8-KMaterial AgreementsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Material Agreement (Dec 23, 2005)

Filed December 23, 2005For Securities:ED

Summary

This 8-K filing by Consolidated Edison, Inc. (Con Edison) on December 23, 2005, announces the execution of a new employment agreement with John D. McMahon, President and CEO of its subsidiary Orange and Rockland Utilities, Inc. The agreement, effective September 1, 2005, and extending through August 31, 2007, with automatic one-year renewals, outlines Mr. McMahon's compensation and the terms of his potential separation from the company. His initial base salary is $635,000 with a target bonus of 80% of base salary for 2005, along with long-term incentive awards and standard executive benefits. The filing also details significant severance provisions for Mr. McMahon in the event of termination by Con Edison without cause, or resignation for good reason following a change in control. These provisions include continued base salary, pro-rated bonus, extended retirement and welfare benefits for up to three years, accelerated vesting of equity awards, and potential tax gross-ups. These terms are designed to ensure executive retention and provide financial security in various termination scenarios, which investors should consider when evaluating executive compensation and potential future liabilities.

Key Highlights

  • 1Consolidated Edison, Inc. has entered into a new employment agreement with John D. McMahon, President and CEO of Orange and Rockland Utilities, Inc.
  • 2The new agreement supersedes a previous one dated September 1, 2000, with an effective date of September 1, 2005.
  • 3The employment term extends to August 31, 2007, with provisions for automatic one-year renewals.
  • 4Mr. McMahon's initial base salary is $635,000, with a 2005 target bonus set at 80% of his base salary.
  • 5Significant severance packages are outlined for termination without cause or resignation for good reason, including extended benefits and accelerated equity vesting.
  • 6Special provisions apply in the event of a 'Change in Control,' enhancing severance benefits.
  • 7The agreement includes non-compete and employee non-solicitation clauses for a specified period post-termination.
  • 8Con Edison will indemnify Mr. McMahon against liabilities incurred as an officer or director.

Frequently Asked Questions

The main purpose of this 8-K filing is to report the execution of a new employment agreement between Consolidated Edison, Inc. and its executive John D. McMahon, detailing his compensation, term of employment, and severance benefits.

Mr. McMahon's compensation includes an initial base salary of $635,000, a target bonus of 80% of his base salary for 2005, an award under the Long Term Incentive Plan, and benefits consistent with other senior executives.

In the event of termination without cause, Mr. McMahon is entitled to accrued salary and bonus, enhanced retirement benefits equivalent to two additional years of service, a cash payment equal to two times his base salary plus target bonus, two years of continued medical, dental, and life insurance benefits, full vesting of equity awards (with performance-based grants at target), vesting of deferred compensation, and outplacement services.

Yes, if Mr. McMahon's employment is terminated without cause or he resigns for good reason within a specified period (six months prior to and 24 months following a Change in Control), the severance benefits are enhanced, increasing the multiplier for cash payments and benefit extensions from two to three years.