Exhibit 10(a)
CONSTELLATION ENERGY GROUP, INC.
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EXECUTIVE BENEFITS PLAN
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NOTE - SEE ATTACHED SUMMARY OF NEW
EXECUTIVE PENSION PROVISIONS FOR A
DESCRIPTION OF CHANGES AFFECTING THIS PLAN
THAT HAVE NOT YET BEEN INCORPORATED INTO
FINAL WRITTEN PLAN DOCUMENTS
Restated October, 1999
TABLE OF CONTENTS
Page No.
1. Objective 1
2. Definitions 1
3. Plan Administration 4
4. Eligibility 4
5. Supplemental Pension Benefit 4
(a) Retirement benefits 4
(i) Eligibility for retirement benefits
(ii) Computation of retirement benefits 5
(iii) Form of payout of retirement benefits 6
(iv) Amount, timing, and source of monthly
retirement benefit payout 7
(v) Amount, timing, and source of lump sum
retirement benefit payout 7
(vi) Death of participant entitled to lump sum payout 7
(vii) Health and dental benefits 7
(b) Accrued benefit 8
(i) Computation of gross accrued benefit 8
(ii) Computation of net accrued benefit 8
(c) Entitlement to benefit upon happening of
certain events 9
(i) Satisfaction of requirements 9
(ii) Other events 9
(1) Change in control 9
(2) Plan amendment 9
(3) Involuntary Demotion, Termination
From Employment With Constellation
Energy Group, or eligibility
withdrawal without Cause 10
(iii) Form of benefit payout 10
(iv) Amount, timing and source of benefit
payout 10
(v) Death of participant entitled to lump
sum payout 11
(d) Other benefits 12
(i) Eligibility for other benefits 12
(ii) Computation of other benefits 12
(iii) Form of payout of other benefits 13
(iv) Amount, timing, and source of monthly
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other benefit payout 13
6. Supplemental Long-Term Disability Benefit 13
(i) Eligibility for disability benefits 13
(ii) Computation of disability benefits 14
(iii) Form of payment of disability benefits 14
(iv) Amount, timing, and source of monthly
disability benefit payout 14
(v) Bonus 15
7. Supplemental Survivor Annuity Benefit 15
(a) Survivor annuity benefit 15
(i) Eligibility for survivor annuity benefit 15
(ii) Computation of survivor annuity benefit 15
(iii) Form of payout of survivor annuity benefits 17
(iv) Amount, timing, and source of monthly
survivor annuity benefit payout 17
(b) Other survivor benefit 17
(i) Eligibility for other survivor benefit 17
(ii) Computation of other survivor benefit 18
(iii) Form of payout of other survivor
benefit 18
(iv) Amount, timing, and source of monthly
other survivor benefit payout 18
8. Death Benefit 19
9. Dependent Death Benefit 19
10. Sickness Benefit 19
11. Vacation Benefit 20
12. Planning Benefit 20
13. Miscellaneous 21
CONSTELLATION ENERGY GROUP, INC.
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EXECUTIVE BENEFITS PLAN
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1. Objective. The objective of this Plan is to enhance the benefits provided
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to officers and key employees of Constellation Energy Group and its
subsidiaries in order to attract and retain talented executive personnel.
2. Definitions. All words beginning with an initial capital letter and not
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otherwise defined herein shall have the meaning set forth in the Pension
Plan. All singular terms defined in this Plan will include the plural and
vice versa. As used herein, the following terms will have the meaning
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specified below:
"Annual Base Salary" means an amount determined by adding the monthly base
rate of pay amounts (i.e., the types of such pay that are includable in the
computation of Pension Plan benefits)earned over the twelve calendar months
immediately preceding the month that includes the date of the computation.
"Average Incentive Award" (or "Average Award") means generally the product
of the percentage equal to an average of the two highest of the
participant's five immediately prior year award percentages earned under
Constellation Energy Group's Executive Annual Incentive Plan, Constellation
Energy Group's Senior Management Annual Incentive Plan and/or the Results
Incentive Awards Program multiplied by the participant's annualized base
rate of pay amount (i.e., the types of such pay that are includable in the
computation of Pension Plan benefits) in effect at the end of the prior
year.
"Cause" means the participant's (a) failure to comply with Constellation
Energy Group policy, (b) deliberate and continual refusal to satisfactorily
perform employment duties on substantially a full-time basis, (c)
deliberate and continual refusal to act in accordance with any specific
instructions of a majority of Constellation Energy Group's Board of
Directors, (d) disclosure, without the consent of a majority of
Constellation Energy Group's Board of Directors, of confidential
information or trade secrets concerning Constellation Energy Group which
could be materially
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damaging to Constellation Energy Group, or (e) deliberate misconduct which
could be materially damaging to Constellation Energy Group without
reasonable good faith belief by the participant that such conduct was in
the best interest of Constellation Energy Group.
