Primary Responsibilities: In addition to its responsibilities described elsewhere in this proxy statement, the Corporate Governance Committee’s principal responsibilities include:
✓Identifying individualsIdentifies and recommends qualified to become Board candidates;
✓Recommending Board approval of Director nomineescandidates for election at the annual meeting of shareholders;
| ✓Developing and recommend toby the Board a set ofand shareholders and oversees Board and Committee structure and composition✓Recommends Corporate Governance Guidelines and advises on corporate governance guidelines applicable to the Company; and | ✓Overseeing theissues including evaluation processes for the Board, Committees, each Director, and the CEO.
|
The Committee is responsible for taking a leadership role in shaping the corporate governance practices of Exelon including amongst other things:
✓Board and Committee structure and composition issues;
✓Performance criteria and evaluations of the CEO and Board Chair if employed by the Company;and CEO
| ✓Oversight ofOversees Exelon’s environmental strategies, including climate change and sustainability policies;
policies | | ✓DelegationsOversees Utility board governance policies and practices, qualifications and election of authority for ExelonUtility directors, and its subsidiaries;annual review of the Utility boards and directors. | ✓Oversight ofReviews Exelon’s effortsdirector compensation program and retains an independent compensation consultant ✓Has authority to promote diversity among its contractors and suppliers; and
✓Recommendations with respectretain an independent search firm to identify candidates for Director compensation.
|
The Committee utilizes an independent compensation consultant to assist it in its evaluation and recommendations to the Board with respect to Director compensation. The Chairs of the Corporate Governance and Compensation and Leadership Development Committees sit on each other’s Committees which is helpful in the process for evaluating the performance and setting the compensation for the CEO. The Corporate Governance Committee may utilize other consultants, such as specialized search firms, to identify candidates for Director.
As part of the Corporate Governance Committee’s role in monitoring and oversight of CEO succession planning, the Committee developed an emergency CEO succession plan, which is reviewed by the Committee and the full Board annually. In addition, CEO succession is a topic on the agenda for meetings of the full Board at least twice each year.
Finance and Risk Committee | Meetings in 2017: 4 |
Primary Responsibilities:
The Finance and Risk Committee’s purpose and responsibilities include:
✓Overseeing the Company’s risk management functions;
✓Overseeing matters relating to the financial condition and risk exposures by Exelon;
✓Monitoring the financial condition, capital structure, financing plans and programs, dividend policy, treasury policies and liquidity and related financial risk at Exelon and its major subsidiaries;
| ✓Overseeing or appraising of the capital management and planning process, including capital investments, acquisitions and divestitures;
✓Overseeing Company-wide risk management strategy, policies, procedures, and mitigation efforts, including insurance programs;
| ✓Overseeing the strategy and performance of risk management policies relating to risks associated with marketing and trading of energy and energy-related products; and
✓Reviewing and approving risk policies relating to power marketing, hedging and the use of derivatives.
|
The Finance and Risk Committee includes members with experience in the economics of energy, nuclear operations, banking and investment management and security, reflecting experience in dealing with the range of risks that the Company faces.
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Board and Corporate Governance Matters
| Generation Oversight Committee | | | Chair: Adm. Richardson | Meetings in 2017: 4 | |
Primary Responsibilities:
The Generation Oversight Committee’s purpose and responsibilities include:
Other Members:Mr. Crane, Mr. DeBenedictis* and Mr. Young | | Primary Responsibilities: | | | ✓Advising and assisting the full Board in fulfilling its responsibilities to overseeOversees the safe and reliable operation of all generating facilities owned or operated by Exelon or its subsidiaries with principal focus on nuclear safety and, including those facilities in which Exelon has significant equity or operational interests; | ✓Overseeing theOversees management and operationoperations of the Company’s generating facilities andincluding the overall organizational effectiveness (both corporate and stations) of the generation operations;station operations |
| ✓Overseeing the establishment of andOversees compliance with policies and procedures to manage and mitigate risks associated with the security and integrity of Exelon’s generation assets; andassets
✓ReviewingReviews environmental, health and safety issues related to generating facilities | | * Note that historically, Committee meetings included in person visits to generation plants. During 2020, to ensure the Company’s generating facilities. |
Investment Oversightsafety of staff and Committee | Meetings in 2017: 2 |
Primary Responsibilities:
The purpose and responsibilities of the Investment Oversight Committee include:
✓Overseeing members, in-person visits were limited to the management and investment of the assets held in trusts established or maintained by the Company or any subsidiaryCommittee Chair who served as proxy for the purposefull Committee in its oversight of funding the expense of decommissioning nuclear facilities;
✓Monitoring the performance of the nuclear decommissioning trustsoperational excellence and the trustees, investment managers and other advisors and service providers for the trusts;
| ✓Overseeing the evaluation, selection and retention of investment advisory and management, consulting, accounting, financial, clerical or other servicesin particular this year, with respect to the nuclear decommissioning trusts;COVID-related protocols - staffing adjustments, sufficient PPE, social distancing practices - to ensure safety and reliable operations continued.
|
Risk Committee
| | | | | | | | Chair: Ms. Berzin | | | | | Other Members:Mr. Anderson, Ms. Brlas, Ms. Cheshire, Mr. Crane, Mr. de Balmann, Mr. DeBenedictis*, Ms. Jojo, Dr. Joskow, Mr. Lawless, Adm. Richardson, Mr. Shattuck, and Mr. Young | | | | Primary Responsibilities: ✓OverseeingOversees risk management functions, including compliance with risk management program, and matters relating to the evaluation, selectionrisk exposures of Exelon and appointmentits subsidiaries ✓Monitors liquidity, and related financial risks | | ✓Oversees risk management strategies, policies, procedures, and mitigation efforts with respect to marketing and trading of trusteesenergy and other fiduciaries for the nuclear decommissioning trusts;energy-related products | ✓Overseeing the administration of the nuclear decommissioning trusts; and
✓MonitoringOversees risk management strategies, policies, procedures, and receiving periodic reports concerning the investment performance of the trusts under the pension and post-retirement welfare plans and the investment options under the savings plans.mitigation efforts with respect to cyber security
|
The Investment Oversight Committee also provides general oversight of Exelon’s investment management functions. The Committee includes members with experience
* Until Mr. DeBenedictis’s retirement in investment management, investment banking and the economics of energy and serves as a resource and advisory panel for Exelon’s investment management team and the Board.April 2021. www.exeloncorp.com 3235Exelon 2021 Proxy Statement
Table of Contents Board and Corporate Governance Matters
Board Processes and Policies BOARD AND CORPORATE GOVERNANCE MATTERS
Board, Committee, and Individual Director Evaluations Exelon has strong evaluation processes for its Board, five Board Committees, and individual Directors.  | Exelon has strong evaluation processes for its Board six Board Committees, and individual Directors.Evaluations ANNUAL ASSESSMENT
|
The Board conducts an annual assessment of its performance and effectiveness. The process is coordinated by the Board Chair and the chair of the Corporate Governance Committee, taking into account the recommendations of the Corporate Governance Committee on the process and criteria to be used for Board, Committee, and individual Director evaluations. The current process provides that all Directors engage in a one-on-one interview with the Board Chair or the chair of the Corporate Governance Committee to discuss the following topics, among others that may arise:  | |  | |  | Board Evaluations
| | Committee Evaluations | | Individual Director Evaluations | The Board conducts an annual assessment of its performance and effectiveness. The process is coordinated by the Board Chair and the chair of the Corporate Governance Committee taking into account the recommendations of the Corporate Governance Committee on the process and criteria to be used for Board, Committee, and individual Director evaluations. All Directors are interviewed by the Board Chair or the chair of the Corporate Governance Committee to discuss the following topics, among others that may arise:
●• overallOverall Board performance and areas of focus including strategic and business issues, challenges, and opportunities;opportunities
●•Board meeting logistics;logistics
| | ●• CEO, senior management and Director succession planning;planning
●• accountability Accountability to shareholder views;views
●• Board Committee structure and composition;composition
| | ●• Board culture;culture
●• Board composition;composition
• Management engagement with the Board and Committees ●• management performance, including quality Quality of materials provided to the Directors.Directors
|
Interviews also seek practical input on what the Board should continue doing, start doing, and stop doing. Following the completion of such interviews, the Board Chair and chair of the Corporate Governance Committee collaborate to prepare and provide to the Board a summary of the assessment input provided. Outcome: The Board’s current structure, composition, and stop doing. Following such interviews, the Board Chair and Chaireffectiveness were deemed to be very strong in light of the Corporate Governance Committee collaborate to prepare and provide a summary of the assessment input provided and discussed with the Board.consistently collaborative interactions. |
|  | All six of the Board’s Committees conduct annual assessments of their performance and take into consideration:Committee Evaluations ANNUAL ASSESSMENT
|
All five of the Board’s standing Committees conduct annual assessments of their performance and take into consideration the following.
| ●• the sufficiency of their charters;
●whether Whether Committee members possess the right skills and experiences or whether additional education or training is required;required
| | ●• whether The sufficiency of their charters
• Whether there are sufficient meetings covering the right topics; andtopics | | ●• whether Whether meeting materials and presenters are effective, among other matters.matters
|
Assessments also seek practical input on what Committees should continue doing, start doing, and stop doing. A summary of all Committee assessment results is provided to the Corporate Governance Committee and Board for review and discussion.
| Outcome: Current Committee structures and composition were deemed appropriate. |
 | Individual Director EvaluationsBIENNIAL ASSESSMENT FOR EACH DIRECTOR |
The process for individual Director evaluations was strengthened in 2017 to provide for individual assessments of all Directors on a biennial basis, which means that each Director is evaluated every other year. Individual Director performance assessments include peer review by all members of the Board as well as input from members of senior management on the contributions and performance of each Director. Directors are interviewed by the Chair of the Corporate Governance Committee or by the Board Chair to provide input on each Director undergoing assessment. In addition, select members of senior management are interviewed to provide input based on their regular interactions with Directors. In 2020, all interviews were conducted by the Board Chair because the chair of the Corporate Governance Committee was in the group undergoing assessment. Topics covered in the interviews included the following:
| • Meeting preparedness • Meaningful and constructive participation and contributions • Demonstrated independence | | • Respectful, effective, and candid communication skills • Company and industry knowledge | | • Strategic foresight • Openness to new learnings and training |
Interviews also sought practical input on what Directors should continue doing, start doing, and stop doing. After discussing the process and overall results with the Corporate Governance Committee, the Board Chair collaborates with the chair of the Corporate Governance Committee to provide feedback separately to individual Directors for developmental opportunities.
Outcome: Individual assessment results is provided to the Corporate Governance Committee and Board for review and discussion. | | Individual Directors are assessed regularly taking into consideration experience, tenure, qualifications, and core competencies as well as contributions and performance. The process for individual Director performance assessments was recently strengthened to include peer and senior management input on the contributions and performance of six of the current twelve independent Directors,were discussed with the remaining six Directors undergoing such assessment next year. The Board was divided into two groups taking into account tenure and other diversity considerations to effectively and thoughtfully execute such assessments. All Directors were interviewed to provide input on each of the six Directors and four members of senior management also provided input, based on their regular interactions with Board members. Interviews were conducted by the chair of the Corporate Governance Committee in 2018, as the Board Chair volunteered to undergo assessment in 2018. Topics covered in the interviews included:
●executive session.meeting preparedness;
●meaningful and constructive participation and contributions;
●respectful, effective and candid communication skills;
●demonstrated independence;
●Company and industry knowledge;
●strategic foresight; and
●openness to new learnings and training.
Interviews also sought practical input on what Directors should continue doing, start doing, and stop doing. After discussing with the Corporate Governance Committee, the Chair of the Corporate Governance Committee collaborates with the Board Chair and feedback is conveyed separately to the individual Directors assessed for developmental opportunities.
|
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Table of Contents
Board and Corporate Governance Matters BOARD AND CORPORATE GOVERNANCE MATTERS
Director Education
The Board has an orientation and onboarding program for new Directors and provides continuing education for all Directors that is overseen by the Corporate Governance Committee.
New Director
Orientation | | 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 industry acquired before joining the Board.industry. Materials provided to new Directors include information on the Company’s vision and strategic direction, financial matters, principal operating businesses, corporate governance practices, Code of Business Conduct, and other key policies and practices. New Directors also meetThe onboarding process includes a series of one-on-one meetings with the CEO,members of senior executivesmanagement and members of their staff for deep-dive briefings on the executives’ responsibilities, programs and challenges.business units. New Directors are also invited for tours ofto tour various Company facilities, depending on their orientation needs. Incumbent Directors are also invited to participate in site visits.needs and preferences. |
Continuing
Director
Education &Site Visits | | 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 effectively issues before them at that time (such as new regulatory or accounting standards). The education often takesEducation may take the form of presentations from senior leadership or other subject matter experts within the Company, presentations from third-party experts, or “white papers,” coveringpapers” which are deep dives into timely subjects or topics, which a Director can review before the meeting and ask questions about during the meeting. topics. |
| | |
| | The Audit Committee devotesplans for at least one meeting a meeting each year in which a session is devoted to educating the Committee members abouteducation on new accounting rules and standards and topics that are necessarydeemed to be helpful to having a good understanding of our accounting practices and financial statements. |
| | |
| | The Generation Oversight Committee uses site visits as a regular part of education for its members by holding each of its meetings at a different generating station (nuclear, fossil or hydro). Eachstation. Historically, each Generation Oversight Committee meeting agenda includes a briefing by local plant management, a tour of the facility, and lunch with plant personnel.personnel of all levels. Beginning in March 2020 in connection with the COVID-19 pandemic, these site visits were halted for the safety of our employees and Directors and meetings were held virtually. |
Director
Education
Seminars | | Continuing director education |
| | Directors are also involves individual Directors’ attendance at educationinvited from time to time to tour other facilities such as Exelon’s cyber operations center and utility operations control centers. During these visits, Directors are able to interact directly with employees staffing key functions. Additionally, Directors may attend educational seminars and programs sponsored by otherexternal organizations. The Company covers the cost for any Director who wishes to attend external programs and seminars on topics relevant to their service as Directors. |
Corporate Governance Principles
Our Corporate Governance Principles, together with the articles of incorporation, bylaws, Committee charters, and other policies and practices, provide the framework for the effective governance of Exelon. The Corporate Governance Principles address matters including the Board’s responsibilities and role; Board structure, Director selection, evaluation, and other expectations; Board operations; Board Committees; and additional matters such as succession planning, executive stock ownership requirements, and our recoupment policy. The Corporate Governance Principles are reviewed periodically and were last amended in January 2018July 2020 to reflect evolving governance trends and to remain contemporary with the needs of the Company and its stakeholders.
Process for Communicating with the Board
Shareholders and other interested persons can communicate with any Director or the independent Directors as a group by writing to them, c/o Thomas S. O’Neill, SeniorGayle Littleton, Executive Vice President, General Counsel and Corporate Secretary, Exelon Corporation, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398. The Board has instructed the Corporate Secretary to review communications initially and transmit a summary to the Directors and to exclude from transmittal any communications that are commercial advertisements, other forms of solicitation, general shareholder service matters, or individual service or billing complaints. Under the Board policy, the Corporate Secretary will forward to the Directors any communication raising substantial issues. All communications are available to the Directors upon request.
Shareholders may also report an ethics concern with the Exelon Ethics Hotline by calling 1-800-23-Ethic1-800-23-ETHIC (1-800-233-8442). You may also report an ethics concern via email to EthicsOffice@ExelonCorp.com.EthicsOffice@exeloncorp.com.
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Board and Corporate Governance Matters
Directors’ Compensation BOARD AND CORPORATE GOVERNANCE MATTERS
Stock Ownership Requirements for Directors
Under Exelon’s Corporate Governance Principles, all Directors are required to own, within five years of joining the Board, at least 15,000 shares of Exelon common stock or deferred stock units or shares accrued in the Exelon common stock fund of the Directors’ deferred compensation plan.
Director Compensation of Non-Employee Directors
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.
In making Director compensation recommendations, the Corporate Governance 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, andas well as the form and amount of compensation paid to Directorsdirectors at comparable companies. In 2020, the Committee engaged Meridian Compensation Partners to support the annual review of non-employee Director pay.
The non-employee Director compensation program comprises cash and equity components. The Board targets Directortotal compensation to be at the median level of compensation paid to directors at the peer group of companies used to benchmark executive compensation.
For service rendered Separately, the Board Chair compensation is benchmarked to Fortune 100 companies given (a) the Company in 2017, Exelon’s non-employee Directors received the compensation shownvery limited number of companies in the following table21-company peer group that have an independent board chair, (b) the relative size of Exelon’s business compared to its peers, and explained(c) the relative complexity of Exelon’s business as one of the few remaining public utilities with regulated electric and gas transmission and delivery business plus a competitive power generation and energy sales business. Finally, the Corporate Governance Committee also factors in the accompanying notes.
| Name | | Annual Board &
Committee
Retainers
$ | | Stock Awards
(Description Below)
$ | | All Other
Compensation
(Note 1)
$ | |
Total
Compensation
$ |
| Anderson | | $ | 165,000 | | $ | 145,000 | | $ | — | | $ | 310,000 |
| Berzin | | | 125,000 | | | 145,000 | | | 15,000 | | | 285,000 |
| de Balmann | | | 145,000 | | | 145,000 | | | 15,000 | | | 305,000 |
| DeBenedictis | | | 145,000 | | | 145,000 | | | 15,000 | | | 305,000 |
| Gioia | | | 145,000 | | | 145,000 | | | 5,300 | | | 295,300 |
| Jojo | | | 125,000 | | | 145,000 | | | 15,000 | | | 285,000 |
| Joskow | | | 125,000 | | | 145,000 | | | — | | | 270,000 |
| Lawless | | | 135,000 | | | 145,000 | | | — | | | 280,000 |
| Mies | | | 165,000 | | | 145,000 | | | 19,722 | | | 329,722 |
| Rogers | | | 135,000 | | | 145,000 | | | 15,000 | | | 295,000 |
| Shattuck | | | 445,000 | | | 145,000 | | | 15,000 | | | 605,000 |
| Steinour | | | 145,000 | | | 145,000 | | | 15,000 | | | 305,000 |
| Total All Directors | | | 2,000,000 | | | 1,740,000 | | | 130,022 | | | 3,870,022 |
(1) | Values in this column represent gifts made by the Company or the Exelon Foundation as the matching portion of the Director’s contributions to qualified not-for-profit organizations pursuant to Exelon’s matching gift plan described below in Other Compensation. For Mr. Mies, the amount also includes $4,722, the incremental cost to the Company for travel from an Exelon Board meeting to another professional engagement.
|
38 Exelon 2018 Proxy Statement
Tablelevel of Contentsinvolvement and responsibilities undertaken by the current Chair, Mayo Shattuck, into its review and analysis of appropriate pay levels. See below for further discussion on Mr. Shattuck’s role and responsibilities.
Board and
Based upon the Corporate Governance MattersCommittee’s review of benchmarking completed in December 2020, the Board made no changes to Director compensation for 2021.
Cash Fees Earned or Paid in Cash
The following table sets forth the components of the cash compensation paid in 20172020 to Exelon’s non-employee Directors.
Role | | Annual Cash
Retainer |
Non-Employee Director | | $ | 125,000 |
Board Chair | | | 300,000 |
Chairs of Audit Committee, Compensation and Leadership Development Committee,
Finance and Risk Committee and Generation Oversight Committee | | | 20,000 |
Chairs of Corporate Governance Committee and Investment Oversight Committee | | | 10,000 |
Generation Oversight Committee Member, including the Chair | | | 20,000 |
In December 2017, the Corporate Governance Committee reviewed a director compensation study prepared by Meridian at the request of the Committee. The Meridian study indicated that the compensation paid to some Committee chairs should be adjusted to reflect the work load and responsibilities associated with the position and was below the median for the peer group. The Meridian study otherwise confirmed that Exelon’s Director compensation and Director stock ownership requirements were appropriately set at about the median level of the peer group. The Committee also determined that the compensation paid to some Committee chairs should be adjusted to reflect the work load and responsibilities associated with the position. The Committee recommended that the compensation payable to the Chairs of the Audit and Finance and Risk Committee should be increased to $25,000 per year, the compensation payable to the Chair of the Corporate Governance Committee should be increased to $20,000 per year, and the compensation payable to the Chair of the Investment Oversight Committee should be increased to $15,000 per year. The Board approved the changes in Committee chair fees to be effective as of January 1, 2018.
No additional compensation is paid for meeting attendance.
Deferred Compensation
Directors may elect to defer any portion of cash compensation described above 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, including one fund composed entirely of Exelon common stock. Fund balances (including amounts invested in the Exelon common stock fund) 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 retirementdeparture from the Board. These funds are identical to those that are available to Company employees who participate in the Exelon Employee Savings Plan.
www.exeloncorp.com 39
TableAdditionally, Directors who serve as members of Contentsany special committee receive fees of $5,000 per quarter for as long as the Committee remains needed.
| | | Annual Cash | |
| | | Retainer | |
| Role | | $ | |
| Non-Employee Director | | $ | 125,000 | |
| Board Chair | | | 300,000 | |
| Committee Chairs: | | | | |
| Audit Committee | | | 25,000 | |
| Risk Committee | | | 25,000 | |
| Compensation and Leadership Development Committee | | | 20,000 | |
| Corporate Governance Committee | | | 20,000 | |
| Generation Oversight Committee(1) | | | 20,000 | |
(1)The Chair and all members of the Generation Oversight Committee receive a $20,000 annual membership retainer.
Board and Corporate Governance Matters
Fees Paid in Stock AwardsEquity Compensation
A significant portion of Director compensation is paidprovided in the form of deferred stock unitsequity to align the interests of Directors with the interests of shareholders. In 2017,2020, Exelon’s non-employee Directors received deferred stock units worth $145,000valued at $155,000 that are paidwere granted quarterly in arrears. Deferred stock units 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 Exelon common stock on the day the quarterly dividend is paid.
Deferred stock units earn dividend equivalents at the same level and at the same time that dividends are paid on shares of Exelon common stock. Dividend equivalentswhich are reinvested in the deferred stock accounts as additional stock units. DeferredThe account balance of deferred stock units are paid out to the Directors upon the end of Board service, when they arewill be settled in shares of Exelon common stock leaving these amounts at risk duringand may be distributed in a lump sum or in annual installments upon reaching age 65, age 72, or upon a Director’s departure from the Director’s entire tenure on the Board.
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BOARD AND CORPORATE GOVERNANCE MATTERS
Outstanding Equity Awards as of December 31, 2020
As of December 31, 2017,2020, the non-employee Directors held the following amounts of deferred Exelon common stock units.
Name | | Total Deferred
| |
| | Stock Units (Note 1)
(1) | |
| Name | | (#) | |
| Anderson | | 17,982 | 30,999 | |
| Berzin | | 49,116 | 65,448 | |
| Brlas | | | 8,180 | |
| Cheshire | | | 1,712 | |
| de Balmann | | 59,745 | 77,210 | |
| DeBenedictis | | 40,929 |
Gioia | 56,390 | 7,237 |
| Jojo | | 8,810 | 20,849 | |
| Joskow | | 33,985 | 48,705 | |
| Lawless | | 63,967 | 81,881 | |
| Mies | | 30,945 | 42,626 | |
RogersRichardson | | 56,454 | 5,101 | |
| Shattuck | | 17,693 | 30,678 | |
| Steinour | | 34,367 | 46,412 | |
| Young | | | 8,980 | |
| Total All Directors | | 421,230 | 525,171 | |
| (1) | TotalBalance reflects deferred stock units includes deferred stock units fromgranted under the current Exelon deferred stock unit plan along with accumulated units from automatic dividend reinvestment. For Ms. Berzin and Messrs. de Balmann and Lawless, the balance also includes deferred stock units deferred fromgranted under the equivalent plans for Unicom Corporation andlegacy Constellation Energy Group, Inc. Deferred Compensation Plan for directors that will be settled in cash on a 1 for 1 basis upon their departure from the Exelon Directors who previously served as Directors of those predecessor companies.
board and any subsidiary company board. |
Other CompensationBenefits Provided
From time to time, Exelon Directors mayare invited to bring spouses or guests to Exelon or industry related events where it is customary and expected.events. When such invitations are extended, Exelon payscovers the cost of spousal or guest travel, meals, lodging and related activities when invited to attend such events.activities. The value of this spousal or guest related travel is calculated according to IRS regulations and imputed to the Director as additional taxable income. Directors also receive reimbursement to cover the additional taxes owed on such imputed income. However, in most cases there is no direct incremental cost to Exelon of providing transportation and lodging for a Director’s spouse or guest when he or she accompanies the Director, and the only additional costs to Exelon are those for meals and activities and to reimburse the Director for the taxes on the imputed income. In 2017,2020, there were no incremental costssuch events that resulted in imputed income or any tax reimbursements.
Chair Compensation
Mr. Shattuck receives annual compensation of $300,000 for his role as Board Chair. The amount of which was first set by the Board in 2012 in recognition of Mr. Shattuck’s significant expertise and commitment of time and energy involved in serving as Exelon’s Chair. This fee is in addition to the Company for such perquisites.
Exeloncash retainer, deferred stock units payable to all Directors, and any relevant Committee fees. A fulsome understanding of his experience, the scope of his involvement, and the time commitment he provides is important to understanding the compensation decision.
Mr. Shattuck’s background and experience in directly relevant roles is extensive. He was the former chair, president and chief executive officer of Constellation Energy as well as the former chair and chief executive officer of Deutsche Banc Alex. Brown, and he also held leadership roles with the Institute of Nuclear Power Operations, Edison Electric Institute, Center for Strategic & International Studies – Commission on Nuclear Energy. These experiences uniquely qualify him to lend strategic oversight and guidance to Exelon’s Board and senior leaders. His considerable industry and financial background provides a level of insight and strategic experience that allows for an unparalleled level of leadership to our Board. This leadership has been critical as Mr. Shattuck has led the Board through transformational events, including the acquisition of PHI and its three utilities, the Illinois lobbying investigation and now the announced separation of Exelon’s utility businesses from its generation business.
36Exelon Foundation have a matching gift program available to Directors, officers and employees that matches contributions to eligible not-for-profit organizations up to $15,000 per year for Directors, $10,000 per year for executives and up to $5,000 per year for other employees.
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BOARD AND CORPORATE GOVERNANCE MATTERS
Mr. Shattuck is deeply involved in all aspects of recruiting, vetting, onboarding, and mentoring new directors in furtherance of Exelon’s current and ongoing Board refreshment efforts. Since 2019, Mr. Shattuck has been focused on planning for the upcoming retirements of five directors, three of whom had, or still have, chair leadership roles. Because of the need and desire to identify talented diverse candidates, Board recruiting has been a critically important and time-consuming responsibility for Mr. Shattuck. As new members join the Board, Mr. Shattuck mentors and educates new members on the complexities of Exelon’s business and industry challenges.
Mr. Shattuck co-leads the Board and annual individual director assessment process, personally conducting individual director interviews. He summarizes these interviews and provides insights with the Corporate Governance Committee and Board and assisting with individual director coaching opportunities. Mr. Shattuck is an active member of the Board’s Risk Committee and two Special Committees of the Board and he also attends as many meetings of the other Board Committees as is feasible.
The Board reviewed Chair compensation in 2020 and continues to believe that the level of Chair fee remains an appropriate reflection of the extensive and pivotal role of the Chair and the virtually full-time demands on the Chair due to his responsibilities, the complexity of Exelon and its regulatory environment, and the challenging industry in which it operates. In reaching this conclusion, the Board considered many factors, including Mr. Shattuck’s extensive industry experience and knowledge of the regulatory environment, the time commitment attributable to his Chair responsibilities, and the compensation paid for similar roles among the peer and Fortune 100 companies used in its analysis.
2020 Director Compensation
The following table summarizes the compensation paid for each of our non-employee Directors who served as a member of the Board and its Committees in 2020.
| | | Annual Board & | | | | | | All Other | | | | |
| | | Committee Retainers | | | Stock | | | Compensation | | | Total | |
| | | ($) | | | Awards | | | ($) | | | Compensation | |
| Name | | (Note 1) | | | ($) | | | (Note 2) | | | ($) | |
| Anderson | | $ | 176,538 | | | $ | 155,000 | | | $ | 0 | | | $ | 331,538 | |
| Berzin | | | 150,000 | | | | 155,000 | | | | 15,000 | | | | 320,000 | |
| Brlas | | | 125,000 | | | | 155,000 | | | | 1,000 | | | | 281,000 | |
| Cheshire | | | 53,329 | | | | 66,128 | | | | 0 | | | | 119,457 | |
| de Balmann | | | 165,000 | | | | 155,000 | | | | 15,000 | | | | 335,000 | |
| DeBenedictis | | | 145,000 | | | | 155,000 | | | | 15,000 | | | | 315,000 | |
| Jojo | | | 125,000 | | | | 155,000 | | | | 15,000 | | | | 295,000 | |
| Joskow | | | 125,000 | | | | 155,000 | | | | 0 | | | | 280,000 | |
| Lawless | | | 165,000 | | | | 155,000 | | | | 0 | | | | 320,000 | |
| Mies | | | 53,942 | | | | 50,673 | | | | 515,000 | | | | 619,615 | |
| Richardson | | | 158,516 | | | | 155,000 | | | | 2,500 | | | | 316,016 | |
| Shattuck | | | 445,000 | | | | 155,000 | | | | 25,989 | | | | 625,989 | |
| Steinour | | | 40,865 | | | | 50,673 | | | | 500,000 | | | | 591,538 | |
| Young | | | 145,000 | | | | 155,000 | | | | 70,914 | | | | 370,914 | |
| Total All Directors | | $ | 2,073,191 | | | $ | 1,872,474 | | | $ | 1,175,403 | | | $ | 5,121,068 | |
| (1) | Amounts reported for Messrs. Anderson, de Balmann, Lawless, and Shattuck, each include fees for membership on one or more special committees. Prorated retainers were paid to Ms. Cheshire upon her election to the Board on July 28, 2020, and to each of Admiral Mies and Mr. Steinour who each retired from the Board on April 28, 2020. |
| (2) | Amounts reported in this column include contributions made by Exelon or the Exelon Foundation to qualified not-for-profit organizations under Exelon’s matching gift program or in honor of Board service. Exelon’s matching gift program provides up to $15,000 per year in contributions to match those made by directors. For Messrs. Steinour and Mies, who retired from the Board in 2020, the amounts shown reflects a one-time contribution made by the Exelon Foundation to charitable organizations selected by each in honor of their many years of service to Exelon. For Messrs. Shattuck and Young the amount shown under All Other Compensation includes $10,989 and $55,914 respectively which represents the aggregate incremental cost incurred by Exelon for their approved personal use of corporate aircraft in conformance with COVID related safety protocols implemented in 2020. The value of each flight, calculated in accordance with IRS regulations, was imputed to Mr. Shattuck and to Mr. Young as additional taxable compensation. No tax reimbursement was made to either of them with respect to this taxable compensation. |
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Audit Committee
Matters
PROPOSAL 2
Ratification of PricewaterhouseCoopers LLP as Exelon’s
Independent Auditor for 2021
The Audit Committee and the Board of Directors have determined that the retention of PricewaterhouseCoopers LLP (PwC) as the independent auditor remains in the best interests of the Company and its shareholders based on the Audit Committee’s level of satisfaction with the quality of services provided by PwC and consideration of factors described below.
PwC has served as the Company’s independent auditor since the Company’s formation in 2000. The Committee believes PwC’s deep familiarity with the Power and Utilities industry and Exelon’s businesses and operations, accounting policies and practices, and internal controls over financial reporting is valuable to the Company and its shareholders. Because of PwC’s familiarity, the firm has developed and implemented efficient and innovative audit processes, enabling the provision of services for fees considered by the Committee to be competitive.
 | |
| Proposal 2: Ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Auditor for 2018 |
| The Audit Committee and the Board of Directors have concluded that retaining PricewaterhouseCoopers LLP (PwC) is in the best interests of the Company and its shareholders based on consideration of the factors set forth in the Report of the Audit Committee on pages 42-43 of this proxy statement. Representatives of PwC will attend the annual meeting to answer questions and will have the opportunity to make a statement. |
| The Board recommends a vote “FOR” the ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Auditor for 2018.2021. |   | |
Evaluation of the Independent Auditor Fees
The Audit Committee regularly considers the independence, qualifications, compensation and performance of its independent auditor. In 2018, the Committee approved an evaluation framework developed by management to assist with the Committee’s annual assessment of the independent audit firm, which includes the solicitation of feedback from members of management and the Audit Committee. Results of the full assessment were provided to the Committee for its annual review and determination of whether to retain PwC as the Company’s independent auditor for 2021. Using the framework, the Audit Committee assessed the following table presentsfour areas in addition to a consideration of the firm’s independence.
Quality of the independent audit firm and audit process
| • | The number of restatements, material weaknesses and significant deficiencies to determine if any items should have been reasonably identified by the independent audit firm. |
| • | Results of the 2018 PCAOB Inspection report issued in April 2020. |
| • | The risk associated with the audit firm based on their financial stability, compliance with applicable laws and professional standards, pending litigation or judgments against the firm, and results of applicable firm inspections. |
Level of service provided by the independent audit firm
Results of annual satisfaction surveys distributed to the Committee and management with high interactions with the independent audit firm.
