Constellation Energy Corp
For the period ended Apr 30, 2024. Filed Mar 20, 2024.
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Apr 30, 2024 · Filed Mar 20, 2024
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UNITED STATES**
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
| ☒ | Filed by the Registrant | ☐ | Filed by a Party other than the Registrant |
|---|
| Check the appropriate box: | |
|---|---|
| ☐ | Preliminary Proxy Statement |
| ☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Under Rule 14a-12 |
CONSTELLATION ENERGY CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
| Payment of Filing Fee (Check the appropriate box): | |
|---|---|
| ☒ | No fee required. |
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Letter From the Board of Directors to Shareholders
March 21, 2024
Dear Fellow Shareholders:
When Constellation launched two years ago, we were driven by a belief that our unique ability to reliably deliver carbon-free power in every hour of every day was the most undervalued product and service in the world.
That world has changed. Today, state and federal policies are starting to recognize the unique value our company provides, giving us the opportunity to extend the life of our nuclear clean energy centers and grow our fleet to increase our clean energy output. That recognition is also shared by the company’s customers, who come to us for help navigating increasingly volatile energy markets and seeking solutions to meeting their own ambitious climate goals. And significantly, nuclear energy now has historically high support from the public at large and is being recognized more widely for its role in addressing the climate crisis and maintaining the reliable, 24/7 energy we all depend on in our daily lives. Constellation is in a rare space, where our nation’s need for clean and reliable energy is fully aligned with the nuclear and other assets we own and our strategy to maximize their value.
Since 2022, the company has delivered a total shareholder return of 139.8% and increased the strength of our investment-grade balance sheet. In December, we authorized management to increase the company’s share repurchase plan by an additional $1 billion – bringing the total repurchase plan to $2 billion. We have grown our dividend 150% in the first two years as a stand-alone company and are confident in the company’s forecast of 10% annual base earnings per share growth through this decade. Looking ahead, we see continued opportunities to power our nation’s growing digital infrastructure with clean energy, support the decarbonization of sectors across our economy and continue expanding our carbon-free energy output.
Advancing a Reliable, Carbon-Free Energy Future and Serving Customers Across the U.S.
In 2023, Constellation made significant progress on our growth strategy as we continued to expand our fleet of the nation’s best-run nuclear plants through the acquisition of a partial ownership stake in the South Texas Project Electric Generation Station (STP), one of the newest and largest nuclear plants in the U.S., with an exceptional track record for safety and reliability. STP generates enough carbon-free power for two million average homes in one of the most economically dynamic regions in Texas. The STP acquisition helps advance the company’s ambitious goal of achieving 95% carbon-free energy generation by 2030 and 100% by 2040.
In a year of extreme weather and record temperatures, our generation fleet once again set the standard for our industry. We also maintained strong reliability throughout the year, continuing best-in-class nuclear operations. During summer 2023, the hottest summer on record, our carbon-free nuclear fleet ran nearly 100% of the time to provide reliable power to the equivalent of more than 16 million homes. This success demonstrates the dedication of Constellation’s people, who performed tens of thousands of tasks at our nuclear plants during spring refueling and maintenance outages designed to ensure all reactors would run uninterrupted through the peak summer heat. In addition, we began producing hydrogen at Nine Mile Point Clean Energy Center and achieved an industry record for blending clean hydrogen with natural gas at Hillabee Generating Station.
Our commercial business also performed at an extraordinary level in 2023 serving customers in 48 states and optimizing our nuclear fleet in the wholesale markets. Through this industry leading business at Constellation, we also support our customers in reaching their climate and decarbonization goals. Last year, through collaboration with Microsoft, we announced our investment in technology to help U.S. businesses match their energy use with carbon-free resources in every hour of every day, thereby helping companies transition to 100% clean electricity around the clock. Microsoft became a customer for this product at a Virginia data center and we also entered a historic agreement with ComEd, one of the nation’s largest utilities, to power all of its 54 facilities with hourly-matched carbon-free energy.