"Change in Control" means (a) the purchase or acquisition by any person,
entity or group of persons, (within the meaning of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), or any
comparable successor provisions), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or
more of either the outstanding shares of common stock of Constellation
Energy Group or the combined voting power of Constellation Energy Group's
then outstanding shares of voting securities entitled to a vote generally,
or (b) the consummation of, following the approval by the stockholders of
Constellation Energy Group of a reorganization, merger, or consolidation of
Constellation Energy Group, in each case, with respect to which persons who
were stockholders of Constellation Energy Group immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50 percent of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated entity's then outstanding securities, or (c) a liquidation or
dissolution of Constellation Energy Group or the sale of substantially all
of its assets, or (d) a change of more than one-half of the members of the
Board of Directors of Constellation Energy Group within a 90-day period for
reasons other than the death, disability, or retirement of such members.
"Committee" means the Committee on Management of the Board of Directors of
Constellation Energy Group.
"Constellation Energy Group" means Constellation Energy Group, Inc., a
Maryland corporation, or its successor.
"Constellation Energy Group's Executive Annual Incentive Plan" means such
plan or other incentive plan or arrangement designated in writing by the
Plan Administrator.
"Constellation Energy Group's Senior Management Annual Incentive Plan"
means such plan or other incentive plan or arrangement designated in
writing by the Plan Administrator.
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"Demotion" means a transfer to a position with Constellation Energy Group
or a subsidiary of Constellation Energy Group that either (a) is below the
substantially equivalent position in which the participant was employed on
the date of transfer, or (b) results in a substantial reduction in pay when
compared to the participant's pay on the date of the transfer. Whether a
position is a substantially equivalent position shall be determined in the
reasonable discretion of the Committee, with reference to factors including
whether the participant retains principal responsibility for a department
or division, and whether the participant remains eligible for the
perquisites enjoyed by the participant before the position change.
"Income Replacement Percentage" means the percentage under the LTD Plan
that is used to calculate the participant's actual LTD Plan benefit.
"Interest Rate" means the rate equal to 3.5% plus 65% of yield on the
Lehman Brothers Government/Corporate Bond Index.
"LTD Plan" means the Constellation Energy Group, Inc. Disability Insurance
Plan as may be amended from time to time, or any successor plan.
"Mortality Table" means the mortality table used to value liabilities for
Pension Plan funding purposes.
"Pension Plan" means the Pension Plan of Constellation Energy Group, Inc.
as may be amended from time to time, or any successor plan.
"Plan Administrator" means, as set forth in Section 3, the Committee.
"Rabbi Trust" means the trust adopted by Constellation Energy Group
pursuant to the Grantor Trust Agreement Dated as of April 30, 1999, between
Constellation Energy Group and Citibank, N.A.
"Results Incentive Awards Program" means the program applicable to certain
employees that provides awards; but includes only the types of awards that
are includable in the computation of Pension Plan benefits.
"Termination From Employment With Constellation Energy Group" means a
participant's separation from service with
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Constellation Energy Group or a subsidiary of Constellation Energy Group;
however, a participant's retirement, disability, or transfer of employment
to or from a subsidiary of Constellation Energy Group shall not constitute
a Termination From Employment With Constellation Energy Group.
3. Plan Administration. The Committee is the Plan Administrator and has sole
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authority (except as specified otherwise herein) to interpret the Plan and,
in general, to make all other determinations advisable for the
administration of the Plan to achieve its stated objective. Appeals of
written decisions by the Plan Administrator may be made to the Board of
Directors of Constellation Energy Group. Decisions by the Board shall be
final and not subject to further appeal. The Plan Administrator shall have
the power to delegate all or any part of its duties to one or more
designees, and to withdraw such authority, by written designation.
4. Eligibility. Each officer or key employee of Constellation Energy Group or
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its subsidiaries may be designated in writing by the Plan Administrator as
a participant with respect to one or more benefits under the Plan. Once
designated, participation shall continue until such designation is
withdrawn at the discretion and by written order of the Plan Administrator,
provided, however, that such withdrawal may not be made for benefits
provided pursuant to Sections 5 and 7 with respect to a participant who has
satisfied the eligibility requirements to retire (as set forth in Section
5(a)(i)). Notwithstanding the foregoing, any participant who is disabled
under the LTD Plan shall continue to participate in this Plan while
classified as disabled and, for purposes of the supplemental pension
benefit provided by this Plan, while classified as disabled, shall be
deemed to continue to accrue Credited Service until no later than his/her
Normal Retirement Date.
5. Supplemental Pension Benefit.
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(a) Retirement benefits.
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(i) Eligibility for retirement benefits. A participant shall be
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eligible to retire under this Plan on or after the participant's
Normal Retirement Date, or on the first day of any month
preceding his/her Normal Retirement Date, if the participant has
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attained (1) age 55 and has accumulated at least 20 years of
Credited Service; or (2) age 60 and has accumulated at least one
year of Credited Service.