Alignment with Exelon’s core values
| • | Whether the audit firm’s onsite team demonstrates a commitment to diversity, equity, and inclusion (DE&I) aligned with Exelon’s core values. |
| • | Annual DE&I assessment of third-party finance vendors by management led to firm’s appointment to DE&I honor roll for 9th consecutive year. |
Good faith negotiation of fees for professional audit services rendered
| • | Robust biennial fee negotiations process. |
| • | Review of fees incurred for reasonableness against the annually approved fees and reported current fee estimates provided to the Committee quarterly. |
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AUDIT COMMITTEE MATTERS
Independence
In addition to the four assessment areas above, the Committee also engaged in an assessment of PwC’s independence controls through the provision of its required communications in addition to the independence demonstrated by PwC through forthright, candid and prompt communications in general, and on related independence matters, when needed.
Based on the results of its assessment, the Audit Committee found PwC to be independent from the Company and its management and appointed the firm as its independent auditor for 2021.
If shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection, but no assurance can be given that the Audit Committee will change the appointment. Representatives of PwC will participate in the annual meeting to answer questions and will have the opportunity to make a statement.
New Lead Engagement Partner
The Committee was directly involved in the consideration, and selection of a new lead engagement partner and oversaw the execution of a seamless transition to the new lead engagement partner, who assumed the role in January 2021.
Critical Audit Matters
In conformance with Public Company Accounting Oversight Board rules, the Committee reviewed and discussed with PwC three critical audit matters arising from the current period audit of Exelon’s financial statements. Critical audit matters (CAMs) are defined to be any matter arising from the audit of Exelon’s annualthe financial statements forthat was communicated or required to be communicated to the years ended December 31, 2017 and 2016, and fees billed for other services rendered by PwC during those periods.
| | Year Ended December 31, |
| (in thousands) | | 2017 | | 2016 |
| Audit fees(1) | | $ | 28,483 | | $ | 24,986 |
| Audit related fees(2) | | | 2,207 | | | 3,656 |
| Tax fees(3) | | | 1,205 | | | 1,943 |
| All other fees(4) | | | 379 | | | 836 |
(1) | Audit fees include financial statement audits and reviews under statutory or regulatory requirements and services that generally only the auditor reasonably can provide, including issuance of comfort letters and consents for debt and equity issuances and other attest services required by statute or regulation.
|
(2) | Audit related fees consist of assurance and related services that are traditionally performed by the auditor such as accounting assistance and due diligence in connection with proposed acquisitions or sales, consultations concerning financial accounting and reporting standards and audits of stand-alone financial statements or other assurance services not required by statute or regulation.
|
(3) | Tax fees consist of tax compliance, tax planning and tax advice and consulting services, including assistance and representation in connection with tax audits and appeals, tax advice related to proposed acquisitions or sales, employee benefit plans and requests for rulings or technical advice from taxing authorities.
|
(4) | All other fees primarily reflect accounting research software license costs.
|
Pre-approval Policies
The Exelon Audit Committee has aand that 1) relate to accounts or disclosures that are material to the financial statements and 2) involve especially challenging, subjective, or complex audit judgment. The Committee concurred with PwC’s assessment and identification of the CAMs contained in its Audit Report included within Exelon’s 2020 Annual Report on Form 10-K.
Fees Subject to Pre-approval Policy
Pursuant to the Audit Committee’s pre-approval policy, for pre-approval of audit and non-audit services. Under this policy, the Audit Committee pre-approves all audit and non-audit services to be provided by the independent auditor taking into account the nature, scope, and projected fees of each service as well as any potential implications for auditor independence. The policy specifically sets forth services that the independent auditor is prohibited from performing by applicable law or regulation. Further, the Audit Committee may prohibit other services that in its view may compromise, or appear to compromise, the independence and objectivity of the independent auditor. Predictable and recurring audit and permitted non-audit services are considered for pre-approval by the Audit Committee on an annual basis.
For any services not covered by these initial pre-approvals, the Audit Committee has delegated authority to the Audit Committee Chair to pre-approve any audit or permitted non-audit service with fees in amounts less than $500,000. Services with fees exceeding $500,000 require full Committee pre-approval. The Audit Committee receives quarterly reports on the actual services provided by and fees incurred with the independent auditor. No services were provided pursuant to the de minimis exception to the pre-approval requirements contained in the SEC’s rules.
Auditor Fees
The table presents fees for professional audit services rendered by PwC for the audit of Exelon’s annual financial statements for the years ended December 31, 2020 and 2019, and fees billed for other services rendered by PwC during those periods.
| | | | Year Ended December 31, |
| | | | | |
| (in thousands) | | | | 2020 | | | | 2019 | |
| Audit fees(1) | | | $ | 25,340 | | | | $26,604 | |
| Audit related fees(2) | | | | 926 | | | | 1,569 | |
| Tax fees(3) | | | | 790 | | | | 2,161 | |
| All other fees(4) | | | | 1,482 | | | | 738 | |
| Total: | | | $ | 28,538 | | | | $31,072 | |
| | | | | | | | | | |
| (1) | Audit fees include financial statement audits and reviews under statutory or regulatory requirements and services that generally only the auditor reasonably can provide, including SEC and FERC financial statement audits and reviews, review of documents filed with the SEC, issuance of comfort letters and consents for debt issuances and other attest services required by statute or regulation. |
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Audit Committee Matters AUDIT COMMITTEE MATTERS
| (2) | Audit related fees consist of assurance and related services that are traditionally performed by the principal auditor and are reasonably related to the performance of the audit or review of the financial statements, audits of stand-alone financial statements or other assurance services to comply with contractual requirements, financial accounting, or reporting and control consultations. |
| (3) | Tax fees consist of tax compliance, planning and advice services, including tax return preparation, refund claims, tax payment planning, assistance with tax audits and appeals, advice related to mergers and acquisitions and transactions, or requests for rulings or technical advice from tax authorities. |
| (4) | All other fees primarily reflect system implementation quality assurance services but also include fees incurred in connection with the receipt of an SEC subpoena requesting information related to the facts underlying the deferred prosecution agreement entered into by ComEd, and accounting research software license costs. |
Report of the Audit Committee
The Audit Committee’s primary responsibility is to assist the Board of Directors in fulfilling its responsibility to oversee and review the quality and integrity of the Company’s financial statements and internal controls over financial reporting, the independent auditor’s qualifications and independence, and the performance of the Company’s internal audit function and of its independent auditor.
The Audit Committee is composed entirely of independent Directors and satisfies the independence, financial experience and other qualification requirements of the New York Stock Exchange (NYSE) and applicable securities laws and regulations. The Board of Directors has determined that each of the members of the Audit Committee is an “audit committee financial expert” for purposes of the SEC’s rules and also that each of the members of the Audit Committee is independent as defined by the rules of the NYSE and Exelon’s Corporate Governance Principles.
Under its charter, the Audit Committee’s principal duties include:
● | Having sole authority to appoint, retain, or replace the independent auditor, subject to shareholder ratification, and to oversee the independence, compensation and performance of the independent auditor;
|
● | Reviewing financial reporting and accounting policies and practices;
|
● | Overseeing the work of the internal auditor and reviewing internal controls;
|
● | With the advice and assistance of the Finance and Risk Committee, reviewing in a general manner the processes by which Exelon assesses and manages enterprise risk; and
|
● | Reviewing policies and procedures with respect to internal audits of officers’ and Directors’ expenses, compliance with Exelon’s Code of Business Conduct, and the receipt and response to complaints regarding accounting, internal controls or auditing matters.
|
Each member of the Audit Committee also serves on the Finance and Risk Committee. On occasion, the Audit and Finance and Risk Committees meet jointly to review areas of mutual interest between the two Committees.
The Audit Committee meets outside the presence of management for portions of its meetings to hold separate discussions with the independent auditor, the internal auditors, and the General Counsel.
The Audit Committee met six times in 2017, fulfilling its duties and responsibilities as outlined in its charter, as well as receiving periodic updates on the Company’s financial performance and strategic initiatives, as well as other matters germane to its responsibilities.
Management has primary responsibility for preparing the Company’s financial statements and establishing effective internal controls over financial reporting. PricewaterhouseCoopers LLP (PwC), the Company’s independent auditor for the year ended December 31, 2020, is responsible for auditing those financial statements and expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal controls over financial reporting based on criteria established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission.
In this context, the
The Audit Committee has reviewed and discussed with management and PwC the Company’s audited financial statements contained infor the 2017 Annual Report on SEC Form 10-K,year ended December 31, 2020, including the critical accounting policies applied by the Company in the preparation of these financial statements.statements and PwC’s evaluation of the Company’s internal control over financial reporting. The Audit Committee has also discussed with PwC the requirements of the Public Company Accounting Oversight Board (PCAOB),matters required to be discussed pursuant to PCAOB standards and had the opportunity to ask PwC questions relating to such matters. These discussions included the quality, and not just the acceptability, of the accounting principles utilized, the reasonableness of significant accounting judgments, and the clarity of disclosures in the financial statements.
At each of its meetings in 2017,PwC has provided to the Audit Committee met with the Company’s Chief Financial Officer and other senior members of the Company’s financial management. The Audit Committee reviewed with PwC and the Company’s internal auditor the overall scope and plans for their respective audits in 2017. The Audit Committee also received regular updates from the Company’s internal auditor on internal controls and business risks and from the Company’s General Counsel on compliance and ethics issues.
The Audit Committee met with the internal auditor and PwC, with and without management present, to discuss their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. The Audit Committee also met with the Company’s General Counsel and Chief Compliance and Ethics Officer, with and without management present, to review and discuss compliance and ethics matters, including compliance with the Company’s Code of Business Conduct.
On an ongoing basis, the Audit Committee considers the independence, qualifications, compensation and performance of PwC. Such consideration includes reviewing the written disclosures and thePCAOB-required letter provided by PwC in accordance with applicable requirements of the PCAOB regarding PwC’sits communications with the Audit Committee concerning independence, and discussing with PwC their independence.
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Audit Committee Matters
The Audit Committee is responsible for the approval of audit fees, and the Committee reviewed and pre-approved all fees paid to PwC in 2017. The Audit Committee has adopted a policy for pre-approval of services to be performed bydiscussed the independent auditor. Further informationfirm’s independence with PwC.
In reliance on this policy and on the fees paid to PwC in 2017 and 2016 can be found in the section of this proxy statement titled “Ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Auditor for 2018.” The Audit Committee periodically reviews the level of fees approved for payment to PwC and the pre-approved non-audit services PwC has provided to the Company to ensure their compatibility with independence. The Audit Committee also monitors the Company’s hiring of former employees of PwC.
The Audit Committee monitors the performance of PwC’s lead partner responsible for the audit, oversees the required rotation of PwC’s lead audit partner and, through the Audit Committee Chair,these reviews and approves the selection of the lead audit partner. In addition, to help ensure auditor independence, the Audit Committee periodically considers whether there should be a rotation of the independent auditor.
PwC has served as the Company’s independent auditor since the Company’s formation in 2000. As in prior years, the Audit Committeediscussions and management engaged in a review of PwC in connection with the Audit Committee’s consideration of whether to recommend that shareholders ratify the selection of PwC as the Company’s independent auditor for 2018. In that review, the Audit Committee considered both the continued independence of PwC and whether retaining PwC is in the best interests of the Company and its shareholders. In addition to independence, other factorsinformation considered by the Audit Committee included:
● | PwC’s historical and recent overall performance on the audit, including the quality of the Audit Committee’s ongoing discussions with PwC;
|
● | PwC’s expertise and capability in handling the accounting, internal control, process and system risks and practices present in the Company’s utility and energy generation businesses, including relative to the corresponding expertise and capabilities of other audit firms; the quality, quantity and geographic location of PwC staff, and PwC’s ability to provide responsive service;
|
● | PwC’s tenure as the Company’s independent auditor and its familiarity with its operations and businesses, accounting policies and practices, and internal control over financial reporting;
|
● | the significant time commitment required to onboard and educate a new audit firm that could distract management’s focus on financial reporting and internal control;
|
● | the appropriateness of PwC’s fees, relative to the Company’s financial statement risk and the size and complexity of its business and related internal control environment, and compared to fees incurred by peer companies;
|
● | an assessment of PwC’s identification of its known significant legal risks and proceedings that may impair PwC’s ability to perform the audit; and
|
● | external information on audit quality and performance, including recent PCAOB reports on PwC and its peer firms.
|
The Audit Committee concluded that PwC is independent from the Company and its management, and has retained PwC as the Company’s independent auditor for 2018. The Audit Committee and the Board believe that the continued retention of PwC is in the best interests of the Company and its shareholders and have recommended that shareholders ratify the appointment of PwC as the Company’s independent auditor for 2018.
In addition, in reliance on the reviews and discussions referred to above,judgment, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in Exelon Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017,2020, for filing with the SEC.
THE AUDIT COMMITTEE
Anthony K. Anderson, Chair
Ann C. Berzin
Paul L. Joskow
Richard W. Mies
Stephen D. Steinour
Ann Berzin
Laurie Brlas
Paul Joskow
www.exeloncorp.com 4043Exelon 2021 Proxy Statement
Table of Contents
Executive
Compensation
PROPOSAL 3
Say-on-Pay: Advisory Vote on Executive Compensation
We provide shareholders with a say-on-pay vote every year at the annual meeting of shareholders. While the vote is non-binding, the Board and Compensation and Leadership Development Committee (referred to herein as the “Compensation Committee”) take the results of the vote into consideration when evaluating the executive compensation program. Accordingly, you may vote to approve or not approve the following advisory resolution on the compensation of the named executive officers at the 2021 annual meeting:
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 2021 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the 2020 Summary Compensation Table and the other related tables and disclosure.
| |
| Proposal 3: Say-on-Pay: Advisory Vote on Executive Compensation |
| We provide shareholders with a say-on-pay vote every year at the annual meeting of shareholders. While the vote is non-binding, the Board and Compensation and Leadership Development Committee (referred to as the “Compensation Committee” in the Executive Compensation and Compensation Discussion and Analysis sections) take the results of the vote into consideration when evaluating the executive compensation program. Accordingly, you may vote to approve or not approve the following advisory resolution on the executive compensation of the named executive officers at the 2018 annual meeting:
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 2018 Annual Meeting of Shareholders pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and the other related tables and disclosure.
The Board of Directors recommends a vote FOR this proposal for the following reasons:
●Most of compensation is performance-based and contingent on achieving financial and operational results that align the interests of executives with those of the Company’s shareholders based on rigorous goals,
●Exelon had strong financial and operational performance in 2017, achieving total shareholder return (TSR) of 15.1% that continued to build on the 2016 TSR of 32.8%.
●The Company achieved the adoption of Zero Emission Credits (ZEC) policies in the states of New York and Illinois, thereby helping to safeguard the fair valuation of resilient and emissions-free nuclear power production in those states.
●The Company’s compensation framework provides market-aligned pay opportunities that foster the attraction, motivation, engagement and retention of key talent, to drive outstanding Company performance and long-term shareholder value.
●We continued to engage with shareholders in 2017. The feedback received was positive and highly supportive of the changes we implemented in 2016 to strengthen our executive compensation program over the past two years. In particular, many investors commented favorably on the demonstrated linkage between pay and performance and the alignment of our incentive compensation goals with the Company’s overall business strategies.
|
| The Board of Directors unanimously recommends a vote “FOR” the approval of the compensation paid to the Company’s named executives, as disclosed in this proxy statement. |  | |
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Compensation Discussion
& Analysis
Executive Compensation Program
Executive Overview
This CD&A discusses Exelon’s 2020 compensation for our named executive officers comprising our CEO, CFO, and three other most highly compensated executive officers serving as of the end of 2020. These officers are referred to as our NEOs and are listed below.
| CHRISTOPHER | JOSEPH NIGRO | WILLIAM VON | CALVIN G. | KENNETH CORNEW |
| CRANE | Sr. Executive Vice | HOENE, JR. | BUTLER JR. | Sr. Executive Vice President |
| President and | President and | Sr. Executive Vice | Sr. Executive Vice | and Chief Commercial |
| Chief Executive | Chief Financial | President and Chief | President and CEO, | Officer; President and CEO, |
| Officer | Officer | Strategy Officer | Exelon Utilities | Exelon Generation |
Each of the above NEOs serve as executive officers of the Company as of the date of this Proxy Statement; however, as previously disclosed, Mr. Cornew and Mr. Von Hoene, Jr. will each depart the company as of March 31, 2021. Additional details about their separations are included on page 64.
2020 Company Performance Highlights
Despite the profound impact of COVID-19 pandemic on our customers, employees and communities, we delivered strong financial and operational performance in 2020.
Maintained industry leading operational excellence • All Utilities achieved best-ever scores in customer satisfaction • Each utility scored in the top decile for SAIFI with ComEd and PHI achieving best-ever performance • Each utility scored in the top quartile for CAIDI performance with ComEd achieving best-ever performance • Nuclear operations set second highest record capacity factor of 95.4% | | Met or exceeded our financial commitments • Delivered adjusted operating earnings* of $3.22 exceeding the mid-point of our original guidance range of $3.00 – $3.30 • Over $400M in cost savings helped mitigate impacts of COVID-19, weather, and storms • Invested over $6.6B at our utilities to replace aging infrastructure to improve reliability for customers • 2020 TSR of -3.94% and three-year TSR of 18.59% |
Executive Compensation Highlights
• The Compensation Committee made NO changes to the design, goals or targets under the annual or long-term incentive compensation programs after they were approved in February 2020. • Consistent with prior years, the Committee evaluated each earnings adjustment, both positive and negative, and approved 2020 performance results for the Annual Incentive Plan (AIP) of adjusted (non-GAAP) operating EPS* of $3.08, reduced from adjusted operating earnings* of $3.22 per share to reflect the exclusion of $0.14 of unrealized gain from equity investments. For 2020, adjusted EPS* also excluded certain COVID-19 related expenses (See Appendix A for more detail). | | 2020 Annual Incentive Plan payout: 101.21% 2018 – 2020 Performance Share Program payout: 63.65% |
* See Definitions of Non-GAAP measures in Appendix A at page 79.
For detailed information about our response to the COVID-19 pandemic, see page 9.
4244 Exelon 20182021 Proxy Statement
Table of Contents
Compensation Discussion COMPENSATION DISCUSSION & AnalysisANALYSIS
“Our Committee strives to design and implement an executive compensation framework that motivates and rewards Exelon executives to achieve superior performance for the benefit of our shareholders and other key stakeholders.”
Yves C. de Balmann, Chair,Alignment between Business Strategy & Compensation and Leadership Development Committee
This Compensation Discussion and Analysis (CD&A) discusses Exelon’s 2017 executive compensation program. The program covers compensation for our named executive officers (NEOs) listed below:
Exelon’s Named Executive Officers
CHRISTOPHER M. CRANE | JONATHAN W. THAYER | WILLIAM A. VON HOENE, JR. | KENNETH W. CORNEW | DENIS P. O’BRIEN |
President and Chief
Executive Officer, Exelon | Senior EVP and Chief
Financial Officer, Exelon | Senior EVP and Chief
Strategy Officer, Exelon | Senior EVP and Chief
Commercial Officer,
Exelon; President and
Chief Executive Officer,
Exelon Generation | Senior EVP, Exelon;
Chief Executive Officer,
Exelon Utilities |
Executive Summary
Business and Strategy Overview, Value Proposition, and Performance Highlights
Business Overview
Exelon is composed of two primary businesses:
| 1 | 2 |
| Regulated Utilities | Electric Generation |
We have regulated operations that consist of six utility subsidiaries, serving approximately 10 million electricity and gas customers, more than any other company in the industry. Our operational performance is top quartile or better across numerous metrics such as the frequency and duration of outages. We have significantly improved the operational performance of PHI since the 2016 acquisition consistent with our long-term strategy to increase investment in regulated assets for the benefit of our customers. | We also operate a competitive generation business that comprises one of the largest and cleanest electric generation businesses in the country and the largest competitive retail supply business serving wholesale, commercial, and industrial customers. We are the largest producer of emissions-free energy in the U.S. and are a best-in-class operator in terms of outage days and operating costs for our nuclear fleet. |
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Compensation Discussion & Analysis
Exelon’s Value Proposition
The value propositionas articulated below provides more granular insights intoin five strategic business objectives, reflect our long-term strategic goals and the path to achieving these goals. Our continued focus on the following five key strategic initiatives isthat are expected to drive strong operational and financial performance. The table below demonstrates the strong link between Exelon’s value propositionValue Proposition and the compensation components or metrics that are used in our executive compensation program.
2020 Strategic
Business Objective |  | Compensation
Component or Metric | | 2020 Performance Highlights |
1. | Regulated utility growth with utility
| | | | |
| 1 | Utility EPS rising 6-8% and rate base growth of 7.4%7.3% annually through 20212023 | ADJUSTED (NON-GAAP)OPERATING EPS* AIP Metric UTILITY NET INCOME LTIP Metric | 
| Adjusted (non-GAAP) • Operating EPS of $3.22 exceeded the mid-point of the original 2020 guidance with utilities contributing $2.02
●• Performance measure for annual incentiveBGE & PHI filed their first ever multi-year rate plans in Maryland; BGE’s plan was approved in December 2020
Utility Net Income
●Performance share award measure
|
2.2 | Support utility growth, debt reduction and the dividend | Strong free cash generationEXELON FFO/DEBT*
LTIP Metric | | • Achieved $400 million of savings across the organization to help offset the impacts of COVID-19, weather and maintaining a strong balance sheet to support utility growth while also reducing debt by $3storms • Together with previously announced cost savings, Exelon has demonstrated effective cost management, having achieved total savings of over $1.3 billion over the next 4 yearssince 2015 |
| Exelon FFO/Debt
●Performance share award measure
|
3.3 | Invest in utilities where we can earn an appropriate return | UTILITY EARNED ROE* LTIP Metric |
| Utility Return on Equity
●• Performance share award measureInvested approximately $6.6 billion at our electric and gas
companies to replace aging infrastructure and enhance reliability and resiliency for the benefit of customers |
4.4 | Superior operational performance to support achievement of financial objectives |
| Operational Metrics
●Outage duration (CAIDI),outage frequency net(SAIFI),nuclear fleetwide capacityfactor and dispatch match areperformance measures for the annual incentiveAIP
| | • All Utilities achieved first quartile operating performance in outage duration and frequency. Customer service remains at top quartile across all utilities with BGE, ComEd and PECO delivering service in top decile • Exelon’s nuclear owned and operated fleet achieved a second-highest ever capacity factor of 95.4%** |
5.5 | Create sustainable value for shareholders by executing business strategy |
| RelativeRELATIVE TSR
●Modifier for performance sharePerformanceShare award for LTIP
| | • Selected 10 start-ups as part of the first round of $20 million Climate Change Investment Initiatives (2c2i), 50% are minority- or women-owned, 60% of the projects focus on greenhouse gas mitigation and the others focus on resiliency and adapting to the changing climate environment • On track to meet operations-driven GHG emission reduction goal to further our best-in-class operator status and support sustainable long-term value creation |
Overview
* See Definitions of 2017 Key Achievements on ObjectivesNon-GAAP measures in Appendix A at page 79.
Reported below are** Excludes EDF’s equity ownership share of the achievements attained on our long-term strategic goals.CENG joint venture.
Strong Financial and Operational Performance
Shareholder Engagement
Strategic Business Objective
The Compensation Committee regularly reviews executive compensation, taking into consideration input received through Exelon’s regular and ongoing engagement with investors. Feedback is solicited throughout the year in connection with the annual meeting of shareholders and the Compensation Committee’s review of the executive compensation program. | 3-Year Average | 2017 ResultsSay-on-Pay Support
|
1. | Regulated utility growth with utility EPS rising 6-8% and rate base growth of 7.4% annually through 2021
|
| ●Completed 11 distribution and 6 transmission rate cases with regulatory authorities, increasing annual revenue and rate base by an expected combined $396 million
|
2. | Strong free cash generation and maintaining a strong balance sheet to support utility growth while also reducing debt by $3 billion over the next 4 years
|
| ●Deployed targeted level of capital of $5.3 billion into our utilities to improve reliability, replace aging infrastructure, and enhance customer experience
|
3. | Invest in utilities where we can earn an appropriate return
|
|
4. | Superior operational performance to support achievement of financial objectives
|
| ●Utilities performed largely at first quartile levels with especially strong results across key metrics:
●BGE, ComEd and PECO achieved 1stdecile performance in the System Average Interruption Frequency Index (SAIFI)
●BGE and ComEd achieved 1stdecile performance in the Customer Average Interruption Duration Index (CAIDI)
●PHI achieved best ever performance on SAIFI and CAIDI
|
5. | Create sustainable value for shareholders by executing business strategy
|
| ●Achieved 2017 adjusted (non-GAAP) operating EPS of $2.60
●Results would have been $2.73 absent the deferral of 9 cents in Illinois zero emissions credits (ZEC) revenues given the Illinois Power Agency’s decision to delay the ZEC procurement by one month, into 2018, and a 4 cent impairment due to an unexpected FERC decision regarding utility transmission formula rate mechanisms
●Achieved significant judicial success in defending ZEC programs in New York and Illinois
●Announced commitment to lower costs by $250 million on an annual run-rate basis by 2020
|
46
As discussed on page 26, during 2020, Exelon 2018 Proxy Statementengaged with a significant cross-section of our shareholder base, representing approximately 30% of Exelon’s outstanding shares. The Chairs of Exelon’s Compensation and Governance Committees participated in select investor discussions in 2020. Feedback from all discussions was shared with the appropriate Board Committee and/or the full Board.
Shareholders in general expressed their approval of the ongoing executive compensation program and did not request any significant changes during our engagement conversations. One suggestion received was to consider the addition of a human capital management or diversity metric. In response, senior leadership and the Compensation Committee are currently exploring the feasibility of including a diversity, equity, and inclusion (DE&I) set of performance metrics to be linked to the AIP for executive officers in the 2022 annual incentive program. Based on feedback received, investors remain supportive overall of Exelon’s executive compensation program and design as demonstrated by our 2020 say-on-pay vote result of 93.2%.
www.exeloncorp.com 43
Table of Contents
Compensation Discussion COMPENSATION DISCUSSION & Analysis
Sustainable Business Practices
Exelon’s sustainability practices – including our environmental and social initiatives – are a fundamental component of our strategy and operations. We achieved significant progress against our objectives in 2017, including:
● | Expanded paid leave policy to allow both women and men to meet the dual demands of work and family;
|
● | Signed the White House Equal Pay Pledge affirming our commitment to uphold fair treatment for all of our employees and aligning with our values;
|
● | Increased diversity spending with suppliers by $432 million (a 29% increase from the prior year) demonstrating our strong commitment to diversity and inclusion initiatives;
|
● | 2017 awards and recognitions include: Billion Dollar Roundtable, Civic 50, Top 50 Companies for Diversity, Best Places to Work in 2017, CEO Action for Diversity & Inclusion, and UN’s HeForShe;
|
● | Exelon and our employees set a new record in corporate philanthropy and volunteerism, committing over $52 million in giving and volunteering 210,000 hours;
|
● | Recognized as having the lowest carbon dioxide emissions of the top 20 investor owned utilities; and
|
● | Named to the Dow Jones Sustainability Index North America for the 12thconsecutive year and by Newsweek Green rankings for 9thconsecutive year.
|
Executive Compensation Program Highlights
What We Do
| | What We Don’t Do
|
✓Pay for performance – 90% of CEO pay and an average of 81% of NEO pay is at risk
✓Significant stock ownership requirements for Directors and executive officers – 6X base salary for CEO and 3X for other NEOs
✓Mitigate undue risk in compensation programs (e.g., incentive awards are capped) and conduct an annual risk assessment of the compensation programs
✓Require double-trigger for change-in-control benefits – change-in-control plus termination
✓Retain an independent compensation consultant to advise the Compensation Committee
✓Evaluate management succession and leadership development efforts annually
✓Provide limited perquisites based on sound business rationale
| ✓Seek shareholder feedback on executive compensation programs, engaged with holders of approximately 45% of our shares in 2017
✓Prohibit hedging transactions, short sales, derivative transactions or pledging of Company stock
✓Require executive officers to trade through 10b5-1 trading plans or obtain pre-approval before trading Exelon stock
✓Annually assess our programs against peer companies and best practices
✓Set appropriate levels of “stretch” in incentive targets, based on industry performance and/or Exelon’s business plan
✓Provide for discretionary clawbacks of incentive compensation paid or payable to current and former executives under certain circumstances
| | ✕No guaranteed minimum payout of AIP or LTIP programs
✕No employment agreements
✕No excise tax gross-ups for change-in-control agreements
✕No dividend-equivalents on PShares
✕No inclusion of the value of LTIP awards in pension or severance calculations
✕No additional credited service under supplemental pension plans since 2004
✕No option re-pricing or buyouts
|
www.exeloncorp.com 47
Table of ContentsANALYSIS
Compensation Discussion & Analysis
2017 CEO Pay Outcomes
Strong CEO Pay for Performance Alignment Closely Aligned to Total Shareholder Return (TSR)
● | Exelon’s TSR of 52.9% for the period January 1, 2016 through December 29, 2017 outperformed the PHLX Utility Sector Index (UTY) by 20.7 percentage points.
|
● | Chart provides a comparison of the CEO total compensation as shown in the Summary Compensation Tables of Exelon’s annual proxy statements to Exelon’s stock price over a five-year period beginning December 31, 2012.
|
● | CEO pay decreased at an annualized rate of 2.9%, from $17.2 million to $14.9 million, while Exelon’s stock price increased from $29.74 to $39.41 resulting in an annualized rate of increase for TSR of 10.6%.
|
Continued TSR Outperformance Relative to UTY in 2017
● | Building on Exelon’s 2016 TSR of 32.8%, we continued to deliver strong TSR performance of 15.1% in 2017, outperforming the UTY by 2.3 percentage points.
|
● | For the three-year period beginning in 2015, Exelon trailed the UTY index, dragged down by a negative 22.1% TSR for 2015.
|
ONE- AND THREE-YEAR TSR GROWTH
CEO
|
 |
|
NEOs
|
 |
Almost 78% of our CEO’s target total direct compensation is in the form of LTIP, which is nearly 6 percentage points higher than the average CEO in our peer group. |
48 Exelon 2018 Proxy Statement
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Compensation Discussion & Analysis
Goal Rigor
The 2017 EPS “Target” goal was set at $2.75, 7 cents above the 2016 actual results and 10 cents above the midpoint of our publicly disclosed 2017 earnings guidance range. 2017 operational metrics were set at challenging levels that corresponded to top quartile performance compared to industry standards.
Building on the 2017 goal rigor, the Compensation Committee set the adjusted (non-GAAP) operating EPS AIP target for 2018 at a level significantly higher than the Company’s actual performance in 2017, which is generally aligned with the midpoint of our publicly disclosed 2018 financial guidance. For 2018, maximum targets were set at levels that outperform Company historical metrics for three of the four operational metrics:
● | best-ever for Dispatch Match
|
● | best-ever for Nuclear FleetwideCapacity Factor
|
● | best-ever for outage frequency results (best-in-class)
|
● | first decile of industry standards for outage duration goals
|
Compensation Philosophy and Practices
Exelon’s Executive Compensation Program PhilosophyObjectives
The goal of our executive compensation program is to retain and reward leaders who create long-term value for our shareholders by delivering on objectives that support the Company’s Value Proposition and strategic business objectives as described above.
The Compensation Committee strives to set challenging performance targets that drive and motivate executives to achieve long-term strategic plan.success, shareholder value, and to help ensure key talent is retained. The Committee selects performance metrics that are tied to the Company’s financial strategies and are proven measures of long-term value creation. Financial targets are based on our internal business plans and external market factors. Our executive compensation program is constructed to attract, motivate, engage and retain the high quality leaders who can effectively manage a company of Exelon’s size and complexity.
In designing the Company’s executive compensation program, the Compensation Committee striveshas been designed to align the incentives of our NEOsleaders with the interests of our shareholders. This is accomplished byshareholders using metrics and adopting goals directly linked to the Company’s strategy. We believe consistent executionstrategy and performance.
Each element of our strategy over multi-year periods will drive long-term shareholder value creation. Moreover our programtotal direct compensation is structured to motivate measured but sustainablebased on market data, the executive’s competencies and appropriate risk-taking.skills, scope of responsibilities, experience and performance, retention, succession planning and organizational structure of the businesses.
Robust Goal Setting Process
Goal-setting process is competitive and well-defined
| | ●The Compensation Committee annually reviews components, targets and payouts to ensure that they are challenging, contain appropriate stretch, and are designed to mitigate excessive risk
●The Committee considers short- and long-term financial and operational results relative to our internal goals
●Goals for the AIP, including Adjusted Operating EPS, are set in January
●Exelon provides full-year guidance for EPS and other key financial metrics around the same time
|
| | |
Target levels are challenging to achieve and drive long-term growth and success
| | ●EPS metric is aligned generally with external financial guidance
●Target goals are generally set near the mid-point of Exelon’s full-year EPS guidance
●Distinguished goals are generally set above Exelon’s full-year EPS guidance
●Operational metrics are set at challenging levels (i.e., target typically corresponds to top quartile performance) compared to industry standards
●Return and cash flow metrics are set based on internal business plan
|
www.exeloncorp.com 49
Table of Contents
Compensation Discussion & AnalysisObjectives
Guiding Principles
The following principles guide and inform the Compensation Committee’s efforts to deliver a highly effective executive compensation program that drives shareholder value, operational performance, and fosters the attraction, motivation, of key talent.
