8-KMaterial Agreements

CONSOLIDATED EDISON INC 8-K Report, Material Agreement (Jan 25, 2006)

Filed January 25, 2006For Securities:ED

Summary

This Form 8-K filing from Consolidated Edison, Inc. (ED) on January 25, 2006, primarily reports on material definitive agreements related to executive compensation. The report details significant increases in base salaries for several key officers of Consolidated Edison, Inc. and its subsidiary, Consolidated Edison Company of New York, Inc., including the Chairman, CEO, CFO, and General Counsel. Additionally, it outlines awards granted under various incentive plans for fiscal year 2005 and grants under the Long-Term Incentive Plan (LTIP) for officers, which include restricted stock units and stock options with performance-based vesting criteria tied to total shareholder return and other company performance metrics. The executive compensation changes and incentive awards signal a focus on retaining and motivating senior leadership during a period of potential growth or strategic initiatives. Investors should note that the LTIP awards are structured with performance conditions, meaning the ultimate value realized by executives will depend on the company's future financial and stock performance relative to industry benchmarks. The filing references previous 8-K and 10-K/10-Q filings where the specific terms of these incentive plans were disclosed.

Key Highlights

  • 1Significant salary increases were awarded to top executives of Consolidated Edison, Inc. and its subsidiaries, effective January 19, 2006.
  • 2Key officers receiving salary adjustments include the Chairman, CEO, CFO, and General Counsel.
  • 3Bonuses were awarded under the 2005 Executive Incentive Plan (EIP) and other annual incentive plans for executives.
  • 4Long-Term Incentive Plan (LTIP) awards, consisting of restricted stock units and stock options, were granted to multiple officers.
  • 5LTIP awards are subject to performance-based vesting tied to Con Edison's total shareholder return relative to the S&P Electric Utilities Index over a three-year period.
  • 6Stock options granted have exercise prices based on fair market value at the grant date and typically vest from the third to tenth anniversary of the grant.
  • 7The filing references prior SEC filings for detailed terms of the executive incentive and long-term incentive plans.

Frequently Asked Questions

The primary purpose of this Form 8-K filing is to disclose material definitive agreements concerning executive compensation. This includes changes to base salaries, awards granted under annual incentive plans for 2005, and grants under the Long-Term Incentive Plan (LTIP) for key officers of Consolidated Edison, Inc. and its subsidiaries.

The LTIP awards include restricted stock units and stock options. Fifty percent of the restricted stock units are subject to a performance multiplier (0-150%) based on Con Edison's total shareholder return relative to the S&P Electric Utilities Index over three years. The other fifty percent are based on other performance determinations. Units generally vest upon completion of the performance period. Stock options generally vest over a period of three to ten years from the grant date.

The filing specifically mentions salary increases and/or incentive awards for Eugene R. McGrath (Chairman), Kevin Burke (CEO), Robert N. Hoglund (CFO), Charles E. McTiernan, Jr. (General Counsel), Stephen B. Bram (Group President – Energy and Communications), Louis Rana (President – Con Edison of New York), Mary Jane McCartney (Senior Vice President – Gas), John D. McMahon (President – Orange and Rockland Utilities, Inc.), and Joan S. Freilich (Vice Chairman).

The filing indicates that the specific terms and conditions for these incentive plans have been previously disclosed in other SEC filings. For instance, the Executive Incentive Plan (EIP) was included in a December 29, 2005, 8-K filing, and the Long-Term Incentive Plan (LTIP) and related agreements were detailed in a January 24, 2005, 8-K filing and a March 31, 2003, 10-Q filing.