We believe building a sustainable energy future also means supporting the communities we serve through economic and workforce development, charitable giving and volunteerism. In 2023, Constellation hired more than 1,500 people and was certified as a “Great Place to Work.” We launched a $1.25 million Powering Change initiative, dedicated to breaking down employment barriers for people in underserved and underrepresented communities. We doubled the size of our charitable foundation, and our people volunteered more than 102,000 hours of service in our communities and, together with the company and the foundation, contributed more than $18 million to 4,400 charities.
| Constellation Energy Corporation 2024 Proxy Statement | 1 |
Letter From the Board of Directors to Shareholders
Strengthening our Board Composition and Ensuring Strong Governance Practices
The Board remains committed to effective governance practices to ensure oversight of the most relevant and important issues and opportunities facing Constellation. As a Board, we regularly consider how each of our directors’ backgrounds, experiences and skills enable effective oversight of the company’s growth, business planning, and sustainability issues, including business risks related to cybersecurity, safety and climate change. We remain confident in our current Board composition and continue to actively search for prospective director candidates to ensure a regular process of Board refreshment. In June 2023, we welcomed Dhiaa Jamil to the Board, whose background and experience in nuclear energy is invaluable as we continue to deliver on our clean energy center strategy.
The discussions Constellation held with our shareholders over the past year were an important resource as we review our governance practices and consider both near-term and long-term strategic decisions. Through these meetings, we gained valuable insights into investor perspectives and priorities with discussions that often focused on our climate strategy and sustainability- related initiatives, Board composition and risk oversight, pay-for-performance alignment, and our governance practices, including our commitment to fully de-classify the Board following the 2026 Annual Meeting of Shareholders.
Your Vote is Important to Us
As we approach our 2024 Annual Meeting of Shareholders, we want to stress that your vote is very important to us. We encourage you to carefully read the attached proxy statement, and we ask that you support our voting recommendations.
Thank you for your continued support of Constellation and the Board as stewards of your investment.
| Constellation Energy Corporation 2024 Proxy Statement | 2 |
Notice of Annual Meeting of Shareholders
To Shareholders of Constellation:
You are invited to participate in the 2024 Annual Meeting of Shareholders of Constellation. The Annual Meeting will take place in a virtual-only format. Shareholders may begin logging into the meeting on Tuesday, April 30, 2024 at 8:45 a.m. Eastern Time.
| Items Of Business: | |
|---|---|
| 1. To elect four Class II directors nominated by our Board of Directors; 2. To consider and act on an advisory vote regarding the approval of compensation paid to our named executive officers; | 3. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2024; and 4. To transact any other business properly brought before the meeting and any adjournment or postponement thereof. |
| Your vote is important, and you are encouraged to vote promptly whether or not you plan to virtually attend the 2024 Annual Meeting of Shareholders. This proxy statement is provided in connection with a solicitation of proxies by the Board of Directors of Constellation Energy Corporation (the “Board”) to be used at the Annual Meeting of Shareholders to be held on Tuesday, April 30, 2024 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof (the “Annual Meeting”). This proxy statement is first being provided to our shareholders on or about March 21, 2024. | ||
|---|---|---|
| Voting | ||
| Online | By Phone | By Mail |
| Vote online at www.proxyvote.com 24 hours a day. Prior to the Annual Meeting, visit www.proxyvote.com and use the control number that appears on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials when you access the webpage. You may also scan the QR Barcode on the form you receive to transmit your voting instructions. | Call toll-free 1-800-690-6903 If your shares are held in the name of a broker, bank or other nominees, follow the telephone voting instructions provided on your voting instruction card. If your shares are registered in your name, call 1-800-690-6903 and follow the telephone voting instructions. You will need the 16-digit control number that appears on your proxy card, voting instruction form or notice of Internet Availability of Proxy Materials. | If you have received a printed version of these proxy materials, complete, date, sign and mail your proxy card in the enclosed postage-paid envelope provided, or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
Virtual Meeting www.virtualshareholdermeeting.com/CEG2024. Tuesday, April 30, 2024 9:00 a.m., Eastern Time Record Date March 6, 2024
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 30, 2024: Our proxy statement and 2023 Annual Report are available free of charge on our website constellationenergy.com or at www.proxyvote.com.
AT THE MEETING: Shareholders as of March 6, 2024 (the “record date”) may attend the virtual Annual Meeting and vote by using the 16-digit control number found on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials that you previously received. Any shareholder of record attending the Annual Meeting may vote during the meeting, at www.virtualshareholdermeeting.com/CEG2024, even if they have voted over the Internet, by telephone or returned a completed proxy card. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a valid form issued in your name from that record holder.