Manage for the Long-term1
The Board manages for the long-term and makes pay decisions that are in the best long-term interests of the Company and shareholders.
| | Alignment with Shareholders Compensation is directly linked to performance and is aligned with shareholders by having a majorityapproximately 82% of NEO pay at risk in both short- andshort-and long-term incentives. |
| | |
| 2 | Manage for the Long-Term The Board oversees management in alignment with the long-term interests of the Company and its shareholders. Our compensation program supports the execution of Exelon’s Value Proposition over multi-year periods to drive the success of our long-term strategy. |
| |
| 3 | Market Competitive Our NEOs’ pay levels are set by taking into consideration multiple factors including the size and complexity of Exelon’s business, peer group market data, internal equity comparisons, experience, succession planning, performance and retention. |
| |
| 4 | Extensive Shareholder Engagement We engage directly with shareholders and take responsive actions to improve our compensation programs based on year-round feedback from shareholders.feedback. |
| | | | | |
Market Competitive5
Our NEOs’ pay levels are set by taking into consideration multiple factors, including peer group market data, internal equity comparisons, experience, succession planning, performance and retention.
| | Stock Ownership Guidelines Executives are required to meet and maintain significant stock ownership requirements.guidelines. Since 2016, our CEO’s requirement is 6XCEO has been required to own 6x of his base salary, while other NEOs are 3Xrequired to own 3x of their base salary. All NEOs own at least 200% of their required stock ownership guidelines. See page 55 for details. |
| |
| 6 | Balance The portion of NEO pay at risk rewards the appropriate balance of short- andshort-and long-term financial and strategic business results. The compensation program is structured to motivate measured, but sustainable and appropriate, risk-taking. |
Compensation Decisions - Roles of Board, Compensation Committee and
CEO
● | CEO compensation decisions are made by the independent members of the Board, based on recommendation of the Compensation Committee.
|
● | Other NEO compensation decisions are made by the Compensation Committee, based on several factors including input from the CEO and the independent compensation consultant.
|
Setting Target Total Direct Compensation (TDC) Pay for the CEO…Performance Alignment
One of the Compensation Committee’s most important responsibilities is to recommend the CEO’s compensation to the independent Directors of the Board. The Compensation Committee fulfills this responsibility by analyzing peer group compensation and performance data with its independent compensation consultant. The Committee also reviews the various elements of the CEO’s compensation in the context of the target TDC which includes base salary, annual and long-term incentive target opportunities.
…and for Our NEOs
The Compensation Committee uses a varietyand Board approved the following compensation for the CEO. Consistent with prior years, 78% of data to gauge market competitiveness, includingthe CEO’s total target direct compensation for 2020 was in the form of long-term incentives, which is nearly 5 percentage points more than the average in our benchmarking peer group dataconsisting of general industry and regression analysis. TDC can vary based on competencies and skills, scopeenergy services companies.
 | 2020 Base Salary Base salary was unchanged at $1,293,000. 2020 AIP Award Payout and Target Adjustment AIP target was held flat at 145% of salary; payout for 2020 performance results was above target at 101.21%. 2018-2020 Performance Share Payout Three-year performance, inclusive of the TSR modifier was below target at 63.65%. |
Over the last three years, CEO pay as reflected in the Summary Compensation Table decreased at an annualized rate of responsibilities, the executive’s experience and performance, retention, succession planning and the organizational structure1.0% from $15.6 million to $15.2 million, while Exelon’s TSR increased at an annualized rate of the businesses (e.g., internal alignment and reporting relationships)5.8%.
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Compensation Discussion COMPENSATION DISCUSSION & Analysis
Peer Groups Used for Benchmarking Executive Compensation
We use a blended peer group for assessing our executive compensation program that consists of two sub-groups: energy services peers and general industry peers. We use a blended peer group because (1) there are not enough energy services peers with size, scale and complexity comparable to Exelon to create a robust energy services-only peer group, and (2) Exelon’s market for attracting talent includes general industry peers, with recent key executives hired from companies such as Johnson & Johnson and Proctor & Gamble. When selecting general industry peers, we look for capital asset-intensive companies with size, scale and complexity similar to Exelon, and we also consider the extent to which they may be subject to the effects of volatile commodity prices similar to Exelon’s sensitivity to commodity price volatility. Exelon’s revenues are at the 85thpercentile of the following blended peer group comprising 20 companies.
● | Energy Services– Beginning in 2017, we included the following 11 energy services companies in our peer group even though seven of these companies had 2016 revenues that were less than half of Exelon's revenues: |
| American Electric
Power Company, Inc. | Dominion
Energy, Inc. | Duke Energy
Corporation | Edison
International | Entergy
Corporation |
| FirstEnergy
Corporation | NextEra
Energy, Inc. | PG&E Corporation | Public Service
Enterprise Group Inc. | Sempra Energy |
| The Southern
Company | | | | |
● | General Industry– Beginning in 2017, we included the following general industry peers in our peer group: |
| 3M
Company | Deere & Company | DowDuPont | General Dynamics
Corporation | Honeywell
International Inc. |
| International
Paper
Company | Marathon
Petroleum
Company | Northrop
Grumman
Corporation | Valero Energy
Corporation | |
In 2017, a change was made to our general industry peer sub-group. Alcoa, Hess, and Johnson Controls were removed due to corporate transactions that significantly altered their comparability to Exelon. These companies were replaced with Marathon Petroleum and Valero Energy Corporation in the general industry peer group and Sempra Energy in the energy services peer group, which the Compensation Committee deemed to better reflect the overall composition and profile of the peer group.
To account for differences in the size of the compensation peer group companies, market data is statistically adjusted using a regression analysis by the Committee’s independent consultant allowing for a comparison of the compensation levels to similarly-sized companies. Each element of our NEOs’ compensation is then targeted to the median of the peer group. To the extent an NEO’s total compensation exceeds the peer group median, it is due to outstanding performance, critical skills, experience and tenure. If an NEO’s compensation is below the median, it is generally due to underperformance against relevant metrics or reflective of an individual who is newer in his or her role.
How the Peer Group is used
● | As an input in developing compensation targets and pay mix |
● | To assess the competitiveness of compensation and benefit programs |
● | Benchmarks for incentive program design |
● | Benchmarks for stock ownership guidelines |
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Table of ContentsANALYSIS
Compensation Discussion & Analysis
2017 Say-on-Pay Vote Outcome and Shareholder Engagement
The Compensation Committee regularly reviews executive compensation, taking into consideration the input received through Exelon’s robust engagement program with its investors. Feedback is typically solicited throughout the year in connection with the annual meeting of shareholders and the Compensation Committee’s review of the executive compensation program.
During 2017, Exelon contacted the holders of nearly 50% of our outstanding shares, representing almost two-thirds of the Company’s institutional investors. We engaged with portfolio managers and governance professionals from a significant cross-section of our shareholder base, representing approximately 45% of Exelon’s outstanding shares. Mr. Yves de Balmann, Chair of the Compensation Committee, participated in most of the discussions held with shareholders, and feedback received was shared with the Compensation Committee, the Corporate Governance Committee, and the Board.
Feedback received in 2017 indicated that investors remain supportive of the extensive changes made to the executive compensation program in 2016. This support was reflected in our 2017 say-on-pay vote results. At the Company’s annual meeting of shareholders held in April 2017, approximately 86% of the votes cast on the Company’s say-on-pay proposal voted in favor of the proposal (up from approximately 38% in 2016). No additional substantive changes were made to the executive compensation program as a result of this feedback.
Actions Implemented in 2016 Demonstrate Responsiveness to Shareholders
Annual Incentive Plan (AIP) | | Long-Term Incentive Plan (LTIP) |
✓Capped future payouts at target if absolute TSR is negative for 12 months
✓Moved operational metrics to AIP from PShare metrics to eliminate duplicate metrics used in LTIP
✓Eliminated the individual performance multiplier component
| | ✓Changed PShare performance periods from annual to three-year periods to align with long-term strategic goals and initiatives and shareholder interests
✓Moved EPS and operational metrics from LTIP to AIP to parallel market practices and eliminate duplicate metrics used in annual and long-term plans; adopted new PShare financial and credit metrics connected with goal to support and drive utility performance
✓Amended TSR modifier to compare to UTY market index to more closely correspond with shareholder return experience, and capped payouts at target where TSR is negative for the final 12 months of the measurement period
|
52 Exelon 2018 Proxy Statement
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Compensation Discussion & Analysis
Compensation Decisions and Rationale
20172020 Compensation Program Structure
The
In keeping with Exelon’s executive compensation philosophy and objectives, the Compensation Committee designed Exelon’s 20172020 compensation program to motivate and reward leaders who create long-term value for our shareholders. The primary compensation elements includebe composed of fixed and variable components that include:elements summarized below.
Pay
Element | | Form | Performance | PurposeShareholder Alignment: |
Salary | Cash |  | Merit Based | ●• Provides portion ofFixed income stability at competitive, market-based levels attracts and retains top talent.
|
Annual
Incentive
Plan | Cash | | ●•1 Year
●Adjusted (non-GAAP) Operating EPS(1) (70%)
• Operational Goals(30%)
• Outage Duration • Outage Frequency Net • Nuclear Fleetwide
Capacity Factor(2) • Dispatch Match ●TSR Cap if negative 1-year absolute TSR
| ●• Motivates executives to achieve key annual financial and operational objectives using adjusted (non-GAAP) operating EPSEPS* and operational goals that reflect our commitment to become theremain a leading diversified energy provider
●Aligns with shareholder interests by capping payouts at target if 1-year absolute TSR is negative
|
Long-Term
Incentive
Plan | Performance
Shares
(67%of LTIP) | Cumulative
Performance | 2017-2019
Scorecard | (Cumulative Performance over 3-year cycle) 2020 – 2022 Scorecard: ●• Utility Earned ROE(1) (33.3%(33.3%)
●• Utility Net Income (33.3%(33.3%)
●• Exelon FFO/Debt(1) (33.4%(33.4%)
Subject to TSR Cap & TSR Modifier | ●• Drives executive focus on long-term goals supporting utility growth, financial results, and capital stewardship
• Rewards relative achievement of financial goals and stock price compared to drive behavior and align with shareholder interestsutility peers (UTY) over three-year period (TSR Modifier) ●• Includes relative comparison of TSR to market index and caps payout at targetPayouts capped if absolute TSR is negative to further align with shareholder interestsfor the last 36 months of the performance cycle (TSR Cap)
|
2017-2019
Modifier | ●Point- for-point relative TSR Modifier (3-year period)
●TSR Cap if negative 1-year absolute TSR
|
Restricted Stock
(33%of LTIP) | Vest One-Third Per Year Over 3 Yearsone-third per year over three years | • Balances LTI portfolio providing executive with market competitive time-based award |
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Table of Contents
Compensation Discussion & Analysis
2017 Target Compensation
The table below lists the target value of the compensation elements for each NEO as of December 31, 2017.
| | Cash Compensation | | Long-Term Incentives | | Target Total
Direct
Compensation |
| Name | | Base | | AIP
Target | | Target
Total Cash | | RSUs
33% of LTIP | | PShares
67% of LTIP | | Target Total
LTIP | |
| Crane | | $1,261,000 | | 130% | | $2,900,300 | | $3,332,901 | | $6,766,799 | | $10,099,700 | | $13,000,000 |
| Thayer | | 807,900 | | 95% | | 1,575,405 | | 891,526 | | 1,810,069 | | 2,701,595 | | 4,277,000 |
| Von Hoene, Jr. | | 886,600 | | 100% | | 1,773,200 | | 963,864 | | 1,956,936 | | 2,920,800 | | 4,694,000 |
| Cornew | | 883,600 | | 100% | | 1,767,200 | | 963,204 | | 1,955,596 | | 2,918,800 | | 4,686,000 |
| O’Brien | | 824,700 | | 95% | | 1,608,165 | | 815,376 | | 1,655,459 | | 2,470,835 | | 4,079,000 |
Total Cash Compensation (Base Salary and Annual Incentive Program)
2017 Base Salary Review and Adjustments
Base salaries for our NEOs are set by the Compensation Committee and adjusted following an annual market assessment of peer group compensation. Base salaries may be adjusted (1) as part of the annual merit review or (2) based on a promotion or significant change in job scope. The Compensation Committee considers the results of the annual market assessment in addition to the following factors when contemplating a merit review: individual performance, scope of responsibility, leadership skills and values, current compensation, internal equity, and legacy matters.
In January 2017, the Compensation Committee approved a 2.5% increase in base salary for each NEO (excluding the CEO) effective March 1, 2017, as part of its annual merit review.
2017 Annual Incentive Program (AIP) Award Determinations
In prior years, the AIP process included the application of an individual performance multiplier to the final award determination. Some shareholders voiced concern about the use of the discretionary individual performance multiplier, so this multiplier was removed in 2016 for AIP payout determinations made in 2017.
Accordingly, for 2017 the Compensation Committee used the following process to determine 2017 AIP awards for each NEO:
Step
1(1) | See Definitions of Non-GAAP measures in Appendix A at page 79. |  | Step
2 | | | Step
3 | | | Step
4
|
| | |
| (2) | | | | |
Set AIP Target | Determine Performance Factor | Determine Negative TSR Cap | Apply Final Multiplier |
●Expressed as percentage of base salary, as of 12/31/17
●CEO annual incentive target of 130%
●Other NEO annual incentive targets range from 95% to 100%
| ●Based on 70% adjusted (non-GAAP) operating EPS and 30% operational metrics
| ●If Exelon’s absolute TSR for the year is negative, AIP payout will be capped at target (100%)
| ●Multiply the target award by the lesser of (i) the performance factor or (ii) the negative TSR cap if applicable
●Award can range from 0% to 200% of target (target of 100%)
|
54 Exelon 2018 Proxy Statement
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Compensation Discussion & Analysis
2017 Performance.The following table includes the threshold, target, and distinguished or maximum performance goals and results achieved under the 2017 annual incentive plan (AIP).
| Goals | | Threshold | | Target | | Distinguished | | Weighting | | Weighted
Payout as a
% of Target |
| Financial (70%) | | | | | | | | | | |
Adjusted (non-GAAP)
Operating Earnings Per Share (EPS)* | | | | 70% | | 42.37% |
| Operational (30%) | | | | | | | | | | |
Outage Duration (CAIDI)
Calculated as the total number of customer interruption minutes divided by the total number of customer interruptions | |  | | 7.5% | | 12.86% |
Outage Frequency (SAIFI)
Calculated as the total number of customer interruptions divided by the total number of customers served | |  | | 7.5% | | 15.00% |
Net Fleetwide Capacity Factor
The weighted average of the capacity factor of all Exelon nuclear units, calculated as the sum of net generation in megawatt hours divided by the sum of the hourly annual mean net megawatt rating, multiplied by the number of hours in a period** | |  | | 7.5% | | 11.49% |
Dispatch Match
Measure the responsiveness of a fossil generating unit to the market | |  | | 7.5% | | 15.00% |
| Formulaic Performance Calculation | | | | | | | | | | 96.72% |
* | Refer to Appendix at A-1 for our rationale for using a reconciliation of adjusted (non-GAAP) operating earnings per share to GAAP earnings per share. |
** | Starting in 2017 we introduced a cappingCapping feature on NetNuclear Fleetwide Capacity Factor to accountmetric adjusts for the lower spot pricing for energy and to ensureensures that this metric is self-funding. For every incremental dollar the Company makes after achieving target performance, participants receive half. |
Performance Considerations.
Base Salary
When evaluating whether to make any adjustments, the Compensation Committee considers a number of factors including the outcome of the annual merit review, results of the annual market assessment of NEO and CEO compensation provided by the Committee’s independent compensation consultant, the need to retain an experienced team, job promotion, individual performance, scope of responsibility, leadership skills and values, current compensation, internal equity, and legacy matters.
NEOs. The AIP payout was calculated at 96.72%Compensation Committee sets base salaries for each NEO, which may be adjusted following an annual review. Base salary adjustments are effective as of target,March 1 each year. In January 2020 as part of its annual review, the Compensation Committee approved a 2.5% increase in base salary in line with prior years for each NEO except for Mr. Butler Jr., who received a larger increase in connection with his promotion in December 2019. All promotion-related adjustments were based on market data for Mr. Butler Jr.’s role.
CEO. For the CEO’s compensation, the Compensation Committee makes recommendations which are reviewed and approved by the independent directors of the Board. In January 2020, the Compensation Committee recommended Mr. Crane’s base salary be held flat based on the following performance outcomes:annual market assessment conducted by the independent compensation consultant, Meridian Partners.
| | | Base Salary as of | | | Base Salary as of | |
| NEO | | March 1, 2019 | | | March 1, 2020 | |
| Crane | | $1,293,000 | | | $1,293,000 | |
| Nigro | | 794,375 | | | 814,234 | |
| Cornew | | 928,332 | | | 951,541 | |
| Von Hoene, Jr | | 931,484 | | | 954,771 | |
| Butler Jr. | | 553,280 | | | 700,000 | |
| | | | | | | |
www.exeloncorp.com 45
● | achieved outstanding operational performance on the four metrics, including best-in-class performance for Nuclear Fleetwide Capacity Factor and best-ever SAIFI performance; |
● | had an absolute TSR of 15.1%, outperforming the UTY; and |
● | delivered solid financial performance on operating EPS at $2.60, which would have been $2.69 if the 2017 ZEC credits revenue recognition was not postponed to 2018 as explained on page 46. |
In determining the final payout for all NEOs (including the CEO), the Compensation Committee and Board concluded that this was the appropriate payout to reflect overall financial and operational performance. Furthermore, the Committee and Board decided to not adjust 2017 performance for the loss of 9 cents attributable to ZEC credits that were carried forward to 2018, even though those credits were included in the 2017 target of $2.75. This 2017 target was 7 cents above the 2016 actual operating EPS.
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Table of Contents
Compensation Discussion COMPENSATION DISCUSSION & AnalysisANALYSIS
Annual Incentive Program (AIP)
AIP Overview
The following table shows howAIP is an annual cash incentive program that provides the formula was applied and the actual amounts awarded. The Compensation Committee made no changesopportunity to the NEOs targets for AIP.
| NEO | | AIP Target | | Formulaic
Performance
Factor | | Actual
Award |
| Crane | | $1,639,300 | | 96.72% | | $1,585,531 |
| Thayer | | 767,505 | | 96.72% | | 742,331 |
| Von Hoene, Jr. | | 886,600 | | 96.72% | | 857,520 |
| Cornew | | 883,600 | | 96.72% | | 854,618 |
| O’Brien | | 783,465 | | 96.72% | | 757,767 |
2017 Long-Term Incentive Program (LTIP)
The Compensation Committee annually grants equity incentive awards at its meeting in January. On January 30, 2017, the Compensation Committee approved awards of restricted stock units (RSUs) and performance shares (PShares) shown in detail in the Grants of Plan-Based Awards table on page 65.
Restricted Stock Units.RSUs vest ratably over three years. Dividend equivalents with respect to RSUs are reinvested as additional RSUs, subject to the same vesting conditions as the underlying RSUs.
Performance Share Units.A target number of PShares is granted, the earning of which is contingent on performance for the subsequent three-years. Performance measures for the currently open cycles are summarized in the tables below. In addition to these financial measures, any earnedreceive an annual cash award is subject to a total shareholder return modifier to compensate for relative performance achieved against the performance of the UTY index. See page 53 for the rationale behind the selection of the performance goals used for PShares.
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Compensation Discussion & Analysis
Performance Share (PShare) Award Determinations
In prior years, the PShare determination process included the application of an individual performance multiplier to the final award determination. Some shareholders voiced concern about the use of the discretionary individual performance multiplier, so this multiplier was not applied to PShare payout determinations made in 2017.
Accordingly, the Compensation Committee uses the following process to determine PShare targets and awards:
| Step | | Step | | Step | | Step | | Step |
| 1 |
|  | | 2 |
| | | 3 |
| | | 4 |
| | | 5 | | |
| | | | | | | | |
Establish PShare Target
Target set in January of the first year of the performance cycle | | Determine Performance Multiplier
Based on performance achieved over the cyclePerformance can range from 0% to 150% of target (target of 100%) | | Determine TSR Modifier
Subtract the performance of the UTY from Exelon’s absolute TSR performance over the three-year performance period (e.g., 2017-2019) | | Calculate Final Multiplier
Multiply the performance multiplier by (1 + the TSR multiplier)If Exelon’s absolute TSR for the final 12 months of the measurement period is negative, PShare payout will be capped at target | | Apply Final Multiplier
Apply the final multiplier to determine the number of shares issuedAward can range from 0% to 200% of target (target of 100%) after application of the TSR modifier |
2015-2017 PShare Program Payout Determination
The Compensation Committee approved a payout of 111.25%, based on the average performanceachievement of 117.03%predetermined financial and operational goals. The metrics used for the 2015, 2016 and 2017 scorecards and a TSR modifier of negative 4.94% based on 2015-2017 TSR performance. The 2015, 2016 and 2017 scorecards are presented in the Appendix at A-2; the 2017 award payout calculation is presented below:2020 AIP program included:
| Year | | Scorecard
Performance | | Average
Performance | | TSR
Modifier | | Overall
Award Payout |
| 2015 | | 122.48% | | | | | | |
| 2016 | | 125.00% | | 117.03% | | -4.94% | | 111.25%* |
| 2017 | | 103.61% | | | | | | |
2015-2017 TSR Modifier and Cap Determination
 | | To address shareholder concerns received
| | | | What it is | | Why it is Important |
 | | Adjusted (non-GAAP) Operating EPS* | |  | | The Company’s net income from ongoing business activities divided by average shares outstanding during the year and adjusted to exclude certain costs, expenses, gains and losses, and other specified items. | | Supports commitment to provide solid returns to our shareholders and to support and grow our dividend. |
 | | Outage Duration (CAIDI) | |  | | Measure of the total number of customer interruption minutes divided by the total number of customers served. | | Providing reliable power and quickly responding to interruptions is essential to operations and customer satisfaction. |
| Outage Frequency (SAIFI) | |  | | Measure of the total number of customer interruptions divided by the total number of customers served. | | Dependable infrastructure and reliable power are essential to operations and customer satisfaction. |
| Nuclear Fleetwide Capacity Factor | |  | | The weighted average of the capacity factor of all Exelon nuclear units, calculated as the sum of net generation in 2016,megawatt hours divided by the following modifications were madesum of the hourly annual mean net megawatt rating, multiplied by the number of hours in a period. | | Efficient operation of our nuclear fleet maximizes cost-efficiency and delivery of clean, reliable energy. |
| Dispatch Match | |  | | Measures the responsiveness of a fossil generating unit to the TSR modifier and a TSR cap was added:●Changed TSR modifier peer group frommarket.
| | Providing sufficient power during peak times ensures we satisfy the competitive integrated companies (Entergy, FirstEnergy, NextEra Energy, and PSEG) to the UTY●Changed to a point-for-point approach, where the UTY’s absolute TSR performance is subtracted from Exelon’s absolute TSR over the three-year period
●The modifier is no longer capped (positive or negative)
●Cap payout at target if TSR is negative for the final 12 monthsneeds of the measurement period
For the 2015-2017 performance period, the TSR modifier was 18.98% for Exelon minus 23.92% for the UTY, resulting in a TSR modifier of negative 4.94%. Exelon’s 2017 one-year absolute TSR was 15.11% so the TSR cap was not applicable.
our customers. |
| | | | | | | | |
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Table of ContentsAIP Goal Setting Process
Compensation Discussion & Analysis
The following table shows how the formula was applied and the actual amounts awarded.
| NEO | | Target
Shares | | | | Performance
Factor | | | | Actual
Award |
| Crane | | 176,221 | | x | | 111.25% | | = | | 196,046 |
| Thayer | | 48,455 | | x | | 111.25% | | = | | 53,906 |
| Von Hoene, Jr. | | 53,112 | | x | | 111.25% | | = | | 59,087 |
| Cornew | | 52,359 | | x | | 111.25% | | = | | 58,249 |
| O’Brien | | 44,307 | | x | | 111.25% | | = | | 49,292 |
Because all of the NEOs have achieved 200% or more of their stock ownership targets (as described on page 59), all of their PShare awards were settled in cash. For participants who have not achieved 200% of their stock ownership target, PShare awards are settled half in shares of Exelon common stock and half in cash.
Robust Goal-Setting Process and Rigorous Targets
The Compensation Committee strives to set challenging operational and financial performance targets that drive and motivate executives to achieve short- and long-term success and to help ensure key talent is retained. The Compensation Committee selects metrics that are directly tied to the Company’s operational and financial strategies and are proven measures of long-term value creation. Operational targets are benchmarked and set at the top quartile or higher as compared to industry standards. Financial targets are based on our internal business plans and external market factors.
Goal-Setting for 2018
Exelon’s goal-setting process employs a multi-layer approach and analysis that incorporates a blend of objective and subjective business considerations and other analytical methods to ensure that the goals are sufficiently rigorous. Such considerations include:
●Recent History:Goals generally reflect a logical progression of results from the recent past
●Relative Performance:| • | Recent History — Goals generally reflect a logical progression of results from the recent past |
| |
| • | Relative Performance — Performance is evaluated against a relevant group of the Company’s peers |
| • | Strategic Objectives — Near- and intermediate-term goals follow a trend line consistent with long-term aspirations |
| |
| • | Shareholder Expectations — Goals are aligned with externally communicated financial guidance and shareholder expectations |
| |
| • | Sustainable Sharing — Earned awards reflect a balanced degree of shared benefits between shareholders and participants |
The Compensation Committee annually reviews AIP components, targets and payouts to ensure that they are challenging, contain appropriate stretch, and are designed to mitigate excessive risk taking. The Committee considers short- and long-term financial and operational results relative to our internal goals. Goals for the AIP, including adjusted (non-GAAP) operating EPS*, are set in January/early February around the same time that Exelon provides full-year guidance for EPS and other key financial metrics.
No changes due to COVID-19. 2020 AIP targets were not adjusted as a result of COVID-19 as the Compensation Committee decided to maintain the original incentive targets established in February 2020.
| * | See Definitions of Non-GAAP measures in Appendix A at page 79 |
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COMPENSATION DISCUSSION & ANALYSIS
The Compensation Committee used the following process to determine 2020 AIP awards made to each NEO:
| Beginning of Performance Year |  | After End of Performance Year |
 | |  | |  |
| 1 | Set Individual AIP
Targets | | 2 | Set Performance
Goals | | 3 | Apply Performance
Multiplier |  |
| | | | |
• Expressed as percentage of base salary, as of 12/31/19 • CEO annual incentive target of 145%; other NEO annual incentive targets range from 90% to 100% | | • Set target goal for adjusted (non-GAAP) operating EPS* (70%) • Set targets for achievement of certain operational goals (30%) • Goals include Threshold, Target, and Distinguished performance levels | | • Performance multiplier is a measure of performance against each goal as a percentage of target • Multiply the target award by the performance multiplier • Award can range from 0% to 200% of target (target of 100%) |
2020 AIP Performance and Payout Determinations
The following table details the 2020 threshold, target, and distinguished or maximum performance goals, and the results achieved. The Performance Multiplier for 2020 AIP awards was calculated to be 101.21% of target, based on the following:
| | | | Performance Scale | | Performance | | Performance | | |
| | | | Threshold | | Target | | Distinguished | | Relative to | | as % of | | Weighted |
| | AIP Metrics: | | (50% payout) | | (100% payout) | | (200% payout) | | Target | | Target | | Performance |
 | Adjusted Operating EPS* | |  | | 75.00% | | 52.50% |
 | CAIDI | |  | | 200.00% | | 15.00% |
 | SAIFI | |  | | 176.92% | | 13.27% |
 | Fleetwide Capacity Factor | |  | | 122.56% | | 9.19% |
 | Dispatch Match | |  | | 150.00% | | 11.25% |
| | | | | | Payout: | | 101.21% |
| | | | | | | | | | | | | | |
The following table shows actual AIP payout amounts awarded to Exelon’s NEOs:
| | | AIP Target | | | | | | |
| | | (as % of | | Dollar Value of | | Performance | | Actual |
| NEO | | Base Salary) | | AIP Target | | Multiplier | | Award |
| Crane | | 145% | | $1,874,850 | | 101.21% | | $1,897,536 |
| Nigro | | 95% | | 773,522 | | 101.21% | | 782,882 |
| Cornew | | 100% | | 951,541 | | 101.21% | | 963,055 |
| Von Hoene, Jr | | 100% | | 954,771 | | 101.21% | | 966,324 |
| Butler Jr. | | 90% | | 630,000 | | 101.21% | | 637,623 |
| * | See Definitions of Non-GAAP measures in Appendix A at page 79. |
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AIP Goal Rigor
Adjusted (non-GAAP) Operating EPS* (70%). Building on past goal rigor, the Compensation Committee set an adjusted (non-GAAP) operating EPS* AIP target for 2020 at a range, which range was set to begin above the mid-point of the Company’s peers
●Strategic Aspirations:Near- and intermediate-term goals follow a trend line consistent with long-term aspirations
●Shareholder Expectations:Goals are aligned with externally communicated financialoriginal 2020 EPS guidance and shareholder expectationsend at $3.22 adjusted earnings per share (actual operating EPS results for 2019). “Distinguished” goals were set substantially above the upper end of Exelon’s full-year EPS guidance.Adjusted (non-GAAP) Operating EPS*
| | | | | Threshold | | Target | | Distinguished |
| | | Guidance(1) | | (50%) | | (100%) | | (200%) |
| 2020(2) | | $3.00 - $3.30 | |  |
| 2019 | | $3.00 - $3.30 | |  |
| 2018 | | $2.90 - $3.20 | |  |
| | | | | | | | | |
LOOKING FORWARD… On February 24, 2021, Exelon issued 2021 financial guidance setting adjusted operating EPS* at $2.60 - $3.00. The guidance for 2021 is lower than the adjusted operating EPS* results for 2020 as a result of the impacts of the severe weather event in Texas, lower realized energy prices, and lower capacity revenues, partially offset by opportunities and growth at the utilities. For 2021, the AIP adjusted operating EPS* target is aligned with this guidance. The “Distinguished” goal is set above the upper end of Exelon’s full-year EPS guidance. |
| (1) | Reflects initial full-year guidance provided during January/February of each year. |
| (2) | Even though 2020 Adjusted EPS* was $3.22, for purposes of determining the 2020 AIP payout for Exelon’s NEOs, $3.08 was used, which excludes the impact of $0.14 of unrealized gain from equity investments. |
●Operational Goals (30%). Operational “Target” metrics for 2020 were set at challenging levels that corresponded to top quartile performance compared to industry standards and “Distinguished” targets were set at “best-ever” levels that outperform the historical achievement of Company metrics for three of the four operational metrics.
Results from 2018, 2019 and 2020 are shown below. Each performance graph shows the threshold, target, and distinguished goals as well as actual performance relative to those goals.
| LOOKING FORWARD… | For 2021, the “Distinguished” targets for SAIFI, Fleetwide Capacity Factor, and Dispatch Match were set at “Best Ever” levels and for CAIDI, in the first decile of industry standards. |
| * | See Definition of Non-GAAP measures in Appendix A at page 79. |
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Sustainable Sharing: COMPENSATION DISCUSSION & ANALYSIS
Long-Term Incentive Program (LTIP)
LTIP Overview & Goal Setting Process
The Compensation Committee grants long-term equity incentive awards annually at its January or February meeting. When the total target equity incentive award is determined, the value is split between RSUs (33%) and performance shares (67%).
| • | Restricted Stock Units (33% of total award). RSUs granted to NEOs vest ratably over three years. RSUs receive dividend equivalents that are reinvested as additional RSUs and remain subject to the same vesting conditions as the underlying RSUs. RSUs are not subject to any performance metrics. |
| |
| • | Performance Shares (67% of total award). Performance shares granted to NEOs in January 2020 are earned based on performance achieved for the three-year period ending on December 31, 2022. The performance metrics underlying the 2020–2022 performance share awards are listed below. These are the same performance metrics underlying the performance shares granted since 2017. |
| Performance share metrics: | | | | What it is: | | Why it is Important: |
| Utility Earned ROE* | |  | | Average utility ROE weighted by year-end rate base. Earned ROE is calculated using adjusted (non-GAAP) operating earnings*, reflecting all lines of business for the utility businesses (electric distribution, gas distribution, transmission), divided by average shareholder’s equity over the year. | | Measure of value created by utility businesses. Aligned with our strategy to invest in our utilities where we can earn an appropriate return. |
| Utility Net Income* | |  | | Aggregate utility adjusted (non-GAAP) operating earnings*, including Exelon hold-co net operating income (loss). | | Measures financial performance of the Utilities. Aligned with our strategy to grow our regulated utility business. |
| Exelon FFO/Debt* | |  | | Funds from operations to total debt ratio. The ratio is calculated following S&P’s current methodology. Management uses FFO/Debt to evaluate financial risk by measuring the company’s ability to service debt using cash from operations. | | Key ratio for determining our credit rating and thereby our access to capital. Aligned with our strategy to generate free cash and reduce debt. |
| | | | | | | |
| • | Setting Performance Share Targets. Performance share targets are based on external commitments and/or probabilistic modeling. The performance scale range for the Utility ROE and Utility Net Income metrics was based on the following probability levels of achievement: 95% for threshold and 5% for distinguished with the target aligned with projected performance and external commitments. The target for the Exelon FFO/Debt metric is aligned with the expectations of credit rating agencies. |
| |
| • | Actual Targets Disclosed After Each Cycle. We do not disclose actual three-year targets used in our performance share performance cycles until each cycle is completed. We feel it is important to safeguard the confidentiality of our long-term outlook on projected performance, especially in light of changes in our industry, with our peer companies, and the overall utility and power generation markets. This policy supports the propriety of our long-standing disclosure practices to only issue annual performance guidance as part of our financial disclosure policies. |
| |
| • | Performance Share Awards Subject to TSR Modifier and Cap. Performance share awards are subject to a TSR modifier that compares Exelon’s performance relative to the performance of the UTY index on a point by point basis. Performance share awards are also subject to a TSR cap that will limit payouts at target if TSR for the prior 36 month period is negative. (Please note that the TSR cap was modified starting with the 2020 awards to extend the measurement period to the full 36 months of each cycle. Prior awards used a measurement period of 12 months.) |
| |
| * | See Definition of Non-GAAP measures in Appendix A at page 79. |
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COMPENSATION DISCUSSION & ANALYSIS
The Compensation Committee used the following process to determine performance share targets and awards:
 | |  | |  | |  | |  |
| 1 | Determine Performance Metrics & Individual Targets | | 2 | Determine Performance Multiplier | | 3 | Determine TSR Modifier | | 4 | Calculate Final Multiplier & Apply TSR Cap (if applicable) | | 5 | Apply Final
Multiplier |
Targets are set in January/February of the first year of the performance cycle. | | Based on performance achieved over the three-year cycle. Performance can range from 0% to 150% of target (target of 100%). | | Subtract the TSR of the UTY over the three-year performance period from Exelon’s TSR for the same three-year period. | | Multiply the Performance Multiplier by (100% + TSR Modifier). This value is the Final Multiplier. If Exelon’s absolute TSR for the 12 month period is negative (for the 2018-2020 performance cycle), performance share payout will be capped at 100%.(1) | | | Apply the Final Multiplier to determine the number of shares issued. Award can range from 0% to 200% of target (target of 100%) after application of the TSR modifier. |
| | | | | | | | | | | | | | |
| (1) | Beginning with the 2020-2022 performance cycle, the TSR cap will apply if TSR is negative for the prior 36-month period. |
On January 25, 2021, the Committee approved awards of RSUs and performance shares shown in detail in the Grants of Plan-Based Awards table on page 59.
