if an incumbent director receives a plurality of the votes cast, but does not receive a majority of the votes cast, the Corporate Governance Committee, or such other independent committee designated by the Board, must make a recommendation to the Board as to whether to accept or reject the offer of resignation of the incumbent director, or whether other action should be taken. The independent members of the Board will consider the Corporate Governance Committee’s recommendation and publicly disclose the Board’s decision and the basis for that decision within 90 days from the date of the certification of the final election results. The director not receiving a majority of the votes cast will not participate in the Corporate Governance Committee’s recommendation or the Board’s decision regarding the offer to resign. For this purpose, the term “a majority of the votes cast” means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” the director’s election. Further, a “contested election” is one in which the Corporate Secretary receives a notice that a shareholder has nominated or intends to nominate a person for election to the Board in compliance with our bylaws and such nomination has not been subsequently withdrawn on or prior to the tenth day before the notice of meeting is first mailed.

A brief statement about the background and qualifications of each nominee and each continuing director is provided on the following pages. No director has a familial relationship to any other director, nominee for director or executive officer.

All of the nominees are presently members of the Board, and the Board is recommending that all four nominees be elected. Each nominee has informed the Board that he or she is willing to serve as a director. If any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the Board. It is the intention of the proxyholders to vote proxies for the election of the nominees named in this proxy statement, unless such authority is withheld.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 23
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

Our Director Nominees

Biographies of Class II Directors with Terms Expiring at the 2024 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.

 

     
     
   

Bradley M. Halverson – Independent Director

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

Age: 62 Director Since:
February 2022

Committees:

Compensation

Corporate Governance

Other current public directorships:

Sysco Corporation (since 2016)

Lear Corporation (since 2020)

Satellogic, Inc. (since 2022)

       

Mr. Halverson is the former Group President, Financial Products and Corporate Services and Chief Financial Officer of Caterpillar, Inc., the world’s leading manufacturer of construction and mining equipment, diesel and gas engines, turbines and locomotives. Prior to serving in that leadership role from 2013 to 2018, Mr. Halverson held a series of positions with increasing responsibility during his 30-year tenure with the company, including: Vice President, Financial Services from 2010 to 2013; Corporate Controller, Global Finance & Strategic Services from 2004 to 2010; and Corporate Business Development Manager, Corporate Services from 2002 to 2004, among others since joining the company in 1988.

Prior to his work at Caterpillar, Mr. Halverson worked as Financial Reporting Manager with Rolscreen Company and, before that, he worked in a series of roles with Price Waterhouse LLP. Mr. Halverson currently serves as: an independent director, Chair of the Audit Committee and a member of the Compensation and Leadership Development and Executive Committees of the board of Sysco Corporation, a food distributor; 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 Foundation, and previously served as Chairman of the board of directors of Easterseals Central Illinois and member of 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 2024 Proxy Statement 24
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

     
     
   

Charles L. Harrington – Independent Director

Former Executive Chairman and Chief Executive Officer —
Parsons Corporation
 

Age: 65 Director Since:
February 2022

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)

       

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 Executive Chairman in 2021 and retiring in 2022, Mr. Harrington served as Chairman, Chief Executive Officer and President of Parsons from 2008 to 2021, after serving in a 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, strategy development and execution, M&A, and business development that he developed while serving as the Chief Executive Officer and President 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. Mr. Harrington also brings relevant experience from the building of a leading cyber practice at Parsons Corporation.

 

    Constellation Energy Corporation 2024 Proxy Statement 25
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

     
     
   

Dhiaa M. Jamil – Independent Director

 

Former Executive Vice President and Chief Operating Officer —
Duke Energy
 

Age: 67 Director Since:
June 2023

Committees:

Compensation

Nuclear Oversight

Other current public directorships:

None

       

Prior to his retirement in June 2023, Mr. Jamil served as Executive Vice President and Chief Operating Officer of Duke Energy, one of the largest energy holding companies in the U.S., a position he held since 2015. In that role, Mr. Jamil was responsible for the company’s generating fleet, transmission grid, enterprise-wide project management and construction, environment, health and safety and other related support functions. From 2008 to 2015, Mr. Jamil served as Executive Vice President of Duke Energy’s regulated generation and as Chief Nuclear Officer, where he oversaw the largest regulated nuclear fleet in the country. During that time, he played a key role in Duke Energy’s 2012 merger with Progress Energy, integrating and transforming a fleet of 12 nuclear units. Earlier in his career, he held various leadership roles of increasing responsibility at Duke Energy’s Oconee, McGuire and Catawba nuclear stations, including station manager and site vice president.

Mr. Jamil is a former chair of the UNC Charlotte Energy Production Infrastructure Center (Epic) Advisory Board and served as a trustee for the Duke Energy Foundation, the philanthropic arm of Duke Energy. He also served on the board of directors of the Nuclear Energy Institute from 2014 - 2023 and Nuclear Electric Insurance Limited, which insures all nuclear power plants in the U.S., from 2013 to 2022. He has also previously served on various utilities’ nuclear safety review boards and was a member of the National Nuclear Training Accrediting Board.

 

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

With more than 40 years of experience in the energy industry, Mr. Jamil is a trusted and dependable leader with a track record of operating generation assets safely, reliably and effectively. As an executive with 14,000 employees under his scope of responsibility while at Duke Energy, Mr. Jamil gained valuable insight into the demands and challenges associated with managing large organizations, which is important to the Board as it oversees the management of Constellation’s strategy and growth. In addition to his extensive operational leadership experience in the energy industry, Mr. Jamil also brings to the Board robust expertise in the nuclear power generation business, as well as a deep and desired appreciation for the reliability and environmental benefits of nuclear energy.

 

    Constellation Energy Corporation 2024 Proxy Statement 26
 
 

Proposal 1: Election of Directors

 

Our Director Nominees

 

     
     
   

Nneka Rimmer – Independent Director

 

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

Age: 52 Director Since:
November 2022

Committees:

Audit & Risk

Nuclear Oversight

Other current public directorships:

Energizer Holdings, Inc. (since 2018)

       

Prior to her retirement in 2021, Ms. Rimmer served as President, Global Flavors & Extracts, for McCormick & Company, Inc., a global leader that manufactures, markets and distributes spices, seasoning mixes, condiments and other products to the food industry. Ms. Rimmer held a series of roles with increasing responsibility at McCormick & Company, including: Senior Vice President, Business Transformation, from 2019-2020, Senior Vice President, Strategy and Global Enablement, from 2017-2019; and Senior Vice President, Corporate Strategy & Development, from 2015-2017.

 

Prior to joining McCormick, Ms. Rimmer spent 15 years with Boston Consulting Group (BCG) focused on advising Fortune 100 C-Suite executives and board directors on global growth, M&A strategy, talent development and change management. She rose to become BCG’s first Black female partner, with leadership positions across the consumer goods and retail, public sector and strategy practices.

 

Ms. Rimmer currently serves as an independent director and member of the Audit and Human Capital Committees of the board of Energizer Holdings, Inc., a manufacturer of batteries and other products. She is also on the 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.

 

    Constellation Energy Corporation 2024 Proxy Statement 27
 
 

Proposal 1: Election of Directors

 

Class I Directors

 

Biographies of Continuing Class I Directors with Terms Expiring at the 2026 Annual Meeting

The Board is classified until the 2026 Annual Meeting and, therefore, the following individuals who are Class I directors will not stand for re-election at the 2024 Annual Meeting of Shareholders.

 

     
     
   

Joseph Dominguez – Non-Independent Director

President and Chief Executive Officer — Constellation
 

Age: 61 Director Since:
February 2022

Committees:

None

Other current public directorships:

None

       

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 Corporation. In that role, he was responsible for the safe and reliable delivery of electricity to customers and oversight of the management of the electric grid for over four million residential and business customers in Chicago and most of northern Illinois.

Prior to joining ComEd, Mr. Dominguez served as Executive Vice President of Governmental and Regulatory affairs and Public Policy for Exelon, where he led the development and implementation of federal, state, and regional governmental, regulatory, and public policy strategies. Mr. Dominguez was also a partner in the law firm of White and Williams, LLP, with a broad-based litigation practice counseling large and small corporations, institutions and government entities. Prior to joining White and Williams LLP, Mr. Dominguez served as an Assistant U.S. Attorney in the Eastern District of Pennsylvania.

 

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 2024 Proxy Statement 28
 
 

Proposal 1: Election of Directors

 

Class I Directors

 

     
     
   

Julie Holzrichter – Independent Director

Chief Operating Officer — CME Group Inc.
 

Age: 56 Director Since:
February 2022

Committees:

Audit & Risk

Compensation

Other current public directorships:

None

       

Ms. Holzrichter is Chief Operating Officer of CME Group Inc., the world’s leading derivatives marketplace. In this role, she is responsible for managing the company’s global operations and clearing and post-trade service division. During the course of her more than twenty- five year career with the company, Ms. Holzrichter has held a series of roles with increasing responsibility at CME Group Inc. Prior to being appointed to her current role in 2014, Ms. Holzrichter served as: senior managing director of Global Operations from 2012 to 2014; managing director, Global Operations from 2007 to 2012; and director, Operations, from 2006 to 2007, among others. Additionally, 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, ChicagoFirst and the CME Group Women’s Initiative Network. 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 leads CME Group's trading floor operations, global market solutions and services, data centers and critical infrastructure, global security, and business continuity and crisis management functions. Her operational, leadership, financial derivatives market, 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 investment risks that are critical to Constellation’s operations, business and growth.

 

    Constellation Energy Corporation 2024 Proxy Statement 29
 
 

Proposal 1: Election of Directors

 

Class I Directors

 

     
     
   

Ashish Khandpur – Independent Director

President and Chief Executive Officer — Avient Corporation
 

Age: 56 Director Since:
February 2022

Committees:

Compensation

Corporate Governance

Other current public directorships:

Avient Corporation (since 2023)

       

Dr. Ashish Khandpur is President and Chief Executive Officer of Avient Corporation, a leading provider of specialized and sustainable material solutions. Previously, he was 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 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 technical and business background combination, 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, and his current role as President and Chief Executive Officer of Avient Corporation, 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.

 

    Constellation Energy Corporation 2024 Proxy Statement 30
 
 

Proposal 1: Election of Directors

 

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 2024 Annual Meeting of Shareholders.

 

     
     
   

Laurie Brlas – Independent Director

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

Age: 66 Director Since:
February 2022

Committees:

Audit & Risk (Chair)

Corporate Governance

Other current public directorships:

Albemarle Corporation (since 2017)

Graphic Packaging Holding Company (since 2019)

Autoliv, Inc. (since 2020)

       

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 to 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.