BY ORDER OF THE BOARD OF DIRECTORS
Arden T. Phillips
Corporate Secretary
March 21, 2024
| Constellation Energy Corporation 2024 Proxy Statement | 3 |
Information About the Annual Meeting
Throughout this proxy statement, “Constellation”, the “Company”, “we”, “our”, or “us” are intended to refer to Constellation Energy Corporation and its consolidated subsidiaries, unless specifically indicated otherwise. Constellation does not incorporate into this document the contents of any website or the documents referred to in this proxy statement.
**Distribution of Proxy Materials:**This proxy statement is provided in connection with a solicitation of proxies by the Board of Directors of Constellation to be used at the Annual Meeting of Shareholders to be held on Tuesday, April 30, 2024 at 9:00 a.m., Eastern Time, and at any adjournment or postponement thereof. On or about March 21, 2024, this proxy statement, along with our annual report, are being mailed or made available to shareholders.
**Attendance at the Annual Meeting:**You are invited to attend the virtual Annual Meeting and we request that you vote on the proposals described in this proxy statement as recommended by the Board of Directors. If you have received a printed copy of these materials by mail, you may complete, sign and return your proxy card, or submit your proxy vote by telephone or over the Internet. If you did not receive a printed copy of these materials by mail and are accessing them via the Internet, you may follow the instructions under the heading, “Questions and Answers About the Annual Meeting” beginning on page 95 of this proxy statement to submit your proxy vote via the Internet or by telephone. Also, other information about voting is provided under “Questions and Answers About the Annual Meeting.”
**Every Vote is Important:**Make your vote count. Please vote your shares promptly to ensure your representation and the presence of a quorum during the Annual Meeting. Vote your shares now via the Internet, by telephone, or by signing, dating, and returning the proxy card or voting instruction form. If you only received a Notice of Internet Availability of Proxy Materials, you may requesta paper proxy card to submit your vote by mail, if you prefer. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting online. If you are a beneficial owner of shares, your broker will not be able to vote your shares with respect to the election of directors and most of the other matters presented during the meeting, unless you have given your broker specific instructions to do so. We strongly encourage you to vote and greatly appreciate your prompt response.
Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option.
**Asking Questions:**The virtual meeting platform will provide shareholders with all the comparable rights as an in-person meeting.
| • | Shareholders may submit questions for the meeting in advance at www.proxyvote.com |
| • | Shareholders may also submit questions live during the meeting at www.virtualshareholdermeeting.com/CEG2024 |
| Constellation Energy Corporation 2024 Proxy Statement | 4 |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
Our Annual Meeting is taking place in a virtual-only format, which provides our shareholders with comparable opportunities to vote and ask questions that they would have at an in-person meeting. For more information, please see, “Questions and Answers About the Annual Meeting” beginning on page 95 of this proxy statement.
What Shareholders will be Voting On
| Items of Business · Board’s Voting Recommendation · Page | ||||
|---|---|---|---|---|
| 1 | To elect four Class II directors nominated by our Board of Directors | FOR ALL | 23 | |
| 2 | To consider and act on an advisory vote regarding the approval of compensation paid to named executive officers | FOR | 54 | |
| 3 | To ratify the appointment of PricewaterhouseCoopers LLP as Constellation’s independent registered public accounting firm for 2024 | FOR | 90 | |
| 4 | To transact any other business properly brought before the meeting and any adjournment or postponement thereof. | — | ||
We are not aware of any other business to come before the Annual Meeting.
| How to Vote in Advance of the Meeting If you are a shareholder on the record date, you may vote in advance of the meeting in any of the following ways: | ||
|---|---|---|
| Online | By Phone | By Mail |
| Vote online at www.proxyvote.com 24 hours a day. Prior to the Annual Meeting, visit www.proxyvote.com and use the control number that appears on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials when you access the webpage. You may also scan the QR Barcode on the form you receive to transmit your voting instructions. | Call toll-free 1-800-690-6903 If your shares are held in the name of a broker, bank or other nominees, follow the telephone voting instructions provided on your voting instruction card. If your shares are registered in your name, call 1-800- 690-6903 and follow the telephone voting instructions. You will need the 16-digit control number that appears on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. | If you have received a printed version of these proxy materials, complete, date, sign and mail your proxy card in the enclosed, postage-paid envelope provided, or return to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| Constellation Energy Corporation 2024 Proxy Statement | 5 |
Constellation’s Business Strategy
Constellation’s Business Strategy
In a rapidly changing world, demand for clean, reliable power generation is growing. Customers and policymakers are growing increasingly aware that America needs clean and dependable power generation to grow our data-driven economy, protect our national security, and transition to a carbon-free future. With our unmatched clean, reliable generation portfolio, Constellation is uniquely placed to help our country and our customers meet their economic growth and sustainability goals. With revenues of more than $24.9 billion in 2023 and total assets of $50.8 billion, Constellation is both the nation’s largest carbon-free energy producer and a leading competitive energy supplier, producing approximately 10% of the nation’s carbon-free energy and helping America transition to a clean, sustainable future.