2018 – 2020 Performance and Performance Share Payout Determinations
The following table details the 2018 – 2020 threshold, target, and distinguished performance goals, and the results achieved. The Performance Multiplier for 2018 – 2020 Performance shares awards was calculated to be 76.01% of target (prior to application of the TSR modifier described below), based on the following:
| | | | | | | | | | | | | | | Actual |
| | | | | | | | | | | | | | | Award v. |
| Performance Share | | Threshold | | | | Target | | | | Distinguished | | Metric | | Metric |
| Metrics: | | (50%) | | 75% | | (100%) | | 125% | | (150%) | | Weighting | | Weighting |
| Utility Earned ROE* |  | | 33.3% | | 25.62% |
| Utility Net Income* | |  | | 33.3% | | 25.34% |
| Exelon FFO/Debt* | |  | | 33.4% | | 25.05% |
| | | | | | | | | 2018 – 2020 Performance Multiplier: | | 76.01% |
| | | | | | | | | | | | | | | |
The Utility Earned ROE* and Utility Net Income* use interpolation between threshold, target, and distinguished levels of performance whereas the FFO/Debt* metric uses a “stair-step” approach (e.g., 50%, 75%, 100%, 125% or 150%) with no interpolation between the performance levels.
| * | See Definition of Non-GAAP measures in Appendix A at page 79. |
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COMPENSATION DISCUSSION & ANALYSIS
The following table shows how the payout formula was calculated and actual Performance shares amounts awarded for 2018-2020:
| | | Target | | | | | | | | |
| | | Performance | | Target | | | | Actual Award | | Actual Award |
| | | Share Value | | Performance | | Performance | | (Performance | | Value |
| NEO | | ($) | | Shares | | Factor | | shares) | | ($) |
| Crane | | 7,370,000 | | 176,541 | x | 63.65% | = | 112,368 | | 4,871,153 |
| Nigro | | 1,600,463 | | 41,133 | x | 63.65% | = | 26,181 | | 1,134,946 |
| Cornew | | 1,955,596 | | 51,020 | x | 63.65% | = | 32,474 | | 1,407,748 |
| Von Hoene, Jr | | 1,956,936 | | 51,055 | x | 63.65% | = | 32,497 | | 1,408,745 |
| Butler Jr. | | 553,217 | | 14,433 | x | 63.65% | = | 9,187 | | 398,256 |
Performance Awards Settled in Common Stock and/or Cash. Pursuant to the terms of the long-term incentive program, performance share award payouts are settled in the form of 50% shares of Exelon common stock and 50% in cash, unless participants have achieved 200% or more of their stock ownership guidelines, in which case performance share award payouts are settled 100% in cash. All NEOs have achieved 200% of their stock ownership target, so all performance share awards reflect a balanced degree of shared benefits between shareholders and participantswere settled in cash.
Performance Share Goal Rigor
To ensure adequate rigor for the financial targets applicable to the PShares,2020-2022 performance share performance cycle, we conducted statistical simulations to understand the level of difficulty offor our payout range. We also conductedThis included a sensitivity analysis of reasonable value ranges for several internal and external variables that areknown to be significant drivers of performance. We also examinedperformance, and an examination of historical levels of deviation of Company performance compared to plan.plan as shown below for the two prior performance cycles.
Example: AIP Goal Rigor
The Compensation Committee set the adjusted (non-GAAP) operating EPS AIP target for 2018*
| See Definition of Non-GAAP measures in Appendix A at a level significantly higher than the Company’s actual performance in 2017, which is generally aligned with the midpoint of our publicly disclosed 2018 financial guidance. For 2018, maximum targets were set at levels that outperform Company historical performance for three of the four operational metrics:●best-ever for Dispatch Match
●best-ever for Nuclear Fleetwide Capacity Factor
●best-ever for outage frequency results (best-in-class)
●first decile of industry standards for outage duration goals
page 79. |
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COMPENSATION DISCUSSION & ANALYSIS
| * | See Definition of Non-GAAP measures in Appendix A at page 79. |
2020 Target Compensation Discussion & Analysis
PShare Goal Settingfor Named Executive Officers
The three-performance metrics underlyingtable below lists the 2018-2020 PShare awards includetarget value of the following:compensation elements for each NEO as of December 31, 2020.
| | | Cash Compensation | | Long-Term Incentives | | |
| | | | | | | | | | | Performance | | | | Target Total |
| | | | | AIP | | Target | | RSUs | | Shares | | Target Total | | Direct |
| | | Base | | Target | | Total Cash | | [33%] | | [67%] | | LTIP | | Compensation |
| Name | | ($) | | (%) | | ($) | | ($) | | ($) | | ($) | | ($) |
| Crane | | 1,293,000 | | 145% | | 3,167,850 | | 3,630,000 | | 7,370,000 | | 11,000,000 | | 14,167,850 |
| Nigro | | 814,234 | | 95% | | 1,587,756 | | 788,288 | | 1,600,463 | | 2,388,750 | | 3,976,506 |
| Cornew | | 951,541 | | 100% | | 1,903,082 | | 963,204 | | 1,955,596 | | 2,918,800 | | 4,821,882 |
| Von Hoene, Jr. | | 954,771 | | 100% | | 1,909,542 | | 963,864 | | 1,956,936 | | 2,920,800 | | 4,830,342 |
| Butler Jr. | | 700,000 | | 90% | | 1,330,000 | | 716,100 | | 1,453,900 | | 2,170,000 | | 3,500,000 |
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COMPENSATION DISCUSSION & ANALYSIS
Compensation Governance and Oversight
 | Utility Earned ROE
(33.3%) | |  | Utility Net Income
(33.3%) | |  | Exelon FFO/Debt
(33.4%) | |
Average utility ROE weighted |  | What We Do | | |
| | | |
|  Pay for performance
Significant stock ownership requirements for Directors and Executive Officers Cap incentive awards and conduct an annual risk assessment of the compensation programs Double-trigger for change-in-control benefits Independent compensation consultant advises the Compensation Committee Annually evaluate management succession and leadership development efforts Limited perquisites based on sound business rationale | | Clawback provision for incentive compensation awards Annual review of pay equity by year-end rate basean independent third party Engage in year-round shareholder outreach Prohibit hedging, short sales, derivative transactions or pledging of Company stock Require Executive Officers to trade through 10b5-1 trading plans Annually assess our programs against peer companies and best practices Set appropriate levels of “stretch” in incentive targets |
| Aggregate utility adjusted (non-GAAP) operating earnings, including Corporate | Funds from operations to total debt ratio | |
|  | What We Don’t Do | | |
| | | | |
|  No guaranteed minimum payout of AIP or LTIP programs
No employment agreements No excise tax gross-ups for change-in-control agreements No dividend-equivalents on Performance shares | | The value of LTIP awards is not included in pension or severance calculations No additional credited service under supplemental pension plans since 2004 No option repricing or buyouts |
Compensation Decisions
Setting Target Compensation for…
Executive Officers •The Compensation Committee is responsible for overseeing the development and administration of the executive compensation program for executive officers (other than the CEO) based on several factors including input from the CEO and the independent compensation consultant retained to provide services described below. •Analyze a variety of data to gauge market competitiveness, including peer group compensation and performance data. •Total Direct Compensation (TDC) can vary by named executive officer based on competencies and skills, scope of responsibilities, the executive’s experience and performance, retention, succession planning and the organizational structure of the businesses. | | Chief Executive Officer •The CEO’s compensation is approved by the independent members of the Board, based on the recommendations of the Compensation Committee. •CEO compensation is developed by analyzing peer group compensation and performance data with its independent compensation consultant. •Every year, the Committee reviews each element of the CEO’s compensation including base salary, annual and long-term incentive target opportunities. |
Role of Independent Compensation Consultant
The Utility ReturnCompensation Committee retains the services of Meridian Compensation Partners, LLC (Meridian), an independent compensation consultant to support its duties and responsibilities. Meridian provides advice and counsel on Equity (ROE)executive and Utility Net Incomedirector compensation matters and provides information and advice regarding market trends, competitive compensation programs, and strategies including:
Annual market data for each senior executive position, including evaluating Exelon’s compensation strategy and reviewing and confirming the peer group used to prepare the market data
An independent assessment of management recommendations for changes to the compensation structure
Assisting management to ensure the Company’s executive compensation programs are designed and administered consistent with the Compensation Committee’s requirements
Ad hoc support on executive compensation matters and related governance trends
The Compensation Committee annually reviews the compensation, performance, and independence of Meridian and approves the firm’s fees and other retention terms. In 2020, Meridian provided no other services for Exelon or its affiliates. Fees paid to Meridian were less than 1% of its gross annual revenues.
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COMPENSATION DISCUSSION & ANALYSIS
Peer Groups Used for Benchmarking 2020 Executive Compensation
We use interpolation between threshold, target,a blended peer group for assessing our executive compensation program that consists of two subgroups: energy services peers and distinguished levelsgeneral industry peers (except for the position of performance whereasCEO of Exelon Utilities which only uses energy services companies).
Why We Use a Blended Peer Group: We use a blended peer group because (1) there are not enough energy services peers with size, scale and complexity comparable to Exelon to create a robust energy services-only peer group, and (2) Exelon’s market for attracting talent includes general industry peers, with key executives hired from several Fortune 100 companies. When selecting general industry peers, we look for capital asset-intensive companies with size, scale and complexity similar to Exelon, and we also consider the extent to which they may be subject to the effects of volatile commodity prices similar to Exelon’s sensitivity to commodity price volatility. |
Exelon evaluates its peer group on an annual basis and adjusts for changes with our energy and general industry peers when needed.
As previously disclosed, in connection with the Funds From Operations (FFO)/Debt metric usesCompensation Committee’s responsibility to oversee and monitor the ongoing effectiveness of Exelon’s executive compensation program design, the Committee approved changes to Exelon’s peer group in light of business developments affecting two peer companies—PG&E filed for bankruptcy in 2019 and DowDuPont separated into three separate businesses in 2019. These changes were based on analyses of developments with market peers and a “stair-step” approachreview of benchmarked compensation practices in consultation with no interpolation between the performance levels. Performance will be evaluated atCommittee’s independent compensation consultant.
As a result of these changes, the end of 2020 afterCommittee replaced PG&E with DTE Energy, the completionlargest of the three-year performance period. This is partavailable utilities that also has a diverse mix of the transition to the three-year performance period.operations. DowDuPont was replaced with Delta Air Lines and Lockheed Martin. Both Delta and Lockheed Martin were selected because each are size-appropriate, have a high proportion of U.S. revenue, operate in mature capital-intensive industry segments, and operate in moderate-to-heavy regulatory environments.
PShare targets were set based on external commitments and/or probabilistic modeling. The performance scale range for the Utility Net Income and Utility ROE metrics was based on the following probability levels of achievement: 95% for threshold and 5% for distinguished and the target is aligned with projected performance. The target for Exelon FFO/Debt metric is aligned with the expectations of credit rating agencies.
Energy Services (11 peer companies) 2020 Updates: DTE Energy was added; PG&E was removed. |  | | General Industry (10 peer companies) 2020 Updates: Delta Air Lines and Lockheed Martin were added; DowDuPont was removed. |  |
 American Electric Power Company, Inc.
Dominion Energy, Inc. DTE Energy Duke Energy Corporation Edison International Entergy Corporation FirstEnergy Corporation NextEra Energy, Inc. Public Service Enterprise Group, Inc. Sempra Energy The Southern Company | | 3M Company Deere & Company Delta Air Lines General Dynamics Corporation Honeywell International, Inc. International Paper Company Lockheed Martin Marathon Petroleum Company Northrop Grumman Corporation Valero Energy Corporation |
| | | | |
| Exelon’s Position Relative to Peer Group | | | | |
| | | | | | | |
| Revenues* | | | Market Capitalization* |
|  | |  |
Why we use a Regression Analysis: Because there is a correlation between the size of an organization and its compensation levels, market data is statistically adjusted using a regression analysis. This commonly applied technique allows for a more precise estimate of the market value of Exelon given the size/scope of responsibility for Exelon’s executive roles. Each element of NEO compensation is then compared to these size-adjusted medians of the peer group. |
| * | Based on the four fiscal quarters prior to and publicly available as of June 20, 2020. |
54Exelon 2021 Proxy Statement
Governance FeaturesTable of Our Executive Compensation ProgramsContents
COMPENSATION DISCUSSION & ANALYSIS
Stock Ownership and Trading Requirements
To strengthen the alignment of executive interests with those of shareholders, officers ofexecutives at the Companyvice president level or above are required to own certain amountsmultiples of base salary of Exelon common stock by the later of (1) five years following an(1) the last adjustment made to the guidelines (last adjustments made in 2012)2012 or (2) the date of his or her employmenthiring or promotion to a new position. Compliance with Exelon’s stock ownership guidelines is measured on September 30 each year. As of the annual measurement date of September 30, 2017,2020, all NEOs had exceeded 200% of their stock ownership guidelines, as shown in the following chart:
Crane | Thayer | Von Hoene, Jr. | Cornew | O’Brien |
 |  |  |  |  |
The following types of ownership count towards meeting the stock ownership guidelines: restricted shares and restricted stock units, shares held in the Exelon Deferral Plan, dividend reinvestment plan, 401(k) Employee Savings Plan, and common shares beneficially owned directly or indirectly.chart. For additional details about NEO stock ownership, please see the Beneficial Ownership Table on page 77.71.
The following types of ownership count towards meeting the stock ownership guidelines:
restricted shares and restricted stock units,
shares acquired and held through the exercise of stock options,
| • | shares held in the Exelon Corporation Deferred Compensation Plan, dividend reinvestment plan, and 401(k) employee savings plan, and |
| |
| • | common shares beneficially owned directly or indirectly, including shares held in trust. |
Prohibition on Hedging and Pledging of Common Stock; Other Trading Requirements
Exelon requires executive vice presidentsofficers and above who wish to sell Exelon common stock to do so only through the adoption of a stock trading plan meeting the requirements of SEC Rule 10b5-1(c). This requirement is designed to enable officers to diversify a portion of their holdings in excess of the applicable stock ownership requirements in an orderly manner as part of their personal financial plans. The use of Rule 10b5-1 stock trading plans serves to reduce the risks that such transactions will be viewed negatively or as commentary with respect to the future value of Exelon’s stock. In addition, the use of Rule 10b5-1 stock trading plans are believed to reduce the potential for accusations of trading on the basis of material, non-public information, which could damage the reputation of the Company. Exelon’s stock
Our insider trading policy does not permitincludes 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 pledging.other derivative transactions involving Exelon stock.
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Compensation Discussion & Analysis
Recoupment (Clawback)Clawback Policy
Consistent with developing best practices,
In 2018, the Board of Directors recently revised its recoupmentclawback policy to broaden the discretionary ability to clawback incentive compensation when deemed appropriate. Under the policy, the Board has sole discretion to recoup incentive compensation if it determines that:
●the incentive compensation was based on the achievement of financial or other results that were subsequently restated or corrected;
●the incentive plan participant engaged in fraud or intentional misconduct that caused or contributed to the need for restatement or correction;
●a lower incentive plan award would have been made to the participant based on the restated or corrected results; and
●recoupment is not precluded by applicable law or employment agreements.
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COMPENSATION DISCUSSION & ANALYSIS
The Board or Compensation Committee may also seek to recoup incentive compensation paid or payable to current or former incentive plan participants if, in its sole discretion, the Board or Compensation Committee determinedetermines that:
●the current or former incentive plan participant breached a restrictive covenant or engaged or participated in misconduct or intentional or reckless acts or omissions or serious neglect of responsibilities that caused or contributed to a significant financial loss or serious reputational harm to Exelon or its subsidiaries regardless of whether a financial statement restatement or correction of incentive plan results was required; and
●recoupment is not precluded by applicable law or employment agreements.
In addition, the terms of the annual incentive plan provide that the Compensation Committee and management may curtail awards if there is a “significant event,” which is defined as a single, high-profile event caused by a failure of Exelon that is determined to have been directly or indirectly caused by a human error or poor management attention. Significant events may include a single high-profile outage or another event that may result in negative customer and media impact or a significant adverse governmental or regulatory action. The Compensation Committee may also apply negative discretion to unvested equity incentive awards if a significant event or other occurrence is determined to have a similar impact on the Company. Similarly, the terms of the long-term incentive plan provide that the Compensation Committee may amend or adjust the performance measures or other terms and conditions of outstanding awards in the event of unusual or nonrecurring events affecting the Company or its financial statements or changes in law or accounting principles.
Risk Management Assessment of Compensation Policies and Practices
The Compensation Committee reviews Exelon’s compensation policies and practices as they relate to the Company’s risk management practices and risk-taking incentives. In 2017, the Compensation Committee partnered with2020, Exelon’s Enterprise Risk Management group to applyapplied 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 Committee believes that itsthe risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on Exelon. In this regard, the Compensation Committee considered the following compensation program features, in place towhich balance the degree of risk taking:
●the annual incentive planThe AIP includes multiple incentive performance measures with a balance of financial and non-financial metrics;metrics
●long-termLong-term incentives include multiple vehicles and performance metrics and three-year overlapping performance periods that are aligned with long-term stock ownership requirements;requirements
●incentiveIncentive metrics, performance goals, and capital allocation require multiple approval levels and oversight;oversight
●totalTotal compensation pay mix includes effective and market aligned balance of short- and long-term incentive compensation elements;elements
●incentiveIncentive compensation is balanced by formulaic and discretionary funding;funding
●short-Short- and long-term incentive awards contain award caps or modifiers;modifiers
●reasonableReasonable change-in-control and severance benefits are within common norms;market norms
●clawbackClawback provisions exceed regulatory mandates; andmandates
●consistentConsistent and meaningful stock ownership requirements create sustained and consistent ownership stakes.stakes
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Compensation Discussion & Analysis
Tax Consequences
Under Section 162(m) of the Internal Revenue Code (Code) applicable for tax years beginning before December 31, 2017, executive(the Code), generally NEO compensation in excess ofover $1 million paid to a CEO or other person among the three other highest compensated officers (excluding the CFO)for any year is generally not deductible for purposes of corporate federal income taxes. However, qualified performance-based compensation, within the meaning of Section 162(m) and applicable regulations, remains deductible. Historically, the Compensation Committee’s policy has been to seek to cause executive incentive compensation to qualify as “performance-based” in order to preserve its deductibility for federal income tax purposes to the extent possible.
Because it is not “qualified performance-based compensation” within the meaning of Section 162(m) applicable for tax years beginning before December 31, 2017, base salary is not eligible for a federal income tax deduction to the extent that it exceeds $1 million. Accordingly, Exelon is unable to deduct that portion of Mr. Crane’s 2017 base salary in excess of $1 million. AIP awards and PShares payable to NEOs are intended to be qualified performance-based compensation under Section 162(m), and to be deductible for federalUnited States income tax purposes. Restricted stock and RSUs are not deductible byHistorically, there was an exemption from this $1 million deduction limit for compensation payments that qualified as “performance-based” under applicable IRS regulations. With the Company for federal income tax purposes under the provisions of Section 162(m) to the extent an NEO’s compensation that is not “qualified performance-based compensation” is in excess of $1 million.
In order to qualify payments under the AIP and performance share program as performance-based for Section 162(m)enactment of the Code, the Compensation Committee uses a “plan-within-plan” two-step approach to determine the amount of the bonus payment. The first step is to fund the overall bonus pool. The pool is funded if the Company meets the pre-established performance metrics. The second step is accomplished when the Compensation Committee exercises “negative discretion” by making adjustments to the formula award funded by the overall pool. Negative discretion is used to reduce the amount funded by the pool to an amount equal to the target bonus (for AIP) or target equity (for the performance share program) adjusted for final Company performance and individual performance.
Under Section 4999 of the Code, there is an excise tax if change-in-control or severance benefits are greater than 2.99 times the five-year average amount of income reported on an individual’s W-2. In April 2009, the Compensation Committee adopted a policy that no future employment or severance agreements that provide for benefits for NEOs on account of termination will include an excise tax gross-up. In 2016, the NEOs consented to the removal of the remaining legacy excise tax gross-up provisions for transactions resulting in a change-in-control, with no recompense for said removal.
On December 22, 2017 the Tax Cuts and Jobs Act (Tax Act), the performance-based compensation exemption was signed into law, and includes significant changes to the executive compensation deduction rules ineliminated under Section 162(m) of the Code. The changes include:
● | expanding the covered employees as described in Section 162(m) to include the CFO, which had previously been excluded from the limitation;
|
● | sustaining classification as a “covered employee” in perpetuity even after death through severance and post-death payments for all applicable “covered employees” identified for tax years beginning after December 31, 2016;
|
● | removing the exception for performance-based compensation thereby making a larger portion of the executives’ pay non-deductible for federal tax purposes; and
|
● | expanding Section 162(m) to include corporations that have publicly traded equity and publicly traded debt, foreign private issuers that meet the new definition of a publicly held corporation and possibly large private C or S corporations.
|
Code, except with respect to certain grandfathered arrangements. The Tax Act will have expansive impactsalso expanded the definition of covered employee to Exeloninclude the CFO and extended the classification for all covered employees in perpetuity even after death through severance and post-death payments. Finally, the application of the $1 million limitation has been expanded to include covered employees at Exelon’s corporate registrants with publicly traded debt in addition to those with publicly traded equity as our executive compensation is 60%required prior to 65% performance-based, which may not be deductible for tax purposes beginning with the 2018 tax year. Also,Tax Act.
Under the new law, Exelon has nineeight registrants with the SEC that could potentiallynow fall within the scope of Section 162(m). Without further IRS guidance clarifying technical aspects of the Tax Act, Exelon is unable to fully quantify the tax consequences of the legislation. Given the uncertainty, the SEC issued Staff Accounting Bulletin 118 which provides for a measurement period, not to extend beyond one year of the enactment date, for registrants to assess the financial impacts and report in their financial statements.
The Compensation Committee will review current executive compensation programs considering the expansive tax consequences, however the Committee will continue to focus on designing executive compensation programs that motivate executives to drive long-term performance and that align the interest of Exelon’s executives with shareholders.
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Compensation Discussion & Analysis
Report of the Compensation and Leadership Development Committee
The Compensation and Leadership Development Committee is accountable for ensuringbelieves that the decisions made aboutit must maintain flexibility in its approach to executive compensation are in order to structure a program that it considers to be the best long-term interestsmost effective in attracting, motivating and retaining the Company’s key executives, and therefore, the deductibility of our shareholders. We accomplish this objective by having robustcompensation is one of several factors considered when making executive compensation principles in place and considering feedback received from shareholders to continuously improve and strengthen our executive compensation programs. Input received from investors representing over 45% of Exelon’s outstanding shares in 2017 was positive and resulted in no significant changes to our executive compensation program. Shareholders indicated continued satisfaction with the modifications implemented in 2016 that addressed concerns and better aligned the program with the Company’s strategy.decisions.
Compensation Committee Report
The Compensation and Leadership Development Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 45-6142-56 of this proxy statement. Based on such review and discussion, the Committee recommended to the Board thatapprove the Compensation Discussion and Analysis be included in the 20182021 Proxy Statement.