(ii) Computation of retirement benefits. A participant who is eligible
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to retire under this Plan will be entitled to supplemental
pension retirement benefits under this Plan, which will be
calculated as set forth below on the participant's Retirement
Date:
(1) add the Annual Base Salary and the Average Incentive Award,
(2) divide the sum by 12,
(3) multiply this dollar amount by the appropriate percentage,
determined as follows: Chairman of the Board and President
of Constellation Energy Group, and President of
Constellation Enterprises, Inc. - 60%; all other
participants (by completed years of Credited Service) 1
through 9 - 3% per year; 10 through 19 - 40%; 20 through 24
- 45%; 25 through 29 - 50%; and 30 or more - 55%,
(4) multiply this dollar amount by the Early Retirement
Adjustment Factor set forth under the Pension Plan;
provided, however, if the participant is age 62 or older and
is an officer or key employee of Constellation Energy Group
or its subsidiaries, other than the Chairman of the Board
and President of Constellation Energy Group or the President
of Constellation Enterprises, Inc., such factor shall be one
(1),
(5) subtract from this dollar amount the charges relating to
coverage for a preretirement survivor annuity in excess of
50%, and for a post-retirement survivor annuity in excess of
50%, and
(6) subtract from the remainder the net amount payable to the
participant under the Pension Plan.
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(iii) Form of payout of retirement benefits. Each participant entitled
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to supplemental pension retirement benefits will receive his/her
supplemental pension retirement benefits payout in the form of a
monthly payment, unless the participant makes a valid election to
receive his/her supplemental pension retirement benefits payout
in the form of a lump sum.
A participant may elect to receive his/her supplemental pension
retirement benefits payout in the form of a lump sum by
submitting to the Plan Administrator a signed Lump Sum Election
Form. The Form must be received by the Plan Administrator before
the beginning of the calendar year during which the participant's
Retirement Date occurs. The election may be revoked at any time
before the beginning of the calendar year during which the
participant's Retirement Date occurs, by submitting to the Plan
Administrator a signed Lump Sum Revocation Form.
(iv) Amount, timing, and source of monthly retirement benefit payout.
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A participant entitled to monthly supplemental pension retirement
benefits will receive monthly payments equal to the amount
determined under paragraph (a)(ii). Such payments shall commence
effective with the participant's Retirement Date. If such
participant receives (or would have received but for the Internal
Revenue Code limitations) cost of living adjustment(s) under the
Pension Plan, the monthly payments hereunder will be
automatically increased based on the percentage of, and at the
same time as, such adjustment(s). Monthly payments hereunder
shall permanently cease upon the death of the participant,
effective with the monthly payment for the month following the
month of the participant's death. Monthly payments hereunder
shall be made in accordance with the provisions of the Rabbi
Trust and, to the extent not paid under the terms of the Rabbi
Trust, from general corporate assets.
(v) Amount, timing, and source of lump sum retirement benefit payout.
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A participant entitled to a lump sum supplemental pension
retirement benefit will
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receive a lump sum payment. This lump sum payment will be
calculated by a certified actuary and will be equal to the
present value of an immediate annuity including the estimated
present value of post-retirement supplemental survivor annuity
benefits described in Section 7, using (1) the supplemental
pension retirement benefit amount calculated under paragraph
(a)(ii), which is expressed as a monthly amount, (2) the
Interest Rate computed on the participant's Retirement Date, and
(3) the Mortality Table. Such lump sum payment shall be made
within 60 days after the participant's Retirement Date. The lump
sum payment shall be made in accordance with the provisions of
the Rabbi Trust and, to the extent not paid under the terms of
the Rabbi Trust, from general corporate assets. A participant
who receives a lump sum payment shall not be entitled to any
cost of living or other pension payment adjustments or to post-
retirement survivor annuity coverage under the Plan.
(vi) Death of participant entitled to lump sum payout. In the event
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of the death of a participant after his/her Retirement Date and
before the participant receives the lump sum payment under
paragraph (a)(v), such lump sum payment shall be made to the
participant's surviving spouse (as defined in Section 7(i)). The
lump sum payment shall be the same amount and made at the same
time and from the same sources as set forth in paragraph (a)(v).
If there is no surviving spouse at the date of the participant's
death, no payments shall be made pursuant to Sections 5 or 7. A
surviving spouse who receives a lump sum benefit under this
paragraph (a)(vi) shall not be entitled to any cost of living or
other pension payment adjustments or to post-retirement survivor
annuity coverage under the Plan.
(vii) Health and dental benefits. A participant who receives
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supplemental pension retirement benefits under this Plan, but
who is not eligible for benefits under the Constellation Energy
Group Retiree Flexible Benefits Program, is entitled to health
and dental benefits under this Plan that in the sole discretion
of the Plan Administrator, are reasonably similar to health and
dental benefits
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provided for participants under the Constellation Energy Group
Retiree Flexible Benefits Program, taking into account employer
cost, age and service.
(b) Accrued benefit.
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(i) Computation of gross accrued benefit. The computation of the
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gross accrued supplemental pension benefit for a participant as
of the date of the computation will be made as follows:
(1) add the Annual Base Salary and the Average Incentive Award,
(2) divide the sum by 12, and
(3) multiply this dollar amount by the appropriate percentage,
determined as follows: Chairman of the Board and President
of Constellation Energy Group and President of Constellation
Enterprises, Inc. - 60%; all other participants (by
completed years of Credited Service as of the date of the
computation) 1 through 9 - 3% per year; 10 through 19 - 40%;
20 through 24 - 45%; 25 through 29 - 50%; and 30 or more -
55%.