We aim to serve as a strategic partner to businesses and the federal, state and local governments that are setting ambitious carbon-reduction goals and driving economic growth by powering the data economy and new digital infrastructure. We are a leading advocate at the federal and state levels for policies that will reduce greenhouse gas (GHG) emissions and preserve and grow reliable, clean energy.1 The principles of our sustainable business strategy demonstrate our commitment to a carbon-free future while maintaining a strong balance sheet. Our strategy builds on these principles:
***Power America’s Clean Energy Future.***We will operate and grow the nation’s largest fleet of carbon-free, zero-emissions generation facilities, with world-class levels of safety, reliability and resiliency.
Expand America’s Largest Fleet of Clean Energy Centers. We will leverage and expand our state-of-the-art clean energy assets by co-locating with data centers, exploring direct air capture of CO 2, and, if supported by policy, producing clean hydrogen and other sustainable fuels to reduce industrial pollution.
***Provide Energy and Sustainability Solutions for Customers.***We will provide reliable, resilient energy and deliver innovative sustainability solutions that help customers achieve their carbon-free energy goals.
***Uplift and Strengthen our Communities.***We will advance respect, belonging, diversity and equity, and drive community investment and create family-sustaining clean energy jobs for all.
Our nearly 90% carbon-free generation fleet consists of nuclear, wind, solar, hydroelectric and lower-carbon natural gas assets. Our fleet has a total generation capacity of 33,094 megawatts (MW). Through our integrated business operations, we sell electricity, natural gas and other energy-related products and sustainable solutions to various types of customers, including distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive markets across multiple geographic regions.
In the coming years, our country will need even more reliable, clean megawatts—the most important energy commodity in our economy. Constellation is uniquely positioned to offer them to customers whether through on-site applications like digital infrastructure projects and hydrogen (with the right policy support) or off-site solutions like CORe or hourly matched carbon free energy.
| (1) | The terms “clean energy” or “clean” as used in this proxy statement refer to energy generated by facilities that do not emit greenhouse gases such as carbon dioxide or other harmful pollutants like nitrogen oxides and sulfur oxides during the generation process. |
| Constellation Energy Corporation 2024 Proxy Statement | 6 |
2023 Operational Highlights and Accomplishments
2023 Operational Highlights and Accomplishments
In 2023, we continued to build upon prior year achievements that support long-term value creation with outstanding total shareholder return and strong financial and operational performance. For example, we accomplished the following in 2023:
| (1) | See the reconciliation to the corresponding GAAP measures set forth in Appendix A of this proxy statement. |
| Constellation Energy Corporation 2024 Proxy Statement | 7 |
Our Board and Director Nominees
Our Board and Director Nominees
The Board of Directors is composed of a mix of highly experienced individuals who oversee Constellation’s strategy and business performance. The Board is currently classified and consists of three tiers of directors. In accordance with our bylaws, the Board will be fully de-classified following the 2026 Annual Meeting of Shareholders. The Corporate Governance Committee has recommended, and the Board has nominated, Bradley Halverson, Charles Harrington, Dhiaa Jamil and Nneka Rimmer forre-election as Class II directors. Upon election, each of the Class II directors will serve a two-year term or until his or her successor is elected and qualified, or his or her earlier death, resignation, or removal. All of the nominees are presently members of the Board. The Board is recommending that all four nominees be elected by shareholders.