 

    Constellation Energy Corporation 2024 Proxy Statement 31
 
 

Proposal 1: Election of Directors

 

Class III Directors

 

     
     
   

Yves C. de Balmann – Independent Director

Executive Partner at Bridge Growth Partners
 

Age: 77 Director Since:
February 2022

Committees:

Compensation (Chair)

Corporate Governance

Other current public directorships:

None

       

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.

Previously, Mr. de Balmann served as a director of ESI Group, a provider of virtual prototyping software and services, which was listed on the Euronext Paris. Mr. de Balmann also served as a director of Laureate Education, Inc. (listed on Nasdaq) 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 to 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 2024 Proxy Statement 32
 
 

Proposal 1: Election of Directors

 

Class III Directors

 

     
     
   

Robert J. Lawless – Independent Director

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

Age: 77 Director Since:
February 2022

Committees:

Corporate Governance

Other current public directorships:

None

       

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 to 2012, when Constellation Energy Group merged with Exelon Corporation. He also served as a member of the board of Exelon Corporation from 2012 to 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.

 

    Constellation Energy Corporation 2024 Proxy Statement 33
 
 

Proposal 1: Election of Directors

 

Class III Directors

 

 

     
     
   

Admiral John M. Richardson – Independent Director

Former Chief of Naval Operations — U.S. Navy
 

Age: 63 Director Since:
February 2022

Committees:

Audit and Risk

Corporate Governance

Nuclear Oversight (Chair)

Other current public directorships:

The Boeing Company (since 2019)

BWX Technologies, Inc. (since 2020)

       

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 to 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 and a member of the National Academy of Engineering.

 

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.

 

    Constellation Energy Corporation 2024 Proxy Statement 34
 
 

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 evaluate the qualifications of each director candidate in accordance with the criteria described in the director qualification standards section of our Corporate Governance Principles. The Board believes that directors should be selected so that the Board represents diverse experience at various policy-making and executive levels in business, government, and in sectors that are relevant to the company’s business operations.

 

  In evaluating the qualifications of director nominees, the Corporate Governance Committee considers factors including, but not limited to, the following:  
       
 

Integrity

Embodiment of the highest personal and professional ethics, integrity, and values

Judgment

Possession of an inquiring and independent mind, practical wisdom, and mature judgment

 
 

Industry Background

Broad training and experience at the policy-making level in business, government, education, technology, or other sectors relevant to the company's business and operations

Skills/Expertise

Expertise that is useful to the enterprise and complementary to the background and experience of other directors

 
 

Diligence

Willingness to remain current with industry and other developments relevant to Constellation’s strategic direction

Time Commitment

Willingness to devote the time required to execute the duties and responsibilities of Board membership and a commitment to serve over a period of years to develop knowledge about Constellation’s operations

 
 

Loyalty

Commitment to representing the long-term interests of shareholders, customers, employees, and communities served by Constellation

Independence

Involvement only in activities or interests that do not conflict with responsibilities to Constellation and its shareholders

 
       

 

The director selection criteria described above are evaluated by the Corporate Governance Committee each time a new candidate is considered for Board membership. The Corporate Governance Committee and the Board may consider other factors they deem to be relevant to the success of a publicly traded company operating in the energy sector. As part of the annual nomination process, the Corporate Governance Committee reviews the qualifications of each director nominee, including currently serving Board members, and reports its findings to the Board. On February 6, 2024, the Corporate Governance Committee determined that each Board nominee satisfied the criteria described above and advised the Board that each of the director nominees listed under “Proposal 1: Election of Directors” is qualified to serve on the Board.

 

    Constellation Energy Corporation 2024 Proxy Statement 35
 
 

Corporate Governance

 

Board Skills

 

Board Skills

The Corporate Governance Committee regularly 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. The skills matrix includes the following skills and attributes:

 

 

 

    Constellation Energy Corporation 2024 Proxy Statement 36
 
 

Corporate Governance

 

Board Skills Matrix

 

Board Skills Matrix

The following matrix identifies the five most prominent skills and attributes that each director brings 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 2024 Proxy Statement 37
 
 

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 is as 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.

In June 2023, Mr. Jamil was appointed to the Board which caused its gender diversity percentage to decrease from 30% to 27%. The Board remains confident in its current composition, but will continue to actively search for additional candidates that will contribute desirable and valuable skills to the Board and its deliberations. The Board will consider its gender composition along with several other factors while conducting candidate searches to ensure it continues to maintain a heterogeneous representation of different skills, perspectives and backgrounds.

 

Board Diversity Matrix as of March 1, 2024

 

 

Total number of Directors

 

Female

 

Male

 

Non-
Binary

Did Not
Disclose
Gender
Gender Identity 3 8
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 1 6
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: 2

 

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 under-represented 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.

For purposes other than the compliance with the Nasdaq listing rule, Constellation considers an individual who self-identifies as one or more of the following to be racially or ethnically diverse: Black or African American, Hispanic or Latinx, Asian (including South Asian), Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Middle Eastern or North African.

 

    Constellation Energy Corporation 2024 Proxy Statement 38
 
 

Corporate Governance

 

Board Leadership Structure

 

Board Leadership Structure

Constellation’s bylaws permit the members of the Board to determine the leadership structure of the Board, including whether the roles of Board Chair and Chief Executive Officer should be performed by the same individual or whether the roles should be performed by separate individuals. As a matter of policy, the Board believes that separation of these functions is not required, and whether to combine the roles or not is a matter for the Board’s sole discretion, taking into consideration the current and anticipated circumstances of the company, the skills and experiences of the individual or individuals in question, and the leadership composition of the Board. The Board believes that it is important to retain the flexibility to make this determination at any given point in time based on what it believes will provide the best leadership structure, considering the needs of the company at that time. Currently, the roles of the Chief Executive Officer and Board Chair are separated. The Board 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 will serve as the Lead Independent Director.

The duties of the Lead Independent Director include:

 

Assist the Board Chair in his or her duties as requested.
Assume the duties of the Board Chair when the Board Chair is not available to perform his or her duties.
Call special Board meetings as appropriate.
Lead, in conjunction with the Corporate Governance and Compensation committees, the annual process for evaluating the performance and compensation of the CEO and communicate to the CEO the results of the evaluation.
If the Board Chair is employed by the company, lead, in conjunction with the Corporate Governance and Compensation committees, the annual process for evaluating the performance and compensation of the Board Chair and communicate to the Board Chair the results of the evaluation.
Lead, in conjunction with the Corporate Governance Committee, the process for annual review and evaluation of Board and committee performance.
Preside at executive sessions of the independent directors.
Review Board meeting schedules, agendas, and materials and provide input to committee chairs on committee schedules, agendas, and materials.
Serve as principal liaison between the independent directors and management and between independent directors and the Board Chair, when needed.

 

Board Responsibilities

Constellation’s operations are managed by executive officers under the direction of the Board of Directors. The Board considers the interests of all its constituencies, including: shareholders, customers, employees, and the communities we serve. The Board is committed to ensuring that Constellation conducts business in accordance with the highest standards of ethics, integrity, and transparency.

The Board’s responsibilities include, but are not limited to, the oversight of:

 

the management of the company’s business and the assessment of the company’s business risks;
the processes for maintaining our integrity regarding our financial statements and other public disclosures, and compliance with laws and ethical principles; and
talent management and succession planning for the CEO and other executives.

 

The Board also reviews and approves major financial objectives and strategic and operating plans.

 

    Constellation Energy Corporation 2024 Proxy Statement 39
 
 

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, 2023, 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 2023 was 100%.

 

Board Committees

Constellation has four standing Board committees: Audit & Risk, Compensation, Corporate Governance, and Nuclear Oversight. Each committee is comprised exclusively of independent directors.

Each committee is governed by a charter stating its responsibilities. The charters are available on the company’s website at www.Constellationenergy.com on the Board committees page and in print to any shareholder who requests a copy from Constellation’s Corporate Secretary. The committee charters are regularly reviewed and updated to incorporate best practices and prevailing governance trends.

Each committee charter gives the committee authority and discretion to retain and terminate the services of one or more outside advisors and consultants to assist it in performing its duties. Each committee has the sole authority to approve such advisors’ and consultants’ fees and other retention terms, and the company funds the cost of committee advisors and consultants.

The charters of the Audit & Risk, Compensation, Corporate Governance and Nuclear Oversight committees require that each committee perform an annual self-evaluation, review its charter each year and meet at least four times each year.

 

Committee Membership as of March 1, 2024

 

Director Audit and Risk Compensation Corporate Governance Nuclear Oversight

de Balmann

 
Brlas    

Dominguez(1)

Halverson

 

Harrington

Holzrichter

   
Jamil  

 

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.

 

    Constellation Energy Corporation 2024 Proxy Statement 40
 
 

Corporate Governance

 

Board Committees

 

Committee Membership Appointments

The Board regularly reviews committee composition to ensure that the skills represented on each committee are appropriate in light of the company’s stage of development and emerging governance trends. The Board believes that it is important to have each chair of the Board’s committees sit on the Corporate Governance Committee to most efficiently exercise oversight of, and share thoughts and insights regarding, the company’s governance structure, policies and practices. Therefore, in February 2024, the Corporate Governance Committee recommended and the Board approved the appointment of Ms. Brlas (Chair of the Audit & Risk Committee) and Admiral Richardson (Chair of the Nuclear Oversight Committee) to the Corporate Governance Committee.

 

Audit & Risk Committee

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

 

reviewing and discussing with management and the company’s independent registered public accounting firm matters related to the annual audited financial statements, quarterly financial statements, earnings press releases and the accounting principles and policies applied;
considering and reviewing with management and the independent registered public accounting firm matters related to the company’s internal controls over financial reporting;
reviewing the responsibilities, staffing and performance of the company’s internal audit function;
reviewing issues that arise with respect to the company’s compliance with legal or regulatory requirements and corporate policies dealing with business conduct;
appointing, compensating, retaining, and overseeing the company’s independent registered public accounting firm, while possessing the sole authority to approve all audit engagement fees and terms as well as all non-audit engagements with such firm; and
reviewing the policies and processes established by management to identify, assess, monitor, manage and control the company’s material strategic, financial, operational, regulatory, reputational and other risks and risk exposures.

During the fiscal year ended December 31, 2023, the Audit & Risk Committee held five meetings.

 

The charter also requires the Audit & Risk Committee membership to be comprised of three or more directors that satisfy the independence requirements for membership on the Audit & Risk Committee.

Our Board has determined that each of the Audit & Risk Committee’s members satisfy the applicable independence and other requirements of Nasdaq and the SEC for audit committees and that Ms. Brlas, Ms. Rimmer and Mr. Harrington each qualify as an “audit committee financial expert” as defined under applicable SEC rules.