THE COMPENSATION AND LEADERSHIP
DEVELOPMENT COMMITTEE
Yves C. de Balmann, Chair
ChairMarjorie Rodgers Cheshire
Robert J. Lawless
Linda P. Jojo
John Young
62 56Exelon 20182021 Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
Executive Compensation DataTables
Summary Compensation Table
| Year | | Salary
($) | | Stock Awards
($)
(Note 1) | | Non-Equity
Incentive Plan
Compensation
($)
(Note 2) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(Note 3) | | All Other
Compensation
($)
(Note 4) | | Total
($) |
| Christopher M. Crane | | | | | | | | | | | | | | | | | | |
| President and Chief Executive Officer, Exelon |
| 2017 | | $ | 1,261,000 | | $ | 10,099,755 | | $ | 1,585,531 | | $ | 1,524,765 | | $ | 386,808 | | $ | 14,857,859 |
| 2016 | | | 1,255,515 | | | 10,099,718 | | | 1,639,300 | | | 1,836,211 | | | 400,958 | | | 15,231,702 |
| 2015 | | | 1,224,808 | | | 9,821,055 | | | 2,072,777 | | | 2,462,551 | | | 380,054 | | | 15,961,245 |
| Jonathan W. Thayer | | | | | | | | | | | | | | | | | | |
| Senior Executive Vice President and Chief Financial Officer, Exelon |
| 2017 | | | 804,339 | | | 2,701,654 | | | 742,331 | | | 144,688 | | | 119,146 | | | 4,512,158 |
| 2016 | | | 784,802 | | | 2,701,035 | | | 1,071,368 | | | 225,160 | | | 60,504 | | | 4,842,869 |
| 2015 | | | 794,556 | | | 2,700,466 | | | 947,006 | | | 229,066 | | | 90,194 | | | 4,761,288 |
| William A. Von Hoene Jr. | | | | | | | | | | | | | | | | | | |
| Senior Executive Vice President and Chief Strategy Officer, Exelon |
| 2017 | | | 882,696 | | | 2,920,829 | | | 857,520 | | | 202,125 | | | 374,057 | | | 5,237,227 |
| 2016 | | | 831,350 | | | 3,700,342 | | | 1,237,642 | | | 216,271 | | | 198,770 | | | 6,184,375 |
| 2015 | | | 755,296 | | | 2,296,821 | | | 835,753 | | | 163,284 | | | 111,890 | | | 4,163,044 |
| Kenneth W. Cornew | | | | | | | | | | | | | | | | | | |
| Senior Executive Vice President and Chief Commercial Officer, Exelon; President and Chief Executive Officer, Exelon Generation |
| 2017 | | | 878,865 | | | 2,918,832 | | | 854,618 | | | 235,324 | | | 87,667 | | | 4,975,306 |
| 2016 | | | 857,477 | | | 2,918,043 | | | 1,233,350 | | | 231,669 | | | 93,848 | | | 5,334,387 |
| 2015 | | | 836,558 | | | 2,918,046 | | | 1,090,185 | | | 191,460 | | | 93,485 | | | 5,129,734 |
| Denis P. O’Brien | | | | | | | | | | | | | | | | | | |
| Senior Executive Vice President, Exelon; Chief Executive Officer, Exelon Utilities |
| 2017 | | | 820,293 | | | 2,470,846 | | | 757,767 | | | 295,787 | | | 134,243 | | | 4,478,936 |
| 2016 | | | 800,378 | | | 2,470,066 | | | 1,093,660 | | | 325,832 | | | 95,567 | | | 4,785,503 |
| 2015 | | | 780,874 | | | 2,469,294 | | | 994,688 | | | 239,970 | | | 86,431 | | | 4,571,257 |
| | | Year | | Salary
($) | | Bonus
($) | | Stock Awards
($)
(Note 1) | | Non-Equity
Incentive Plan
Compensation
($)
(Note 2) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(Note 3) | | All Other
Compensation
($)
(Note 4) | | Total
($) | |
| Christopher Crane | | | | | | | | | | | | |
| President and CEO, Exelon | | | | | | | |
| | | 2020 | | 1,293,000 | | — | | 11,000,013 | | 1,897,536 | | 757,754 | | 214,500 | | 15,162,803 | |
| | | 2019 | | 1,335,633 | | — | | 11,000,064 | | 2,103,957 | | 468,171 | | 475,912 | | 15,383,737 | |
| | | 2018 | | 1,261,000 | | — | | 10,099,725 | | 2,123,070 | | 1,734,587 | | 380,051 | | 15,598,433 | |
| Joseph Nigro | | | | | | | | | | | | |
| Senior Executive Vice President and CFO, Exelon | | | | | | | |
| | | 2020 | | 810,511 | | — | | 2,388,790 | | 782,882 | | 244,253 | | 100,841 | | 4,327,277 | |
| | | 2019 | | 790,823 | | — | | 2,388,777 | | 846,875 | | 234,992 | | 83,276 | | 4,344,743 | |
| | | 2018 | | 767,496 | | — | | 4,589,122 | | 885,414 | | 188,680 | | 95,263 | | 6,525,975 | |
| Kenneth Cornew | | | | | | | |
| Senior Executive Vice President and Chief Commercial Officer, Exelon; President and CEO, Exelon Generation | |
| | | 2020 | | 947,189 | | — | | 2,918,828 | | 963,055 | | 299,794 | | 338,335 | | 5,467,201 | |
| | | 2019 | | 924,181 | | — | | 2,918,842 | | 1,041,774 | | 774,571 | | 69,319 | | 5,728,687 | |
| | | 2018 | | 935,596 | | — | | 2,918,830 | | 1,089,182 | | 281,793 | | 89,336 | | 5,314,737 | |
| William Von Hoene, Jr. | | | | | | | |
| Senior Executive Vice President and Chief Strategy Officer, Exelon | | | | | | | |
| | | 2020 | | 948,434 | | — | | 2,920,861 | | 966,324 | | 241,308 | | 352,103 | | 5,429,030 | |
| | | 2019 | | 962,271 | | — | | 2,920,831 | | 1,045,311 | | 270,738 | | 466,524 | | 5,665,675 | |
| | | 2018 | | 904,673 | | — | | 2,920,823 | | 1,092,880 | | 242,061 | | 524,221 | | 5,684,658 | |
| Calvin Butler Jr. | | | | | | | |
| Senior Executive Vice President and CEO, Exelon Utilities | | | | | | | |
| | | 2020 | | 700,000 | | — | | 2,170,072 | | 637,623 | | 127,209 | | 107,284 | | 3,742,188 | |
| | | 2019 | | 559,495 | | — | | 2,075,734 | | 706,986 | | 116,481 | | 45,480 | | 3,504,176 | |
Notes to the Summary Compensation Table
| (1) | The amounts shown in this column include the aggregate grant date fair value of restricted stock unit and performance share unit awards for the 2017-20192020-2022 performance period granted on January 30, 2017.27, 2020. The grant date fair values of the stock awards have been computed in accordance with FASB ASC Topic 718 using the assumptions described in Note 20 of the Combined Notes to Consolidated Financial Statements included in Exelon’s 20172020 Annual Report on Form 10-K. The 2020-2022 performance share unit awardsaward component of the stock award values depicted above are subject to performance conditions. For the 2017-2019 performance share unit award,conditions and the grant date fair value andassumes the value assumingachievement of the highesttarget level of performance; however, values may be higher based on performance including the maximum total shareholder return multiplier is as follows: |
| |
| | | | Performance
Share Unit Value |
| | | | At Target | | At Maximum |
| | Crane | | $ | 6,766,820 | | $ | 13,533,640 |
| | Thayer | | | 1,810,096 | | | 3,620,192 |
| | Von Hoene Jr. | | | 1,956,949 | | | 3,913,898 |
| | Cornew | | | 1,955,617 | | | 3,911,234 |
| | O’Brien | | | 1,655,465 | | | 3,310,930 |
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| | | Performance
Share Award Value |
| | | At Target | At Maximum |
| | | ($) | ($) |
| | Crane | 7,370,008 | 14,740,016 |
| | Nigro | 1,600,468 | 3,200,936 |
| | Cornew | 1,955,607 | 3,911,214 |
| | Von Hoene, Jr. | 1,956,978 | 3,913,956 |
| | Butler Jr. | 1,453,931 | 2,907,862�� |
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Executive Compensation Data
| (2) | The amounts shown in this column for 20172020 represent payments made pursuant to the Annual Incentive Plan. |
| |
| (3) | The amounts shown in this column represent the change in the accumulated pension benefit for the NEOs from December 31, 20162019 to December 31, 2017.2020. None of the NEOs had above market earnings in a non-qualified deferred compensation account in 2017. 2020. |
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COMPENSATION DISCUSSION & ANALYSIS
| (4) | All Other Compensation: The following table describes the incremental cost of other benefits provided in 20172020 that are shown in this column. The amounts shown for 2018 and 2019 for each NEO have been revised to correct previously overstated compensation amounts arising from a misapplied calculation to determine compensation related to the use of corporate aircraft. For 2018, this includes an overstatement of $44,645, $4,246, and $10,200 for Messrs. Crane, Nigro, and Von Hoene, Jr., respectively. For 2019, this includes an overstatement of $60,955, $2,709, $8,850, $15,459, and $492 for Messrs. Crane, Nigro, Cornew, Von Hoene, Jr., and Butler Jr., respectively. |
| |
| All Other Compensation |
ALL OTHER COMPENSATION
| Name | | Perquisites
($)
(Note 1) | | Reimbursement
for Income Taxes
($)
(Note 2) | | Company
Contributions to
Savings Plans
($)
(Note 3) | | Company
Paid Term
Life Insurance
Premiums
($)
(Note 4) | | Total
($) | | Perquisites
($)
(Note 1) | | Reimbursement
for Income Taxes
($)
(Note 2) | | Company
Contributions to
Savings Plans
($)
(Note 3) | | Company
Paid Term
Life Insurance
Premiums
($)
(Note 4) | | Other
($) | | Total
($) | |
| Crane | | $ | 152,380 | | $ | 115,639 | | $ | 75,495 | | $ | 43,294 | | $ | 386,808 | | 108,713 | | 3,257 | | 64,545 | | 37,985 | | — | | 214,500 | |
| Thayer | | | 95,636 | | | 5,959 | | | 13,990 | | | 3,561 | | | 119,146 | |
| Von Hoene Jr. | | | 201,182 | | | 115,578 | | | 51,337 | | | 5,960 | | | 374,057 | |
| Nigro | | | 50,143 | | 6,568 | | 39,797 | | 4,333 | | — | | 100,841 | |
| Cornew | | | 32,759 | | | — | | | 51,156 | | | 3,752 | | | 87,667 | | 271,930 | | 17,363 | | 45,290 | | 3,752 | | — | | 338,335 | |
| O’Brien | | | 52,543 | | | 18,409 | | | 42,164 | | | 21,127 | | | 134,243 | |
| Von Hoene, Jr. | | | 203,940 | | 98,798 | | 45,378 | | 3,987 | | — | | 352,103 | |
| Butler Jr. | | | 65,511 | | 8,535 | | 30,349 | | 2,889 | | — | | 107,284 | |
Notes to All Other Compensation Table
| (1) | Amounts reported for personal benefits provided to NEOs include: (1) transportation related benefits (including personal use of corporate aircraft, fleet services, rail passenger services, parking, spousal and family travel); (2) relocation/housing and living benefits related to changes in NEOs’ principal place of work as a result of regulatory commitments in connection with the 2016 acquisition of Pepco Holdings, Inc.; and (3) other benefits (including personal financial planning, Company gifts, and matching charitable contributions, physical examinations, and event tickets). as detailed below: |
| |
| ●• | Amounts reported for the personal use of corporate aircraft are based on the aggregate incremental cost to Exelon and are calculated using the hourly incremental cost for flight services, including federal excise taxes, fuel charges, and domestic segment fees. Exelon’s Board-approved policy on corporate aircraft usage includes spousal/domestic partner and other family member usage when appropriate. Associated costs for meals and other related amenities for spouse/domestic partners are covered when attendance at Company or industry-related events is customary. Exelon also provides fleet services of Company cars and driver services for NEOs and other officers enabling the performance of duties among the Company’s various offices and facilities. Certain NEOs are also entitled to limited personal use of the Company’s cars and drivers including commuting to work locations. Costs reported represent estimated incremental costs based upon driver wages multiplied by the average overtime rate for drivers plus an additional amount for fuel. Costs related to NEO personal use is typically imputed as additional taxable income. Amounts reported in this column for Mr. Crane include $62,389$81,873 for personal use of corporate aircraft. Amounts reported in this column for Mr. Nigro include $22,041 for personal use of corporate aircraft. Amounts reported for Mr. Von Hoene, Jr. include $61,094 for personal use of corporate aircraft $50,089 for spousal travel and $13,067 for other transportationlargely related benefits.to commuting in compliance with regulatory commitments as described below. Amounts reported for Mr. Von HoeneButler include $48,164$33,642 for personal use of corporate aircraft $8,518and $3,751 for spousal travel and $13,367 for other transportation related benefits. Amounts reported for Messrs. Thayer, Cornew and O’Brien include $7,943, $8,212, and $2,400 respectively, for all other transportation benefits.travel. |
| ●• | Benefits areAmounts include the value received by Mr. Cornew due to the company’s agreement to have its relocation vendor purchase at an appraised value the Baltimore residence purchased by Mr. Cornew in connection with his relocation to Baltimore as Chief Executive Officer of Constellation. The value of the benefit included is $216,640, based on a determination of the difference between the average of two appraisals to be received and the price Mr. Cornew paid for the home in 2012 plus qualified capital improvements as provided to for under the executive relocation program’s standard terms. |
| • | Messrs. Butler Jr., Nigro, and Von Hoene, O’Brien, and Thayer, each of whom isJr. were subject to state public service commission requirements to maintain principal workplaces in the District of Columbia pursuant to a regulatory order issued in 2016 that related to obtainingthe approval of the acquisition of Pepco Holdings Inc. Pursuant to thesethis legacy obligations,obligation, Exelon provides transportation and relocation/housing and living benefits. Amounts reported forbenefits to certain executives. Messrs. Thayer,Nigro, Von Hoene, Jr., and O’BrienButler Jr. include $64,793, $114,042$7,755, $116,006, and $23,303$10,803, respectively, for such benefits. Mr. Thayer’s expense was paid in 2018, however was incurred in 2017. |
| ●• | Limited personal financial planning benefits valued at $16,840 for each executive are provided with usage values imputed as additional taxable income. Executive officers may request Company matching gifts to qualified charitable organizations in amounts up to $10,000, and up to $15,000 for Messrs. Thayer andMr. Cornew under the Constellation legacy policy. Executive officers may use Company-provided vendors for comprehensive physical examinations and related medical testing. Tickets to sporting or other events may be provided with values imputed as additional taxable income. |
|
| (2) | Exelon 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; business-relatedbusiness-requested spousal travel involves personal benefits and income isexpenses are imputed to the employeeemployee; and for required relocation and housing/living expenses incurred in compliance with regulatory requirements. Amounts reported for Mr. Cornew include $16,891 related to such reimbursements. Pursuant to our obligations under the 2016 regulatory order set forth in Note 1 above, amounts reported for Messrs.Mr. Von Hoene, and O’BrienJr. include $89,633 and $18,409 respectively$91,003 related to such benefits.reimbursements concerning regulatory requirements. |
| (3) | Each of the NEOs participated in the Company’s 401(k) and Deferred Compensation Plans. The amountsAmounts reported represent the Company matching contributions to the NEOs’ accounts. |
| (4) | Exelon provides basic term life insurance, accidental death and disability insurance, and long-term disability insurance to all employees, including NEOs. The values shown in this column include the premiums paid during 20172020 for additional term life insurance policies for the NEOs and for additional long-term disability insurance over and above the basic coverage provided to all employees. |
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Executive Compensation DataCOMPENSATION DISCUSSION & ANALYSIS
Grants of Plan-Based Awards
| | | | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(Note 1) | |
Estimated Possible
Payouts Under Equity
Incentive Plan Awards
(Note 2) | | All Other
Stock
Awards:
Number
of Shares
or Units
(#)
(Note 3) | | Grant Date
Fair Value
of Stock
and Option
Awards
($)
(Note 4) |
| Name | | Grant
Date | | Threshold
($) | | Plan
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | |
| Crane | | 1/30/2017 | | $ | 61,474 | | $ | 1,639,300 | | $ | 3,278,600 | | | | | | | | | | | |
| | 1/30/2017 | | | | | | | | | | | 32,186 | | 193,117 | | 386,234 | | | | $ | 6,766,820 |
| | 1/30/2017 | | | | | | | | | | | | | | | | | 95,118 | | | 3,332,935 |
| Thayer | | 1/30/2017 | | | 28,781 | | | 767,505 | | | 1,535,010 | | | | | | | | | | | |
| | 1/30/2017 | | | | | | | | | | | 8,610 | | 51,658 | | 103,316 | | | | | 1,810,096 |
| | 1/30/2017 | | | | | | | | | | | | | | | | | 25,444 | | | 891,558 |
| Von Hoene Jr. | | 1/30/2017 | | | 33,248 | | | 886,600 | | | 1,773,200 | | | | | | | | | | | |
| | 1/30/2017 | | | | | | | | | | | 9,308 | | 55,849 | | 111,698 | | | | | 1,956,949 |
| | 1/30/2017 | | | | | | | | | | | | | | | | | 27,508 | | | 963,880 |
| Cornew | | 1/30/2017 | | | 33,135 | | | 883,600 | | | 1,767,200 | | | | | | | | | | | |
| | 1/30/2017 | | | | | | | | | | | 9,302 | | 55,811 | | 111,622 | | | | | 1,955,617 |
| | 1/30/2017 | | | | | | | | | | | | | | | | | 27,489 | | | 963,215 |
| O’Brien | | 1/30/2017 | | | 29,380 | | | 783,465 | | | 1,566,930 | | | | | | | | | | | |
| | 1/30/2017 | | | | | | | | | | | 7,874 | | 47,245 | | 94,490 | | | | | 1,655,465 |
| | 1/30/2017 | | | | | | | | | | | | | | | | | 23,270 | | | 815,381 |
| | | | | Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards
(Note 1) | | Estimated Possible Payouts
Under Equity Incentive Plan
Awards
(Note 2) | | All Other
Stock
Awards:
Number of
Shares or | | Grant Date
Fair Value
of Stock
and Option
Awards | |
| Name | | Grant
Date | | Threshold
($) | | Plan
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Units (#)
(Note 3) | | ($)
(Note 4) | |
| Crane | | 01/27/2020 | | 70,307 | | 1,874,850 | | 3,749,700 | | | | | | | | | | | |
| | | 01/27/2020 | | | | | | | | 25,991 | | 155,913 | | 311,826 | | | | 7,370,008 | |
| | | 01/27/2020 | | | | | | | | | | | | | | 76,793 | | 3,630,005 | |
| Nigro | | 01/27/2020 | | 29,007 | | 773,522 | | 1,547,044 | | | | | | | | | | | |
| | | 01/27/2020 | | | | | | | | 5,644 | | 33,858 | | 67,616 | | | | 1,600,468 | |
| | | 01/27/2020 | | | | | | | | | | | | | | 16,677 | | 788,322 | |
| Cornew | | 01/27/2020 | | 35,683 | | 951,541 | | 1,903,082 | | | | | | | | | | | |
| | | 01/27/2020 | | | | | | | | 6,897 | | 41,371 | | 82,742 | | | | 1,955,607 | |
| | | 01/27/2020 | | | | | | | | | | | | | | 20,377 | | 963,221 | |
| Von Hoene, Jr. | | 01/27/2020 | | 35,804 | | 954,771 | | 1,909,542 | | | | | | | | | | | |
| | | 01/27/2020 | | | | | | | | 6,901 | | 41,400 | | 82,800 | | | | 1,956,978 | |
| | | 01/27/2020 | | | | | | | | | | | | | | 20,391 | | 963,883 | |
| Butler Jr. | | 01/27/2020 | | 23,625 | | 630,000 | | 1,260,000 | | | | | | | | | | | |
| | | 01/27/2020 | | | | | | | | 5,127 | | 30,758 | | 61,516 | | | | 1,453,931 | |
| | | 01/27/2020 | | | | | | | | | | | | | | 15,150 | | 272,489 | |
Notes to Grants of Plan-Based Awards Table
| (1) | All NEOs have annual incentive plan target opportunities based on a fixed percentage of their base salary. 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. The possible payout at threshold for AIP was calculated at 3.75% of target, which is 50% performance on the lowest weighted AIP performance metric. For additional information about the terms of these programs, see Compensation Discussion and Analysis above. Analysis. |
| |
| (2) | NEOs have a long-term performance share unit target opportunity that is a fixed number of performance share unitsshares commensurate with the officer’s position. The possible payout at threshold for performance share unit awards was calculated at 16.67% of target. The maximum possible maximum payout for performance share unitsshares was calculated at 150% of target, with an uncapped total shareholder return multiplier, capped atprior to application of a TSR modifier, which may increase or decrease the amount of awards but which may not cause payment to exceed 200% of target. For additional information about the terms of this program, see discussion starting on page 56. 49. |
| |
| (3) | This column shows restricted stock unit awards made during the year. The vesting dates of the awards are provided in footnote 2 to the Outstanding Equity Table below. Table. |
| |
| (4) | This column shows the grant date fair value, calculated in accordance with FASB ASC Topic 718, of the performance share unit awards and restricted stock units granted to each NEO during 2017.2020. Fair value of performance share unit awards granted on January 30, 201727, 2020, are based on an estimated payout of 100% of target. |
| |
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Executive Compensation DataCOMPENSATION DISCUSSION & ANALYSIS
Outstanding Equity Awards at Year End
| | Option Awards (Note 1) | | Stock Awards |
| Name | | Number of
Securities
Underlying
Unexercised
Options
That Are
Exercisable
(#) | | Number of
Securities
Underlying
Unexercised
Options
That Are Not
Exercisable
(#) | | Option
Exercise
or Base
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units of
Stock That
Have Not Yet
Vested
(#)
(Note 2) | | Market Value
of Shares or
Units of Stock
That Have Not
Yet Vested
Based on
12/31 Closing
Price $39.41
($)
(Note 2) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not Yet
Vested
(#)
(Note 3) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
or Unearned
Shares,
Units or
Other Rights
That Have
Not Yet
Vested
($)
(Note 3) |
| Crane | | 285,000 | | — | | $ | 39.21 | | 2-Apr-2022 | | 414,685 | | $ | 16,342,736 | | 884,526 | | $ | 34,859,170 |
| | 94,000 | | — | | | 43.40 | | 24-Jan-2021 | | | | | | | | | | |
| | 53,000 | | — | | | 46.09 | | 24-Jan-2020 | | | | | | | | | | |
| | 49,000 | | — | | | 56.51 | | 26-Jan-2019 | | | | | | | | | | |
| | 28,000 | | — | | | 73.29 | | 27-Jan-2018 | | | | | | | | | | |
| Thayer | | 97,000 | | — | | | 39.81 | | 12-Mar-2022 | | 142,633 | | | 5,621,167 | | 236,578 | | | 9,323,539 |
| | 175,946 | | — | | | 39.24 | | 24-Feb-2022 | | | | | | | | | | |
| | 125,429 | | — | | | 32.46 | | 25-Feb-2021 | | | | | | | | | | |
| | 67,304 | | — | | | 37.71 | | 26-Feb-2020 | | | | | | | | | | |
| | 8,676 | | — | | | 101.05 | | 21-Feb-2018 | | | | | | | | | | |
| Von Hoene Jr. | | 88,000 | | — | | | 39.81 | | 12-Mar-2022 | | 138,225 | | | 5,447,447 | | 248,826 | | | 9,806,233 |
| | 67,000 | | — | | | 43.40 | | 24-Jan-2021 | | | | | | | | | | |
| | 33,000 | | — | | | 46.09 | | 24-Jan-2020 | | | | | | | | | | |
| | 25,200 | | — | | | 56.51 | | 26-Jan-2019 | | | | | | | | | | |
| | 19,000 | | — | | | 73.29 | | 27-Jan-2018 | | | | | | | | | | |
| Cornew | | 70,000 | | — | | | 39.81 | | 12-Mar-2022 | | 151,697 | | | 5,978,379 | | 255,590 | | | 10,072,802 |
| | 26,000 | | — | | | 43.40 | | 24-Jan-2021 | | | | | | | | | | |
| | 13,300 | | — | | | 46.09 | | 24-Jan-2020 | | | | | | | | | | |
| | 14,900 | | — | | | 56.51 | | 26-Jan-2019 | | | | | | | | | | |
| | 11,000 | | — | | | 73.29 | | 27-Jan-2018 | | | | | | | | | | |
| O’Brien | | 102,000 | | — | | | 39.81 | | 12-Mar-2022 | | 102,998 | | | 4,059,151 | | 216,356 | | | 8,526,590 |
| | 49,000 | | — | | | 43.40 | | 24-Jan-2021 | | | | | | | | | | |
| | 27,000 | | — | | | 46.09 | | 24-Jan-2020 | | | | | | | | | | |
| | 30,700 | | — | | | 56.51 | | 26-Jan-2019 | | | | | | | | | | |
| | 22,000 | | — | | | 73.29 | | 27-Jan-2018 | | | | | | | | | | |
| | | Option Awards (Note 1) | | Stock Awards | |
| Name | | Number of
Securities
Underlying
Unexercised
Options
That Are
Exercisable
(#) | | Number of
Securities
Underlying
Unexercised
Options
That Are Not
Exercisable
(#) | | Option
Exercise or
Base Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units of
Stock That
Have Not
Yet Vested
(#)
(Note 2) | | Market Value
of Shares
or Units of
Stock That
Have Not Yet
Vested Based
on 12/31
Closing Price
$42.22
($)
(Note 2) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Yet Vested
(#)
(Note 3) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
or Unearned
Shares, Units
or Other
Rights That
Have Not Yet
Vested
($)
(Note 3) | |
| Crane | | 285,000 | | — | | 39.21 | | 04/02/2022 | | 278,970 | | 11,778,113 | | 623,192 | | 26,311,166 | |
| | | 94,000 | | — | | 43.40 | | 01/24/2021 | | | | | | | | | |
| Nigro | | 13,000 | | — | | 39.81 | | 03/12/2022 | | 102,857 | | 4,342,623 | | 135,332 | | 5,713,717 | |
| | | 13,400 | | — | | 43.40 | | 01/24/2021 | | | | | | | | | |
| Cornew | | 70,000 | | — | | 39.81 | | 03/12/2022 | | 77,445 | | 3,269,728 | | 165,362 | | 6,981,584 | |
| Von Hoene, Jr. | | 88,000 | | — | | 39.81 | | 03/12/2022 | | 77,498 | | 3,271,966 | | 165,476 | | 6,986,397 | |
| | | 67,000 | | — | | 43.40 | | 01/24/2021 | | | | | | | | | |
| Butler Jr. | | — | | — | | — | | — | | 100,131 | | 4,227,531 | | 84,888 | | 3,583,971 | |
Notes to Outstanding Equity Table
| (1) | Non-qualified stock options were granted to NEOs pursuant to the Company’s long-term incentive plans. Awards vest in four equal increments, beginning on the first anniversary of the grant date. All awards expire on the tenth anniversary of the grant date. For Mr. Thayer,No stock optionsoption awards have been granted prior to March 12, 2012 were granted under the Constellation Energy Group Inc. Long Term Incentive Plan and were converted into the equivalent right to receive Exelon common stock. The number of stock options received upon conversion is equal to the original number of Constellation stock options multiplied by the merger exchange ratio (0.93) and rounded down to the nearest whole share. The exercise price for each converted share is equal to the original Constellation exercise price divided by the exchange ratio (0.93), rounded up to the nearest whole cent. since 2012. |
| |
| (2) | The amount shown includes unvested restricted stock unit (RSU) awards and the performance share unit (PShare) award earned for the performance period beginning January 1, 20152018, and ending December 31, 2017,2020, which vested on January 29, 2018.25, 2021. The unvested restricted stock unit awards are composed of the final third of the award made in January 2015,2018, which vested on January 29, 2018;25, 2021; two-thirds of the award made in January 2016,2019, half of which vested on January 29, 201827, 2020, and half of which will vest on the date of the Compensation Committee’s first regular meeting in 2019;2021; and the full award granted on January 30, 2017,27, 2020, one-third of which vested on January 29, 201825, 2021, and one-third of which will vest on the date of each of the Compensation Committee’s first regular meetings in |
66 Exelon 2018 Proxy Statement
Table of Contents
Executive Compensation Data
| 2019 2022 and 2020,2023, respectively. All RSU awards accrue additional shares through automatic dividend reinvestment. For Mr. Thayer and Mr. Cornew,Nigro, the amount shown also includes ana retention-related restricted stock unit award of 30,000 retention stock unitsfor 40,000 shares granted on January 28, 2013 which vested29, 2018 that will cliff vest on January 28, 2018.29, 2022. For Mr. Von Hoene,Butler Jr., the amount shown also includes ana promotion-related restricted stock unit award of 20,000 retention stock unitsfor 28,468 shares granted on October 21, 2013December 2, 2019 that will cliff vest on October 21, 2018.December 2, 2024. All shares are valued at $39.41,$42.22, the closing price on December 29, 2017.
31, 2020. |
| |
| (3) | The amount shown includes the target PShareperformance share awards granted on January 26, 2016February 4, 2019 for the performance period ending December 31, 20182021, and the target PShareperformance share awards granted on January 30, 201727, 2020, for the performance period ending December 31, 2019. These2022. The value of these awards havehas been increased to reflect the highest level of performance achievable for the period, or 200%. All shares are valued at $39.41,$42.22, the closing price on December 29, 2017. 31, 2020. |
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards (Note 1) |
| Name | | Number of
Shares Acquired
on Exercise
(#) | | Value
Realized on
Exercise
($) | | Number of
Shares Acquired
on Vesting
(#) | | Value
Realized on
Vesting
($) |
| Crane | | — | | $ | — | | 378,031 | | $ | 13,246,197 |
| Thayer | | 167,669 | | | 2,809,042 | | 104,613 | | | 3,665,638 |
| Von Hoene Jr. | | — | | | — | | 99,549 | | | 3,488,202 |
| Cornew | | — | | | — | | 113,013 | | | 3,959,985 |
| O’Brien | | — | | | — | | 95,686 | | | 3,352,831 |
| | | Option Awards | | Stock Awards (Note 1) | |
| Name | | Number of
Shares
Acquired
on Exercise
(#) | | Value
Realized
on
Exercise
($) | | Number of
Shares
Acquired
on Vesting
(#) | | Value
Realized on
Vesting
($) | |
| Crane | | — | | — | | 300,152 | | $ 14,188,163 | |
| Nigro | | — | | — | | 66,537 | | 3,145,185 | |
| Cornew | | — | | — | | 86,120 | | 4,070,907 | |
| Von Hoene, Jr. | | — | | — | | 86,181 | | 4,073,761 | |
| Butler Jr. | | — | | — | | 24,363 | | 1,151,662 | |
Notes to Option Exercises and Stock Vested Table
| (1) | Share amounts are composed of the following tranches of prior awards that vested on January 30, 2017:27, 2020: the PShareperformance share awards granted for the performance period of January 1, 20142017, through December 31, 2016;2019; the final third of the RSU awards granted in January 2014,2017, the second third of the RSU awards granted in January 2015 (including a supplemental grant made to Mr. Thayer in July 2014)2018 and the first third of the RSU awards granted in January 2016.2019. All of these awards were valued at $35.04$47.27 upon vesting. |
60Exelon 2021 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION & ANALYSIS
Pension Benefits
Exelon sponsors the Exelon Corporation Retirement Program, a traditional defined benefit pension plan that covers certain management employeesincludes the Service Annuity System (SAS), a traditional pension plan covering NEOs who commenced employment prior to January 1, 2001 and certain collective bargaining unit employees. The Exelon Corporation Retirement Program includes the Service Annuity System (SAS)Cash Balance Pension Plan (CBPP), which is the legacy ComEd pension plan. Effectivean account-based plan covering eligible NEOs hired between January 1, 2001, Exelon also established two cash balance defined benefit pension plans to reduce future retirement benefit costs and provide an option that is portable as the Company anticipated a workforce that was more mobile than the traditional utility workforce. The cash balance defined benefit pension plans cover management employeesFebruary 1, 2018, and certain collective bargaining unit employees hired on or after such date, as well as certain management employees hired prior to such dateNEOs who previously elected to participate in a cash balance plan. Legacy Constellation employees participate intransfer to the Pension Plan of Constellation Energy Group, Inc. (Constellation Pension Plan).CBPP from the SAS. The Constellation Pension Plan includes a traditional pension formula referred to as the Enhanced Traditional Plan (ETP) and a Pension Equity Plan (PEP). Employees hired before January 1, 2000 participate in the ETP. Employees hired on or after January 1, 2000 and employees hired before that date who elected to do so participate in the PEP. Each of these plansRetirement Program is intended to be tax-qualified under Section 401(a) of the Internal Revenue Code. An employee can participate in only one of the qualified pension plans.
For NEOs participating
Service Annuity System (SAS)
Mr. Crane participates in the SAS. Under the SAS, theMr. Crane will receive an annuity benefit payable at normal retirement age is equal to the sum of 1.25% of the participant’sMr. Crane’s earnings as of December 25, 1994, reduced by a portion of the participant’shis earned Social Security benefit as of that date, plus 1.6% of the participant’sMr. Crane’s highest average annual pay, multiplied by the participant’shis years of credited service (up to a maximum of 40 years). Pension-eligible compensation forunder 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.
The “normal
“Normal retirement age” under the SAS is 65. The65 and the plan also offers an early retirement benefit prior to age 65,benefits, which isare payable if a participant retires after attainment of age 50 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, under the SAS, 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.
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Table of Contents
Executive Compensation DataCash Balance Pension Plan (CBPP)
All other NEOs participate in the CBPP. Under the cash balance pension plan,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. (EmployeesNEOs who participated intransferred from the SAS prior to January 1, 2001 and elected to participate in the cash balance planCBPP also have a frozen transferred SAS benefit from the former plan, and received a “transition” credit based on their age, service and compensation at the time of transfer.) Beginning January 1, 2008, When the CBPP was initially established in 2001, it provided an annual benefit credit under the plan is 7% of 5.75% of an employee’s base pay and annual incentive award for the year, and beginning January 1, 2013an annual investment credit based on the average of that year’s S&P 500 stock index return and the 30-year bond rate for employees hiredthe 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 or after such date,cash balance plans. NEO participants in the CBPP currently receive an annual benefit credit is equalranging from 7.0% to a percentage10.5% (depending on length of service) of base paysalary and annual incentive award, which varies between 3% and 8%, based upon age. Beginning in 2017, thean annual investment credit isbased on the third segment spot rate of interest on long-term investment grade corporate bonds. The segment rate will be determined asbonds for the month of November of the year for which the cash balance account receives the investment credit. Cash balance participants with pre-2008 balances receive an additional benefit credit ranging from 0.5% to 3.5% based on their pre-2008 service. Also, beginning in 2017, account balances for employees hired prior to January 1, 2013 will be subject(subject to a minimum investment credit of 4%. For employees hired on or after January 1, 2013, the annual investment credit is the second segment spot rate of interest on long-term corporate bonds, determined as of November of the year for which the cash balance account receives the investment credit, subject to a minimum annual investment credit rate of 3.8% and a maximum annual investment credit rate of 7% minimum). Benefits are vestedvest 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, and as described above, years of service are not relevant to a determination of accrued benefits under the cash balance pension plans.CBPP.
For
In 2019, the Company also provided a one-time Transition Benefit Credit 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.
Supplemental Management Retirement Plan (SMRP)
All NEOs who participate in the PEP, a lump sum benefit amount is computed based on covered earnings multipliedSMRP, which Exelon sponsors as permitted by a total credit percentage. Covered earnings are equal to the average of the highest three of the last five twelve-month periods’ base pay plus annual incentive awards. The total service credit percentage is equal to the sum of the credit percentages based on the following formula: 5% per year of service through age 39, 10% per year of service from age 40 to age 49, and 15% per year of service after age 49. No benefits are available under the PEP until a participant has at least three years of vesting service. Benefits payable under the PEP are paid as an annuity unless a participant elects a lump sum within 60 days after separation.
The Code limits to $270,000 the individual 2017 annual compensation that may be taken into account under the tax-qualified retirement plan. As permitted by Employee Retirement Income Security Act, Exelon sponsors threeAct. The SMRP provides supplemental executive retirement plans (or SERPs) that allowbenefits to the payment to a select group of management or highly-compensatedbenefits provided under the tax-qualified Retirement Program for individuals out of its general assets of any benefits calculatedwhose annual compensation exceeds the limits imposed under provisionsthe 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 qualified pension plan which may be above thesebut for the application of the Internal Revenue Code limits. The SERPs offerSMRP offers a lump sum as an optional form of payment, which 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 20172020 is 3.11%2.30%. For participants in the cash balance pension plan and the PEP,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 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.
Under the terms of the SERPs, participants are provided the amount of benefits they would have received under the SAS, cash balance plan, ETP or PEP, as applicable, but for the application of the Code limits.
In addition, certain executives previouslyMr. Crane received grantsa grant of additional credited service under a SERP. In particular,the SMRP upon joining the Company (then ComEd) in 1998,1998. As part of original offer of employment, Mr. Crane received an additional 10 years of credited service through September 28, 2008,was granted the date of his tenth anniversary, as part of his employment offer that providedright to earn one additional year of service credit for each year of employment up to a maximum of 10ten additional years.years as an incentive to join the Company. Mr. Crane received ten years of credited service as of September 28, 2008, the tenth anniversary of his employment date with the Company.
As
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Table of January 1,Contents
COMPENSATION DISCUSSION & ANALYSIS
Since 2004, Exelon does not grantno longer provides additional years of credited service to executives under the SERPSMRP for any period in which services are not actually performed, except that up to two years of service credits may be provided upon a qualifying termination of employment under severance or change in control agreements, first entered into after such date, and performance-based grantsawards or grantsawards which are intended to make up for lost pension benefits from another employer may be (but have not been) provided.employer. Service credits previously available under employment, change in control or severance agreements or arrangements (or any successor arrangements) are not affected by this policy.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 following tables. The present value for cash balance and PEPCBPP participants is the account balance. The assumptions used in estimating the present values for SAS participants include the following: pension benefits are assumed to begin at each participant’s earliest unreduced retirement age; the SERPSMRP lump sum amounts are determined using the rate of 5% for SAS participants at the assumed retirement age; the lump sum amounts are discounted from the assumed retirement date at the applicable discount rates of 4.04%3.34% as of December 31, 20162019 and 3.62%2.58% as of December 31, 2017;2020; and the applicable mortality tables. The applicable mortality table is the RP 2000-based table projected generationally using Exelon’s best estimate of long-term mortality improvements. The December 31, 20172020 mortality table is consistent with the mortality used in the Exelon December 31, 20172020 pension disclosure.
68 Exelon 2018 Proxy Statement
Table of Contents
Executive Compensation DataPension Benefits
| Name | | Plan Name | | Number of
Years Credited
Service
(#) | | Present Value
of Accumulated
Benefit
($) | | Payments
During Last
Fiscal Year
($) |
| Crane(1) | | SAS | | 19.26 | | $ | 1,312,415 | | $ | — |
| | SERP | | 29.26 | | | 16,757,102 | | | — |
| Thayer | | PEP | | 15.00 | | | 293,333 | | | — |
| | SERP | | 15.00 | | | 1,608,131 | | | — |
| Von Hoene Jr. | | Cash Balance | | 15.93 | | | 418,264 | | | — |
| | SERP | | 15.93 | | | 1,267,201 | | | — |
| Cornew | | Cash Balance | | 23.59 | | | 706,119 | | | — |
| | SERP | | 23.59 | | | 1,194,380 | | | — |
| O’Brien | | Cash Balance | | 35.51 | | | 1,514,210 | | | — |
| | SERP | | 35.51 | | | 2,034,833 | | | — |
| Name | | Plan Name(1) | | Number of
Years Credited
Service
(#) | | | Present Value
of Accumulated
Benefit
($) | | | Payments
During Last
Fiscal Year
($) | |
| Crane | | SAS | | | 22.26 | | | | 1,685,578 | | | | — | |
| | | SMRP | (2) | | 32.26 | | | | 19,344,451 | | | | — | |
| Nigro | | CBPP | | | 24.42 | | | | 485,767 | | | | — | |
| | | SMRP | | | 24.42 | | | | 1,222,161 | | | | — | |
| Cornew | | CBPP | | | 26.59 | | | | 962,826 | | | | — | |
| | | SMRP | | | 26.59 | | | | 2,293,831 | | | | — | |
| Von Hoene, Jr. | | CBPP | | | 18.93 | | | | 549,567 | | | | — | |
| | | SMRP | | | 18.93 | | | | 1,890,005 | | | | — | |
| Butler Jr. | | CBPP | | | 12.91 | | | | 312,002 | | | | — | |
| | | SMRP | | | 12.91 | | | | 621,538 | | | | — | |
Notes to Pension Benefits Table
| (1) | Plans include: Service Annuity System (SAS); Supplemental Management Retirement Plan (SMRP); and Cash Balance Pension Plan (CBPP). |
| (2) | Based on discount rates prescribed by the SEC proxy disclosure guidelines, Mr. Crane’s non-qualified SERPSMRP present value is $16,757,102.$19,344,451. Based on lump sum plan rates for immediate distributions under the non-qualified plan, the comparable lump sum amount applicable for service through December 31, 20172020 is $22,976,599.$28,495,474. Note that, in any event, payments made upon termination may be delayed by six months in accordance with U.S. Treasury Department guidance. |
Deferred Compensation Programs
Exelon offers deferred compensation plans to permit the deferral of certain cash compensation to facilitate tax and retirement planning and satisfaction of stock ownership requirements for executives and key managers. Exelon maintains non-qualified deferred compensation plans that are open to certain highly-compensated employees, including the NEOs.Corporation Deferred Compensation Plan
The Exelon Corporation Deferred Compensation Plan is a non-qualified plan that permits legacy Exelon executives and key managersthe NEOs to defer receipt of basecertain cash compensation to facilitate tax and retirement planning. The Deferred Compensation Plan also permits the Company to credit related matching contributions that would have been contributed to the Exelon Corporation Employee Savings Plan (the Company’s tax-qualified 401(k) plan) but for the applicable limits under the Internal Revenue Code. The Constellation Deferred Compensation Plan is a non-qualified plan that permits legacy Constellation executives to defer receipt of base compensation and the Company to credit related matching contributions that would have been contributed to the
Exelon Corporation Employee Savings Plan. The Deferred Compensation Plans permit participants to defer taxation of a portion of their income. The Exelon Deferred Compensation Plan benefits the Company by deferring the payment of a portion of its compensation expense, thus preserving cash.