(ii) Computation of net accrued benefit. The computation of the net
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accrued supplemental pension benefit for a participant as of the
date of the computation will be made by subtracting from the
gross accrued benefit determined under paragraph (b)(i) the
amount, computed on the date a benefit is payable under paragraph
(c)(iv), of (1) the participant's Accrued Gross Pension under the
Pension Plan, expressed as a monthly amount if the participant is
not eligible for Normal Retirement, Early Retirement or
Disability Retirement benefits under the Pension Plan, otherwise
(2) the gross amount payable to the participant under the Pension
Plan.
(c) Entitlement to benefit upon happening of certain events.
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(i) Satisfaction of requirements. A participant who has satisfied the
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age and Credited Service requirements set forth in Section
5(a)(i) while eligible as set forth in Section 4, but who does
not retire under the Plan due to Demotion, Termination From
Employment With Constellation Energy Group, or the withdrawal of
a participant's eligibility to participate under Section 5, shall
be entitled to his/her net accrued supplemental pension benefit.
The effective date of the Demotion, Termination From Employment
With Constellation Energy Group, or eligibility withdrawal event
shall be the date of such Demotion, Termination From Employment
With Constellation Energy Group, or eligibility withdrawal.
(ii) Other events. A participant, regardless of his/her age and years
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of Credited Service, shall be entitled to his/her net accrued
supplemental pension benefit upon the happening of any of the
following entitlement events, but only if such entitlement event
occurs before a participant retires under this Plan:
(1) Change in Control. A Change in Control, followed within two
-----------------
years by the participant's Demotion, a participant's
Termination From Employment With Constellation Energy Group,
or the withdrawal of the participant's eligibility to
participate under the Plan, is an entitlement event. The
effective date of the entitlement event shall be the date of
the Demotion, Termination From Employment With Constellation
Energy Group, or eligibility withdrawal.
(2) Plan amendment. A Plan amendment that has the effect of
--------------
reducing a participant's gross accrued supplemental pension
benefit is an entitlement event. In determining whether such
a reduction has occurred, the participant's gross accrued
supplemental pension benefit calculated on the day
immediately preceding the effective date of the amendment
shall be compared to the
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participant's gross accrued supplemental pension benefit
calculated on the effective date of the amendment. An
amendment that has the effect of reducing future benefit
accruals is not an entitlement event. It is intended that an
entitlement event under this paragraph (c)(i)(2) will occur
only with respect to those amendments that are substantially
similar to amendments that are prohibited by Internal
Revenue Code section 411(d)(6) with respect to qualified
pension plans. The effective date of the entitlement event
shall be the effective date of the Plan amendment.
(3) Involuntary Demotion, Termination From Employment With
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Constellation Energy Group, or eligibility withdrawal
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without Cause. A participant's involuntary Demotion or
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involuntary Termination From Employment With Constellation
Energy Group without Cause, or the withdrawal of a
participant's eligibility to participate under Sections 5 or
7 of the Plan without Cause, is an entitlement event. The
effective date of the entitlement event shall be the
effective date of the participant's involuntary Demotion or
involuntary Termination From Employment With Constellation
Energy Group without Cause, or the eligibility withdrawal
without Cause.
(iii) Form of benefit payout. Each participant entitled to a payout
----------------------
under this paragraph (c) will receive such payout in the form of
a lump sum payment.
(iv) Amount, timing, and source of benefit payout. A participant
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entitled to a payout of his/her net accrued benefit, as a result
of the occurrence of an event described in paragraphs (c)(i),
(c)(ii)(1), (2), or (3) will be entitled to a lump sum benefit.
This lump sum benefit will be calculated by a certified actuary
as the present value of an annuity beginning at age 62 (unless
the participant is the Chairman of the Board or President of
Constellation Energy Group, or the President of Constellation
Enterprises, Inc. in which case age 65) (or the participant's
actual
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age, if the participant is older than age 62 (unless the
participant is the Chairman of the Board or President of
Constellation Energy Group, or the President of Constellation
Enterprises, Inc. in which case age 65) on the date the lump sum
benefit is payable), including the estimated present value of
post-retirement survivor annuity benefits described in Section 7,
using (1) the net accrued benefit amount calculated under
paragraph (b)(ii) on the effective date of the event, which is
expressed as a monthly amount, (2) the Early Retirement
Adjustment Factor (using the method set forth in (a)(ii)(4))
computed by substituting the date the lump sum benefit is payable
for the Retirement Date, (3) the Interest Rate computed on the
date the lump sum benefit is payable, and (4) the Mortality
Table. The lump sum benefit shall be payable on the date that is
the later of the date of the participant's Termination From
Employment With Constellation Energy Group or the date the
participant reaches age 55. The lump sum payment shall be made
within 60 days after such date and shall be made in accordance
with the provisions of the Rabbi Trust and, to the extent not
paid under the terms of the Rabbi Trust, from general corporate
assets. A participant who receives a lump sum benefit under this
paragraph (c)(iv) shall not be entitled to any cost of living or
other pension payment adjustments or to preretirement or post-
retirement survivor annuity coverage.