 

Compensation Committee

The Compensation Committee’s duties and responsibilities include:

 

assisting the Board in the establishment of performance criteria, evaluation, and compensation setting for the Chief Executive Officer;
electing and approving the compensation of “executive officers” as defined under Rule 3b-7 of the Securities Exchange Act of 1934;
overseeing leadership development and succession planning policies and criteria for executive officer level positions;
overseeing the plans and programs under which short and long-term incentives are awarded to executive officers and approving performance goals and awards under these plans;
reviewing and approving employment agreements, severance, and change in control or similar plans or agreements, and payments to be made thereunder to any executive officer;
reviewing and discussing with management human capital management matters; 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.

 

    Constellation Energy Corporation 2024 Proxy Statement 41
 
 

Corporate Governance

 

Board Committees

 

During the fiscal year ended December 31, 2023, 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 2023.

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, changing industry practices and providing market information and analysis regarding the competitiveness of our program design.

During 2023, Meridian performed several services, including the following:

 

provided presentations on executive compensation trends, best practices and recent developments;
prepared competitive assessments by position for each element of compensation and for compensation in the aggregate;
reviewed drafts and commented on the CD&A and related compensation tables for the proxy statement;
reviewed the peer group used for compensation purposes and recommended changes, if appropriate; and
attended executive sessions of the Compensation Committee.

 

Meridian provided no services to management during 2023. 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 non-employee directors;
taking a leadership role in shaping the corporate governance practices of the company;
periodically reviewing and making recommendations to the Board regarding revisions to the company’s Corporate Governance Principles;
reviewing and approving any transaction between the company and any related person in accordance with the company’s Related Person Transactions Policy; and
reviewing succession planning and making recommendations to the Board for the positions of Board Chair, Chief Executive Officer, and President.

The charter also requires the Corporate Governance Committee to be composed of three or more independent non-employee directors. During the fiscal year ended December 31, 2023, the Corporate Governance Committee held four meetings.

 

Nuclear Oversight Committee

The Nuclear Oversight Committee’s duties and responsibilities include oversight of management’s administration of:

 

the safety and reliability of the company’s nuclear facilities, with a principal focus on nuclear safety;
compliance with laws, regulations, and standards related to nuclear generation safety and operations;
compliance with environmental and safety laws, regulations, and standards applicable to ownership and operation of nuclear power facilities;
the establishment of, and compliance with, policies and procedures to manage and mitigate risks including cybersecurity risks, associated with the security and integrity of the company’s nuclear operations and assets; and
the operation of the company’s nuclear facilities and the overall organizational effectiveness of nuclear operations.

 

    Constellation Energy Corporation 2024 Proxy Statement 42
 
 

Corporate Governance

 

Director Independence

 

During the fiscal year ended December 31, 2023, the Nuclear Oversight Committee held four meetings. Each meeting of the Nuclear Oversight Committee is held at one of our nuclear facility sites.

 

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 2023, nor any of the nominees for election, has a material relationship with the company. The Board also has affirmatively determined that each non-employee director is independent according to the independence standards in the Corporate Governance Principles.

The Board 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.

 

Corporate Governance Principles

Our standards of corporate governance are outlined in our Corporate Governance Principles, which in conjunction with our articles of incorporation, bylaws, Board committee charters and related policies and practices, form the framework for the effective governance of the company. The Corporate Governance Principles address matters including the Board’s responsibilities and role, Board structure, director selection, self-evaluations and additional matters such as succession planning and executive stock ownership requirements. The Corporate Governance Principles are reviewed periodically to incorporate evolving governance trends and to remain aligned with the needs of the company and its stakeholders.

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

Communicating with the Board

Shareholders and other interested persons can communicate with any director or the independent directors as a group by writing to them at Constellation Energy Corporation, Attn: Office of the Corporate Secretary, 1310 Point Street Baltimore, Maryland 21231- 3380. The Corporate Secretary will review communications initially and transmit a summary of substantial or material issues to directors, excluding transmittal of any communications that are commercial advertisements, other forms of solicitation, or general shareholder or customer service matters.

Related Person Transactions

Constellation has adopted a written policy on the review, approval or ratification of transactions with related persons, which is overseen by the Corporate Governance Committee and is available on our website. The policy provides that the Corporate Governance Committee will review any proposed, existing, or completed transactions in which the amount involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect material interest. In general, related persons are directors and executive officers and their immediate family members, as well as shareholders beneficially owning 5% or more of Constellation’s outstanding stock as defined in SEC rules. Related person transactions that are in, or not inconsistent with, the best interests of Constellation are approved by the Corporate Governance Committee and reported to the Board. Related person transactions are disclosed in accordance with applicable SEC and other regulatory requirements. There were no related person transactions identified in 2023.

 

    Constellation Energy Corporation 2024 Proxy Statement 43
 
 

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. The Chief Risk Officer reports to the Board at least twice a year (and to the Audit & Risk Committee at least four times a year) on the magnitude, probability and impact of certain risks and ways that the company is mitigating those risks.

 

 

 

    Constellation Energy Corporation 2024 Proxy Statement 44
 
 

Corporate Governance

 

Board Role in Risk Oversight

 

Enterprise Risk Management

Our Board maintains oversight of the company’s enterprise risk program, including with respect to commodity markets, market design, enterprise security (physical and cyber), operating risks and financial performance. Managing business risks of all types, from strategic, operational, financial, and regulatory risks to global risks like climate change, is central to Constellation’s business. Our Chief Risk Officer leads the enterprise risk management (“ERM”) team which is responsible for coordinating Constellation’s risk management program. The program incorporates the Three Lines of Defense Model of governance developed by the Institute of Internal Auditors, and is designed to anticipate strategic and emerging risks, integrate risk into business planning, minimize unexpected performance variances, and support growth initiatives within Constellation’s risk appetite.

The ERM team works collaboratively with business teams to help them identify and assess risks, and to better understand how to manage risks and establish tolerances that allow for growth while staying within our risk appetite. It also provides an enterprise-wide view of risks and risk management practices. Regular risk assessments deepen our understanding of risks, enable effective action to mitigate risks and strengthen our risk culture. We align our key risk indicators with our risk appetite and industry-leading practices. Successful risk management requires participation from internal teams across our businesses and the ERM team which is tasked with identifying and evaluating the most significant risks of the business and the actions needed to manage and mitigate those risks. We assess and mitigate our environmental risk as part of both the risk program and the ISO 14001:2015 Environmental Management System.

 

 

 

The diagram above summarizes the process by which risks are assessed and discussed with the Board and/or the relevant Board committees. As described in the diagram, business units conduct risk assessments routinely throughout the year and key risk factors outside of tolerance are reported quarterly to the Board or committee owning the risk. Individual enterprise risks are presented to the Audit & Risk Committee as needed, but no less than once a year. Annually, each enterprise risk is evaluated and its inherent risk (both probability and severity) is assessed for updated placement on the enterprise risk heat map. We maintain a “bow-tie” analysis, centered on potential risk events, which is reviewed on a quarterly basis. As part of the analysis, prevention controls and mitigations regarding an underlying threat are evaluated and the related containment controls and actions, and potential risk impacts are reviewed. The results of this analysis, for individually selected risks, are reported to the Audit & Risk Committee at least quarterly.

 

    Constellation Energy Corporation 2024 Proxy Statement 45
 
 

Corporate Governance

 

Board Role in Risk Oversight

 

Cybersecurity Risk

We have implemented processes for assessing, identifying and managing material risks from cybersecurity threats to the company, including governance at the Board level and executive management accountability for the execution of our cyber risk management strategy and the controls designed to protect our operations. In order to effectively oversee cybersecurity risk management practices, our Board has delegated direct oversight of cybersecurity risks to its Nuclear Oversight and Audit & Risk committees. The Nuclear Oversight Committee is tasked with overseeing compliance with policies and procedures to manage and mitigate cybersecurity risks associated with our nuclear assets. The Audit & Risk Committee oversees policies and processes established by management to identify, assess, monitor, manage and control the company’s material strategic, financial, operational, regulatory, business unit, reputational and other risks, including technology and cyber risks.

Our SVP, Chief Information Officer and VP, Chief Information Security Officer, in conjunction with the Legal department, provide regular reports to the Board and committees regarding our operational and information technology programs and systems and risks, along with key risk indicators to track performance of the cybersecurity program. For example, the Chief Information Officer and the Chief Information Security Officer provide quarterly reports to the Board regarding the effectiveness of particular aspects of the cybersecurity program.

Emergent cybersecurity incidents or events are reported to the full Board between scheduled meetings on an ad hoc basis following the exercise of our incident response and crisis management protocols which were revised and enhanced in 2023, in part, to enable the company to comply with recently adopted SEC cybersecurity disclosure requirements. As a critical infrastructure owner/operator, the cybersecurity of our critical assets is regularly inspected by regulatory agencies, including the U.S. Nuclear Regulatory Commission and the North American Electric Reliability Corporation. Also, the risk and maturity of our enterprise cyber security program, including our alignment with the National Institute of Standards and Technology (NIST) Cyber Security Framework, is periodically assessed by independent third parties. Our external auditor, as part of the company’s annual SOX controls audit, also reviews the effectiveness of the enterprise cyber program.

We provide company-wide training under our cybersecurity program. As part of the training, all personnel, including employees and contractors, with electronic access to the company’s network are required to complete security awareness training within 30 days of hire and on annual basis thereafter. The training familiarizes personnel with cybersecurity risks, how to identify and report threats (including phishing attacks), and reinforces behavioral expectations as outlined by company policy. Additional training is required for individuals with elevated access or performing specialized roles.

 

Director Retirement Policy

Each non-employee director must tender their resignation from the Board at or before the next Annual Meeting of Shareholders following the director’s 80th birthday. The Board has full discretion to decline a tendered resignation if it determines, based on the recommendation of the Corporate Governance Committee, that it is in the best interests of the company and its shareholders to extend the director’s continued service for an additional period of time. The Board has not established term limits for director service, but relies instead on the mandatory retirement age and annual Board self-evaluations to assure a regular process of Board refreshment. The Board believes term limits could deprive the Board of the valuable contributions of experienced directors who have extensive knowledge of the company and its operations.

 

Board and Committee Self-Evaluations

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

 

Annual Board Self-Evaluations

The Board conducts an annual self-assessment of its performance and effectiveness. The process is coordinated by the Board Chair and the chair of the Corporate Governance Committee and incorporates recommendations from other Board members. The Corporate Governance Committee oversees and approves the format and framework to be used for Board and committee self-evaluations. The annual self-evaluations follow the process outlined below.