The following table provides summary information about each of the nominees for election at the 2024 Annual Meeting as well as the seven directors that are not currently standing for re-election.
| Name | Class | Age | Director Since | Independent | Current Committee Memberships | Other Current Public Company Boards |
|---|---|---|---|---|---|---|
| Laurie Brlas Former Chief Financial Officer–Newmont Mining Corporation | III | 66 | 2022 | ✔ | Audit & Risk (Chair) Corporate Governance | • Albemarle Corporation • Graphic Packaging Holding Company • Autoliv, Inc. |
| Yves C. de Balmann Executive Partner at Bridge Growth Partners | III | 77 | 2022 | ✔ | Compensation (Chair) Corporate Governance | None |
| Joseph Dominguez President and Chief Executive Officer–Constellation | I | 61 | 2022 | N/A | None | |
| Bradley M. Halverson Former Chief Financial Officer–Caterpillar Inc. | II | 62 | 2022 | ✔ | Compensation Corporate Governance | • Sysco Corporation • Lear Corporation • Satellogic, Inc. |
| Charles L. Harrington Former Chairman– Parsons Corporation | II | 65 | 2022 | ✔ | Audit & Risk Corporate Governance (Chair) Nuclear Oversight | • J.G. Boswell Company • JBT Corporation • Korn Ferry |
| Julie Holzrichter Chief Operating Officer–CME Group | I | 56 | 2022 | ✔ | Audit & Risk Compensation | None |
| Dhiaa Jamil Former Chief Operating Officer–Duke Energy | II | 67 | 2023 | ✔ | Compensation Nuclear Oversight | None |
| Ashish Khandpur President and Chief Executive Officer–Avient Corporation | I | 56 | 2022 | ✔ | Compensation Corporate Governance | • Avient Corporation |
| Robert J. Lawless Former Chief Executive Officer–McCormick & Company, Inc. | III | 77 | 2022 | ✔ | Corporate Governance | None |
| Admiral John M. Richardson Former Chief of Naval Operations–U.S. Navy | III | 63 | 2022 | ✔ | Audit & Risk Corporate Governance Nuclear Oversight (Chair) | • The Boeing Company • BWX Technologies, Inc. |
| Nneka Rimmer Former President, Global Flavors & Extracts–McCormick & Company, Inc. | II | 52 | 2022 | ✔ | Audit & Risk Nuclear Oversight | • Energizer Holdings, Inc. |
| (1) | In June 2023, the gender diversity percentage decreased from 30% to 27% when Mr. Jamil was appointed to the Board, see page 38 of this proxy statement for more information. |
| Constellation Energy Corporation 2024 Proxy Statement | 8 |
Compensation Program Structure
Compensation Program Structure
A significant portion of compensation for the CEO (and other named executive officers (NEOs) listed in the compensation tables of this proxy statement) is tied to the achievement of short-term and long-term financial and operational goals. The components of compensation paid to our CEO (and the other NEOs), except for base salary, are “at-risk”. The table below illustrates components for total direct compensation.
Chief Executive Officer Compensation
The Compensation Committee reviews and recommends, and the Board of Directors considers and approves, the compensation of our CEO annually, based on a comprehensive evaluation of his individual performance and our company’s performance relative to our peers and the market. The Compensation Committee considers both quantitative and qualitative factors, such as financial results, strategic initiatives, leadership development, succession planning, stakeholder engagement, corporate responsibility, and risk management. The committee also benchmarks the CEO’s compensation against independent peer group data provided by an external consultant, to ensure that the compensation is competitive, reasonable, and aligned with shareholder interests.
Given the effectiveness of the CEO’s leadership in driving strong financial results, superior shareholder returns, strategic growth, and operational success, the committee recommended that the CEO’s compensation for fiscal year 2023 should be competitive with market median of the peer group which is reflected in the 2023 pay decisions above.
CEO Incentive Pay Strongly Aligned to Stock Performance Relative to Peer Group Average and S&P 500
One of the key objectives of our executive compensation program is to align the interests of our executives with those of our shareholders. We believe that our compensation program reflects this objective by linking a significant portion of our executives’ pay to the achievement of financial and strategic goals that drive shareholder value creation. As a result, our executives’ compensation varies with our performance and the market value of our common stock.
| Constellation Energy Corporation 2024 Proxy Statement | 9 |
Key Executive Compensation Practices
Since our separation from our former parent company, Exelon Corporation, in February 2022, we have delivered strong financial results and superior shareholder returns. Our total shareholder return (TSR) since separation was 139.8% as of December 31, 2023, compared to 8.3% for the S&P 500 Index and an average of 14.4% for our peer group. Our one-year TSR was 37.2%, compared to 26.3% for the S&P 500 Index and an average of 12.5% for our peer group. These results reflect the successful execution of our strategy and operational excellence.