(v) Death of participant entitled to lump sum payout. In the event of
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the death of a participant after the occurrence of an event
described in paragraphs (c)(i), (c)(ii)(1), (2), or (3) and
before the participant receives the lump sum payment under
paragraph (c)(iv), such lump sum payment shall be made to the
participant's surviving spouse (as defined in Section 7(i)). The
lump sum payment will be calculated by a certified actuary and
will be equal to 50% of the present value of an immediate annuity
using (1) the monthly amount under paragraph (c)(iv), (2) the
Early Retirement Adjustment Factor computed using the
participant's age at the date of the participant's death, or if
the participant was younger than age 60 on the date of death,
using age 60, (3) the Interest Rate
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computed on the date the lump sum benefit is payable, and (4) the
Mortality Table. However, if the participant's death occurred
during the 60 day period described in paragraph (c)(iv), 100%
shall be used instead of 50% in the preceding sentence. The lump
sum benefit shall be payable on the date that is the later of the
date that the participant would have reached age 55 or the date
of the participant's death. The lump sum payment shall be made
within 60 days after such date, and shall be made in accordance
with the provisions of the Rabbi Trust and, to the extent not
paid under the terms of the Rabbi Trust, from general corporate
assets. If there is no surviving spouse at the date of the
participant's death, no payments shall be made pursuant to
Sections 5 or 7. A surviving spouse who receives a lump sum
benefit under this paragraph (c) (v) shall not be entitled to any
cost of living or other pension payment adjustments or to
preretirement or post-retirement survivor annuity coverage under
the Plan.
(d) Other benefits.
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(i) Eligibility for other benefits. Upon a participant's Termination
------------------------------
From Employment With Constellation Energy Group, if such
participant (1) does not satisfy the requirements of Sections
5(a)(i), 5(c)(i), and/or 5(c)(ii), and (2) is a vested
participant under the Pension Plan, such participant shall be
entitled to the benefits in this Section 5(d).
(ii) Computation of other benefits. A participant who is eligible for
-----------------------------
other benefits will be entitled to benefits under this Plan,
which will be calculated as set forth below on the date the
participant begins receipt of benefit payments under the Pension
Plan:
(1) compute the participant's adjusted monthly benefit payment
under the terms of the Pension Plan, by also treating
awards, if any, paid to the participant under Constellation
Energy Group's Executive Annual Incentive Plan and/or
Constellation Energy Group's Senior Management Annual
Incentive Plan during the immediately preceding twenty-
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four consecutive months as bonuses and/or incentives
included in the computation of the participant's Average Pay
(as defined under the Pension Plan), and
(2) subtract from the amount in (1) above the participant's
actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the participant will
bear the cost of any post-retirement survivor annuity
coverage provided under Section 7(b).
(iii) Form of payout of other benefits. Each participant entitled to
--------------------------------
other benefits will receive his/her other benefits payout in the
form of a monthly payment.
(iv) Amount, timing, and source of monthly other benefit payout. A
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participant entitled to monthly other benefits will receive
monthly payments equal to the amount determined under paragraph
(d)(ii). Such payments shall commence effective with the date
the participant commences receipt of benefit payments under the
Pension Plan. Monthly payments hereunder shall permanently cease
upon the death of the participant, effective with the monthly
payment for the month following the month of the participant's
death. Monthly payments hereunder shall be made from general
corporate assets.
6. Supplemental Long-Term Disability Benefit.
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(i) Eligibility for disability benefits. Any participant who has completed
-----------------------------------
at least one full calendar month of service with Constellation Energy
Group or its subsidiaries, who has elected coverage under the LTD
Plan, and who is disabled (as determined under the LTD Plan) will be
entitled to supplemental disability benefits under this Plan.
(ii) Computation of disability benefits. The amount of such supplemental
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disability benefits shall be determined as follows:
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(1) multiply the monthly base rate of pay amount in effect
immediately prior to becoming entitled to benefits under the LTD
Plan by twelve,
(2) add the Average Incentive Award to the product,
(3) add certain bonuses and incentives that are included in the
computation of Average Pay under the Pension Plan (except that
awards under the Results Incentive Awards Program shall be
excluded), earned over the last 12 months to the product,
(4) divide the sum by 12,
(5) multiply this monthly dollar amount by the Income Replacement
Percentage, and
(6) subtract from the product the gross monthly amount provided for
the participant under the LTD Plan before such amount is reduced
for other benefits as set forth under the LTD Plan.
(iii) Form of payment of disability benefits. Each participant entitled to
--------------------------------------
supplemental disability benefits will receive his/her supplemental
disability benefit payout in the form of a monthly payment.
(iv) Amount, timing, and source of monthly disability benefit payout. A
---------------------------------------------------------------
participant entitled to supplemental disability benefits will receive
a monthly payment equal to the amount determined under (ii) above.
Such payments shall commence effective with the commencement of the
participant's LTD Plan benefit payments. Monthly payments shall
permanently cease when benefit payments under the LTD Plan cease.
Monthly payments shall be made from Constellation Energy Group's
general corporate assets.
If a participant receiving payments pursuant to this Section 6
receives cost of living or other inflation/indexing adjustment(s)
under the LTD Plan, the payments hereunder will be automatically
increased based on the same percentage of, and at the same time as,
such adjustment(s).