 

    Constellation Energy Corporation 2024 Proxy Statement 46
 
 

Corporate Governance

 

Annual Board Self-Evaluations

 

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 Individual Interviews The Board Chair and the chair of the Corporate Governance Committee conduct one-on-one interviews with each Board member to discuss the topics provided in the questionnaires, among other topics that might arise. Interviews also seek practical feedback regarding actions the Board should adopt, modify or cease.
3 Discussion of Results A summary of the Board questionnaire results is provided to the Corporate Governance Committee and Board for review and discussion. Also, following completion of the interviews, the Board Chair and the chair of the Corporate Governance Committee work together to prepare and provide to the Board a summary of interview feedback.
4 Implement Change Based on Feedback The Board develops plans to take actions based on the results, as appropriate.

 

2023 Outcome:The Board’s current structure, composition, and effectiveness were deemed to be very strong and that Board interactions are consistently collaborative.

 

Annual Committee Self-Evaluations

 

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.

 

2023 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.

 

  Constellation Energy Corporation 2024 Proxy Statement 47
 
 

Corporate Governance

 

New Director Orientation

 

New Director Orientation

 

Comprehensive director orientation is overseen by the Corporate Governance Committee and administered by the Corporate Secretary. The orientation program is tailored to the needs of each new director depending on his or her level of experience serving on other boards and knowledge of the company or energy industry. Materials provided to new directors include information on the company’s vision and strategic direction, financial matters, corporate governance practices, Code of Business Conduct, risk management framework, and other key policies and practices. The onboarding process includes a series of one-on-one meetings with members of senior management and their staff for deep-dive briefings on business units. New directors are also invited to tour various company facilities, depending on their orientation needs and preferences.

 

Continuing Director Education and Site Visits

 

Constellation provides continuing education opportunities for incumbent directors on subjects that aid in their development and assist in the effective discharge of their duties, including, compliance and corporate governance developments, business-specific learning opportunities, and briefing sessions on topics that present special risks and opportunities to the company. The Corporate Governance Committee may recommend committee member rotation if it determines that rotation would enhance a director’s education.

 

Continuing director education is provided during portions of Board and committee meetings and is focused on topics necessary to enable the Board to effectively consider issues before them at that time (such as new regulatory or accounting standards). Education may take the form of presentations from senior leadership or other subject matter experts within the company, presentations from external advisors, or “white papers” which are deep dives into timely subjects or topics.

 

Directors are also invited from time to time to tour facilities. During these visits, directors are able to interact directly with employees staffing key functions. Additionally, directors may attend educational seminars and programs sponsored by external organizations. The company covers the costs related to the attendance of any such external programs and seminars.

 

Ethics and Compliance

 

Constellation is committed to maintaining a robust, comprehensive 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 program 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 Ethics and Compliance Officer has a direct reporting relationship to the Audit & Risk Committee.

 

We maintain a detailed Code of Business Conduct, applicable to all employees, officers, and directors across the enterprise and a Supplier Code of Conduct, which is based on the Code of Business Conduct principles and applies to all Constellation supply managed suppliers, including contractors, consultants, and vendors. The Code of Business Conduct sets out our core values — which include acting with integrity — and addresses a wide range of topics, including conflicts of interest, workplace conduct, safety, protecting confidential information and other company assets, and bribery and corruption. The Code of Business Conduct highlights the importance of speaking up and that retaliation for raising in good faith questions or concerns about potential violations of the Code of Business Conduct or compliance with applicable laws and regulations is not tolerated.

 

Generally, all employees and certain contract workers must participate in annual Code of Business Conduct training. Additionally, non-represented employees are required to complete an annual certification disclosing potential conflicts of interest and affirming their understanding of the Code of Business Conduct. Completion of the training and certifications is tracked.

 

We maintain a 24-hour ethics 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 involvement in four company-wide policies that relate to oversight of employee and company interactions with public officials. The policies include various controls and guidance, and employees in various positions are trained on the requirements of the policies. Among other things, the policies require tracking and review of certain requests, referrals, and recommendations from public officials and regular reporting to the Audit & Risk Committee of such requests, referrals and recommendations.

 

Shareholders may report an ethics concern with the Constellation Ethics Help Line by calling (1-844-927-2282). You may also report an ethics concern via email to [email protected].

 

  Constellation Energy Corporation 2024 Proxy Statement 48
 
 

Director Compensation

 

Constellation’s director compensation program is designed to enable ongoing attraction and retention of highly qualified directors and to address the time, effort, expertise and accountability required of active board membership.

 

The Corporate Governance Committee is responsible for reviewing and making recommendations to the Board regarding its non-employee director compensation program. The committee is authorized to engage outside advisors and consultants in connection with its review and analysis of director compensation. The committee takes various factors into consideration, including responsibilities of directors generally, Board and committee leadership roles such as the Board Chair and Committee Chairs, as well as the form and amount of compensation paid to directors at comparable companies.

 

The non-employee director compensation program is comprised of cash and equity components. The Board targets total compensation to be at the median level of compensation paid to directors at the peer group of companies used to determine executive compensation.

 

Cash Fees

 

Each non-employee director receives an annual cash retainer for his or her service on the Board, as well as additional cash retainers if he or she serves as the Board Chair or as the chair of a committee. Directors serving in multiple leadership roles will receive incremental compensation for each role. The following table lists the cash retainer amounts in effect during fiscal year 2023.

 

Role Annual Cash
Retainer
$
Non-Employee Director $125,000
Board Chair 200,000
Committee Chairs:
Audit and Risk Committee 25,000
Compensation Committee 20,000
Corporate Governance Committee 20,000
Nuclear Oversight Committee(1) 20,000

 

(1)  All members of the Nuclear Oversight Committee, including the chair, receive a $20,000 retainer.

 

Directors do not receive additional compensation for attending regularly scheduled board or committee meetings. All board fees are paid quarterly in arrears. New directors joining the Board receive a prorated fee for the quarter based on the date of their election.

 

Under the Director Deferred Compensation Plan, directors may elect to defer any portion of cash compensation into a non-qualified multi-fund deferred compensation plan. Under the plan, each director has an unfunded account where the dollar balance can be invested in one or more of several mutual funds. Fund balances are settled in cash and may be distributed in a lump sum or in annual installment payments upon a director reaching age 65, age 72, or upon departure from the board.

 

Additionally, directors who serve as members of any special committee receive fees of $5,000 per quarter for as long as the committee continues to meet or is necessary.

 

  Constellation Energy Corporation 2024 Proxy Statement 49
 
 

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. Deferred stock units (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, 2023. The balances reported include additional DSUs accumulated as dividend equivalents.

 

Name Total Deferred Stock Units (#)
de Balmann(1) 98,042
Brlas 17,347
Halverson 3,749
Harrington 3,749
Holzrichter 3,749
Jamil 837
Khandpur 3,749
Lawless(1) 103,503
Richardson 13,747
Rimmer 1,992
Total All Directors 250,464

 

(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.

 

Director Stock Ownership Requirement

 

Our Corporate Governance Principles 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.

 

  Constellation Energy Corporation 2024 Proxy Statement 50
 
 

Corporate Governance

 

Director Compensation Changes

 

Director Compensation Changes

 

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, the Corporate Governance Committee and the Board approved changes to the non-employee director compensation program. After a review of the director compensation program and the amounts payable thereunder by an outside consultant, the Board increased the equity portion of the annual retainer by $15,000, from $155,000, to $170,000 annually. The decision to increase compensation was based on the recommendation of the outside consultant to align the non-employee director compensation with the prevailing level of compensation at similarly sized companies in the market and our industry.

 

2023 Director Compensation

 

The following table summarizes the compensation paid to each of our non-employee directors who served as a member of the Board and its committees in 2023.

 

Name

Fees Earned or
Paid in Cash
($)(1)
Stock
Awards

($)(2)
All Other
Compensation
($)(3)
Total
Compensation

($)

de Balmann

145,000

166,250

311,250

Brlas

150,000

166,250

316,250

Halverson

125,000

166,250

291,250

Harrington

165,000

166,250

331,250

Holzrichter

125,000

166,250

291,250

Jamil

80,069

93,874

173,943

Khandpur

125,000

166,250

291,250

Lawless

325,000

166,250

28,987

520,237

Richardson

165,000

166,250

331,250

Rimmer

145,000

166,250

311,250

 

(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 $77.55, $93.29, $108.64 and $121.69 for the first through fourth quarters. See Note 20 “Stock Based Compensation Plans” of the Consolidated Financial Statements contained in our 2023 Form 10-K for an explanation of the assumptions made in valuing these awards.
(3)The amount included in this column for Mr. Lawless represents the aggregate incremental cost incurred by Constellation for his approved personal use of corporate aircraft.

 

  Constellation Energy Corporation 2024 Proxy Statement 51
 
 

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, 2024, 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

98,882

0

98,882

Brlas

17,347

0

17,347

Halverson

3,749

0

3,749

Harrington

7,491

0

7,491

Holzrichter

3,749

0

3,749

Jamil

987

0

987

Khandpur

3,749

0

3,749

Lawless

155,681

0

155,681

Richardson

13,747

0

13,747

Rimmer

1,992

0

1,992

Named Executive Officers

Dominguez

153,593

0

153,593

Eggers

40,999

0

40,999

Hanson

58,410

0

58,410

Barrón

36,259

0

36,259

McHugh

49,643

0

49,643

Directors & Executive Officers as a group (18 individuals)

736,395

0

736,395

 

(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 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2024.

 

  Constellation Energy Corporation 2024 Proxy Statement 52
 
 

Ownership of Constellation Stock

 

Other Significant Owners of Constellation Stock

 

Other Significant Owners of Constellation Stock

 

The table below lists 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

36,651,641 11.48%
Capital International Investors(2)
333 South Hope Street, 55th Fl
Los Angeles, CA 90071
28,491,444 8.9%

BlackRock, Inc.(3)

55 East 52nd Street
New York, NY 10055

22,564,120 7.1%

FMR LLP(4)

245 Summer Street

Boston, MA 02210

20,038,746 6.27%

T. Rowe Price Associates, Inc.(5)

100 E. Pratt Street
Baltimore, MD 21231

19,391,588 6.1%

State Street Corporation(6)
State Street Financial Center
1 Lincoln Street

Boston, MA 02111

17,801,601 5.57%

 

(1)The Vanguard Group disclosed in its Schedule 13G/A filed on February 13, 2024 that it has sole voting power over 0 shares, shared voting power over 390,523 shares, sole dispositive power over 35,348,259 shares, and shared dispositive power over 1,303,382 shares.

 

(2)Capital International Investors disclosed in its Schedule 13G/A filed on February 9, 2024 that it has sole voting power over 28,240,632 shares, shared voting power over 0 shares, sole dispositive power over 28,491,444 shares, and shared dispositive power over 0 shares.

 

(3)BlackRock, Inc. disclosed in its Schedule 13G/A filed on January 26, 2024 that it has sole voting power over 20,611,950 shares, shared voting power over 0 shares, sole dispositive power over 22,564,120 shares, and shared dispositive power over 0 shares.

