ComEd 2006 Annual Report Download - page 348

ranking of TSR in the S&P 500 Index was at the distinguished level (86 percentile ranking or 200.0% of
target payout). Overall performance against both measures combined resulted in a payout to
participants for 2006 that represented 184.9% of each participant’s target opportunity.
Based on the formula, 2006 Performance Share Unit Awards for NEOs were as follows:
Exelon, Generation and PECO
Name Shares Value* Form of Payment**
Rowe ......................................... 127,581 $7,649,757 100% Cash
Skolds ........................................ 36,980 2,217,321 100% Cash
Young ........................................ 30,509 1,829,290 50%Cash/50% Stock
Mehrberg ...................................... 30,509 1,829,290 100% Cash
Clark .......................................... 24,037 1,441,259 100% Cash
McLean ....................................... 30,509 1,829,290 100% Cash
Crane ......................................... 24,037 1,441,259 50%Cash/50% Stock
O’Brien ........................................ 16,641 997,794 50%Cash/50% Stock
Hilzinger ....................................... 9,245 554,330 50%Cash/50% Stock
ComEd
Name Shares Value* Form of Payment**
Clark ........................................... 24,037 $1,441,259 100% Cash
McDonald ...................................... 9,245 554,330 50%Cash/50% Stock
Mitchell ......................................... 16,641 997,794 50%Cash/50% Stock
Costello ........................................ 9,245 554,330 50%Cash/50% Stock
Hilzinger ........................................ 9,245 554,330 50%Cash/50% Stock
* Based on the closing stock price of $59.96 on January 22, 2007.
** Form of payment based on stock ownership level. Stock payment means amounts paid in shares of Exelon common stock.
Refer to the Stock Ownership Guidelines section in Item 12—Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters. The figures in this column are not the same as the figures reported in
column E of the Summary Compensation Tables because of the effect of the vesting requirement.
Tax and Accounting Consequences
Under Section 162(m) of the Internal Revenue Code, executive compensation in excess of
$1 million paid to a CEO or other person among the four other highest compensated officers is
generally not deductible for purposes of corporate Federal income taxes. However, qualified
performance-based compensation, within the meaning of Section 162(m) and applicable regulations,
remains deductible. The compensation committee intends to continue reliance on performance-based
compensation programs, consistent with sound executive compensation policy. The compensation
committee’s policy has been to seek to cause executive incentive compensation to qualify as
“performance-based” in order to preserve its deductibility for Federal income tax purposes to the extent
possible, without sacrificing flexibility in designing appropriate compensation programs.
Because it is not “qualified performance-based compensation” within the meaning of
Section 162(m), base salary is not eligible for a Federal income tax deduction to the extent that it
exceeds $1 million. Accordingly, Exelon is unable to deduct that portion of Mr. Rowe’s base salary in
excess of $1 million. Annual incentive payments to NEOs and performance share units are intended to
be qualified performance-based compensation under Section 162(m), and are therefore deductible for
Federal income tax purposes. Restricted stock and restricted stock units are not deductible by the
company for Federal income tax purposes under the provisions of Section 162(m) if NEO
compensation is in excess of $1 million.
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