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(v) Bonus. Any participant who has less than ten years of Credited Service
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shall be entitled to a monthly taxable cash bonus, equal to an amount
based on the cost of LTD Plan coverage, using the formula for
computing Constellation Energy Group-provided Flexible Benefits Plan
credits for LTD Plan coverage and taking into account the
Participant's Credited Service and covered compensation. Such cash
bonus shall be made from general corporate assets.
7. Supplemental Survivor Annuity Benefit.
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(a) Survivor annuity benefit.
------------------------
(i) Eligibility for survivor annuity benefit. Following the death of
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a participant (other than a participant who satisfied the
requirements of Section 5(d)(i) upon such participant's
Termination From Employment With Constellation Energy Group), a
supplemental survivor annuity may be paid to the participant's
surviving spouse until the death of that spouse, using the same
percentage to compute such supplemental benefit that is actually
used to compute any survivor annuity provided on behalf of the
participant under the Pension Plan. The participant will not bear
the cost of up to a 50% survivor annuity benefit, but will bear
the cost of a survivor annuity benefit in excess of 50%. For
purposes of this Section 7(a), a participant's surviving spouse
is the individual married to the participant on the date of the
participant's death. If there is no surviving spouse, or if the
participant or the participant's spouse previously received or is
entitled to receive a lump sum payment under Section 5, no
supplemental survivor annuity will be payable.
(ii) Computation of survivor annuity benefit. The amount of the
---------------------------------------
supplemental survivor annuity will be determined as follows:
(1) if the participant had retired prior to the date of death:
(a) begin with the monthly pension benefit (under Section
5(a) of this Plan) that
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the participant was receiving prior to the date of
death, and
(b) multiply this dollar amount by the percentage used to
compute the survivor annuity provided on behalf of the
participant under the Pension Plan.
(2) otherwise:
(a) begin with the larger of the Early Retirement pension
benefit (under both the Pension Plan and Section 5(a)
of this Plan) to which the participant would have been
entitled to receive if the:
(A) participant had been retired at age 60 on the date
of death for purposes of computing the Early
Retirement Adjustment Factor, or
(B) participant had retired on the date of death for
purposes of computing the Early Retirement
Adjustment Factor,
(b) multiply this dollar amount by the percentage used to
compute the survivor annuity provided on behalf of the
participant under the Pension Plan,
(c) subtract from the product the net amount, if any, of
the survivor annuity provided on behalf of the
participant under the Pension Plan, and
(d) subtract from this dollar amount the charges relating
to coverage (under both the Pension Plan and this Plan)
for a preretirement survivor annuity in excess of 50%,
and for a post-retirement survivor annuity in excess of
50%.
(iii) Form of payout of survivor annuity benefits. Each surviving
-------------------------------------------
spouse entitled to a supplemental survivor annuity benefit will
receive his/her
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survivor annuity benefit payout in the form of a monthly payment.
(iv) Amount, timing, and source of monthly survivor annuity benefit
--------------------------------------------------------------
payout. A surviving spouse entitled to monthly supplemental
------
survivor annuity benefits will receive a monthly payment equal to
the amount determined under (ii) above. Such payments shall
commence effective with the first day of the month following the
month of the participant's death. If such surviving spouse
receives (or would have received but for the Internal Revenue
Code limitations) cost of living adjustment(s) under the Pension
Plan, the monthly payments hereunder will be automatically
increased based on the percentage of, and at the same time as,
such adjustment(s). Monthly payments hereunder shall permanently
cease upon the death of the surviving spouse, effective with the
monthly payment for the month following the month of the
surviving spouse's death. Monthly payments hereunder shall be
made in accordance with the provisions of the Rabbi Trust and, to
the extent not paid under the terms of the Rabbi Trust, from
general corporate assets.
(b) Other survivor benefit.
----------------------
(i) Eligibility for other survivor benefit. Following the death of a
--------------------------------------
participant who satisfied the requirements of Section 5(d)(i)
upon such participant's Termination From Employment With
Constellation Energy Group, a survivor benefit may be paid to the
participant's surviving spouse until the death of that spouse.
For purposes of this Section 7(b), a participant's surviving
spouse is the individual who is the Surviving Spouse under the
Pension Plan. If there is no surviving spouse, no survivor
benefit will be payable.
(ii) Computation of other survivor benefit. The amount of the survivor
-------------------------------------
benefit will be calculated as set forth below on the date the
surviving spouse begins receipt of benefit payments under the
Pension Plan:
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(1) compute the surviving spouse's adjusted monthly benefit
payment under the terms of the Pension Plan, by also
treating awards, if any, paid to the participant under
Constellation Energy Group's Executive Annual Incentive Plan
and/or Constellation Energy Group's Manager Annual Incentive
Plan during the immediately preceding twenty-four
consecutive months as bonuses and/or incentives included in
the computation of the participant's Average Pay (as defined
under the Pension Plan), and
(2) subtract from the amount in (1) above the surviving spouse's
actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the surviving spouse
will bear the cost of the survivor benefit.
(iii) Form of payout of other survivor benefit. Each surviving spouse
----------------------------------------
entitled to a survivor benefit will receive his/her survivor
benefit payout in the form of a monthly payment.