 

(4)FMR LLP or Fidelity Institutional Asset Management, disclosed in its Schedule 13G/A filed on February 9, 2024 that it has sole voting power over 18,110,036 shares, shared voting power over 0 shares, sole dispositive power over 20,038,746 shares, and shared dispositive power over 0 shares.

 

(5)T. Rowe Price Associates, Inc., disclosed in its Schedule 13G filed on February 14, 2024 that it has sole voting power over 9,741,438 shares, shared voting power over 0 shares, sole dispositive power over 19,342,528 shares, and shared dispositive power over 0 shares.

 

(6)State Street Corporation disclosed in its Schedule 13G/A filed on January 30, 2024 that it has sole voting power over 0 shares, shared voting power over 10,749,032 shares, sole dispositive power over 0 shares, and shared dispositive power over 17,768,428 shares.

 

  Constellation Energy Corporation 2024 Proxy Statement 53
 
 

Proposal 2 :

Say-On-Pay: Advisory Vote on
Executive Compensation

 

We are seeking an advisory vote to approve the 2023 compensation of our named executive officers.

 

This proposal, known as a say-on-pay proposal, gives our shareholders the opportunity to express their views on the compensation of the company’s named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers and the compensation philosophy, policies and practices described in this proxy statement.

 

The say-on-pay vote is advisory, and therefore not binding on Constellation, the Compensation Committee, or the Board of Directors. However, the Board and Compensation Committee value the opinions of the company’s shareholders and will take the results of the vote into consideration when evaluating the executive compensation program and making future decisions regarding the compensation of our named executive officers.

 

Our Board invites you to review the “Compensation Discussion and Analysis” section and the compensation tables and other compensation related disclosures included in this proxy statement.

 

As discussed in the “Compensation Discussion and Analysis” section of this proxy statement, our Board believes that the company’s executive compensation program, practices and policies drive performance, and align our executives’ interests with those of our shareholders. Accordingly, you may vote to approve or not approve the following advisory resolution on the compensation of the named executive officers at the 2024 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 2024 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the 2023 Summary Compensation Table and the other related tables and disclosure.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 54
 
 

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
Dhiaa Jamil
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     Compensation Programs     Executive Compensation Policies  
               
2023 Operational Highlights and Accomplishments 56   2023 Target Total Direct Compensation for NEOs 60   Clawback Policy 69
Executive Compensation Program Philosophy and Objectives 57   2023 Base Salaries 61   Risk Management Assessment of Compensation Policies and Practices 70
Compensation Program Structure 57   2023 Annual Incentive Plan 61      
Chief Executive Officer Compensation 58   Sustainable Sharing 63      
Shareholder Engagement 58   Long-Term Incentive Plan 65      
Executive Compensation Best Practices 60   Role of the Independent Compensation Consultant 68      
      2023 Executive Compensation Peer Groups 68      

 

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 2023 compensation. Specifically, the individuals determined to be our NEOs based on 2023 compensation are:

 

       

Joe Dominguez

  Daniel Eggers   Bryan Hanson   James McHugh   Kathleen Barrón

President and Chief Executive Officer

  Executive Vice President and Chief Financial Officer   Executive Vice President and Chief Generation Officer  

Executive Vice President and Chief Commercial Officer

  Executive Vice President and Chief Strategy Officer

 

  Constellation Energy Corporation 2024 Proxy Statement 55
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

2023 Operational Highlights and Accomplishments

 

In 2023, we continued to build upon our prior year achievements that support long-term value creation with outstanding total shareholder return and strong financial and operational performance. For example, we accomplished the following in 2023:

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 56
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

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

 

A significant portion of compensation for the CEO and other 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.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 57
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

Chief Executive Officer Compensation

 

The Compensation Committee reviews and recommends, and the Board of Directors considers and approves, the compensation of our CEO annually, based on a comprehensive evaluation of his individual performance and our company’s performance relative to our peers and the market. The committee considers both quantitative and qualitative factors, such as financial results, strategic initiatives, leadership development, succession planning, stakeholder engagement, corporate responsibility, and risk management. The committee also benchmarks the CEO’s compensation against independent peer group data provided by an external consultant, to ensure that the compensation is competitive, reasonable, and aligned with shareholder interests.

 

 

 

Given the effectiveness of the CEO’s leadership in driving strong financial results, superior shareholder returns, strategic growth, and operational success, the committee determined that the CEO’s compensation for fiscal year 2023 should be competitive with the market median of the peer group, which is reflected in the 2023 pay decisions above.

 

CEO Incentive Pay Strongly Aligned to Stock Performance Relative to Peer Group Average and S&P 500

 

One of the key objectives of our executive compensation program is to align the interests of our executives with those of our shareholders. We believe that our compensation program reflects this objective by linking a significant portion of our executives’ pay to the achievement of financial and strategic goals that drive shareholder value creation. As a result, our executives’ compensation varies with company performance and the market value of our common stock.

 

 

 

Shareholder Engagement

 

As part of our ongoing commitment to effective corporate governance and shareholder alignment, we engage with our shareholders regularly to solicit feedback on various topics, including executive compensation. In 2023, we reached out to shareholders representing approximately 60% of our outstanding shares and held discussions with shareholders representing approximately 32% of our outstanding shares. This outreach was in addition to regular communication between our investor relations team and shareholders, including in connection with quarterly earnings calls, analyst meetings, and investor and industry conferences. We appreciate the constructive dialogue we had with our shareholders and the insights they shared with us.

 

  Constellation Energy Corporation 2024 Proxy Statement 58
 
 

Compensation Discussion and Analysis

 

Executive Summary

 

Response to Shareholder Feedback

 

The key theme that emerged from our shareholder engagement meetings, from a compensation perspective, was the desire to include a total shareholder return (TSR) component in our long-term incentive program to further align the interests of our executives with those of our shareholders. The Compensation Committee carefully considered this feedback and decided to make a design change effective with the 2024-2026 Performance Share (PShare) Program. Starting with the 2024 grant of long-term incentive awards, the long-term incentive program will consist of two components:

 

 

 PShares (67%) – performance based LTI comprises the majority of total LTI;
67% of PShares will be based on our Free Cash Flow before Growth;
33% of PShares will be based on relative TSR versus a custom peer group of companies with a high degree of comparability over a three-year period; and
Earned PShares will be subject to a negative modifier based on credit ratings.
 RSUs (33%) – to further strengthen alignment with shareholders, stock ownership and retention.

 

The committee believes that this change is responsive to our shareholders and will enhance the balance and rigor of our long-term incentive program, while reinforcing our pay-for-performance philosophy.

 

 

 

   

 What We 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 who 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 comprehensive 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

 

 

 What We Don’t Do:

•  No guaranteed minimum payout of AIP or LTIP programs

  No employment agreements

  No excise tax gross-ups for charge-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 2024 Proxy Statement 59
 
 

Compensation Discussion and Analysis

 

Compensation Programs

 

Executive Compensation Practices


 

Compensation Programs

 

The goal of the executive compensation program is to recruit, retain and reward leaders who create long-term shareholder value by achieving critical strategic objectives. The approach followed in setting NEO 2023 target compensation is described below.

 

2023 Target Total Direct Compensation for NEOs

 

Setting Target Compensation for
Executive Officers
Setting Target Compensation for
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).

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

•  The Compensation Committee approves each executive officer’s compensation.

•  The CEO assesses the performance of each NEO, other than himself, against their individual objectives and the overall performance of the company. The CEO then makes recommendations to the Compensation Committee regarding the base salary, annual incentive and long-term incentive awards for each NEO, based on his assessment and the competitive market data provided by our independent compensation consultant.

•  Every year, the Compensation Committee reviews 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.

•  The Compensation Committee developed its recommendation of CEO compensation for approval by the Board based on its review of both quantitative and qualitative factors, such as: financial results, strategic initiatives, leadership development, succession planning, stakeholder engagement, corporate responsibility, risk management, individual performance data and advice from its independent compensation consultant.

•  The Compensation Committee also benchmarks the CEO’s compensation against independent peer group data provided by an external consultant, to ensure that the compensation is competitive, aligns with our compensation philosophy and objectives, reflects our pay-for-performance culture, is reasonable, and aligned with shareholder interests.

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

   

 

The table below shows each NEO’s 2023 total target direct compensation and each element of compensation.

 

  Cash Compensation   Long-Term Incentives

Target Total
Direct
Compensation

Name Base AIP
Target
Total Cash
Compensation
  RSUs
33%
PShares
67%
LTI Target
Dominguez $1,200,000 150% $3,000,000   $3,300,000 $6,700,000 $10,000,000 $13,000,000
Eggers $710,000 95% $1,384,500   $759,000 $1,541,000 $2,300,000 $3,684,500
Hanson $850,000 95% $1,657,500   $924,000 $1,876,000 $2,800,000 $4,457,500
McHugh $707,366 85% $1,308,627   $589,050 $1,195,950 $1,785,000 $3,093,627
Barrón $692,900 85% $1,281,865   $504,900 $1,025,100 $1,530,000 $2,811,865

 

  Constellation Energy Corporation 2024 Proxy Statement 60
 
 

Compensation Discussion and Analysis

 

2023 Base Salaries

 

2023 Base Salaries

 

In February 2023, the Compensation Committee determined the base salary of each NEO (other than the CEO) as part of its annual review of executive compensation. When evaluating whether and to what degree to make any adjustments, the Compensation Committee considered a number of factors, including:

 

Competitive posture based on the annual market analysis of executive compensation;
Need to retain experienced executives;
Facilitation of transitional knowledge;
Rewarding for individual performance and leadership skills;
Recognizing scope of responsibility; and
Maintaining appropriate internal equity.

 

For the CEO’s base salary, the Compensation Committee makes recommendations considering market data, evolving responsibilities of the position, and individual performance, which are reviewed and approved by the independent directors of the Board. Based on this input, the Compensation Committee recommended, and the Board approved, a 9.1% increase to Mr. Dominguez’s base salary on February 6, 2023. The increase became effective on March 1, 2023.

 

Effective March 1, 2023, the Compensation Committee approved increases in base salaries for Messrs. Eggers, Hanson, and McHugh and Ms. Barrón as detailed in the table below.

