ComEd 2006 Annual Report Download - page 342

non-qualified supplemental pension plans (the SERP) that allow the payment, out of general assets, to
certain highly-compensated individuals of any benefits calculated under the applicable tax-qualified
plan benefit formula that exceed these limits. Exelon maintains the SERP to restore benefits to the
level they otherwise would have been were it not for the limits established by the IRS for purposes of
Federal tax policy.
For purposes of the SERP, Mr. Skolds received an additional 7
1
⁄ 2 years of credited service upon
his 5th anniversary of employment and will receive an additional 7
1
⁄ 2 years upon his 10th anniversary in
2010. These credited years of service were awarded to him when he came to work for Exelon in 2000
to compensate Mr. Skolds for the pension benefits from his former employer that he surrendered to
come to work for the company. Mr. Mehrberg received an additional 10 years of credited service for
purposes of the SERP upon his fifth anniversary. He was awarded these credited years of service in
2002 as a retention incentive. Mr. Crane received an additional eight years of credited service for
purposes of the SERP through December 31, 2006 as part of his employment offer that provides one
additional year of service credit for each year of employment to a maximum of 10 additional years.
Under his employment agreement, Mr. Rowe is entitled to receive a special supplemental
executive retirement plan benefit (the SERP benefit) upon termination of employment for any reason
other than for cause. The SERP benefit was negotiated with Mr. Rowe in 1998 as part of his initial
employment agreement to attract him from a previous employer, where he also served as CEO. The
SERP benefit, when added to all other retirement benefits provided to Mr. Rowe by Exelon, will equal
Mr. Rowe’s SERP benefit, calculated under the terms of the SERP in effect on March 10, 1998 as if he
had earned 20 years of service on March 16, 1998 and one additional year of service on each
anniversary of that date occurring prior to his termination of employment.
As of January 1, 2004, Exelon ceased the practice of granting additional years of credited service
to executives under the non-qualified pension plans that supplement the Exelon Corporation
Retirement Program for any period in which services are not actually performed, except that up to two
years of service credits may be provided under severance or change in control agreements first
entered into after such date. Service credits available under employment, change in control or
severance agreements or arrangements (or any successor arrangements) in effect as of January 1,
2004 are not affected by this policy. To attract a new executive, Exelon is permitted to grant additional
years of service under the SERP related to its cash balance pension plan to make the executive whole
for retirement benefits lost from another employer by joining Exelon, provided such a grant is disclosed
to shareholders. To date, Exelon has not made any such grant.
The compensation committee believes that the pension plans and the SERP are an important part
of the NEO compensation program. These plans serve a critically important role in the retention of
senior executives, as benefits thereunder increase for each year that these executives remain
employed. The plans thereby encourage our most senior executives to remain employed and continue
their work on behalf of the shareholders.
Perquisites
Exelon provides limited perquisites intended to serve specific business needs for the benefit of
Exelon; however, it is understood that some may be used for personal reasons as well. When
perquisites are utilized for personal reasons, the cost or value is imputed to the officer as income and
the officer is responsible for all applicable taxes; however, in certain cases, the personal benefit is
closely associated with the business purpose in which case the company may reimburse the officer for
the taxes due on the imputed income. The Summary Compensation Table and related footnotes below
detail the perquisites provided and summarize their incremental cost to the company. In 2005, Towers
Perrin reviewed Exelon’s perquisites program. Although specific data for Exelon’s peer group was not
available, Towers Perrin based its analysis on survey data for large energy and general industry
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