The Exelon Employee Savings Plan is intended to be tax-qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. The Constellation Energy Group Employee Savings Plan was merged into Exelon’s Employee Savings Plan as of July 1, 2014. Exelon maintains the Employee Savings Plan to attract and retain qualified employees, including the NEOs, and to encourage employees to save some percentage of their cash compensation for their eventual retirement. The Employee Savingsretirement savings, which under the Plan permits employees to do so, and allows themay be supplemented by Company to make matching contributions in a relatively tax-efficient manner.contributions. The Company maintains the excess matching feature of the Deferred Compensation PlansPlan to enable key managementhighly compensated employees to save for their eventual retirement to the extent they otherwise would have, were it not for the limits established by the IRS.
The Stock Deferral Plan is a non-qualified plan that permitted legacy Exelon executives to defer performance share units prior to 2007.
The following table shows the amounts that NEOs have accumulated under both the Deferred Compensation Plans and the Stock Deferral Plan. The Exelon Deferred Compensation and Stock Deferral Plans were closed to new deferrals of base pay (other than excess Employee Savings Plan deferrals), annual incentive payments or performance share unit awards in 2007, andOnce participants were granted a one-time election to receive a distribution of their accumulated balance in each plan during 2007. Existing balances will continue to accrue dividends or other earnings until payout upon termination. Balances in the Deferred Compensation Plan will be settled in cash upon the termination event selected by the officer and will be distributed either in a lump sum, or in annual installments. Share balances in the Stock Deferral Plan continue to earn the same dividends that are available to all shareholders, which are reinvested as additional shares in the plan. Balances in the plan are distributed in shares of Exelon stock in a lump sum or installments upon termination of employment.
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Executive Compensation Data
The Deferred Compensation Plans continue in effect for those officers who participate in the Employee Savings Plan and who reach their statutory contribution limit during the year. After this limit is reached,year, their elected payroll contributions and Company matching contribution will be credited to their accounts in the Deferred Compensation Plans. The investment options under the Deferred Compensation PlansPlan consist of a basket of investment fund benchmarks substantially the same as those funds available through the Employee Savings Plan. Deferred amounts represent unfunded, unsecured obligations of the Company.
| Name | | Executive
Contributions
in 2017
($)
(Note 1) | | Registrant
Contributions
in 2017
($)
(Note 2) | | Aggregate
Earnings
in 2017
($)
(Note 3) | | Aggregate
Withdrawals/
Distributions
($)
(Note 4) | | Aggregate
Balance at
12/31/17
($)
(Note 4) |
| Crane | | $ | 106,700 | | $ | 63,999 | | $ | 195,133 | | $ | — | | $ | 1,681,456 |
| Thayer | | | — | | | — | | | — | | | — | | | — |
| Von Hoene Jr. | | | 42,966 | | | 35,405 | | | 74,397 | | | — | | | 608,232 |
| Cornew | | | 28,887 | | | 35,107 | | | 68,855 | | | — | | | 479,474 |
| O’Brien(5) | | | 37,746 | | | 28,390 | | | 421,661 | | | — | | | 3,136,200 |
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COMPENSATION DISCUSSION & ANALYSIS
Nonqualified Deferred Compensation
| Name | | Executive
Contributions
in 2020
($)
(Note 1) | | | Registrant
Contributions
in 2020
($)
(Note 2) | | | Aggregate
Earnings
in 2020
($)
(Note 3) | | | Aggregate
Withdrawals/
Distributions
($)
(Note 4) | | | Aggregate
Balance at
12/31/20
($)
(Note 4) | |
| Crane | | | 75,425 | | | | 44,179 | | | | (12,854) | | | | — | | | | 2,336,947 | |
| Nigro | | | 15,267 | | | | 19,540 | | | | (2,351) | | | | — | | | | 188,147 | |
| Cornew | | | 19,824 | | | | 24,272 | | | | (8,926) | | | | — | | | | 726,658 | |
| Von Hoene, Jr. | | | 27,848 | | | | 24,354 | | | | (13,420) | | | | — | | | | 900,587 | |
| Butler Jr. | | | 26,250 | | | | 5,648 | | | | (8,404) | | | | — | | | | 154,946 | |
Notes to Nonqualified Deferred Compensation Table
| (1) | The full amount shown for executive contributions is included in the base salary figures for each NEO shown above in the Summary Compensation Table. |
| (2) | The full amount shown under registrant contributions is included in the Company contributions to savings plans for each NEO shown above in the All Other Compensation Table. |
| (3) | The amount shown under aggregate earnings reflects the NEO’s gain or loss based upon the individual allocation of his notional account balance into the basket of mutual fund benchmarks. These gains or losses do not represent current income to the NEO and have not been included in any of the compensation tables shown above. |
| (4) | For all NEOs the aggregate balance shown includes those amounts, both executive contributions and registrant contributions, that have been disclosed either as base salary as described in Note 1 or as Company contributions under all other compensation as described in Note 2 for the current fiscal year ending December 31, 2017.2020. For Mr. Crane, all executive and registrant contributions included in the aggregate balance have previously been disclosed in Summary Compensation Tables. Mr. Thayer did not participate in the plan during 2017. |
(5) | For Mr. O’Brien the amounts shown for aggregate earnings in 2017 and aggregate balance at December 31, 2017 also include the aggregate earnings and aggregate balance respectively of his Stock Deferral Plan account.
|
Potential Payments upon Termination or Change in Control
ChangeEach NEO is entitled to compensation in controlthe event his or her employment agreements and severance plan covering named executive officers
Background
terminates or upon a change in control. The Compensation Committee reviews Exelon’s change in controladopted changes to severance and severance benefits policies to ensure that they are consistent with competitive practice and reasonable. In reviewing the policies, the Compensation Committee considers the advice of its compensation consultant. The Exelon benefits currently include multiples of change in control benefits ranging from two times base salary and annual bonus for corporate and subsidiary vice presidents to 2.99 times base salary and annual bonus foreffective in 2020, with the CEO, executive vice presidents, presidentsamount of certain business units and select senior vice presidents. In April 2009, the Compensation Committee adopted a policy that Exelon would not include excise tax gross-up payment provisions in senior executive employment, change in control, or severance plans, programs or agreements that are entered into, adopted or materially amended on or after April 2, 2009 (other than renewals of existing arrangements that are not materially amended or arrangements assumed pursuant to a corporate transaction). In October 2016, the NEOs covered by change in control agreements entered into prior to April 2, 2009, which provided for potential excise tax gross-up payments, agreed to waive those payments and the agreements were later amended to remove such gross-up payments. Therefore, no NEO is currently entitled to an excise tax gross-up payment upon any termination of employment from Exelon.
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Executive Compensation Data
NEOs have entered into individual change in control employment agreements, which generally protect such executives’ position and compensation levels for two years after a change in control of Exelon. The agreements are initially effective for a period of two years, and provide for a one-year extension each year thereafter until cancellation or termination of employment.
Quantification of Paymentsbenefits payable being contingent upon a Change in Controlvariety of factors, including the circumstances under which employment terminates.
During the 24-month period following a change in control, or, during the 18-month period following another significant corporate transaction affecting the executive’s business unit in which Exelon shareholders retain between 60% and 66⅔% control (a significant acquisition), if a NEO resigns for good reason or if the executive’s
Severance Benefits
Applicability: Termination of employment is terminated by Exelon other than for cause or disability the executive isor terminates for good reason as defined below.
NEOs are entitled to certain payments and benefits in connection with a termination of employment other than for cause or disability or terminates for good reason as provided for in the following:Senior Management Severance Plan. Benefits under the Plan include the following items.
●• | the executive’sBase Salary: Continued payment of base salary for a period of 24 months after termination of employment |
| • | Annual Incentive: Target annual incentive awards for a period of 24 months after termination of employment and PShare awardsa pro-rated annual incentive award for the year in which the termination occurs;of employment occurs. |
●• | severance payments equal to 2.99 timesEquity Awards: Outstanding equity awards vest in whole or in part in accordance with the sum of (1) the executive’s base salary plus (2) the higher of the executive’s target annual incentive for the year of termination or the executive’s average annual incentive award payments for the two years preceding the termination, but not more than the annual incentive for the year of termination basedtable on actual performancebefore the application of negative discretion;page 65. |
●• | a benefitSupplemental Management Retirement Plan Benefits: Benefit equal to the amount payable under the SERPSMRP determined as if (1) the SERPSMRP benefit were fully vested (2) the executive had 2.99 additional years of age and years of service (2.0 years for executives who first entered into such agreements after 2003 or do not have such agreements) and (3) the severance pay constituted covered compensation for purposes of the SERP;SMRP. |
●• | abenefitRetirement Benefits: If applicable, benefits equal to the actuarial equivalent present value of any non-vested accrued benefit under Exelon’s qualified defined benefit retirement plan;plan. All current NEOs are fully vested. |
●• | Insurance, Health and Welfare Benefits: Life, disability, accident, health and other welfare benefit coverage continues during the severance pay period on the same terms and conditions applicable to active employees, followed by retiree health coverage if coverage is available and eligibility requirements have been met. |
| • | Financial Planning: Outplacement and financial planning services for at least 12 months. |
Payments under the Senior Management Severance Plan are subject to reduction by Exelon to the extent necessary to avoid imposition of excise taxes imposed by Section 4999 of the Internal Revenue Code on excess parachute payments or under similar state or local law.
The Senior Management Severance Plan includes the following definitions with respect to severance benefits.
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“Cause” with respect to severance benefits (or change in control benefits discussed below) generally means any of the following (a) refusal to perform or habitual neglect in the performance of duties or responsibilities or of specific directives of the officer to whom the executive reports or of the Board of Directors of Exelon or any of its participating employers under the Senior Management Severance Plan that are not materially inconsistent with the scope and nature of the executive’s duties and responsibilities; (b) willful or reckless commission of acts or omissions which have resulted in or are likely to result in a material loss or material damage to the reputation of Exelon or any of its affiliates, or that compromise the safety of any employee or other person; (c) commission of a felony or any crime involving dishonesty or moral turpitude; (d) material violation of the Code of Business Conduct (or any corporate policies referenced therein), or of any statutory or common-law duty of loyalty; or (e) any breach by the executive of one or more restrictive covenants contained within the Senior Management Severance Plan.
“Good reason” with respect to severance benefits generally means the following: a material reduction of the executive’s salary unless such reduction is part of a policy, program or arrangement applicable to peer executives of Exelon or of the business unit that employs the executive; a demotion below an executive salary band level; with respect to the CEO, a material adverse reduction in the executive’s position or duties, but excluding any such change caused solely by a disposition of all or a significant portion of Exelon individually or collectively with its affiliates as defined in the Plan.
Post-Termination Arrangements for Messrs. Cornew and Von Hoene, Jr.
As previously announced, the roles that Messrs. Cornew and Von Hoene, Jr. held were eliminated in connection with organizational restructurings and ongoing succession management. Each of Messrs. Cornew and Von Hoene, Jr. entered into separation agreements providing for their receipt of standard benefits provided under the non-change in control provisions of the Senior Management Severance Plan, subject to customary waivers, releases, non-solicitation and non-compete provisions for two years following their departure dates. Benefits include a severance benefit equal to two times the sum of each executive’s base salary and target annual incentive awards. In addition, each is eligible for a pro-rated annual incentive award for 2021 based on the achievement of business performance metrics consistent with those applied to executive peers. In addition, in accordance with the terms in effect on the date of grant for outstanding equity awards, a portion of the performance share unit awards granted to each of Messrs. Cornew and Von Hoene, Jr. will be prorated to reflect the portion of the performance period during which they were employed and all such awards will remain outstanding and subject to their original performance-based vesting schedule. Outstanding restricted stock units will vest and any outstanding stock options will remain exercisable until their expiration date. Messrs. Cornew and Von Hoene, Jr. will also be entitled to receive accrued pension benefits, health care coverage, and other SERP or deferred compensation benefits, as applicable and as described above at page 63.
Mr. Cornew also received home sale relocation benefits under which Exelon’s relocation vendor purchased the Baltimore residence Mr. Cornew acquired in connection with his relocation to Baltimore to take the role of Chief Executive Officer of Constellation. The value of the benefit is $216,640, based on a determination of the difference between the average of two appraisals and the price Mr. Cornew paid for the home in 2012 plus qualified capital improvements as provided for under the executive relocation program’s standard terms.
Change in Control Benefits
Applicability: Termination of employment following a change of control
Pursuant to individual change in control agreements (Messrs. Crane and Nigro) or the Senior Management Severance Plan (Mr. Butler Jr.), these executive are eligible for certain benefits upon certain involuntary terminations by the Company or a resignation for “good reason” in connection with a change in control of Exelon Corporation. Pursuant to the terms of their separation agreements, Messrs. Cornew and Von Hoene, Jr. are not eligible for change in control benefits.
If the executive resigns for good reason (as defined below) or his or her employment is terminated by Exelon other than for cause or disability, during the period commencing 90 days before a change of control or during the 24-month period following a change in control, the executive is entitled to the benefits outlined below.
| • | Severance Pay: The executive receives 2.99 times base salary to be paid in substantially equal regular payroll installments. |
| • | Annual Incentive: Target annual incentive awards for a period of 2.99 years after termination of employment and a pro-rated annual incentive award for the year in which the termination of employment occurs. |
ll previously-awarded stock options, PShares, RSUs,• | Equity Awards: Outstanding equity awards in whole or restricted shares become fully vested,in part as detailed in the table on page 65. |
| • | Supplemental Management Retirement Plan Benefits: Benefit equal to the amount payable under the SMRP determined as if (1) the executive had 2.00 additional years of age and years of service (2.99 years for Mr. Crane) and (2) the stock options remain exercisable until the earlierseverance pay constituted covered compensation for purposes of the fifth anniversary of the executive’s termination date or the option’s expiration date;SMRP; |
●• | lRetirement Benefits: Benefits equal to the actuarial equivalent present value of any non-vested accrued benefit under Exelon’s qualified defined benefit retirement plan. All current NEOs are fully vested. |
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ife,• | Insurance, Health and Welfare Benefits: Life, disability, accident, health and other welfare benefit coverage continues during the severance pay period on the same terms and conditions applicable to active employees, followed by retiree health coverage if the executive has attained at least age 50 and completed at least 10 years of service (or any lesser eligibility requirement then in effect for regular employees); and |
●• | outplacementFinancial Planning: Outplacement and financial planning services for at least 12 months. |
The individual change in control agreements and Senior Management Severance Plan include the following definitions with respect to change in control benefits:
“Change in control” includes any of the following: (a) when any person or group acquires 20% of Exelon’s then outstanding common stock or of voting securities; (b) the incumbent members of the Exelon Board (or new members nominated by a majority of incumbent Directors) cease to constitute at least a majority of the members of the Exelon Board; (c) consummation of a reorganization, merger or consolidation, or sale or other disposition of at least 50% of Exelon’s operating assets (excluding a transaction where Exelon shareholders retain at least 60% of the voting power); or (d) upon shareholder approval of a plan of complete liquidation or dissolution.
Change in control benefits are also provided under the individual change in control agreements if thean executive is terminated other than for cause or disability, or terminates for good reason (1) after a tender offer or proxy contest commences, or after Exelon enters into an agreement which, if consummated, would cause a change in control, and within one year after such termination a change in control does occur, or (2) within two years after a sale or spin-off of the executive’s business unit in contemplation of a change in control that actually occurs within 60 days after such sale or spin-off (a disaggregation), or (3) within 18 months after a sale or disposition of more than 50% of Exelon’s operating assets affecting the executive’s business unit in which Exelon shareholders do not own more than 66-2/3% of the shares of the resulting entity (a “significant corporate transaction”).
A
“Good reason” generally includes (a) a material reduction in salary, incentive compensation opportunity or aggregate benefits; (b) a material adverse reduction in the executive’s position, duties or responsibilities (other than a change in control underthe position or level of the officer to whom the executive reports); (c) a required relocation by more than 50 miles; (d) a material breach of the terms of the individual change in control agreements or the Senior Management Severance Plan, as applicable, by Exelon or its successor.
Equity Awards – Consequences of Termination of Employment
The following table summarizes the treatment of outstanding equity awards granted under the Exelon Long-Term Incentive Plans and related severance arrangements upon a termination of employment agreements generally occurs:for the respective reasons stated below.
●Award Type | when any person acquires 20% of Exelon’s voting securities; |
● | wEvent | | hen the incumbent members of the Exelon Board (or new members nominated by a majority of incumbent Directors) ceaseto constitute at least a majority of the members of the Exelon Board;Consequences |
●RSUs (including other restricted stock awards) | | •Retirement(1) or Disability •Death •Involuntary Termination(3) in connection with a Change in Control(4) | | Unvested awards vest |
| | u•pon consummationVoluntary Termination(2) | | Unvested awards are forfeited |
| | •Involuntary Termination(3) | | Unvested awards prorated and vest |
| Long Term Incentive Awards (including performance share awards) | | •Retirement(1) or Disability •Death •Involuntary Termination(3) in connection with a Change in Control(4) | | Prorated portion vests based on actual performance and is payable to the recipient at the time provided for in the terms of the award |
| •Voluntary Termination(2) | | Unvested awards are forfeited |
| Stock Options | | •Retirement(1) or Disability | | Outstanding awards remain exercisable until the earlier of (a) 5 years from termination date or (b) expiration date of award. |
| | •Voluntary Termination(2) | | Outstanding awards are exercisable to the extent the award was exercisable |
| | •Involuntary Termination(3) | | on the date of termination and may be exercised until the earlier of (a) 90 days from termination date or (b) expiration date of award. |
| | •Death | | Outstanding awards are immediately exercisable and may be exercised until the earlier of (a) 3 years from termination date or (b) expiration date of award. |
| | •Involuntary Termination(3) in connection with a reorganization, mergerChange in Control(4) | | Outstanding awards are immediately exercisable and may be exercised until the earlier of (a) 5 years from termination date or consolidation, or sale or other disposition(b) expiration date of award. |
| (1) | Age 55 with at least 50%10 years of Exelon’soperating assets (excluding a transaction where Exelon shareholders retain at least 60% of the voting power); orservice |
●(2) | upon shareholder approval of a plan of complete liquidation or dissolution. |
The term good reason under the individual change in control employment agreements generally includes any of the following occurring within two years after a change in control or disaggregation or within 18 months after a significant acquisition:
● | amaterial reduction in salary, incentive compensation opportunity or aggregate benefits, unless such reduction is part of apolicy, program or arrangement applicable to peer executives;Not retirement eligible |
●(3) | failure ofInvoluntary Termination means a successor to assumetermination by the agreement;Company for reasons other than for cause or disability or a resignation by an eligible executive for good reason |
●(4) | To be applicable, termination must occur during the period commencing 90 days before a material breachchange of control or during the agreement by Exelon; or |
● | any of the24-month period following but only after a change in control or disaggregation: (1) a material adverse reduction in the executive’sposition, duties or responsibilities (other than a change in the position or level of officer to whom the executive reports or a change that is part of a policy, program or arrangement applicable to peer executives) or (2) a required relocation by more than 50 miles. |
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Executive Compensation Data
The term cause under the change in control employment agreements generally includes any of the following:
● | refusal to perform or habitual neglect in the performance of duties or responsibilities or of specific directives of the officerto whom the executive reports which are not materially inconsistent with the scope and nature of the executive’s duties and responsibilities; |
● | willful or reckless commission of acts or omissions which have resulted in or are likely to result in a material loss or material damage to the reputation of Exelon or any of its affiliates, or that compromise the safety of any employee; |
● | commission of a felony or any crime involving dishonesty or moral turpitude; |
● | material violation of the code of business conduct, or of any statutory or common-law duty of loyalty; or |
● | any breach of the executive’s restrictive covenants. |
If the amount payable to a NEO under a change in control agreement, inclusive of other parachute payments, would cause an excise tax to be imposed under Section 4999 of the Code, the payments to such executive shall be reduced to the maximum amount below which no such tax is imposed or, if the payment without such reduction would leave the executive with a greater amount after payment of such excise taxes, then no such reduction shall be applied.
If a NEO resigns for good reason or is terminated by Exelon other than for cause or disability, in each case under circumstances not involving a change in control or similar provision described above, the NEO may be eligible for the following non-change in control benefits under the Exelon Corporation Senior Management Severance Plan:
● | prorated payment of the executive’s annual incentive and performance share unit awards for the year in whichtermination occurs; |
● | for a 24 month severance period, continued payment of an amount representing base salary and target annual incentive; |
● | a benefit equal to the amount payable under the SERP determined as if the severance payments were paid as ordinary base salary and annual incentive; |
● | during the severance period, continuation of health, basic life and other welfare benefits the executive was receivingimmediately prior to the severance period on the same terms and conditions applicable to active employees, followed by retiree health coverage if the executive has attained at least age 50 and completed at least 10 years of service (or any lessereligibility requirement then in effect for non-executive employees); and |
● | outplacement and financial planning services for twelve months. |
Payments under the Senior Management Severance Plan are subject to reduction by Exelon to the extent necessary to avoid imposition of excise taxes imposed by Section 4999 of the Internal Revenue Code on excess parachute payments or under similar state or local law.
The term good reason under the Senior Management Severance Plan means either of the following:
● | amaterial reduction of the executive’s salary (or, with respect to a change in control, incentive compensation opportunity oraggregate benefits) unless such reduction is part of a policy, program or arrangement applicable to peer executives of Exelonor of the business unit that employs the executive; or |
● | amaterial adverse reduction in the executive’s position or duties (other than a change in the position or level of officer to whom the executive reports) that is not applicable to peer executives of Exelon or of the executive’s business unit, but excluding under the non-change in control provisions of the plan any change (1) resulting from a reorganization or realignmentof all or a significant portion of the business, operations or senior management of Exelon or of the executive’s business unit or(2) that generally places the executive in substantially the same level of responsibility. |
The term cause under the Senior Management Severance Plan generally has the same meaning as the definition of such term under the individual change in control employment agreements.
Benefits under the change in control employment agreements and the Senior Management Severance Plan are subject to termination upon an executive’s violation of his or her restrictive covenants, and incentive payments under the agreements and the plan may be subject to the recoupment policy adopted by the Board of Directors.
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Executive Compensation Data
Estimated Value of Benefits to be Received Upon Retirement
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOseach NEO other than Messrs. Cornew and Von Hoene, Jr. assuming they retired as of December 31, 2017.2020. These payments and benefits are in addition to the present value of the accumulated benefits from each NEO’s qualified and non-qualified pension plans shown in the tables within the Pension Benefit section and the aggregate balance due to each NEO that is shown in the tables within the Deferred Compensation section.
| Name | | Cash
Payment
($)
(Note 1) | | Value of
Unvested
Equity
Awards ($)
(Note 2) | | Total
Value of All
Payments
and Benefits
($)
(Note 3) |
| Crane | | $ | 1,586,000 | | $ | 32,992,000 | | $ | 34,578,000 |
| Thayer | | | — | | | — | | | — |
| Von Hoene Jr. | | | 858,000 | | | 9,327,000 | | | 10,185,000 |
| Cornew | | | 855,000 | | | — | | | 855,000 |
| O’Brien | | | 758,000 | | | 8,127,000 | | | 8,885,000 |
| Name | | Cash
Payment
($)
(Note 1) | | | Value of
Unvested Equity
Awards
($)
(Note 2) | | | Total Value of All
Payments and
Benefits
($)
(Note 3) | |
| Crane | | | 1,898,000 | | | | 27,643,000 | | | | 29,541,000 | |
| Nigro | | | 783,000 | | | | 5,723,000 | | | | 6,506,000 | |
| Cornew | | | — | | | | — | | | | — | |
| Von Hoene, Jr. | | | — | | | | — | | | | — | |
| Butler Jr. | | | 638,000 | | | | — | | | | 638,000 | |
Notes to Benefits to be Received Upon Retirement Table
| (1) | Under the terms of the 20172020 AIP, a pro-rated actual incentive award is payable upon retirement based on the number of days worked during the year of retirement. The amount above represents the executive’s 20172020 annual incentive payout (afterafter Company/business unit performance was determined). determined. |
| (2) | Includes the value of the executives’ unvested PShareperformance share awards granted in 2015, 2016,2018, 2019 and 20172020 assuming target performance and the accelerated portion of the executives’ RSU awards that, per applicable awards agreements,terms, would vest upon retirement. The value of the shares is based on Exelon’s closing stock price on December 29, 201731, 2020 of $39.41. $42.22. |
| (3) | The estimateEstimate of total payments and benefits is based on a December 31, 20172020 retirement date.
|
Estimated Value of Benefits to be Received Upon Termination due to Death or Disability
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOseach NEO other than Messrs. Cornew and Von Hoene, Jr. assuming their employment is terminated due to death or disability as of December 31, 2017.2020. These payments and benefits are in addition to the present value of the accumulated benefits from the NEO’s qualified and non-qualified pension plans shown in the tablestable within the Pension Benefit section and the aggregate balance due to each NEO that is shown in tablesthe table within the Deferred Compensation section.
| Name | | Cash
Payment
($)
(Note 1) | | Value of
Unvested
Equity
Awards ($)
(Note 2) | | Total
Value of All
Payments
and Benefits
($)
(Note 3) |
| Crane | | $ | 1,586,000 | | $ | 32,992,000 | | $ | 34,578,000 |
| Thayer | | | 742,000 | | | 10,068,000 | | | 10,810,000 |
| Von Hoene Jr. | | | 858,000 | | | 10,115,000 | | | 10,973,000 |
| Cornew | | | 855,000 | | | 10,782,000 | | | 11,637,000 |
| O’Brien | | | 758,000 | | | 8,127,000 | | | 8,885,000 |
| Name | | Cash
Payment
($)
(Note 1) | | | Value of
Unvested Equity
Awards
($)
(Note 2) | | | Total Value of All
Payments and
Benefits
($)
(Note 3) | |
| Crane | | | 1,898,000 | | | | 27,643,000 | | | | 29,541,000 | |
| Nigro | | | 783,000 | | | | 7,412,000 | | | | 8,195,000 | |
| Cornew | | | — | | | | — | | | | — | |
| Von Hoene, Jr. | | | — | | | | — | | | | — | |
| Butler Jr. | | | 638,000 | | | | 6,242,000 | | | | 6,880,000 | |
Notes to Benefits to be Received Upon Termination due to Death or Disability Table
| (1) | Under the terms of the 20172020 AIP, a pro-rated actual incentive award is payable upon death or disability based on the number of days worked during the year of termination. The amount above represents the executives’ 20172019 annual incentive payout (afterafter Company/business unit performance was determined). determined. |
| (2) | Includes the value of the executives’ unvested PShareperformance share awards granted in 2015, 2016,2018, 2019, and 20172020 assuming target performance and the accelerated portion of the executives’ RSU awards that, per applicable awards agreements,terms, would vest upon death or disability. The value of the shares is based on Exelon’s closing stock price on December 29, 201731, 2020 of $39.41. $42.22. |
| (3) | The estimateEstimate of total payments and benefits is based on a December 31, 20172020 termination due to death or disability.
|
www.exeloncorp.com 6673Exelon 2021 Proxy Statement
Table of Contents
Executive Compensation Data COMPENSATION DISCUSSION & ANALYSIS
Estimated Value of Benefits to be Received Upon Involuntary Separation Not Related to a Change in Control
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOseach NEO assuming they were terminated as of December 31, 20172020 under the terms of the Amended and Restated Senior Management Severance Plan. These payments and benefits are in addition to the present value of the accumulated benefits from the NEO’s qualified and non-qualified pension plans shown in the tablestable within the Pension Benefit section and the aggregate balance due to each NEO that is shown in the tablestable within the Deferred Compensation section.
| Name | | Cash
Payment
($)
(Note 1) | | Retirement
Benefit
Enhancement
($)
(Note 2) | | Value of
Unvested
Equity
Awards
($)
(Note 3) | | Health and
Welfare
Benefit
Continuation
($)
(Note 4) | | Perquisites
And Other
Benefits
($)
(Note 5) | | Total Value of
All Payments
and Benefits
($)
(Note 6) |
| Crane | | $ | 7,387,000 | | $ | 2,043,000 | | $ | 32,992,000 | | $ | 118,000 | | $ | 40,000 | | $ | 42,580,000 |
| Thayer | | | 3,893,000 | | | 346,000 | | | 10,050,000 | | | 32,000 | | | 40,000 | | | 14,361,000 |
| Von Hoene Jr. | | | 4,404,000 | | | 284,000 | | | 9,988,000 | | | 35,000 | | | 40,000 | | | 14,751,000 |
| Cornew | | | 4,389,000 | | | 336,000 | | | 10,764,000 | | | 39,000 | | | 40,000 | | | 15,568,000 |
| O’Brien | | | 3,974,000 | | | 322,000 | | | 8,127,000 | | | 74,000 | | | 40,000 | | | 12,537,000 |
| Name | | Cash
Payment
($)
(Note 1) | | | Retirement
Benefit
Enhancement
($)
(Note 2) | | | Value of
Unvested
Equity
Awards
($)
(Note 3) | | | Health and
Welfare
Benefit
Continuation
($)
(Note 4) | | | Perquisites
and Other
Benefits
($)
(Note 5) | | | Total Value of
All Payments
and Benefits
($)
(Note 6) | |
| Crane | | | 8,234,000 | | | | 2,471,000 | | | | 27,643,000 | | | | 112,000 | | | | 40,000 | | | | 38,500,000 | |
| Nigro | | | 3,959,000 | | | | 270,000 | | | | 6,961,000 | | | | 35,000 | | | | 40,000 | | | | 11,265,000 | |
| Cornew | | | 4,769,000 | | | | 362,000 | | | | 7,544,000 | | | | 44,000 | | | | 40,000 | | | | 12,759,000 | |
| Von Hoene, Jr. | | | 4,785,000 | | | | 306,000 | | | | 7,549,000 | | | | 33,000 | | | | 40,000 | | | | 12,713,000 | |
| Butler Jr. | | | 3,298,000 | | | | 186,000 | | | | 4,838,000 | | | | 41,000 | | | | 40,000 | | | | 8,403,000 | |
Notes to Benefits to be Received Upon Involuntary Separation Not Related to a CICChange in Control Table
| (1) | Represents the estimated severance benefit equal to 2two times the sum of the executive’s (i) current base salary and (ii) the target annual incentive for the year of termination. In addition, under Section 4.2 of the Senior Management Severance Plan,termination, plus a pro-rated annual incentive award is payable upon involuntary separation or qualifying voluntary separation based on the days worked duringfor the year ofin which termination pursuant to the terms in the 2017 AIP.occurs. The amount above represents the executives’ 20172020 annual incentive payout (afterafter Company/business unit performance was determined and negative discretion was applied). determined. |
| (2) | Represents the estimated retirement benefit enhancement that consists of a one-time lump sum payment based on the actuarial present value of a benefit under the non-qualified pension plan assuming that the severance pay period was taken into account for purposes of vesting, and the severance pay constituted covered compensation for purposes of the non-qualified pension plan. |
| (3) | Includes the value of the executives’ unvested PShareperformance share awards granted in 2015, 2016,2018, 2019, and 20172020 assuming target performance and the acceleratedunvested portion of the executives’ RSU awards that, per applicable awards agreements,terms, would vest upon an involuntary separation not related to a change of control. The value of the shares is based on Exelon’s closing stock price on December 29, 201731, 2020 of $39.41. $42.22. |
| (4) | Estimated costs of healthcare, life insurance, and long-term disability coverage which continue during the severance period. |
| (5) | Estimated costs of outplacement and financial planning services for up to 12 months for all NEOs. |
| (6) | The estimateEstimate of total payments and benefits is based on a December 31, 20172020 termination date. The executives are participants in the Senior Management Severance Plan and severance benefits are determined pursuant to Section 4 of the Severance Plan.
|
74 Exelon 2018 Proxy Statement
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Executive Compensation Data
Estimated Value of Benefits to be Received Upon a Qualifying Termination following a Change in Control
The following table shows the estimated value of payments and other benefits to be conferred upon the NEOseach NEO other than Messrs. Cornew and Von Hoene, Jr. assuming they were terminatedtermination upon a qualifying change in control as of December 31, 2017. The Company has entered into Change in Control agreements with each NEO. These2020. Such payments and benefits are in addition to the present value of accumulated benefits from the NEO’s qualified and non-qualified pension plans shown in the tablestable within the Pension Benefit section and the aggregate balance due to each NEO that is shown in tablesthe table within the Deferred Compensation section.
| Name | | Cash
Payment ($)
(Note 1) | | Retirement
Benefit
Enhancement
($)
(Note 2) | | Value of
Unvested
Equity Awards
($)
(Note 3) | | Health and
Welfare
Benefit
Continuation
($)
(Note 4) | | Perquisites
and Other
Benefits
($)
(Note 5) | | Potential
Scaleback
($)
(Note 6) | | Total Value of
All Payments
and Benefits
($)
(Note 7) |
| Crane | | $ | 10,959,000 | | $ | 3,297,000 | | $ | 32,992,000 | | $ | 177,000 | | $ | 40,000 | | Not required | | $ | 47,465,000 |
| Thayer | | | 6,201,000 | | | 486,000 | | | 10,068,000 | | | 48,000 | | | 40,000 | | Not required | | | 16,843,000 |
| Von Hoene Jr. | | | 6,638,000 | | | 460,000 | | | 10,115,000 | | | 52,000 | | | 40,000 | | Not required | | | 17,305,000 |
| Cornew | | | 7,000,000 | | | 581,000 | | | 10,782,000 | | | 58,000 | | | 40,000 | | Not required | | | 18,461,000 |
| O’Brien | | | 6,406,000 | | | 376,000 | | | 8,127,000 | | | 111,000 | | | 40,000 | | Not required | | | 15,060,000 |
| Name | | Cash
Payment
($)
(Note 1) | | | Retirement
Benefit
Enhancement
($)
(Note 2) | | | Value of Unvested
Equity Awards
($)
(Note 3) | | | Health and
Welfare Benefit
Continuation
($)
(Note 4) | | | Perquisites and
Other Benefits
($)
(Note 5) | | | Scaleback | | | Total
Value of All
Payments
and Benefits
($)
(Note 6) | |
| Crane | | | 11,370,000 | | | | 3,976,000 | | | | 27,643,000 | | | | 168,000 | | | | 40,000 | | | | — | | | | 43,197,000 | |
| Nigro | | | 5,530,000 | | | | 427,000 | | | | 7,412,000 | | | | 53,000 | | | | 40,000 | | | | — | | | | 13,462,000 | |
| Cornew | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Von Hoene, Jr. | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Butler Jr. | | | 4,615,000 | | | | 278,000 | | | | 6,242,000 | | | | 62,000 | | | | 40,000 | | | | (1,438,000) | | | | 9,799,000 | |
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COMPENSATION DISCUSSION & ANALYSIS
Notes to Benefits to be Received Upon a Qualifying Termination following a CICChange in Control Table
| (1) | Represents the estimated cash severance benefit equal to 2.99 times the sum of the executive’s (i) current base salary and (ii) Severance Incentive. Also, this amount includes an additional payment for Mr. O’Brien of $35,000. Under Section 4.1(a)(ii) of the CIC Employment Agreement, the executive’s targetannual incentive award is payable uponat target, plus a pro-rated annual incentive award for the year in which termination (but capped at actual performance).occurs. The amountsamount above representrepresents the executives’ 2017 target2020 annual incentive. incentive payout after Company/business unit performance was determined. |
| (2) | Represents the estimated retirement benefit enhancement that consists of a one-time lump sum payment based on the actuarial present value of a benefit under the non-qualified pension plan assuming that two years of the severance pay period was taken into account(2.99 years for purposes of vesting, and the severance payMr. Crane) constituted covered compensation for purposes of the non-qualified pension plan. |
| (3) | Includes the value of the executives’ unvested PShares, all ofperformance shares, which will vest upon termination at the actual level earned and awarded (it is assumed the 2015, 2016,2018, 2019, and 2017 PShares2020 performance shares are earned at target) and the accelerated portion of the executives’ RSUs that would vest upon a qualifying termination following a change in control. The value of the shares is based on Exelon’s closing stock price on December 29, 201731, 2020 of $39.41. $42.22. |
| (4) | Estimated costs of healthcare, life insurance and long-term disability coverage which continue during the severance period. |
| (5) | Estimated costs of outplacement and financial planning services for up to 12 months for all NEOs. |
| (6) | In 2009, the Compensation Committee adopted a policy that no future employment or severance agreements will provide for an excise tax gross-up payment. In 2016, the Compensation Committee also removed the excise tax gross-up payment from all existing agreements.
|
(7) | The estimateEstimate of total payments and benefits is based on a December 31, 20172020 termination date. The Company has entered into change in control employment agreement with all of the executives.
|
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Table of Contents
Executive Compensation Data
CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules, we are providing the following information about the relationship of annual total compensation, calculated pursuant to SEC rules, of our median employee and our CEO, Christopher M. Crane. For 2017,2020, the ratio of annual total compensation of our CEO and the median of the annual total compensation of all employees was 127:96:1, demonstrating Exelon’s commitment to balance equitable compensation stewardship with competitively based compensation that drives and rewards performance. The total annual compensation for Mr. Crane and the median employee is $14,857,859$15,178,000 and $117,176,$157,000, respectively.