 

 

2023 Salary

2022 Salary

Percentage Increase
Dominguez $1,200,000 $1,100,000 9%
Eggers $710,000 $666,250 7%
Hanson $850,000 $750,000 13%
McHugh $707,366 $680,159 4%
Barrón $692,900 $666,250 4%

 

2023 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 2023 AIP, the Compensation Committee approved financial goals related to adjusted EBITDA (weighted 70%) and operational goals based on customer satisfaction (weighted 10%), fleetwide capacity factor (weighted 10%), dispatch match (weighted 7%), and renewable energy capture (weighted 3%). The Compensation Committee most heavily weighed the financial metric to align the interests of executives with shareholders. Based on achieved performance, AIP payouts may range from 50% to 200% of an NEO’s target incentive opportunity. However, if threshold performance is not achieved with respect to a specific performance metric, no payout would be earned for that metric. The Compensation Committee may exercise its discretion to adjust awards otherwise earned under the AIP; however, no such discretion was exercised in 2023.

 

The pie chart below summarizes the performance metrics and their respective weights. In addition, each NEO’s annual incentive target opportunity expressed as a percentage of their base salary is summarized below. The Compensation Committee determined each NEO’s AIP target as part of its annual review of executive compensation after considering the same factors as those considered for base salaries.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 61
 
 

Compensation Discussion and Analysis

 

Goal Setting

 

The Compensation Committee set the target of each performance metric goal to be challenging but achievable to motivate officers to strive for continuous improvement. The committee considered our long-term financial plan as well as the current economic and regulatory environment when setting financial goals, and operational and strategic plan when setting non-financial goals.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 62
 
 

Compensation Discussion and Analysis

 

Goal Setting

 

 

  Constellation Energy Corporation 2024 Proxy Statement 63
 
 

Compensation Discussion and Analysis

 

Goal Setting

 

With respect to each performance metric, the following table details the 2023 threshold, target, and distinguished or maximum performance goals, achieved performance, unweighted percentage of target earned, and weighted percentage of target earned. Based on achieved performance, the Compensation Committee approved the 2023 AIP payout equal to 188.25% of target. The Compensation Committee did not exercise discretion to adjust this formulaic payout.

 

 

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 distributed to the NEOs on March 15, 2024.

 

NEO

AIP Target %

AIP Target

Formulaic
Performance
Factor

Actual Award

Dominguez 150% $1,757,973 188.25% $3,309,384
Eggers 95% $662,397 188.25% $1,246,962
Hanson 95% $786,083 188.25% $1,479,802
McHugh 85% $592,026 188.25% $1,114,489
Barrón 85% $579,918 188.25% $1,091,696

 

  Constellation Energy Corporation 2024 Proxy Statement 64
 
 

Compensation Discussion and Analysis

 

Long-Term Incentive Plan

 

Long-Term Incentive Plan (LTIP)

 

Our long-term incentive structure aligns pay with performance and our company’s business. The Compensation Committee grants PShares and RSUs annually at its February meeting. For 2023, the Compensation Committee determined each NEO’s total target long-term incentive value based on competitive market data and other factors that are discussed under the heading “Setting Target Compensation for NEOs” in the executive summary of this Compensation Discussion and Analysis.

 

Each NEO’s 2023 LTIP value was allocated between grants of RSUs (33%) and PShares (67%), as described in the chart below.

 

 

RSUs
(33% of LTIP)

PShares
(67% of LTIP)

Dominguez 39,635 80,471
Eggers 9,117 18,509
Hanson 11,098 22,532
McHugh 7,075 14,365
Barrón 6,065 12,313

 

2023 – 2025 Restricted Stock Units (RSUs)

 

In February 2023, the Compensation Committee approved the grant of RSUs for each NEO. RSUs vest ratably over a three- year period. During the vesting period, RSUs receive dividend equivalents that are reinvested as additional RSUs which remain subject to the same vesting conditions as the underlying RSUs. RSUs are not subject to any performance metrics. On each vesting date, the number of RSUs that vest is settled in a like number of shares of our common stock, less applicable taxes, provided that the NEO was continuously employed by the company through the vesting date.

 

2023 – 2025 Performance Share (PShare) Program

 

In February 2023, the Compensation Committee approved the grant of PShares for each NEO. PShares are earned over the three-year period ending December 31, 2025, based on our achievement against free cash flow before growth goals, subject to a negative modifier based on credit ratings. Based on achieved performance, the number of PShares earned at the end of the performance period may range from 50% to 200% of an NEO’s target PShares. However, if threshold performance is not achieved with respect to a specific performance metric, no payout would be earned for that metric. PShares receive dividend equivalents that are reinvested as additional PShare awards which remain subject to the same vesting and performance conditions as the underlying award.

 

Pursuant to the terms of the long-term incentive program, NEOs who have achieved 200% or more of their stock ownership target receive PShare awards settled in cash. PShare awards are settled 50% in cash and 50% in stock for NEOs that have not achieved 200% or more of their stock ownership target. Reinvested dividends are settled in the same form as the underlying award.

 

The performance metrics underlying the 2023 – 2025 PShare awards and the formula used to determine the earned PShare award are described below.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 65
 
 

Compensation Discussion and Analysis

 

2023 - 2025 Performance Share (PShare) Program

PShare Metrics

Metric Rationale and 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.

 

Credit Ratings

 

The relative credit rating metric is based on the ratings assigned by two independent credit rating agencies: Moody’s and S&P. Both agencies use a combination of quantitative and qualitative factors to assess the creditworthiness of an issuer and assign a rating that indicates the probability of default or non-payment of debt obligations.

 

 

 

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

 

 By using the credit ratings from Moody’s and S&P in our long-term incentive program, we aim to incentivize our executives to manage the business in a way that balances growth and profitability with prudent risk-taking and financial discipline, and that enhances our reputation and credibility among investors and other stakeholders.

 

Setting PShare Performance Targets. PShare performance targets are set based on external commitments and analysis of sensitivities at the beginning of the performance period. The modifier ranges are calibrated with the expectations of credit rating agencies.

 

Actual Targets Disclosed After Each 3-Year Performance Cycle. Actual performance targets used in our PShare program are not disclosed until each 3-year performance cycle is completed to safeguard the confidentiality of our long-term outlook on projected performance. This policy supports the propriety of our longstanding disclosure practices to only issue annual performance guidance as part of our financial disclosure policies.

 

2021-2023 Performance Share Program Payout Determination

 

Prior to the separation of Constellation from Exelon, the Compensation Committee of the Exelon board of directors approved the conversion of the 2021 – 2023 PShare award’s target number of shares into target Constellation shares at the date of spin, based on the spin value ratio with an adjustment based on the Exelon TSR multiplier for the period ending December 31, 2021. The Constellation Compensation Committee approved the performance scale aligned to the Constellation business strategy below at separation. Based on achieved performance, the Constellation Compensation Committee approved the 2021-2023 PShare payout at 200% of target. The Compensation Committee did not exercise discretion to adjust this formulaic payout.

 

 

 

  Constellation Energy Corporation 2024 Proxy Statement 66
 
 

Compensation Discussion and Analysis

 

2021-2023 Performance Share Program Payout Determination

 

The table below shows the determination of the number of PShares earned under the 2021-2023 PShares award. The awards vested on February 5, 2024.

 

 

NEO

 

PShare Target

Formulaic

Performance Factor

 

Actual Award

Dominguez 23,887 200% 47,774
Eggers 11,627 200% 23,254
Hanson 46,507 200% 93,014
McHugh 35,409 200% 70,818
Barrón 14,797 200% 29,594

 

Looking Forward to 2024

 

As part of the ongoing review of our executive compensation programs and in response to shareholder feedback, we have made changes to the 2024 incentive programs to better align them with our strategic priorities and shareholder interests. These changes are summarized below.

 

Changes to Annual Incentive Program

 

We have replaced adjusted EBITDA with Adjusted (non-GAAP) Operating Earnings as the primary financial metric for the annual incentive program. Adjusted (non-GAAP) Operating Earnings is defined as GAAP net income excluding certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments from economic hedging activities and fair value adjustments related to gas imbalances and equity investments, decommissioning related activity, asset impairments, certain amounts associated with plant retirements and divestitures, pension and other post-employment benefits (OPEB) non-service credits, and separation related costs.

 

The weighting of the annual incentive program metrics for 2024 will be as follows:

 

Adjusted (non-GAAP) Operating Earnings: 70%

Fleetwide Capacity Factor: 10%

Customer Satisfaction: 10%

Dispatch Match: 7%

Renewable Energy Capture: 3%

 

Changes to Performance Share Program

 

In response to feedback and input from shareholders during engagement meetings, the Compensation Committee has introduced relative TSR as a new metric for the performance share program, which will complement the existing Free Cash-Flow before Growth metric and negative credit rating modifier. Relative TSR will measure our total shareholder return over the three-year performance period compared to a custom peer group of companies in similar industries and markets. In the development of the custom relative TSR group, screening criteria included market cap, capital intensity, long-lived assets, and sensitivity to commodity prices. The Compensation Committee believes that relative TSR will enhance the alignment of our long-term incentives with shareholder value creation and market expectations, while also providing a balanced mix of internal and external performance indicators. Additionally, this change is responsive to our shareholders and will enhance the balance and rigor of our long-term incentive program while reinforcing our pay-for-performance philosophy.

 

The weighting of the performance share program metrics for 2024 will be as follows:

 

Relative TSR: 33%

Free Cash-flow before Growth: 67%

Negative Modifier: Credit Ratings from Moody’s and S&P

 

  Constellation Energy Corporation 2024 Proxy Statement 67
 
 

Compensation Discussion and Analysis

 

Role of the Independent Compensation Consultant

 

Role of the Independent Compensation Consultant

 

The Compensation Committee retains Meridian Compensation Partners, an independent compensation consultant, to support its duties and responsibilities. Meridian provides advice and counsel on executive and director compensation matters and provides information and advice regarding market trends, competitive compensation programs, and strategies including, but not limited to, the following:

 

Market data for each senior executive position, including evaluating Constellation’s compensation strategy and reviewing and confirming the peer group used to prepare the market data,
An independent assessment of management recommendations for changes in the compensation structure,
Assisting management to ensure Constellation’s executive compensation programs are designed and administered consistent with the Compensation Committee’s requirements, and
Ad hoc support on executive compensation matters and related governance trends.

 

The Compensation Committee will annually review the compensation, performance, and independence of Meridian and approve the firm’s fees and other retention terms. In December 2023, 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.

 

2023 Executive Compensation Peer Groups

 

Constellation uses a blended peer group that consists of energy services peers, independent power producers (“IPPs”), and general industry peers for assessing our executive compensation program and the competitive positioning of our NEO’s compensation. We utilize this method because (1) there are not enough energy services and IPPs peers with size, scale and complexity comparable to Constellation to create a robust peer group, and (2) Constellation’s market for attracting talent includes general industry peers, with key executives hired from several Fortune 100 companies. When selecting general industry peers, we consider capital asset-intensive companies with size, scale and complexity similar to Constellation, and we also consider the extent to which they may be subject to the effects of volatile commodity prices similar to Constellation’s sensitivity to commodity price volatility. Constellation evaluates its peer group on an annual basis and adjusts the peer group for changes with our energy and general industry peers when needed.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 68
 
 

Compensation Discussion and Analysis

 

2023 Executive Compensation Peer Groups

 

Due to the correlation between the size of an organization and its compensation levels, market data is statistically adjusted using a regression analysis. Utilizing this commonly applied technique allows for a more precise estimate of the market value of Constellation given the size and scope of responsibility for Constellation’s executive roles. Each element of executive compensation is then compared to these size-adjusted medians of the peer group. This peer group, in part, is also used to assess program design practices.

