ComEd 2006 Annual Report Download - page 343

companies. Towers Perrin found that Exelon’s perquisite program was competitive. The compensation
committee reviewed the costs of the perquisite program and determined the costs to be appropriate for
a company of Exelon’s size.
At its January 22, 2007 meeting, the compensation committee approved the phase-out of most
executive perquisites, effective January 1, 2008. The eliminated perquisites will include: leased
vehicles (existing leases allowed to expire), financial and estate planning, tax preparation and health
and dining/airline club memberships. The phase-out approach includes a one-time transition payment
in January 2008. The CEO will not receive a transition payment. Exelon will continue to provide
executive physicals, parking in downtown Chicago, supplemental long term disability insurance and
executive life insurance for those with existing policies. Exelon will continue to provide Mr. Rowe with
50 hours of personal travel per year on the corporate aircraft and executive chauffeur services because
of the time commitments his position requires.
How The Amount of 2006 Compensation Was Determined
This section describes how 2006 compensation was determined and awarded to the NEOs.
CEO compensation
Exelon’s CEO participates in the same programs and receives compensation based on the same
factors as the other NEOs. However, Mr. Rowe’s overall compensation reflects a greater degree of policy
and decision-making authority and a higher level of responsibility with respect to the strategic direction
and financial and operating results of Exelon. As such, the independent directors of the Exelon board, on
the recommendations of the Exelon corporate governance committee, conducted a thorough review of
Mr. Rowe’s performance in 2006. The review considered performance requirements in the areas of
finance and operations, strategic planning and implementation, succession planning and organizational
goals, communications and external relations, board relations, leadership, and shareholder relations.
Mr. Rowe prepared a detailed self-assessment reporting to the board on his performance during the year
with respect to each of the performance requirements. The Exelon board considered the financial
highlights of the year and a strategy scorecard that assessed performance against the company’s vision
and goals. The factors considered included goals with respect to protecting the current value of the
company, including delivering superior operating performance in terms of safety, reliability, customer
satisfaction and efficiency, supporting competitive markets, protecting the value of our generation assets,
and building healthy, self-sustaining delivery companies. The factors considered also included four goals
relating to growing long-term value, including organizational improvement, aligning financial management
policies with the changing profile of the company, rigorously evaluating new growth opportunities, and
advancing an environmental strategy that leverages Exelon’s carbon position. The Exelon board
considered, in particular, strong results in operating earnings, Exelon’s leading market capitalization, and
successful nuclear and fossil operations, as well as the successful implementation of a new billing system
at PECO and improvements in communications and external relations. It also considered areas where
results were less than hoped for, such as the failure to obtain acceptable merger approvals, the
regulatory difficulties in Illinois, and the need to continue improving delivery reliability.
How base salary was determined
Base salaries for the executives were determined based on individual performance and
experience, with reference to the salaries of executives in similar positions in the peer group.
Mr. Rowe’s 2006 Base Salary. The independent directors of the Exelon board, on the
recommendations of the compensation committee and the corporate governance committee,
determined Mr. Rowe’s base salary for serving as the CEO by considering:
• a review of benchmark levels of base pay, which were provided by the compensation
committee’s consultant;
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