On December 8, 2017,31, 2020, our employee population consisted of approximately 34,97232,339 individuals (excluding the CEO), which includes two employees based in the United Kingdom and eight employees based in Canada. We have chosenchose to exclude these ten employees as permitted under SEC rules from our determination of the “median employee,” given the small number of our non-US based employees. The consistently applied compensation measure we used to identify the median employee was W-2 Box 1 wages for employees as of December 8, 2017.31, 2020. After identifying the median employee, the annual total compensation for the median employee was calculated using the same methodology used in compiling the Summary Compensation Table found on page 6357 in this proxy statement for our NEOs. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We believe the methodology, assumptions, and estimates used in determining the ratio are reasonable given our specific employee population.
Because SEC rules provide flexibility in determining the methodology, assumptions, and estimates used to determine pay ratios and the fact that workforce composition issues differ significantly between companies, comparability of pay ratios amongst companies may be limited.
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Shareholder
Proposal
PROPOSAL 4
Shareholder Proposal Requesting a Report on the Impact of Exelon Plans Involving Electric Vehicles and Charging Stations with Regard to Child Labor Outside the United States
Steven J. Milloy has notified the Company that he intends to submit the following proposal at this year’s Annual Meeting. Mr. Milloy has indicated that he beneficially owns 100 shares of Exelon common stock. We will provide his address promptly upon a shareholder’s oral or written request. The proponent is responsible for the content of this proposal, and, as a result, the Company is not responsible for any inaccuracies the proposal or statement may contain.
The proponent’s concern relates to a supply chain issue associated with rechargeable battery production and decisions made by electric vehicle manufacturers. As this issue is well outside Exelon’s primary business focus and control, the Board is confident that this proposal is NOT in the best interests of Exelon or its shareholders.
The Board recommends a vote “AGAINST” this proposal from Steven J. Milloy. 
Child Labor Audit
Resolved:
Shareholders request that, beginning in 2021, Exelon report to shareholders on the extent to which its business plans with respect to electric vehicles and their charging stations may involve, rely or depend on child labor outside the United States.
Supporting Statement:
Exelon’s business plans involve the promotion of electric vehicles. Exelon hopes to profit from the charging of such vehicles. But according to Amnesty International and media reports:
| • | Cobalt is an expensive metal used in electric car batteries. |
| • | 59% of the global cobalt supply comes from the Democratic Republic of the Congo |
| • | Cobalt mining in the Congo is often done by children — as many as 40,000 — working in brutal and unsafe conditions. A euphemism for these children is “informal” workers. |
| • | Many of these children are injured and killed in these conditions. |
| • | Such child labor is a gross violation of human rights. |
More information on these human rights violations may be found at https://junkscience.com/2020/10/mean-and-unclean-electric-cars-powered-by-child-labor-in-africa/.
Shareholders have the right to know the extent to which, if any and intentionally or not, Exelon’s business plans rely on or involve the direct or indirect exploitation of child labor and/or the violation of the human rights of child workers outside the United States.
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SHAREHOLDER PROPOSAL
Board of Directors’ Statement in Opposition to Proposal from Steven J. Milloy
The Exelon Board of Directors considered the proposal and concluded the preparation of the requested report would have no value to Exelon’s shareholders and therefore recommends a vote AGAINST this proposal. As an electric service provider, Exelon is responding to the needs and desires of its customers and state and local governments to increase adoption of electric vehicles and access to charging infrastructure. Exelon cannot project or control the types of vehicles that consumers or businesses may purchase or use within our service territories or control the battery technologies that such vehicles may utilize. Nor can Exelon project or control how electric vehicle manufacturers might work with their battery suppliers to transition to technologies not reliant on cobalt or address issues related to the sourcing of cobalt as a raw material. Exelon’s business strategy appropriately recognizes and seeks to respond to the near- and long-term trend towards transportation electrification. Increased deployment of electric vehicles is occurring as part of a broader evolution of transportation – one driven by consumers, policymakers, and other stakeholders seeking to address a range of issues, including carbon emissions. Exelon’s business strategy seeks to anticipate and enable these trends, and it is incumbent on the company to plan for how the delivery systems will need to respond to these trends to ensure continued reliability and performance. Although Exelon is expanding the use of electric vehicles in its fleets and is promoting the use of electric vehicles to mitigate climate change, the issues associated with the sourcing of cobalt are far beyond the scope of control of Exelon’s supply chain or business plans. Exelon acknowledges that there have been supply chain issues involving human rights identified with the sourcing of cobalt, which is used as a key element for the production of rechargeable batteries, including those used with electric vehicles. The issues surrounding child labor and human rights violations associated with cobalt production are best addressed through existing manufacturing supply chain initiatives and industry trade groups with a much more direct influence on the situation. Roughly 50% of global cobalt production is used to manufacture rechargeable batteries, which are used in a variety of equipment including portable devices such as mobile phones, tablets and laptop computers, electric vehicles, and stationary devices. In 2017, manufacturers established the Responsible Cobalt Initiative that aims to increase supply chain transparency through an internationally acceptable audit standard for cobalt refiners; to work on the ground with artisanal miners; and to provide a single voice to communicate with cobalt users. In addition, investments in battery technology research and development are demonstrating that alternative materials in lieu of cobalt present real options and efforts underway are also improving technologies for recycling cobalt batteries at end of life. With respect to purchases of equipment with batteries, Exelon’s suppliers are required to comply with the Exelon Corporation Code of Business Conduct, and we work directly with suppliers and through industry coalitions to address supply chain social and environmental issues. The Company believes in the importance of ethical sourcing in its supply chain and is committed to responsible business practices. All Exelon business partners, including our suppliers, are required to comply with the Exelon Corporation Code of Business Conduct (the “Code”). The Code establishes requirements for how Exelon and our business partners will conduct their business operations. All suppliers must meet Exelon’s standards, including basic work conditions, compensation and environmental performance review. Regarding electric vehicles purchased for our own operations, Exelon currently works with Ford Motor Company, which has supply chain programs specifically addressing cobalt sourcing issues, including their participation in the aforementioned Responsible Cobalt Initiative. Exelon also participates in the Electric Utilities Sustainable Supply Chain Alliance, a coalition of utilities and suppliers working together to advance sustainability best practices in utility supply chain activities and supplier networks. |
70Exelon 2021 Proxy Statement
Table of Contents
Ownership of
Exelon Stock
Stock Ownership of Exelon StockDirectors and Executive Officers
Beneficial Ownership Table
The following table shows the ownership of Exelon common stock as of January 31, 2018March 1, 2021 by each Director and each NEO in the Summary Compensation Table, and for all Directors and executive officers as a group.
| Name of Beneficial Owner | | Beneficial
Ownership of
Exelon
Common Stock
(Note 1) | | Common Shares
Underlying Vested
Stock Options and
Options that Vest
Within 60 Days | | Total
Share
Interest
(Note 2) |
| Anthony K. Anderson | | 17,982 | | — | | 17,982 |
| Ann C. Berzin | | 70,654 | | — | | 70,654 |
| Yves, C. de Balmann | | 61,656 | | — | | 61,656 |
| Nicholas DeBenedictis | | 50,929 | | — | | 50,929 |
| Nancy L. Gioia | | 7,237 | | — | | 7,237 |
| Linda P. Jojo | | 8,810 | | — | | 8,810 |
| Paul L. Joskow | | 42,673 | | — | | 42,673 |
| Robert J. Lawless | | 87,715 | | — | | 87,715 |
| Richard W. Mies | | 30,945 | | — | | 30,945 |
| John W. Rogers, Jr. | | 86,072 | | — | | 86,072 |
| Mayo A. Shattuck III | | 297,447 | | — | | 297,447 |
| Stephen D. Steinour | | 79,265 | | — | | 79,265 |
| Christopher M. Crane | | 580,478 | | 509,000 | | 1,089,478 |
| Jonathan W. Thayer | | 122,635 | | 474,355 | | 596,990 |
| Kenneth W. Cornew | | 122,048 | | 135,200 | | 257,248 |
| William A. Von Hoene, Jr. | | 212,280 | | 232,200 | | 444,480 |
| Denis P. O’Brien | | 151,168 | | 230,700 | | 381,868 |
| Total | | | | | | |
| Directors & Executive Officers | | | | | | |
| as a group (23 people) | | | | | | |
| (Note 3) | | 2,465,444 | | 2,002,046 | | 4,467,490 |
| Directors and Named Executive Officers | | Beneficial
Ownership of
Common
Stock
(Note 1) | | Common Stock
Underlying
Options
Exercisable
Within 60 Days | | Total Shares
Beneficially
Owned
(Note 2) |
| Anthony Anderson | | 30,999 | | 0 | | 30,999 |
| Ann Berzin | | 100,276 | | 0 | | 100,276 |
| Laurie Brlas | | 8,180 | | 0 | | 8,180 |
| Marjorie Rodgers Cheshire | | 2,255 | | 0 | | 2,255 |
| Yves de Balmann | | 79,120 | | 0 | | 79,120 |
| Nicholas DeBenedictis | | 66,390 | | 0 | | 66,390 |
| Linda Jojo | | 20,849 | | 0 | | 20,849 |
| Paul Joskow | | 57,987 | | 0 | | 57,987 |
| Robert Lawless | | 118,920 | | 0 | | 118,920 |
| John Richardson | | 5,101 | | 0 | | 5,101 |
| Mayo Shattuck III | | 310,619 | | 0 | | 310,619 |
| John Young | | 8,980 | | 0 | | 8,980 |
| Christopher M. Crane | | 717,588 | | 285,000 | | 1,002,588 |
| Joseph Nigro | | 153,086 | | 13,000 | | 166,086 |
| Kenneth W. Cornew | | 127,330 | | 70,000 | | 197,330 |
| William A. Von Hoene, Jr. | | 262,670 | | 88,000 | | 350,670 |
| Calvin G. Butler Jr. | | 139,157 | | 0 | | 139,157 |
| Directors & Executive Officers as a group (24 people) (Note 3) | | 2,587,525 | | 488,000 | | 3,075,525 |
| (1) | Includes any shares as to which the individual has sole or shared voting power or investment power, Directors’ deferred stock units, 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. |
| (2) | Total share interest of Directors and executive officers, both individually and as a group, represents less than 1% of the outstanding shares of Exelon common stock. |
| (3) | Total includes shares held by all Directors and NEOs as well as thoseExelon executive officers listed in Item 1, Executive“Executive Officers of the RegistrantsRegistrants” in Exelon’s 20172020 Annual Report on Form 10-K filed on February 9, 2018,24, 2021, who are not NEOs for purposes of compensation disclosure. |
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Ownership of Exelon Stock OWNERSHIP OF EXELON STOCK
Other Significant Owners of Exelon Stock
Shown in the table below are those owners who are known to Exelon to hold more than 5% of the outstanding common stock. This information is based on the most recent Schedule 13Gs13G (or Schedule 13G/A) filed with the SEC by The Vanguard Group on February 7, 2018, BlackRock, Inc. on January 24, 2018, FMR LLC on February 13, 2018, and State Street Corporation on February 14, 2018.by:
| Name and address of beneficial owner | | Amount and nature of
beneficial ownership | | Percent of class |
| The Vanguard Group(1) | | | | |
| 100 Vanguard Blvd. | | | | |
| Malvern, PA 19355 | | 71,031,537 | | 7.4% |
| BlackRock, Inc.(2) | | | | |
| 55 East 52ndStreet | | | | |
| New York, NY 10055 | | 70,837,596 | | 7.4% |
| FMR LLC(3) | | | | |
| 245 Summer Street | | | | |
| Boston, MA 02210 | | 60,345,047 | | 6.3% |
| State Street Corporation(4) | | | | |
| State Street Financial Center | | | | |
| One Lincoln Street | | | | |
| Boston, MA 02111 | | 57,252,056 | | 6.0% |
| • | BlackRock, Inc. on January 29, 2021; |
| |
| • | Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, and Wellington Management Company LLP jointly filed on February 3, 2021; |
| |
| • | The Vanguard Group on February 10, 2021; and |
| |
| • | State Street Corporation on February 16, 2021. |
| Name and address of beneficial owner | | Shares
beneficially owned | | Percentage
of class |
The Vanguard Group(1)
100 Vanguard Blvd., Malvern, PA 19355 | | 83,391,341 | | 8.56% |
BlackRock, Inc.(2)
55 East 52nd Street, New York, NY 10055 | | 77,161,858 | | 7.9% |
Wellington Management Group LLP(3)
Wellington Group Holdings LLP
Wellington Investment Advisors Holdings LLP
c/o Wellington Management Company LLP
280 Congress Street, Boston, MA 02210 | | 75,359,646 | | 7.74% |
State Street Corporation(4)
State Street Financial Center
One Lincoln Street, Boston, MA 02111 | | 59,883,500 | | 6.15% |
| (1) | The Vanguard Group disclosed in its Schedule 13G/A that it has sole power to vote or direct the vote of 1,352,6930 shares, shared voting power over 217,7591,573,299 shares, sole power to dispose or direct the disposition of 69,506,98279,113,691 shares, and shared dispositive power over 1,524,5554,277,650 shares. |
| (2) | BlackRock, Inc. disclosed in its Schedule 13G/A that it has sole power to vote or to direct the vote of 61,565,34166,117,799 shares and sole power to dispose or direct the disposition of 70,837,59777,161,858 shares. |
| (3) | FMR LLCWellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, and Wellington Management Company LLP disclosed in its Schedule 13G/A that it has soleshared voting power to vote or direct the vote of 7,478,149over 73,362,922 shares and soleshared dispositive power to dispose or direct the disposal of 60,345,047 shares.
over 75,359,646. |
| (4) | State Street Corporation disclosed in its Schedule 13G that it has shared voting power over 48,517,01046,649,195 shares and shared dispositive power over 57,252,05659,831,569 shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon signed affirmations received from Directors and officers, as well as administrative review of Company plans and accounts administered by private brokers on behalf of Directors and officers, Exelon believes that its Directors and officers made all required Section 16 filings on a timely basis during 2017.
7872 Exelon 20182021 Proxy Statement
Table of Contents
Additional
Information
Shareholder Proposals for 2022 Annual Meeting of Shareholders
If you wish to submit a proposal for possible inclusion in next year’s proxy statement, you
Shareholder proposals must submit itbe submitted in writing to the Corporate Secretary Exelon Corporation, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398.at the address noted below. Exelon must receive your proposal onno earlier than Monday, October 18, 2021, or beforelater than Wednesday, November 21, 2018.17, 2021. Exelon will consider only proposals meeting the requirements of the applicable rules of the Securities and Exchange Commission.SEC. Under our bylaws, the proposal must also disclose fully all ownership interests the proponent has in Exelon and contain a representation as to whether the shareholder has any intention of delivering a proxy statement to the other shareholders of Exelon.
We strongly encourage any shareholder interested in submitting a proposal to contact our Corporate Secretary in advance of this deadline to discuss the proposal, and shareholders may want to consult knowledgeable counsel with regard to the detailed requirements of applicable securities laws.proposal. Submitting a shareholder proposal does not guarantee that we will include it in our proxy statement. Our Corporate Governance Committee reviews all shareholder proposals and makes recommendations to the Board for action on such proposals.
Additionally, under our bylaws, for a shareholder to bring any matter before the 2019 annual meeting that is not included in the 2018 proxy statement, the shareholder’s written notice must be received by the Corporate Secretary not less than 120 days prior to the first anniversary of the mailing date of this proxy statement, which will be November 21, 2018.
Director Nominations for 2022
A shareholder who wishes to recommend a candidate (including a self-nomination) to be considered by the Corporate Governance Committee for nomination as a Director must submit the recommendation in writing to the Chair of the Corporate Governance Committee c/o Thomas S. O’Neill, Senior Vice President, General Counsel andthe Corporate Secretary Exelon Corporation, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398.at the address noted below. The Corporate Governance Committee will consider all recommended candidates and self-nominees when making its recommendation to the full Board of Directors to nominate a slate of Directors for election.
● | Nominations for 2018.Under the Exelon’s bylaws, the deadline has passed for a shareholder to nominate a candidate (or nominate himself or herself) for election to the Board at the 2018 annual meeting. |
● | Nominations for 2019.There are several ways a shareholder may nominate a candidate for election as a Director or to stand for election at the 2019 annual meeting. As noted above, a shareholder may submit a recommendation to the Corporate Governance Committee, which will consider the nomination when making recommendations to the Board for nominations for Director. |
A shareholder may also use one of two alternative provisions of Exelon’s bylaws to nominate a candidate for election as a Director. Under one provision of the bylaws currently in effect, a shareholder must comply with the following: (1) notice of the proposed nomination must be received by Exelon no later than November 21, 2018; (2) the notice must include information required under the bylaws, including: (a) information about the nominating shareholder, (b) information about the candidate that would be required to be included in a proxy statement under the rules of the SEC, (c) a representation as to whether the shareholder intends to deliver a proxy statement to the other shareholders of Exelon, and (d) the signed consent of the candidate to serve as a Director of Exelon, if elected. Under this procedure, any shareholder can nominate any number of candidates for director for election at the annual meeting, but the shareholder’s nominees will not be included in Exelon’s proxy statement or form of proxy for the meeting.
A shareholder who meets criteria in the Exelon bylaws may also nominate a limited number of candidates for election as Directors through provisions commonly referred to as “proxy access.”
| • | Method 1: Notice of the proposed nomination must be received by Exelon no earlier than Monday, October 18, 2021, or later than Wednesday, November 17, 2021. The notice must include information required under the bylaws, including: (a) information about the nominating shareholder, (b) information about the candidate that would be required to be included in a proxy statement under the rules of the SEC, (c) a representation as to whether the shareholder intends to deliver a proxy statement to the other shareholders of Exelon, and (d) the signed consent of the candidate to serve as a Director of Exelon, if elected. Under this procedure, any shareholder can nominate any number of candidates for director for election at the annual meeting, but the shareholder’s nominees will not be included in Exelon’s proxy statement or form of proxy for the meeting. |
| |
| • | Method 2 (Proxy-Access): Subject to the requirements set forth in the bylaws, any shareholder or group of up to 20 shareholders holding both investment and voting rights with respect to at least 3% of Exelon’s outstanding common stock continuously for at least three years may nominate up to 20% of the Exelon Directors to be elected (two Directors on Exelon’s current Board of 12 Directors). The nominating shareholder(s) must provide notice of the proposed nomination and other required information must be received by Exelon no earlier than Monday, October 18, 2021, or later than Wednesday, November 17, 2021. The notice must include information required under the bylaws, any shareholder or group of up to 20 shareholders holding both investment and voting rights with respect to at least 3% of Exelon’s outstanding common stock continuously for at least 3 years may nominate up to 20% of the Exelon Directors to be elected (2 Directors on Exelon’s current Board of 13 Directors). The nominating shareholder(s) must comply with the following, among other detailed requirements specified in the bylaws: (1) notice of the proposed nomination and other required information must be received by Exelon no earlier than October 22, 2018 and no later than November 21, 2018; (2) the notice must include information required under the Bylaws, including: (a) information about the nominating shareholder(s), (b) information about the candidate(s) including information that would be required to be included in a proxy statement under the rules of the SEC, and (c) the signed consent of each candidate to serve as a Director of Exelon, if elected. Under this procedure, the shareholder’s nominees will be included in the Exelon proxy statement and the form of proxy for the meeting. |
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Additional Information
A shareholder who wishes to submit a nomination is encouraged to seek the advice of legal counsel regarding the requirements of the SEC and Exelon’s bylaws. Exelon will not consider any proposal or nomination that does not comply with the requirements of the SEC and Exelon’s bylaws.
Exelon’s bylaws are amended from time to time. Please review the bylaws posted on our website to determine if any changes to the nomination process or requirements have been made.
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ADDITIONAL INFORMATION
Availability of Corporate Documents
The Exelon Corporate Governance Principles, the Exelon Code of Business Conduct, the Exelon Amended and Restated bylaws,Bylaws, and the charters for the Audit, Corporate Governance, Compensation and Leadership Development and other standing Committees of the Board of Directors are available on the Exelon website atwww.exeloncorp.com, on the Governance page under the Investors tab.. Copies may be printed from the Exelon website and copies are available without charge to any shareholder who requests them by writing to Thomas S. O’Neill, Senior Vice President, General Counsel andthe Corporate Secretary Exelon Corporation, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398.at the address noted below. In addition, our Articles of Incorporation, Compensation Consultant Independence Policy, Political Contributions Guidelines, biographical information concerning each Director, and all of our filings submitted to the SEC are also available on our website. Access to this information is free of charge to any user with internet access. Information contained on our website is not part of this proxy statement.
Address of the
Corporate Secretary: | Exelon Corporation
Attn: Gayle Littleton, General Counsel & Corporate Secretary
10 South Dearborn Street
P.O. Box 805398
Chicago, Illinois 60680-5398 |
8074 Exelon 20182021 Proxy Statement
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Frequently
Asked Questions
The following table summarizes the Board’s voting recommendations for each proposal, the vote required for each proposal to pass and the effect of abstentions and uninstructed shares on each proposal. The presence of the holders of a majority of the outstanding shares of common stock entitled to vote at the annual meeting, in person or represented by proxy, is necessary to constitute a quorum.
| Item | | Board
Recommendation | | Voting Standard | | Abstentions | | Broker
Non-Votes |
| Item 1 – Election of 12 Directors | |  | FOR | | Majority of votes cast for each Director | | No Effect | | No Effect |
| Item 2 – Ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Auditor for 2021 | | | FOR | | Majority of votes cast | | No Effect | | Discretionary VotingPermitted(1) |
| Item 3 – Advisory Vote to approve Executive Compensation (Say-on-Pay) | | | FOR | | Majority of votes cast | | No Effect | | No Effect |
| Item 4 – Shareholder Proposal from Steven J. Milloy | |  | AGAINST | | Majority of votes cast | | No Effect | | No Effect |
| (1) | Brokers and banks have discretionary authority to vote shares in the absence of instructions on matters considered “routine,” such as the ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in the absence of instructions on “non-routine” matters, such as the election of directors, say-on-pay, and approval of the equity plan. Broker non-votes will not be counted as shares entitled to vote on any of the foregoing non-routine matters and will have no impact on the vote’s outcome. |
Information about the Virtual Annual Meeting
Q: Why are you having a virtual annual meeting?
The safety of our shareholders, employees and other attendees is of our utmost concern during the ongoing COVID-19 pandemic. In addition to addressing safety concerns, we received positive feedback on the virtual meeting format from investors. After reviewing last years’ experience, Exelon’s directors were very pleased that the format allowed for significantly more participation from shareholders across the country and that they both received and were able to answer many more questions than at previous in-person meetings.
We are committed to ensuring that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You will be able to attend the meeting online, vote your shares electronically and submit questions before or during the virtual annual meeting.
Q: How can I participate in the annual meeting?
Exelon’s 2021 Annual Meeting will be held exclusively via live webcast. There will be no physical meeting location for shareholders to attend. To participate in the virtual annual meeting, visit: www.virtualshareholdermeeting.com/EXC2021 on April 27, 2021 and enter the 16-digit control number included on your proxy card, your Notice of Internet Availability of the proxy materials or the instructions that were included with your proxy materials. Shareholders will be entitled to participate in, vote at, and submit questions in writing during the Annual Meeting. The Annual Meeting will begin promptly at 9:00 a.m. CT on April 27, 2021. Online check-in will begin at 8:45 a.m. CT. Please allow ample time for the online check-in process.
Q: What is the pre-meeting forum?
One of the benefits of holding the Annual Meeting via live webcast is that it allows us to communicate more effectively with shareholders via a pre-meeting forum that you can access by visiting www.proxyvote.com. On our pre-meeting forum, you can submit question in writing in advance of the Annual Meeting and access copies of our proxy materials. Through the pre-meeting forum, we can respond to more questions than we were able to respond to at previous meetings.
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Frequently Asked Questions FREQUENTLY ASKED QUESTIONS
Can
Q: What if I accesshave technical difficulties or trouble accessing the Noticevirtual annual meeting?
If you have any difficult accessing the live webcast of the Annual Meeting and Proxy Statementduring the online check-in process or during the Annual Meeting itself, please call the technical support number that will be posted on the virtual annual meeting log in page.
Q: Where can I view a replay of the annual meeting and the 2017 Financial Reportanswers to questions submitted by shareholders?
A replay of the Annual Meeting webcast, as well as answers to questions submitted by shareholders before or during the Annual Meeting will be available for one year following the date of the meeting on the Internet?investor relations page of our website (investors.exeloncorp.com).
Q: Could other matters be decided at the Annual Meeting?
As permitted by SEC rules, we are makingof the date this proxy statement and ourwent to press, we knew of no matters to be raised at the annual report availablemeeting other than those referred to shareholders electronically via the internet atwww.proxyvote.com. On March 21, 2018, we began mailing to our shareholders a notice containing instructions on how to accessin this proxy statement and our annual report and how to vote online. If you received that notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained on the notice.statement.
In addition, shareholders may request to receive proxy materials in printed form or electronically by email on an ongoing basis. Exelon encourages shareholders to take advantage of the availability of the proxy materials on the internet in order to save Exelon the cost of producing and mailing documents to you, reduce the amount of mail you receive and help preserve resources.
Shareholders of record: If you vote on the internet atwww.proxyvote.com, simply follow the prompts for enrolling in the electronic delivery service.Information about Voting
Beneficial owners: You also may be able to receive copies of these documents electronically. Please check the information provided in the proxy materials sent to you by your bank, broker or other holder of record regarding the availability of this service.
Do I need a ticket to attend the Annual Meeting?
You will need an admission ticket or proof of ownership to enter the annual meeting.
If you are a shareholder of record, the bottom half of your proxy card will serve as your admission ticket.
If your shares are held in the name of a bank, broker, or other holder of record and you plan to attend the meeting, you must present proof of your ownership of Exelon stock as you enter the meeting, such as a bank or brokerage account statement. If you would rather have an admission ticket, you can obtain one in advance by mailing a written request, along with proof of your ownership of Exelon stock, to:
Annual Meeting Admission Tickets c/o Thomas S. O’Neill, Senior Vice President, General Counsel and Corporate Secretary, Exelon Corporation, 10 South Dearborn Street, P.O. Box 805398 Chicago, Illinois 60680-5398.
Shareholders also must present a form of personal photo identification in order to be admitted into the meeting.
No cameras, audio or video recording equipment, similar electronic devices, large bags, briefcases or packages will be permitted into the meeting or adjacent areas. Cell phones and similar wireless communication devices will be permitted in the meeting only if turned off. All items brought into the meeting will be subject to search.
Q: Who is entitled to vote at the Annual Meeting?vote?
Holders of Exelon common stock as of 5:00 p.m. New York TimeEastern time on March 2, 20181, 2021 are entitled to receive notice of the annual meeting and to vote their shares at the meeting. As of that date, there were 964,986,919 shares of common stock outstanding and entitled to vote.shares. Each share of common stock is entitled to one vote on each mattermatter.
Q: How do I vote?
Your vote is important. We encourage you to vote promptly. You may vote in the following ways:
By Internet. If you have internet access, you may vote by internet. You will need the control number included on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form (VIF), as applicable. You may vote in a secure manner at www.proxyvote.com 24 hours a day. You will be able to confirm that the system has properly brought beforerecorded your votes, and you do not need to return your proxy card or VIF.
By Telephone. If you are located in the meeting.U.S. or Canada, you can vote by calling 1-800-690-6903 (toll free) and following the recorded instructions. You will need the control number included on your Notice Regarding the Availability of Proxy Materials, proxy card or VIF, as applicable. You may vote by telephone 24 hours a day. The telephone voting system has easy-to-follow instructions and allows you to confirm that the system has properly recorded your votes. If you vote by telephone, you do not need to return your proxy card or your VIF.
By Mail. If you are a holder of record and received a full paper set of materials, you can vote by marking, dating and signing your proxy card and returning it by mail in the postage-paid envelope provided. If you are a beneficial holder of shares held of record by a bank or broker or other street name, please complete and mail the VIF provided by the holder of record.
At the Annual Meeting. If you attend the Annual Meeting, you may vote online during the Annual Meeting prior to the closing of the polls.
Q: Can I change my vote?
Yes. If you are a holder of record, you may change your vote by submitting a subsequent proxy, by written request received by the Corporate Secretary prior to the annual meeting or by attending the annual meeting and voting your shares. If your shares are held through a broker, bank or other nominee, you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions.
Q: How many votes do you need to hold the annual meeting?
A quorum is required to transact business at the annual meeting. Pursuant to our bylaws, shareholders holding shares of stock constituting at least a majority of the votes entitled to be cast constitutes a quorum. Shareholders may be present virtually or may be represented by proxy. Abstentions that are marked on the proxy form and broker non-votes are included for the purpose of determining a quorum but shares that otherwise are not voted are not counted toward a quorum.
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FREQUENTLY ASKED QUESTIONS
Q: What is the difference between holding shares as a shareholder“shareholder of recordrecord” and as a beneficial owner?“beneficial owner”?
If your shares are registered directly in your name with Exelon’s transfer agent, EQ, (formerly Wells Fargo Shareowner Services), you are the “shareholder“shareholder of record”record” of those shares. This Notice of Annual Meeting and Proxy Statement and accompanying documents have been provided directly to you by Exelon.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner”“beneficial owner” of those shares.shares and your shares may be referred to as being held in “street name.” This Notice of Annual Meeting and Proxy Statement and the accompanying documents have been forwarded to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the internet.
Q: If I am a participant in the Exelon Savings Plan (401(k) retirement plan), how do I vote shares held in my plan account?
If you are a participant in the Exelon Savings Plan, you have the right to provide voting directions to the plan trustee, Northern Trust, by submitting your proxy card for those shares of Exelon Corporation common stock that are held by the plan and allocated to your account. Plan participant proxies are treated confidentially.