 

 

Stock Ownership

 

To strengthen the alignment of executive interests with those of shareholders, executive officers are required to own certain amounts of Constellation common stock five years following his or her employment or promotion to a new position (six-times base salary for Mr. Dominguez; three times base salary for the other NEOs). All NEOs have met their stock ownership requirement.

 

The following types of shares are taken into consideration to satisfy the ownership requirements:

 

shares owned outright by the executive or their immediate family, in street name or held in trust,
net shares from vested Long-Term Performance Share Unit Awards (PShares),
shares from Restricted Stock Unit Awards that are granted but not vested, and
shares held in the deferred compensation program or in retirement plan accounts.

 

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

 

The Board has adopted two recoupment (aka “clawback”) policies. One clawback policy applies only to SEC Section 16 executive officers (which includes, but is not limited to, our CEO and the other NEOs), the other policy applies to all employees (including the Section 16 executive officers) that receive incentive-based compensation. The policy applicable to Section 16 executive officers is compliant with the clawback rules and requirements adopted by the SEC and Nasdaq in 2023. Under this policy, the Board is required to recoup, from current or former Section 16 executive officers, any incentive-based compensation that was erroneously awarded during the three years preceding the date of any accounting restatement that is required due to material non-compliance with any financial reporting requirement under applicable U.S. federal securities laws. The other clawback policy provides our Board wider discretionary authority to recoup incentive compensation. Under this broader clawback policy, the Board or Compensation Committee may seek to recoup incentive compensation paid or payable to current or former incentive plan participants if, in its sole discretion, the Board or Compensation Committee determines that: (a) the current or former incentive plan participant breached a restrictive covenant or engaged or participated in misconduct, or intentional or reckless acts or omissions, or serious neglect of

 

  Constellation Energy Corporation 2024 Proxy Statement 69
 
 

Compensation Discussion and Analysis

 

Risk Management Assessment of Compensation Policies and Practices

 

responsibilities that caused or contributed to a significant financial loss or serious reputational harm to Constellation regardless of whether a financial statement restatement or correction of incentive plan results was required, and (b) recoupment is not precluded by applicable law or employment agreements.

 

Risk Management Assessment of Compensation Policies and Practices

 

The Compensation Committee reviews Constellation’s compensation policies and practices as they relate to the company’s risk management practices and risk-taking incentives. In 2023, 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.

 

  Constellation Energy Corporation 2024 Proxy Statement 70
 
 

Compensation Discussion and Analysis

 

Summary Compensation Table

 

Executive Compensation Tables

 

Summary Compensation Table

 

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

Non-Equity

Incentive

Plan
Compensation(c)

Change in

Pension Value

and Nonqualified

Deferred

Compensation
Earnings(d)

All Other
Compensation(e)
Total
Joseph Dominguez                
President and Chief 2023 $1,181,944 $10,000,025 $3,309,384 $471,090 $222,942 $15,185,385
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

2023 702,101 2,300,140 1,246,962 156,637 102,560 4,508,400
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

2023 831,945 2,800,033 1,479,802 3,566,930 162,443 8,841,153
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
James McHugh                

Executive Vice

President and Chief Commercial Officer

2023 702,453 1,785,095 1,114,489 216,706 72,008 3,890,751
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
Kathleen Barrón                

Executive Vice

President and Chief

Strategy Officer

               
2023 688,088 1,530,152 1,091,696 169,065 166,392 3,645,393
               

 

(a)The amounts shown represent base earnings.
(b)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. For a discussion of threshold, target and maximum levels of vesting on these awards, see the “Long-Term Incentive Plan” description in the Compensation Discussion and Analysis section of this proxy.

 

 

Performance Share Award Value

Name

At Target

At Maximum

Dominguez $6,700,015 $13,400,030
Eggers 1,541,059 3,082,118
Hanson 1,876,014 3,752,028
McHugh 1,196,030 2,392,060
Barrón 1,025,180 2,050,360

 

(c)The amounts shown in this column for 2023 represent payments made pursuant to the Annual Incentive Plan.
(d)The amounts shown in this column represent the change in the accumulated pension benefit for the NEOs from December 31, 2022 to December 31, 2023.
(e)The following table describes the incremental cost of other benefits provided in 2023 that are shown in this column.

 

  Constellation Energy Corporation 2024 Proxy Statement 71
 
 

Executive Compensation Tables

 

2023 All Other Compensation

2023 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 $138,396 $9,011 $71,000 $4,535 $ — $222,942
Eggers 58,386 40,665 3,509 102,560
Hanson 107,482 1,572 49,275 4,114 162,443
McHugh 27,083 40,549 4,376 72,008
Barrón 86,742 35,436 40,271 3,943 166,392

 

(a)Amounts reported for personal benefits provided to NEOs include: (1) transportation related benefits (including corporate aircraft, car and driver, as well as spousal and family travel); and (2) other benefits (including personal financial planning, company gifts, and matching charitable contributions).
i.Amounts reported for the personal use of corporate aircraft are based on the aggregate incremental cost to Constellation and are calculated using the hourly incremental cost for flights, including costs for fuel, maintenance, airport charges, and other variable costs, as applicable. Certain NEOs are also entitled to limited personal use of the company’s cars and drivers including commuting to work locations. Amounts reported in this column for Mr. Dominguez, Mr. Eggers, Mr. Hanson, and Ms. Barrón include $ 42,914, $27,159, $69,550 and $11,775, respectively, for personal use of corporate aircraft. The amounts also include $48,566 for spousal/domestic partner and other family member usage.
ii.Amounts include the aggregate incremental value of relocation costs received by Ms. Barrón which were provided for under Constellation’s Relocation Program and the cost of temporary housing totaling $49,782. These expenses were incurred as part of her move from Washington D.C. to Maryland coinciding with becoming Constellation’s Chief Strategy Officer.
iii.Limited personal financial planning benefits valued at $16,840 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 value ranging from $2,500 to $5,000 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 with regulatory requirements.
(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 2023 for long-term disability over and above the basic coverage provided to all employees.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 72
 
 

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 2/6/2023 $26,370 $1,757,974 $3,515,948            
  2/6/2023         30,177 80,471 160,942   $6,700,015
  2/6/2023               39,635 3,300,010
Eggers 2/6/2023 9,936 662,397 1,324,794            
  2/6/2023         6,941 18,509 37,018   1,541,059
  2/6/2023           9,117 759,081
Hanson 2/6/2023 11,791 786,083 1,572,166            
  2/6/2023       8,450 22,532 45,064   1,876,014
  2/6/2023               11,098 924,019
McHugh 2/6/2023 8,880 592,026 1,184,052            
  2/6/2023         5,387 14,365 28,730 1,196,030 
  2/6/2023               7,075 589,065
Barrón 2/6/2023 8,699 579,918 1,159,836            
  2/6/2023         4,617 12,313 24,626   1,025,180
  2/6/2023               6,065 504,972

 

(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 2023, the possible payout at threshold for AIP was calculated at 1.5% of target based on a threshold payout (50%) of the lowest weighted metric of 3%. For additional information about the terms of this program, see the “Compensation Discussion and Analysis” section 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 the “Compensation Discussion and Analysis” section and the footnotes to the Summary Compensation Table above.

 

(c)This column shows restricted stock unit 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 indicates 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 2023. Fair value of performance share unit awards granted on February 6, 2023, are based on an estimated payout of 100% of target.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 73
 
 

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)

Market Value of
Shares or Units
of Stock That
Have Not Yet
Vested Based
on 12/29/23
Closing Price

$116.89(a)(b)

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Yet Vested(a)(c)
Equity Incentive
Plan Awards:
Market or
Payout Value
or Unearned
Shares, Units
or Other Rights
That Have Not
Yet Vested Based
on 12/29/23
Closing Stock
Price(a)(c)
Dominguez   76,505 $8,942,669 407,917 $47,681,418
Eggers   18,600 2,174,154 106,940 12,500,217
Hanson   58,851 6,879,093 198,855 23,244,161
McHugh   42,660 4,986,527 143,762 16,804,340
Barrón   36,868 4,309,501 89,348 10,443,888

 

(a)Prior to the separation of Constellation from Exelon, the Compensation Committee of Exelon’s Board of Directors approved the conversion of equity awards held immediately prior to the separation into Constellation equity awards under the Constellation Stock Plan. The awards were converted in a manner to maintain the value of the equity awards immediately prior to and immediately after the separation. The Exelon pre- separation price used to value the outstanding awards was $56.81 and was based upon the volume-weighted average stock price (VWAP) for the five days prior to the transaction. The Constellation post- separation stock price of $51.16 was based on the VWAP for the five days after the transaction. The effective date of the separation was February 1, 2022.

(b)The amount shown is composed of: the converted final third of the unvested restricted stock units (RSUs) originally granted in January 2021, which vested on February 5, 2024; two-thirds of the RSUs originally awarded in February 2022, half of which vested on February 5, 2024, and half of which will vest on the date of the Constellation Compensation Committee’s first regular meeting in 2025; and the RSUs awarded February 6, 2023, one-third of which vested on February 5, 2024, and one-third of which will vest on the date of each of the Constellation’s Compensation Committee’s first regular meetings in 2025 and 2026, respectively. For Mr. Hanson, the amount also includes 31,004 retention RSUs inclusive of accrued dividends. Mr. Hanson’s retention award was awarded on February 7, 2022, and will vest on February 7, 2025. For Mr. McHugh, the amount also includes 23,183 retention RSUs inclusive of accrued dividends. Mr. McHugh’s retention award was initially awarded on April 5, 2021, and will vest on April 5, 2025. For Ms. Barrón, the amount also includes 22,819 retention RSUs inclusive of accrued dividends. Ms. Barrón’s retention award was initially granted October 29, 2021, and the award will vest on October 29, 2025. All unvested RSUs accrue additional shares through automatic dividend reinvestment. All shares are valued at $116.89, the closing price on December 29, 2023.