(iv) Amount, timing, and source of monthly other survivor benefit
------------------------------------------------------------
payout. A surviving spouse entitled to monthly survivor benefits
------
will receive monthly payments equal to the amount determined
under paragraph (b)(ii). Such payments shall commence effective
with the date the surviving spouse commences receipt of benefit
payments under the Pension Plan. Monthly payments hereunder
shall permanently cease upon the death of the surviving spouse,
effective with the monthly payment for the month following the
month of the surviving spouse's death. Monthly payments
hereunder shall be made from general corporate assets.
8. Death Benefit. Constellation Energy Group shall make arrangements, through
-------------
its split-dollar life insurance program or otherwise, for life insurance
coverage for each participant providing that the participant's beneficiary
shall receive, as a pre-rollout death benefit, an amount which is
approximately equal to three times the
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participant's compensation, and as a post-rollout benefit, an amount which
is approximately equal to two times the participant's compensation, as set
forth in a separate agreement between Constellation Energy Group and the
participant.
As determined in the sole discretion of the Plan Administrator, in the
event that either (i) a participant is ineligible to receive the type of
life insurance coverage provided to other participants under this Plan, or
(ii) such coverage is not available on reasonably cost-effective terms as a
result of any penalty for smoking or other factors that are reflected in
the insurance carrier's rates, then Constellation Energy Group shall
provide a benefit that, in the discretion of the Plan Administrator, is
substantially equivalent to the cost of the benefit provided to other
participants under this Plan.
9. Dependent Death Benefit. In the event of the death of a participant's
-----------------------
qualified dependent while the participant is an active employee of
Constellation Energy Group or a subsidiary of Constellation Energy Group,
Constellation Energy Group shall make a death benefit payment to the
participant, from general corporate assets. For purposes of this Section 9,
qualified dependent shall have the same meaning as set forth in
Constellation Energy Group's Family Life Insurance Plan. For purposes of
this Section 9, the amount of the death benefit payment shall be the
highest amount of insurance that would have been payable with respect to
such qualified dependent if coverage had been provided under Constellation
Energy Group's Family Life Insurance Plan. The dependent death benefit
payment under this Plan shall be grossed-up for income tax withholding.
10. Sickness Benefit. Each participant, without regard to length of service,
----------------
shall be entitled to the greater of the benefits stipulated under the
Constellation Energy Group sick benefit policy for employees or twenty-six
(26) weeks of paid sick benefits within a rolling 52-week period.
11. Vacation Benefit. Each participant, without regard to length of service,
----------------
shall be entitled to the greater of the benefits stipulated under the
Constellation Energy Group vacation benefit policy for employees or five
weeks of paid vacation during a calendar year.
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12. Planning Benefit. Each participant shall be entitled to certain personal
----------------
financial, tax, and estate planning services paid for by Constellation
Energy Group but provided through designated professional firms. This
entitlement shall be subject to any dollar limitation established by the
Plan Administrator with respect to all such fees. The services shall be
provided to each participant by the chosen firm(s) on a personalized and
confidential basis; and each firm shall have sole responsibility for
quality of the services which it may render.
The services to be provided shall be on an on-going and continuous basis,
but shall be limited to (i) the development and legal documentation of both
career-oriented financial plans and personal estate plans, and (ii) tax
counseling regarding personal tax return preparation and the most
advantageous structuring, tax-wise, of proposed personal transactions.
Such planning benefit shall continue during the year of retirement plus the
next two calendar years and include the completion of the federal and state
personal tax returns for the second calendar year following retirement.
However, if a retired member of senior management continues to serve as a
member of the Board of Directors of Constellation Energy Group, his/her
planning benefit period shall be extended until he/she no longer serves as
a member of the Board of Directors.
Upon the death of a participant entitled to the planning benefit provided
hereunder, his/her surviving spouse shall be entitled to receive the
following planning benefit: (i) if the deceased was not retired at the time
of death, the surviving spouse shall be entitled to the planning benefit
for the year in which the death occurred plus the next two calendar years,
including completion of the federal and state personal tax returns for the
second calendar year after the year in which the death occurred; or (ii) if
the deceased was retired at the time of death, then the surviving spouse
shall receive a planning benefit equal to that the deceased would have
received if he/she had not died prior to expiration of the planning
benefit. The surviving spouse of a retired member of senior management
whose death occurs while serving as a member of the Board of Directors of
Constellation Energy Group, shall be entitled to a planning benefit as set
forth in (i) above.
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The planning benefit provided under this Plan shall be grossed-up for
income tax withholding.
13. Miscellaneous. None of the benefits provided under this Plan shall be
-------------
subject to alienation or assignment by any participant or beneficiary nor
shall any of them be subject to attachment or garnishment or other legal
process except (i) to the extent specially mandated and directed by
applicable State or Federal statute; (ii) as requested by the participant
or beneficiary to satisfy income tax withholding or liability; and (iii)
any policy of insurance written by a commercial carrier on a split-dollar
basis shall be assignable.
This Plan may be amended from time to time, or suspended or terminated at
any time, provided, however, that no amendment or termination shall reduce
any previously accrued supplemental pension benefit under this Plan or
impair the rights of any participant or beneficiary entitled to receive
current or future payment hereunder at the time of such action. All
amendments to this Plan which would increase or decrease the compensation
of any Officer of Constellation Energy Group, either directly or
indirectly, must be approved by the Board of Directors. All other
permissible amendments may be made at the written direction of the
Committee.