Key Executive Compensation Practices
Our executive compensation policies and programs are built upon a strong foundation of corporate governance and compensation best practices. Below is a high-level overview of certain elements of our executive compensation program.
| What We Do: | What We Don’t Do: |
|---|---|
| • Align pay for performance • Maintain significant stock ownership requirements for directors and executive officers • Cap incentive awards and conduct an annual risk assessment of the compensation programs • Subject change-in-control benefits to double trigger vesting • Retain an independent compensation consultant that advises the Compensation Committee • Provide limited perquisites based on sound business rationale • Subject incentive compensation awards to clawback provisions • Review of pay equity by an independent third party • Engage in comprehensive shareholder outreach • Prohibit hedging, short sales, derivative transactions or pledging of company stock • Assess our programs against peer companies and best practices • Set appropriate levels of “stretch” in incentive targets | • No guaranteed minimum payout of AIP or LTIP programs • No employment agreements • No excise tax gross-ups for change-in-control agreements • The value of LTIP awards is not included in pension or severance calculations • No option repricing or buyouts without stockholder approval |
ESG Principles
We are committed to a carbon-free future while maintaining a strong balance sheet, advancing our environmental, social and governance (ESG) initiatives and investing in carbon-free energy solutions. Our ESG principles are core to our purpose and business strategy of supporting the transition to a carbon-free future. Our principles consist of these critical focus areas:
| Providing Carbon-Free Energy and Climate Mitigation | C&I Customer Transformation | Innovation and Technology Enablement | |
|---|---|---|---|
| Carbon-Free Policy Advocacy | Equity and Community Empowerment | Commitment to Diversity, Equity and Inclusion | Strong Corporate Governance and Risk Management |
| Constellation Energy Corporation 2024 Proxy Statement | 10 |
Sustainability
We provide carbon-free energy and services to help meet national climate goals and decarbonize the electric grid. Our values drive our people to function as a team and work towards our common purpose: accelerating the transition to a carbon-free future. This purpose drives us to maintain our position as an industry leader in the production of 24/7 reliable and affordable carbon-free energy and encourages us to innovate and expand upon the carbon-free energy solutions we currently provide to businesses and communities across the United States.
Please see the “About Us—Sustainability” section later in this proxy statement for more information regarding our sustainability efforts and strategy.
| Constellation Energy Corporation 2024 Proxy Statement | 11 |
Corporate Governance
Constellation is committed to maintaining the highest standards of corporate governance that promote the long-term interests of shareholders, strengthens Board and management accountability, and helps build public trust. Strong corporate governance is a fundamental aspect of our long-term sustainable business operations.
The Board provides oversight on the development and execution of our strategy, business operations and performance, enterprise risks, executive compensation, sustainability and environmental stewardship, and governance practices.
Our Board is comprised of eleven directors. All members, excluding Constellation’s President and CEO, are independent under criteria established by The Nasdaq Stock Market LLC (Nasdaq). Board membership is reviewed on an annual basis to ensure our Board members have a diverse set of characteristics, skills and experience necessary to maximize the success of our business and effectively represent shareholder interests. We also consider a diversity of backgrounds and perspectives, including with respect to age, gender, and specialized experience. Currently, 27% of Board members are women and 45% are ethnically and/or racially diverse.
| Board Governance Our corporate governance structure consists of certain elements, including the following: | ||
|---|---|---|
| Independent Board Chair Chief Executive Officer and Board Chair roles are separate | Committee Independence 100% of our committees are comprised of independent directors | Director Stock Ownership Robust ownership requirements (i.e., 5x annual cash retainer) |
| Board Self-Evaluations Annual evaluations for full Board which includes director interviews | Outside Board Service Limit Maximum of 3 other public company Boards (CEO may only serve on the Board of one other public company) | Mandatory Director Retirement By the annual meeting of shareholders following a director’s 80th birthday |
| Committee Self-Evaluations Annual evaluations for each committee | Succession Planning Annual evaluation of management succession and leadership | Governance Assessment Annual review/assessment of governance policies |
| Enterprise Risk Board oversight of enterprise risk, overseen by the Audit & Risk Committee | Executive sessions Regular executive sessions of independent directors meeting without management | De-classification of Board Annual elections for all directors after 2026 annual meeting of shareholders |
| Constellation Energy Corporation 2024 Proxy Statement | 12 |
Shareholder Engagement
Shareholder Engagement
We believe that engaging with our investors provides valuable insights for the Board and its committees into investor perspectives and priorities. In October 2023, Constellation contacted holders of over 60% of our outstanding shares with offers to engage. This outreach was in addition to regular communication between our investor relations team and shareholders (e.g., quarterly earnings calls, analyst meetings, and investor and industry conferences). Shareholders who accepted invitations to engage represented approximately 32% of our outstanding shares. The Constellation engagement team was comprised of members from our Office of Corporate Governance, Investor Relations, Sustainability, Compensation, and Human Resources departments. The engagement team met with shareholders to discuss a wide variety of issues, including business operations and strategy, sustainability and climate matters, executive compensation, human capital, and board composition and effectiveness. Engaging openly with our shareholders on these and other topics drives increased accountability, improves decision making, and ultimately creates long-term value. The feedback received from shareholders and other stakeholders was shared with each Board committee and the Board, as appropriate. Our shareholder engagement process is described below.