(c)The amount shown includes the target performance share awards granted on January 25, 2021, for the performance period ending December 31, 2023, and converted per footnote (a) above. Also included are the target performance share awards granted post-separation on February 7, 2022, for the performance period ending December 31, 2024, and the performance share awards granted on February 6, 2023, for the performance period ending December 31, 2025. All target awards have been increased to reflect the highest level of performance for the period, 200%. All shares are valued at $116.89, the closing price on December 29, 2023.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 74
 
 

Executive Compensation Tables

 

Option Exercises and Stock Vested

 

Option Exercises and Stock Vested

 

Option Awards

 

Stock Awards(a)(b)(c)

 

 

Name

Number
of Shares
Acquired on
Exercise

Value
Realized on
Exercise

 

Number
of Shares
Acquired
on Vesting

Value Realized
on Vesting

Dominguez   41,474 $3,417,440
Eggers   15,582 1,283,928
Hanson   39,450 3,250,653
McHugh   40,900 3,370,156
Barrón   17,552 1,446,257
             
(a)Share amounts shown are composed of the following tranches of prior awards that vested on January 30, 2023; the final third of the RSU awards granted in January 2020, the second third of the RSU awards granted in January 2021 and the first third of the RSU awards granted in February 2022. All of these awards were valued at $82.40 per share upon vesting.

(b)Also included are performance share awards earned under the 2020-2022 Performance Plan which vested on January 30, 2023. All of these awards were valued at $82.40 per share upon vesting

(c)Prior to the separation of Constellation from Exelon, the Compensation Committee of Exelon’s Board of Directors approved the conversion of equity awards held immediately prior to the separation into substitute Constellation equity awards under the Constellation Stock Plan. The awards were converted in a manner to maintain the value of the equity awards immediately prior to and immediately after the separation. The Exelon pre-separation price per share used to value the outstanding awards was $56.81 and was based upon the volume-weighted average stock price (VWAP) for the five days prior to the transaction. The Constellation post-separation stock price of $51.16 was based on the VWAP for the five days after the transaction. The effective date of the separation was February 1, 2022.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 75
 
 

Benefit Plans

 

Pension Benefits

 

Benefit Plans

 

Pension Benefits

Constellation sponsors the Constellation Retirement Program, a defined benefit pension plan that includes the Commonwealth Edison Company Constellation Service Annuity System (SAS), a traditional pension plan covering NEOs who commenced employment prior to January 1, 2001, and the Constellation Cash Balance Pension Plan (CBPP), an account-based plan covering eligible NEOs hired between January 1, 2001, and February 1, 2018. The Constellation Retirement Program is intended to be tax- qualified under Section 401(a) of the Internal Revenue Code.

 

Commonwealth Edison Company Constellation Service Annuity System (SAS)

Only one NEO (Mr. Hanson) participates in the SAS. Under the SAS, the annuity benefit payable at normal retirement age is equal to the sum of 1.25% of the participant’s earnings as of December 25, 1994, reduced by a portion of the participant’s earned Social Security benefit as of that date, plus 1.6% of the participant’s highest average annual pay, multiplied by the participant’s years of credited service (up to a maximum of 40 years). Pension-eligible compensation for the SAS’s Final Average Pay Formula includes base pay and annual incentive awards. Benefits under the SAS are vested after five years of service.

“Normal retirement age” under the SAS is 65 and the plan also offers early retirement benefits, which are payable if a participant retires after attainment of age 50, but before attainment of age 65 and completion of 10 years of service. The annual pension payable under the plan is determined as of the early retirement date, reduced by 2% for each year of payment before age 60 to age 58, then 3% for each year before age 58 to age 50. In addition, the early retirement benefit is supplemented prior to age 65 by a temporary payment equal to 80% of the participant’s estimated monthly Social Security benefit. The supplemental benefit is partially offset by a reduction in the regular annuity benefit.

 

Constellation Cash Balance Pension Plan (CBPP)

Four NEOs (Messrs. Dominguez, Eggers, and McHugh and Ms. Barrón) participate in the CBPP. Under the CBPP, a notional account is established for each participant, and the account balance grows as a result of annual benefit credits and annual investment credits. When the CBPP was initially established in 2001, it provided an annual benefit credit of 5.75% of an employee’s base pay and annual incentive award for the year and an annual investment credit based on the average of that year’s S&P 500 stock index return and the 30-year Treasury rate for the month of November (subject to 4% minimum). The benefit and investment credit rates have been subsequently modified periodically pursuant to U.S. Treasury Department guidance on cash balance plans. NEO participants in the CBPP currently receive an annual benefit credit of 7% of base salary and annual incentive award, and an annual investment credit based on either the third segment spot rate of interest on long-term investment grade corporate bonds for the month of November of the year credited (subject to a 4% minimum) or the second segment spot rate of interest on long- term investment grade corporate bonds for the month of November of the year credited (subject to a 3.8% minimum), depending on length of service. Benefits vest after three years of service and are payable in an annuity or a lump sum at any time following termination of employment. Apart from the benefit credits and the vesting requirement, years of service are not relevant to a determination of accrued benefits under the CBPP.

A one-time transition benefit credit as of December 31, 2018 was provided to all CBPP participants in recognition of the transition to a fully fixed income investment credit rate. The amount of the credit ranged from 0% to 30.5% of 2018 annualized base pay, based on years of service as of December 31, 2007.

Constellation ceased offering the SAS to all new entrants as of January 1, 2009, and the CBPP was closed to all new entrants as of January 1, 2023. Instead, an annual enhanced non-discretionary 401(k) contribution is provided for new employees not eligible for pension benefits.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 76
 
 

Benefit Plans

 

Constellation Supplemental Management Retirement Plan (SMRP)

 

Constellation Supplemental Management Retirement Plan (SMRP)

All NEOs participate in the SMRP which provides supplemental benefits to the benefits provided under the tax-qualified Constellation Retirement Program for individuals whose annual compensation exceeds the limits imposed under the Internal Revenue Code. Under the terms of the SMRP, participants are provided the amount of benefits they would have received under the SAS or CBPP, as applicable, but for the application of the Internal Revenue Code limits. The SMRP offers a lump sum as an optional form of payment. Tax benefits are provided for SMRP participants when FICA and state taxes are not imposed on qualified pension plan benefits, but are imposed on non-qualified retirement benefits, such as those provided under the SMRP. Constellation provides these tax benefits in order to equalize the tax treatment of non-qualified benefits to those received under qualified plans. These tax benefits are provided to all participants in the SMRP (currently over 160, approximately 45% of which are executives (i.e., Vice President level or above)).

For participants in the SAS, the SMRP lump sum includes the value of the marital annuity, death benefits and other early retirement subsidies at a designated interest rate. The interest rate applicable for distributions to participants in the SAS in 2023 is 3.66%. For participants in the CBPP, the lump sum is the value of the non-qualified account balance. The values of the lump sum amounts do not include the value of any pension benefits covered under the tax-qualified pension plans, and the methods and assumptions used to determine the non-qualified lump sum amount are different from the assumptions used to generate the present values shown in the tables of benefits to be received upon retirement, termination due to death or disability, involuntary separation not related to a change in control, or upon a qualifying termination following a change in control which appear later in this proxy statement.

Since 2004, the provision of additional years of credited service to executives was ended under the SMRP for any period in which services are not actually performed, except that up to two years of service credits may be provided under the SMRP upon a qualifying termination of employment under severance or up to 2.99 years of service under change in control agreements, and performance-based awards or awards that are intended to make up for lost pension benefits from another employer. Service credits previously available under employment, change in control or severance agreements or arrangements (or any successor arrangements) are not affected.

The amount of the change in the pension value for each of the NEOs is the amount included in the Summary Compensation Table above. The present value of each NEO’s accumulated pension benefit is shown in the Pension Benefits table below. A portion of 2022 accumulated pension benefit were accrued under Exelon, prior to February 1, 2022. The assumptions used in estimating the present values include the following: pension benefits are assumed to begin at each participant’s earliest unreduced retirement age; the SMRP lump sum amounts for SAS participants are determined using the rate of 4.03% as of December 31, 2023, at the assumed retirement age; the account balances for CBPP participants are assumed to grow at the annual investment credit rate of 5.09% or 5.16% as of December 31, 2023, depending on length of service, to the assumed retirement age; the lump sum amounts are discounted from the assumed retirement date at the applicable discount rates of 5.52% as of December 31, 2022 and 5.17% as of December 31, 2023; and the applicable mortality tables.

 

Name

Plan Name

Number of Years Credited Service Present Value of
Accumulated Benefit
Dominguez CBPP 21.35 $683,832
  SMRP 21.35 1,703,873
Eggers CBPP 7.76 173,181
  SMRP 7.76 444,515
Hanson SAS 35.30 2,385,387
  SMRP 35.30   10,272,226(a)
McHugh CBPP 20.79 538,789
  SMRP 20.79 925,037
Barrón CBPP 13.47 354,050
  SMRP 13.47 590,686

 

(a) Mr. Hanson’s non-qualified Supplemental Management Retirement Plan (SMRP) present value is $10,272,226. Based on lump sum conversion interest rates defined for immediate distributions under the non-qualified plan, the comparable lump sum amount applicable for service through December 31, 2023 is $12,072,856. Note that, in any event, payments made upon termination may be delayed by six months in accordance with U.S. Treasury Department guidance.

 

 

  Constellation Energy Corporation 2024 Proxy Statement 77
 
 

Potential Payments Upon Termination or Change in Control

 

Deferred Compensation

 

Deferred Compensation

Constellation Deferred Compensation Plan

The Constellation Deferred Compensation Plan is a non-qualified plan that permits NEOs to defer certain cash compensation to facilitate tax and retirement planning. The Constellation Deferred Compensation Plan also permits Constellation to credit related matching contributions that would have been contributed to the Constellation Employee Savings Plan (Constellation’s tax-qualified 401(k) plan) but for the applicable limits under the Internal Revenue Code.

 

Constellation Employee Savings Plan

The Constellation Employee Savings Plan is intended to be tax-qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Constellation maintains the Constellation Employee Savings Plan to attract and retain qualified employees, including the NEOs, and encourage retirement savings, which under the plan may be supplemented by company matching and profit-sharing contributions. The excess matching feature of the Constellation Deferred Compensation Plan is maintained to enable highly compensated employees to save for retirement to the extent they otherwise would have, were it not for the limits established by the IRS.

Once participants in the Constellation Employee Savings Plan reach their statutory contribution limit during the year, their elected payroll contributions and company matching contribution will be credited to their accounts in the Constellation Deferred Compensation Plan to the extent provided in an election filed in the prior year. The investment options under the Constellation Deferred Compensation Plan consist of a basket of investment fund benchmarks substantially the same as those funds available through the Constellation Employee Savings Plan. Deferred amounts represent unfunded, unsecured obligations of Constellation.

 

Name

Executive
Contributions
in 2023(a)
Constellation
Contributions
in 2023(b)
Aggregate
Earnings in
2023(c)
Aggregate
Withdrawals/
Distr