Participation in this Plan shall not constitute a contract of employment
between Constellation Energy Group and any person and shall not be deemed
to be consideration for, or a condition of, continued employment of any
person.
The Plan, notwithstanding the creation of the Rabbi Trust, is intended to
be unfunded for purposes of Title I of the Employee Retirement Income
Security Act of 1974. Constellation Energy Group shall make contributions
to the Rabbi Trust in accordance with the terms of the Rabbi Trust. Any
funds which may be invested and any assets which may be held to provide
benefits under this Plan shall continue for all purposes to be a part of
the general funds and assets of Constellation Energy Group and no person
other than Constellation Energy Group shall by virtue of the provisions of
this Plan have any interest in such funds and assets. To the extent that
any person acquires a right to receive payments from Constellation Energy
Group under this Plan, such rights shall be no greater than the right of
any unsecured general creditor of Constellation Energy Group.
-22-
In the event Constellation Energy Group becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other
corporate reorganization in which Constellation Energy Group will not be
the surviving corporation or in which the holders of the common stock of
Constellation Energy Group will receive securities of another corporation
(in any such case, the "New Company"), then the New Company shall assume
the rights and obligations of Constellation Energy Group under this Plan.
This Plan shall be governed in all respects by Maryland law.
Summary of New Executive Pension Provisions
-------------------------------------------
Effective January 1, 2000, the Constellation Energy Group, Inc. Board of
Directors authorized the company to make changes to the Executive Benefits
Plan, and to adopt new plans, to provide supplemental pension and other
benefits to executives of the company and certain subsidiaries. The
following is a summary of the amended and new plans, formal documents for
which have not yet been finalized:
Constellation Energy Group, Inc. Senior Executive Supplemental Pension Plan
---------------------------------------------------------------------------
- Senior officers of Constellation Energy Group, Inc. and presidents of the
primary business units are eligible for a supplemental pension at age 55 or
older with 10 or more years of service or age 62 or older with 5 or more
years of service. The benefit formula is 5.5% per year of supplemental
pension plan eligibility (and for each 4 years of service while not a
supplemental pension plan participant, the participant accrues an
additional 5.5%), with a maximum gross benefit of 55% for all participants
except the Chief Executive Officer of Constellation Energy Group, Inc. who
is entitled to a gross 60% benefit regardless of service. Pay under the
Plan for purposes of computing benefits is based on the sum of the average
of the highest two base salaries and the average of the highest two annual
incentive awards earned in the past five 12-month periods. A 4% per year
early retirement reduction factor is applied for each year retirement is
earlier than age 62. Any lump sum payment under the Plan will be computed
with reference to the 30-year Treasury rate, less 50 basis points. The Plan
also provides a free 50% survivor annuity benefit. Benefits will be secured
under the rabbi trust that currently secures benefits under the Executive
Benefits Plan. For participants in the Plan as of January 1, 2000, if
benefits under the Supplemental Pension Plan (described below) are greater
than benefits
-23-
under this Plan, the participant will receive benefits only under the
Supplemental Pension Plan.
Constellation Energy Group, Inc. Supplemental Pension Plan - Participants
----------------------------------------------------------
under the Executive Benefits Plan as of December 31, 1999 became
participants under the Supplemental Pension Plan effective January 1, 2000.
The Supplemental Pension Plan replaces the supplemental pension benefit
provisions under the Executive Benefits Plan. The Supplemental Pension Plan
benefits are the same as the supplemental pension benefit provisions under
the Executive Benefits Plan, with the following modifications: (a)
retirement eligibility requirements are reduced to age 55 or older with 10
or more years of service; (b) the early retirement reduction factor is
reduced from 6% to 3% for retirements between age 55 and 60, with no
reduction for retirements at or after age 62; and (c) any lump sum payment
under the Plan will be computed with reference to the 30-year Treasury
rate, less 50 basis points. The Plan also provides certain health and
dental benefits, and a free 50% survivor annuity benefit. Benefits will be
secured under the rabbi trust that currently secures benefits under the
Executive Benefits Plan.
Constellation Energy Group, Inc. Supplemental Benefits Plan - The
-----------------------------------------------------------
Supplemental Benefits Plan replaces the supplemental welfare benefit and
other non-pension benefit provisions under the Executive Benefits Plan. The
Supplemental Benefits Plan benefits are the same as the supplemental
welfare and other non-pension benefit provisions under the Executive
Benefits Plan. Senior executives and executives of Constellation Energy
Group, Inc. and certain of its subsidiaries are eligible to participate in
the plan.
Constellation Energy Group, Inc. Restoration Plan - The Restoration Plan
-------------------------------------------------
will provide supplemental pension benefits to employees of Constellation
Energy Group, Inc. and certain of its subsidiaries to the extent their
pension benefits are impacted by Internal Revenue Service limitations under
the Pension Plan of Constellation Energy Group, Inc. Employees who are
entitled to benefits under the Senior Executive Supplemental Pension Plan
or the Supplemental Pension Plan are not eligible to participate in the
Restoration Plan.