If you elect not to provide voting directions to the plan trustee, the plan trustee will vote the Exelon shares allocated to your plan account in the same proportion as those shares held by the plan for which the plan trustee has received voting directions from other plan participants. The plan trustee will follow participant’s voting directions and the plan procedure for voting in the absence of voting directions, unless it determines that to do so would be contrary to the Employee Retirement Income Security Act of 1974 (ERISA).
Because the plan trustee must process voting instructions from participants before the date of the Annual Meeting, you must deliver your instructions no later than April 22, 2021 at 11:59pm Eastern time.
Q: Who will count the votes?
Representatives of Broadridge Financial Communications and Exelon’s Office of Corporate Governance will tabulate the votes and act as inspectors of the election.
Q: Where can I find the voting results?
We will report the voting results in a Form 8-K to be filed with the SEC within four business days following our annual meeting.
Other Information
Q: Can I access the Notice of Annual Meeting and Proxy Statement and the 2020 Financial Report on the internet?
As permitted by SEC rules, we are making this proxy statement and our annual report available to shareholders electronically via the internet at www.proxyvote.com. On March 17, 2021, we began mailing to our shareholders a notice containing instructions on how to access this proxy statement and our annual report and how to vote online. If you received that notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained on the notice. In addition, shareholders may request to receive proxy materials in printed form or electronically by email on an ongoing basis. Exelon encourages shareholders to take advantage of the availability of the proxy materials on the internet in order to save Exelon the cost of producing and mailing documents to you, reduce the amount of mail you receive and help preserve resources.
Shareholders of record: If you vote on the internet at www.proxyvote.com, simply follow the prompts for enrolling in the electronic delivery service.
Beneficial owners: You also may be able to receive copies of these documents electronically. Please check the information provided in the proxy materials sent to you by your bank, broker or other holder of record regarding the availability of this service.
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Frequently Asked Questions FREQUENTLY ASKED QUESTIONS
How do I vote?
Your vote is important. We encourage you to vote promptly. Internet and telephone voting are available through 11:59 p.m.Eastern Time on April 30, 2018. You may vote in the following ways:
By Internet
| By Telephone
| By Mail
| At the Annual Meeting
|
| | | |
If you have internet access, you may vote by internet. You will need the control number included on your proxy card or voting instruction form (VIF), as applicable. You may vote in a secure manner atwww.proxyvote.com24 hours a day. You will be able to confirm that the system has properly recorded your votes, and you do not need to return your proxy card or VIF.
| If you are located in the United States or Canada, you can vote by calling the toll-free telephone number (1-800-690-6903) and following the recorded instructions. You will need the control number included on your Notice Regarding the Availability of Proxy Materials, proxy card or VIF, as applicable. You may vote by telephone 24 hours a day. The telephone voting system has easy-to-follow instructions and allows you to confirm that the system has properly recorded your votes. If you vote by telephone, you do not need to return your proxy card or your VIF.
| If you are a holder of record and received a full paper set of materials, you can vote by marking, dating and signing your proxy card and returning it by mail in the postage-paid envelope provided. If you are a beneficial holder of shares held of record by a bank or broker or other street name, please complete and mail the VIF provided by the holder of record.
| If you are a shareholder of record and attend the annual meeting in person, you may use a ballot provided at the meeting to cast your vote. If you are a beneficial owner, you will need to have a legal proxy from your broker, bank or other holder of record in order to vote by ballot at the meeting.
|
May I revoke a proxy?
Yes. You may revoke a proxy at any time before the proxy is exercised by filing with the Corporate Secretary a notice of revocation, or by submitting a later-dated proxy by mail, telephone or electronically through the Internet. You may also revoke your proxy by attending the annual meeting and voting in person.
Q: What is householding and how does it affect me?
Exelon has adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders
Shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials willmay receive only one copy of this Notice of Annual Meeting and Proxy Statement and the 20172020 Annual Report, unless we are notified that one or more of these shareholders wishes to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Shareholders who receive proxy materials in paper form will continue to receive separate proxy cards/voting instruction forms to vote their shares. Shareholders who receive the Notice of Internet Availability of Proxy Materials will receive instructions on submitting their proxy cards/voting instruction form via the internet.
If you would like to change your householding election, request that a single copy of the proxy materials be sent to your address, or request a separate copy of the proxy materials, please contact our distribution agent, Broadridge Financial Solutions, by calling (800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. We will promptly deliver the proxy materials to you upon receipt of your request.New York 11717 or calling 1-866-540-7095. If you hold your shares in street name, please contact your bank, broker, or other record holder to request information about householding.
Q: Why did I receive more than one proxy card?
If you receive more than one proxy card/voting instruction form, your shares are probably are registered in more than one account or you may hold shares both as a registered shareholder and through the Exelon 401(k) Savings Plan. You should vote each proxy card/voting instruction form you receive.
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Frequently Asked Questions
What are the voting requirements to elect the Directors and to approve each of the proposals discussed in the Proxy Statement?
The presence of the holders of a majority of the outstanding shares of common stock entitled to vote at the annual meeting, in person or represented by proxy, is necessary to constitute a quorum.
Election of Directors: Majority Vote Policy
Under our bylaws, Directors must be elected by a majority of votes cast in uncontested elections. This means that the number of votes cast “for” a Director nominee must exceed the number of votes cast “against” the nominee. An abstention will have no effect on the outcome of the vote because an abstention does not count as a vote cast. In contested elections, the vote standard would be a plurality of votes cast, in which case a withhold vote would have no effect on the vote’s outcome. In either case, broker non-votes will have no effect on the outcome of the vote because they are not considered votes cast.
Our bylaws provide that, in an uncontested election, each Director nominee must submit to the Board before the annual meeting a letter of resignation that becomes effective only if the Director fails to receive a majority of the votes cast at the annual meeting. The resignation of a Director nominee who is not an incumbent Director is automatically accepted by the Board. The resignation of an incumbent Director is tendered to the independent Directors of the Board for a determination of whether or not to accept the resignation. The Board’s decision and the basis for the decision would be disclosed within 90 days following the certification of the final vote results.
Ratification of PricewaterhouseCoopers as Independent Auditor
The appointment of PricewaterhouseCoopers LLP (PwC) as Exelon Corporation’s independent auditor requires an affirmative vote of a majority of shares of common stock represented at the annual meeting and entitled to vote thereon in order to be adopted. An abstention will have the effect of a vote “against” the ratification of the independent auditor. If shareholders do not ratify the appointment of PwC, the Audit Committee will reconsider the appointment.
Executive Compensation
Under our bylaws, whenever any corporate action is to be taken by vote of the shareholders, it shall be authorized upon receiving an affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon, and abstentions will have the effect of a vote “against” the action. However, the vote on executive compensation is advisory and is not binding on the Company, the Board of Directors, or the Compensation and Leadership Development Committee in any way, as provided by law. Our Board and the Compensation and Leadership Development Committee will review the results of the vote and input from shareholders and will take them into account in making a determination concerning executive compensation consistent with our record of shareowner engagement.
Could other matters be decided at the Annual Meeting?
As of the date this proxy statement went to press, we knew of no matters to be raised at the annual meeting other than those referred to in this proxy statement.
Who will count the votes?
Representatives of Broadridge Financial Communications and Exelon’s Office of Corporate Governance will tabulate the votes and act as inspectors of the election.
Where can I find the voting results?
We will report the voting results in a Form 8-K to be filed with the SEC within four business days following the end of our annual meeting.
Q: Who will pay for the cost of this proxy solicitation?
Exelon will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by Directors, officers or employees in person or by telephone, electronic transmission and facsimile transmission. We have hired Alliance AdvisorsMorrow Sodali to distribute and solicit proxies. We will pay Alliance AdvisorsMorrow Sodali LLC a fee of $15,000$20,000 plus reasonable expenses for these services.
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Appendix A
2017 Adjusted (non-GAAP) Operating EarningsDefinitions of Non-GAAP Measures
Exelon reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). Exelon and supplements theits reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including adjusted (non-GAAP) operating earnings per share. share, earned ROE, and FFO/Debt to enhance investors’ understanding of Exelon’s performance. Our method of calculating adjusted (non-GAAP) operating earnings and operating ROE may not be comparable to other companies’ presentations.
Adjusted (non-GAAP) operating earnings per share exclude certain costs, expenses, gains and losses and other specified items, including mark-to-market adjustments from economic hedging activities, unrealized gains and losses from nuclear decommissioning trust fund investments, merger and integration costs, certain costs associated with the PHI acquisition, merger commitments related to the settlement of the PHI acquisition, the impairment of certain long-lived assets, plant retirements and divestitures, costs related to the cost management program, the non-controlling interest in Constellation Energy Nuclear Group, LLC,programs, and other items as set forth in the reconciliation below.
The presentation oftable below reconciling adjusted (non-GAAP) operating earnings per sharefrom GAAP earnings, which is intendedthe most directly comparable GAAP measure. Management uses adjusted (non-GAAP) operating earnings as one of the primary indicators to enhanceevaluate performance, allocate resources, set incentive compensation targets and plan and forecast future periods. We believe the measure enhances an investor’s overall understanding of period over period financial results and provideprovides an indication of Exelon’s baseline operating performance by excluding items that are considered by management to not be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. Accordingly, management uses adjusted (non-GAAP) operating earnings per share as a goal in its annual incentive plan. Adjusted (non-GAAP) operating earnings per share is not a presentation defined under GAAP and may not be comparable to other companies’ presentations. Exelon reports adjusted (non-GAAP) operating earnings per share as supplemental information and in addition to earnings per share that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) operating earnings per share should not be deemed more useful than, a substitute for, or an alternative to earnings per share calculated and presented in accordance with GAAP.
A reconciliation of
The table below reconciles reported GAAP earningsEarnings per share to adjusted (non-GAAP) operating earnings per share for 2017 is presented below2020 (amounts may not add due to rounding):.
| 2017 GAAP Earnings (Loss) Per Share 2017 | | $ | 3.97 | |
| Adjustments: | | | | |
| Mark-to-market impact of economic hedging activities | | | 0.11 | |
| Unrealized gains related to NDT fund investments | | | (0.34 | ) |
| Amortization of commodity contract intangibles | | | 0.04 | |
| Merger and integration costs | | | 0.04 | |
| Merger commitments | | | (0.14 | ) |
| Long-lived asset impairments | | | 0.34 | |
| Plant retirements and divestitures | | | 0.22 | |
| Reassessment of state deferred income taxes | | | (1.37 | ) |
| Cost management program | | | 0.04 | |
| Like-kind exchange tax position | | | (0.03 | ) |
| Tax settlements | | | (0.01 | ) |
| Bargain purchase gain | | | (0.25 | ) |
| Gain on deconsolidation of business | | | (0.14 | ) |
| Vacation policy change | | | (0.03 | ) |
| Change in Environmental Remediation Liabilities | | | 0.03 | |
| Noncontrolling interests | | | 0.12 | |
| Adjusted (non-GAAP) Operating Earnings (Loss) Per Share | | $ | 2.60 | |
| 2020 GAAP Earnings (Loss) Per Share | | $ | 2.01 | |
| Adjustments: | | | | |
| Mark-to-market impact of economic hedging activities | | | (0.22) | |
| Unrealized gains related to nuclear decommissioning trust (NDT) funds | | | (0.26) | |
| Asset impairments | | | 0.41 | |
| Plant retirements and divestitures | | | 0.74 | |
| Cost management program | | | 0.05 | |
| Change in environmental liabilities | | | 0.02 | |
| COVID-19 direct costs | | | 0.05 | |
| Deferred Prosecution Agreement Payments | | | 0.20 | |
| Asset retirement obligation | | | 0.05 | |
| Income tax-related adjustments | | | 0.07 | |
| Noncontrolling interests | | | 0.11 | |
| 2020 Adjusted (non-GAAP) Operating Earnings (Loss) Per Share | | $ | 3.22 | |
Earned ROE is calculated using adjusted (non-GAAP) operating earnings, reflecting all lines of business for the utility businesses (electric distribution, gas distribution, transmission), divided by average shareholder’s equity over the year. Management uses operating ROE as a measurement of the actual performance of the company’s utility business.
FFO/Debt is a coverage ratio that compares funds from operations to total debt and is a key ratio analyzed by the credit rating agencies in determining Exelon’s credit rating. An investment grade rating is critical as it increases the ability to participate in commercial business opportunities, lowers collateral requirements, creates reliable and cost-efficient access to capital markets and increases business and financial flexibility. The ratio is calculated following S&P’s current methodology. The most directly comparable GAAP measure to FFO is GAAP Cash Flow from Operations and the most directly comparable GAAP measure to Debt is Long-Term Debt plus Short-Term Borrowings. Management uses FFO/Debt to evaluate financial risk by measuring the company’s ability to service debt using cash from operations. We believe the measure enhances an investor’s overall understanding of the creditworthiness of Exelon’s operating companies.
Due to the forward-looking nature of some forecasted non-GAAP measures, information to reconcile the forecasted adjusted (non-GAAP) measures to the most directly comparable GAAP measure may not be currently available; therefore, management is unable to reconcile these measures.
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Appendix
2015 PShare Scorecard
The table below reflects the 2015 PShare Scorecard, which uses a “stair-step” approach with no interpolation between data performance levels. Applies to the second year of the 2014-2016 PShare program and the first year of the 2015-2017 PShare program.
| 2015 PShare Scorecard |
| Goals | | Metrics | | Metric
Weighting | | Operating
Company | | Threshold | | Target | | Target
Calibrated to | | Distinguished | | Final
Score | | Actual
Award vs.
Metric
Weighting |
Financial
Management | | ROE | | 30.0% | | Exelon Corp | | 7.25% | | 7.75% | | Budget | | 8.50% | | 8.23% | | 37.5% |
| FFO/Debt | | 30.0% | | ExGen HoldCo | | 27.0% | | 30.0% | | Budget | | 42.7% | | 33.1% | | 30.0% |
Operational
Excellence | | Outage | | 6.7% | | BGE | | 100.0 | | 88.0 | | 1st Quartile | | 85.0 | | 91.0 | | 1.68% |
| Duration | | | | ComEd | | 93.0 | | 83.0 | | 1st Quartile | | 82.0 | | 82.0 | | 3.35% |
| (Average) | | | | PECO | | 93.0 | | 87.0 | | 1st Quartile | | 85.0 | | 84.0 | | 3.35% |
| | Outage
Frequency
(Average) | | 6.7% | | BGE | | 1.00 | | 0.80 | | 1st Decile | | 0.76 | | 0.82 | | 1.68% |
| | | | ComEd | | 0.87 | | 0.77 | | 1st Decile | | 0.74 | | 0.78 | | 1.68% |
| | | | PECO | | 0.87 | | 0.77 | | 1st Decile | | 0.74 | | 0.70 | | 3.35% |
| | Net Fleetwide
Capacity
Factor | | 13.3% | | Nuclear | | 91.1% | | 93.1% | | 1st Quartile | | 93.6% | | 93.9% | | 19.95% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | Dispatch
Match | | 13.3% | | Power | | 94.3% | | 96.6% | | Internal | | 97.8% | | 98.6% | | 19.95% |
| | | | | | | | | | Measure | | | | | | |
| | | | | | | | | | | | | | Committee Approved
Performance | | 122.48% |
2016 PShare Scorecard
The table below reflects the 2016 PShare Scorecard, which uses a “stair-step” approach with no interpolation between data performance levels. Performance was evaluated at the end of 2016. The 2016 scorecard applies to the first year of the 2016-2018 PShare program, the second year of the 2015-2017 PShare program and the final year of the 2014-2016 PShare program.
| 2016 PShare Scorecard |
| Metrics | | Metric
Weighting | | Threshold | | Target | | Distinguished | | Final
Score | | Actual
Award vs.
Metric
Weighting |
| Exelon ROE | | 50.0% | | 6.60% | | 7.05% | | 7.50% | | 8.08% | | 75.0% |
| ExGen FFO/Debt | | 50.0% | | 27.0% | | 30.0% | | 38.01% | | 33.7% | | 50.0% |
| | | | | | | | Committee-Approved
Performance | | 125.00% |
A-2 Exelon 2018 Proxy Statement
Table of Contents
Appendix
2017 PShare Scorecard
The table below reflects the 2017 PShare Scorecard, which uses a “stair-step” approach with no interpolation between data performance levels for FFO/Debt. Utility Return on Equity and Utility Net Income use interpolation. Performance was evaluated at the end of 2017. The 2017 scorecard applies to the final year of the 2015-2017 PShare program.
| 2017 PShare Scorecard |
| Metrics | | Metric
Weighting | | Threshold
50% | | Target
100% | | Distinguished
150% | | Final
Score | | Actual Award vs.
Metric Weighting |
| Utility ROE | | 33.3% | | $1,459.00 | | $1,707.00 | | $1,979.00 | | $1,498.00 | | 35.06% |
| Utility Net Income | | 33.3% | | 8.3% | | 9.5% | | 10.9% | | 9.4% | | 35.15% |
| Metric | | Metric
Weighting | | Threshold
50% | | 75% | | Target
100% | | 125% | | Distinguished
150% | | Final
Score | | Actual Award vs.
Metric Weighting |
| Exelon FFO/ | | 33.4% | | >=16.0% | | >=17.0% | | >=18.0% | | >=22.0% | | >=24.0% | | 18.9% | | 33.4% |
| Debt | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Committee Approved
Performance | | 103.61% |
www.exeloncorp.com A-3
Table of Contents
Appendix
Exelon Corporation
Appendix B
Categorical Standards of Independence
In accordance with
The Exelon Corporation Independence Standards for Directors, the Board has determined that the following categories of relationships do not affect an Exelon director’s independence unless determined to affectany such relationship affects a director’s independence by reason of the independence standards set forth in Exelon’s Corporate Governance Principles.the listing rules of the Nasdaq stock market. The categorical standards are intended to assist the directorsBoard with independence determinations in connection with relationships not specifically covered by the independence standards set forth in the Corporate Governance Principles.listing rules of the Nasdaq stock market. The Board may determine that other relationships do not affect independence.
Immaterial position and ownership interest:The relationship arises solely from (1) such director’s (or an immediatea family member’s) position as a director, trustee, advisory board member, or similar position with another company or organization; (2) such director’s (or an immediatea family member’s) direct or indirect ownership of a 10% or less equity interest in another company or organization; or (3) a combination of the relationships described in clauses (1) and (2).
Immaterial business relationships:A director’s (or an immediatea family member’s) relationship with another company that participates in a transaction with the Company or its consolidated subsidiaries where: the rates or charges involved are determined by competitive bid or are competitive with current prices generally available to the public for similar goods and services; the transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; the transaction involves services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services, or commercial banking services provided on arm’s length terms and in the ordinary course of business; the provider of goods or services in a transaction is determined by the purchaser to be the only practical source to obtain the goods or services; or the interest arises solely from direct or indirect ownership of debt or equity securities of the Company or its subsidiaries where all holders of the same class of securities have the same rights and receive the same benefits on a pro rata basis.
Immaterial transactions:A director’s(or an immediatedirector’s (or family member’s) relationship with another company that has made payments to, or received payments from, the Company for property or services in an amount which, in the last fiscal year, does not exceed the greater of $1 million$200,000 or 2%5% of such other company’s consolidated gross revenues for such year.
Immaterial indebtedness:A director’s relationship as an executive officer, or where any member of his or her immediate family is an executive officer, of any other company which is indebted to the Company, or to which the Company is indebted, in each case excluding normal trade debt, and the total principal amount of such indebtedness is less than the greater of $1 million$200,000 or 2%5% of the total consolidated assets of such other company.
Immaterial investment:A director’s (or an immediate family member’s) relationship with another company (1) in which Exelon or any of its consolidated subsidiaries (including any benefit plan or arrangement sponsored by Exelon or its consolidated subsidiaries), or any nuclear decommissioning trust or other segregated investment fund maintained by Exelon or its subsidiaries makes investments or places funds for investment management or (2) which underwrites or invests in securities issued by Exelon or any of its consolidated subsidiaries, all in the ordinary course of such other company’s business on terms and under circumstances similar to those available to or from entities unaffiliated with such director.
Immaterial non-profit relationships:A director’s relationship as a current employee or where any family member of his or her immediate family serves as executive officer of a charitable or educational organization which receives contributions from the Company or any of its consolidated subsidiaries in its most recent fiscal year of less than the greater of $1 million$200,000 or 2%5% of that organization’s consolidated gross revenues in that year. In any other circumstances, a director’s relationship with a charitycharitable or educational organization to which the Company or any of its consolidated subsidiaries makes contributions where the aggregate contributions made by the Company or any of its consolidated subsidiaries to that organization in its most recent fiscal year were less than the greater of $1 million or 5% of that organization’s consolidated gross receipts for that year.
A-4 80Exelon 20182021 Proxy Statement
Table of Contents
2017 Exelon Recognition and PartnershipsAppendix C
Acronyms Used
Corporate & Foundation Giving |
 | |  |
$52.1 million
Last year, Exelon and its employees set all-time records, committing more than $52.1 million to non-profit organizations and volunteering more than 210,000 hoursACE | | Civic 50
Atlantic City Electric Company, an Exelon was named for the first time to the Civic 50, recognizing the most community-minded companies by Points of Light, the world’s largest organization dedicated to volunteer servicecompany |
Corporate Recognition | | Diversity & Inclusion |
 | |  | |  | |  | |  |
2017 Laurie D. Zelon Pro Bono Award
Awarded by the Pro Bono Institute for exemplary pro bono legal service and leadershipAIP | | Annual Incentive Plan |
Kids in Need of Defense Innovation Award
Exelon’s legal department and the Baltimore chapter of Organization of Latinos at Exelon (OLE) for their work with unaccompanied minors from Central AmericaBGE | | HeForShe
Baltimore Gas and Electric Company, an Exelon joined U.N. Women’s HeForShe campaign, which is focused on gender equality. Pledge includes a $3 million commitment to develop new STEM programs for girls and young women and improving the retention of women at Exelon by 2020company |
| CAIDI | | Customer Average Interruption Duration Index |
| CAM | | Critical Audit Matters |
| CBPP | | Cash Balance Pension Plan |
| CDC | | Centers for Disease Control and Prevention |
| ComEd | | Commonwealth Edison Company, an Exelon company |
| DE&I | | Diversity, Equity and Inclusion |
| DJSI | | Dow Jones Sustainability Index |
| DPL | | Delmarva Power & Light Company, an Exelon company |
| EPS | | Earnings per share |
| ERG | | Employee Resource Group |
| ESG | | Environmental, Social and Governance |
| FERC | | Federal Energy Regulatory Commission |
| FFO | | Funds from operations |
| GAAP | | Generally accepted accounting principles |
| GHG | | Greenhouse gases |
| GRI | | Global Reporting Initiative |
| LTIP | | Long-Term Incentive Plan |
| NEO | | Named Executive Officer |
| PCAOB | | Public Company Accounting Oversight Board |
| PECO | | PECO Energy Company, an Exelon company |
| Pepco | | Potomac Electric Power Company, an Exelon company |
| PHI | | Pepco Holdings LLC, an Exelon company and the holding company for ACE, DPL, Pepco |
| PPE | | Personal protective equipment |
| PwC | | PricewaterhouseCoopers LLP |
| ROE | | Return on equity |
| RSU | | Restricted Stock Unit |
| SAIFI | | System Average Interruption Frequency Index |
| SAS | | Service Annuity System |
| SEC | | Securities and Exchange Commission |
| SMRP | | Supplemental Management Retirement Plan |
| STEM | | Science, Technology, Engineering, and Mathematics |
| TCFD | | Task Force on Climate-Related Financial Disclosures |
| TDC | | Total Direct Compensation |
| TSR | | Total Shareholder Return |
| UTY | | PHLX Utility Sector Index |
| VIF | | Voting instruction form |
| ZEC | | Zero Emission Credits |
www.exeloncorp.com81
Table of Contents
ESG Awards & Partnerships
| | | | |
 | |  | |  |
| | | | |
| Member of CEO Action for Diversity &Inclusion™, the largest CEO-driven businesscommitment to advance diversity and inclusion within the workplace | | Member of the Billion Dollar Roundtable
Exelon became the first energy company to join the Billion Dollar Roundtable, an organization that promotes supplier diversity for corporations achieving $1 billion$1B or more in annual direct spending with minority andor women-owned businesses (2017 – 2020) | | CEO ActionAs a Champion for DiversityHeForShe campaign,Exelon pledged $3 million to STEM education for young women and is committed to sustaining retention parity among men & Inclusion
Exelon joined 150 leading companies for the CEO Action for Diversity & Inclusion™, the largest CEO-driven commitment aimed at taking action to cultivate a workplace where diverse perspectives and experiences are welcomed and respectedwomen |
Sustainability |
 | |  | |  | | |
Dow Jones Sustainability Index
| | | | |
 | |  | |  |
| | | | |
Exelon was named to the Dow JonesSustainability North America Index for 12ththe15th consecutive year | | Received Wildlife Habitat Council’sNewsweek Magazine’s Green Rankings
Employee Engagement Award for itsNewsweek Magazine’s Green Rankings recognized our leadership in sustainability, where we ranked third among utilities, No. 12 in the U.S. 500broad-based engagement with employee teams around habitat and 24th among the Global 500conservation education activities | | Member of LandCenter for People Award
Climate andEnergy Solutions Received the Trust for Public Land’s national “Land for People Award”since 2005 in recognition of Exelon’s Exelon’s deep support of environmental stewardship, creating new parksadvancing strong policy and promoting conservationmarket-based programs to reduce GHG emissions |
| Carbon Reduction
A recent M.J. Bradley and Associates report noted Exelon’s generation fleet had the lowest rate of emissions among the 20 largest public or privately held energy producers. Fortune also recognized Exelon as the second-lowest carbon emitter of all Fortune 100 companies
| | | |
| | | | |
 | |  | |  |
| | | | |
WorkforceEnergy Star® Partner of the Year:Sustained Excellence - Exelon utilitiesBGE, ComEd, DPL, PECO and Pepco were recognized for their continuing leadership efforts in customer energy efficiency programs | | Named to the Just 100 by Forbes and JUST Capital (2016-2021); Exelon ranked88th overall on the “Just 100: CompaniesDoing Right By America” list, which rankscompanies on issues including fair pay and equal treatment, sustainability and community engagement | | Exelon ranked No. 29 on DiversityInc’s2020 list of Top 50 Companies forDiversity, 9th of 15 companies for supplierdiversity, 17th of 30 companies for philanthropy and a top company for LGBTQ employees |
 | |  | |  | |  | |  |
| | | | |
 | |  | |  |
| | | | |
DiversityInc Top 50
DiversityInc. named Exelon as oneearned a perfect score of 100 andthe Top 50 companiesdesignation of “Best Place to Work” onHRC’s Corporate Equality Index for excellencethe 10th consecutive year in diversity2021 | | Indeed.com “50 Best Places to Work”
Indeed.com ranked Exelon No. 18 on its “50 Best Places to Work” | | Human Rights Campaign “Best Places to Work”
For the third consecutive year, HRC’s Corporate Equality Index gaveForbesrecognized Exelon as a perfect ratingBest Employer forDiversity for its diversity within executiveranks, diversity as a business imperative and proactive communication on its best places to work for LGBTQthe issue. | | 2017 U.S. Veterans Magazine’s “BestMagazine Best of the Best”
Best (2013-2020) - Exelon was named to theMost veteran-friendly companies | | Historically Black Engineering Schools
Top Supporter recognitionVeteran-Friendly Companies list,which recognizes companies for five consecutive yearstheir military-friendly policies and programs to actively recruit and hire veterans |
| | | | |
Thank you for being a shareholder!
Table of Contents
EXELON CORPORATION
10 SOUTH DEARBORN STREET
P.O. BOX 805398
CHICAGO, IL 60680-5398
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 30, 2018.26, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would likeDuring The Meeting - Go to reducewww.virtualshareholdermeeting.com/EXC2021
You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 30, 2018.26, 2021. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | |
E39820-P04234-Z71932 | D35909-P51546-Z79334 | KEEP THIS PORTION FOR YOUR RECORDS |
| | DETACH AND RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
EXELON CORPORATION
EXELON CORPORATION
| | |
The Board of Directors recommends you vote FOR the following: | | | | | | |
| | |
| | | | | |
1. | 1. | Election of Directors | | For | | Against | | Abstain |
| | | | | | | | | |
| | Nominees: | | For | | Against | | Abstain |
| | | | | | | | |
| | 1a. | | Anthony K. Anderson | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1b. | | Ann C. Berzin | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1c. | | Christopher M. CraneLaurie Brlas | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1d. | | Yves C. de BalmannMarjorie Rodgers Cheshire | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1e. | | Nicholas DeBenedictisChristopher Crane | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1f. | | Linda P. JojoYves de Balmann | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1g. | | Paul L. JoskowLinda Jojo | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1h. | | Robert J. LawlessPaul Joskow | | ☐o | | ☐o | | ☐o |
| | | | | | | | | | |
| | 1i. | | Richard W. MiesRobert Lawless | | ☐o | | ☐o | | ☐ |
| | | | | | | | | | |
For address changes and/or comments, please check this box and write them on the back where indicated. | | | | | | ☐ |
| | | | | | | | | | |
Please indicate if you plan to attend this meeting. | | ☐ | | ☐ | | |
| | | | | | Yes | | No | | |
| | | | For | | Against | | Abstain |
| | | | | | | | |
| | 1j. | | John W. Rogers, Jr. | | ☐ | | ☐ | | ☐o |
| | | | | | | | | | | |
| | 1k. | | Mayo A. Shattuck III | | ☐ | | ☐ | | ☐ |
| | | 1j. | John Richardson | | o | | o | | | |
| | 1l. | | Stephen D. Steinour | | ☐ | | ☐ | | ☐o |
| | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
|
|
| | For | | Against | | Abstain |
| | | | | | |
| 1k. | Mayo Shattuck III | | o | | o | | o |
| | | | | | | |
| 1l. | John Young | | o | | o | | o |
| | | | | | | |
The Board of Directors recommends you vote FOR proposals 2 and 3. | | 3, and AGAINST proposal 4. | | | | | | |
| | | | | | | |
| 2. | Advisory approval of executive compensation. | | o | | o | | o |
| | | | | | | | | | | |
2. | 3. | Ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Auditor for 2018.2021. | | ☐o | | ☐o | | ☐o |
| | | | | | | |
| 4. | A shareholder proposal requesting a report on the impact of Exelon plans involving electric vehicles and charging stations with regard to child labor outside the United States. | | o | | o | | o |
| | | | | | | | | | | |
3. | | Advisory approval of executive compensation. | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
NOTE:Authority is also given to vote on all other matters that may properly come before the meeting or any adjournment thereof. | | | | | | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |
| | |
| | | | | | |
| Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
Table of Contents
ADMISSION TICKET
To attend the annual meeting please detach and bring this ticket along with a valid photo ID and present them at the Shareholder Registration Table upon arrival. This ticket is not transferable.
No cameras, audio or video recording equipment, similar electronic devices, large bags, backpacks, briefcases or packages will be permitted in the meeting room or adjacent areas. Cell phones and similar wireless communication devices will be permitted in the meeting only if turned off. All items brought into the meeting will be subject to search.
NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING
Exelon'sExelon’s Notice and Proxy Statement and Annual Report are available online atwww.proxyvote.com. The electronic documents have been prepared to offer easy viewing and are completely searchable. The website will allow you to view the materials as you vote the shares. We believe that you will find this method of viewing Exelon'sExelon’s information and voting the shares more convenient.
We encourage you to vote the shares at www.proxyvote.com
and then register for the electronic delivery of Exelon's proxy materials for 2019 and beyond.
IF YOU WISH TO ATTEND THE ANNUAL MEETING, DETACH AND BRING THIS ADMISSION TICKET ALONG WITH A PHOTO ID
E39821-P04234-Z71932We encourage you to vote the shares at www.proxyvote.com
and then register for the electronic delivery of Exelon’s proxy materials for 2022 and beyond. |
EXELON CORPORATION
2018
2021 COMMON STOCK PROXY
This proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders to be held
on Tuesday, May 1, 2018April 27, 2021 at 9:00 A.M. EasternCentral Time at
Offices of Pepco Holdings LLC
www.virtualshareholdermeeting.com/EXC2021701 Ninth Street, NW
Washington, D.C.
THOMAS S. O'NEILL and CARTER C. CULVER and GAYLE E. LITTLETON or either of them with power of substitution, are hereby appointed to vote as specified all shares of common stock which the shareholder(s) named on the proxy card is/are entitled to vote at the annual meeting described above or at any adjournment thereof, and in their sole discretion to vote upon all other matters that may be properly brought before the annual meeting. If the proxy card is signed and dated, but no votes are indicated, it will be voted as recommended by the Board of Directors.
The Northern Trust Company as trustee for the Exelon Employee Savings Plan, for which Northwest Plan Services, Inc. is the plan record keeper, or Vanguard Fiduciary Trust Company as trustee of the Pepco Holdings LLC Retirement Savings Plan, is hereby authorized to execute a proxy with the identical instructions for any shares of common stock held in the respective planPlan for the benefit of any shareholder(s) named on this card. For all shares for which no valid instruction is timely received, the trustee of the respective plan is instructed to vote the shares in the same proportion as the shares that were affirmatively voted by shareholders participating in the respective plan.
Address Changes/Comments:
| |
|
|
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be signed on reverse side)side
FOR each Director nominee
AGAINST
Directors are elected annually by a majority of votes cast in uncontested elections. The average level of vote support for Directors in 2020 was 98%.