Responsiveness to Shareholder Feedback
Our Audit & Risk, Corporate Governance, Compensation and Nuclear Oversight committees will consider the adoption or recommend Board approval of suggested enhancements to policies, practices, or disclosures to meet investor concerns or expectations, if such action is deemed to be in the best interests of the company and its shareholders.
Shareholder feedback from the 2023 engagement cycle indicated that there were no desired material changes to our environmental, social and governance policies and practices at this time. During our engagement meetings, we received generally supportive comments regarding our compensation structure, sustainability goals, and governance structure. However, as shown below, we received feedback on how to further enhance our disclosures and compensation practices, which we promptly acted on. We are committed to conducting future engagement to continue to learn more about the evolving priorities and issues that matter most to our shareholders.
| What We Heard | How We Acted |
|---|---|
| • Shareholders requested more disclosure regarding our Board’s oversight of enterprise risk and risk management. • Shareholders expressed a desire for the company to include a total shareholder return (TSR) component in our long-term incentive program. | • We expanded our discussion of the Board’s role in the oversight of risk in this proxy statement (see pages 44–46). • In February 2024, the Compensation Committee amended the long-term incentive program to include a TSR component beginning with 2024 award grants (see pages 58–59 and 67 for more information). The Compensation Committee and Board believe that this change is responsive to our shareholders and will enhance the balance and rigor of our long-term incentive program while reinforcing our pay-for-performance philosophy. |
| Constellation Energy Corporation 2024 Proxy Statement | 13 |
Table of Contents
Table of Contents
Table of Contents
| Proxy Summary | 5 |
|---|---|
| Cautionary Statements Regarding Forward-Looking Information | 15 |
| About Us | 16 |
| Proposal 1 : Election of Directors | 23 |
| Our Director Nominees | 24 |
| Corporate Governance | 35 |
| Director Qualification and Nomination Criteria | 35 |
| Board Skills | 36 |
| Board Diversity | 38 |
| Board Leadership Structure | 39 |
| Board Committees | 40 |
| Director Independence | 43 |
| Board Role in Risk Oversight | 44 |
| Cybersecurity Risk | 46 |
| Board and Committee Self-Evaluations | 46 |
| Ethics and Compliance | 48 |
| Director Compensation | 49 |
| Ownership of Constellation Stock | 52 |
| Proposal 2: Say-On-Pay: Advisory Vote on Executive Compensation | 54 |
| Compensation Committee Report | 55 |
| Compensation Discussion and Analysis | 55 |
| Executive Compensation Tables | 71 |
| Summary Compensation Table | 71 |
| Grant of Plan-Based Awards | 73 |
| Outstanding Equity Awards at Year End | 74 |
| Option Exercises and Stock Vested | 75 |
| Benefit Plans | 76 |
| Pension Benefits | 76 |
| Potential Payments Upon Termination or Change in Control | 78 |
| Pay Versus Performance | 83 |
| CEO Pay Ratio | 88 |
| Report of the Audit & Risk Committee | 89 |
| Proposal 3: Ratification of PricewaterhouseCoopers LLP as Constellation’s Independent Registered Public Accounting Firm for 2024 | 90 |
| Additional Information | 93 |
| Questions and Answers About the Annual Meeting | 95 |
| Appendix A— Definitions of Non-GAAP Measures | A-1 |
| Constellation Energy Corporation 2024 Proxy Statement | 14 |
Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information
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