New chief brings much to Constellation

Veteran deal maker with Deutsche Banc has wide contacts

October 27, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

By tapping Mayo A. Shattuck III as its president and chief executive, Constellation Energy Group Inc. has landed a veteran deal maker with vast contacts on Wall Street and in banking circles - skills that are needed now that the company's plan to reorganize has been scuttled, industry experts said yesterday.

Shattuck, 47, who is the former chairman of Deutsche Banc Alex. Brown Inc.,will start the new job Thursday, taking over from Christian H. Poindexter, 63, who will remain chairman of the Baltimore-based energy company until October 2003.

But Shattuck enters a fiercely competitive industry and takes charge of a company that was being split into two publicly traded energy businesses and must be stitched back together. He will also have to repair a strained relationship with Wall Street analysts.

"He is a proven CEO who knows our company, who knows our people," Poindexter said in a conference call with reporters yesterday. "I know the chemistry between the two of us is good."

Poindexter said Constellation's board of directors unanimously approved Shattuck's hiring.

Shattuck, who resigned from Deutsche Banc Alex. Brown last month, said he took the job because Constellation is a high-profile company in an exciting industry.

"It is a big company. ... It is a very dynamic industry," he said. "It gives me a chance to continue to be in a leadership and managerial situation that I have very much enjoyed."

Shattuck isn't a stranger to Constellation. He has been on the company's board of directors for seven years and knows the issues it faces, said Douglas L. Becker, chairman and chief executive of Sylvan Learning Systems Inc. and a Constellation director.

"I think he is gong to be fantastic for the company," Becker said. "He has a much better understanding of the company and the industry than you might otherwise expect from an industry outsider."

A.B. "Buzzy" Krongard, a former chairman and chief executive of Alex. Brown and now executive director of the Central Intelligence Agency, said Shattuck is a "good strategic thinker. He has got good customer skills, he is smart."

One of Shattuck's biggest advantages is his vast network of contacts. While he may not know everything about the energy business, he knows top executives at venture capital companies across the country, big Wall Street firms such as Goldman Sachs Group Inc., Morgan Stanley Dean Witter & Co. and Germany's Deutsche Bank A.G., where he worked since July 1999.

"The merger and acquisition background, access to Wall Street do matter," Shattuck said. "We want to be in the flow of ideas and, in particular, acquisition candidates that are available. I do think that is a valued asset."

Shattuck faces challenges, analysts said. Pricing in the energy industry is cutthroat, and profits aren't easily made. At the same time, Constellation and BGE Corp. have begun breaking up and forming two separate publicly traded companies. Shattuck will have to put them back together, and the move will probably mean a corporate reorganization and layoffs, Poindexter said.

"I suspect we are going to wind up with some extra people," Poindexter said.

In addition, Shattuck will have to work to mend the company's strained relationship with analysts, who have been surprised too often with weaker-than-expected earnings announcements from the Baltimore-based utility.

"I think he has got to re-establish credibility," said Michael S. Worms, an analyst at Gerard Klauer Mattison in New York. "We [also] need to see what his view of the company is."

Thomas Hamlin, an analyst at Wachovia Securities in Richmond, Va., said, " Constellation needs to ... get control over its business so we don't get this constant stream of earnings surprises."

Shattuck should relate well to the analysts because he has worked closely with them as an investment banker at Alex. Brown.

Shattuck joined the Baltimore-based investment banking firm in 1985 and quickly became a star in its San Francisco office.

He started auspiciously by helping Sun Microsystems Inc. raise $100 million. Shattuck also played a key role in bringing in a number of other big high-tech clients, including software makers Oracle Systems Corp. and Novell Inc. and Octel Communications, a designer and manufacturer of information processing systems.

"He is a just a very broad-gauged guy," said Richard Franyo, managing director at Deutsche Banc Alex. Brown, who hired Shattuck. "He is really good at strategy. Obviously, he is a terrific leader, incredibly gifted public speaker and just ... unflappable."

Shattuck became president and chief operating officer of Alex. Brown in 1991. He helped negotiate the company's sale to Bankers Trust Corp. for $1.7 billion in April 1997. Two years later, Bankers Trust was sold to Deutsche Bank for $10.6 billion.

At Deutsche Bank, Shattuck oversaw local operations and was chief executive of Deutsche Bank's Private Clients and Asset Management Group for the Americas and global head of Deutsche Bank's private banking division.

He also sat on the boards of both groups, which met in Frankfurt, Germany, where the company has its headquarters.

On Sept. 4, Shattuck resigned from Deutsche Bank. Soon after, his name surfaced as a candidate for the job of U.S. Olympic Committee chief executive along with that of former Baltimore Mayor Kurt L. Schmoke.

Around the same time, Poindexter and Shattuck met privately in the Alex. Brown tower, and the Constellation executive said "he was ready to hand over the reins," Shattuck said. "I was surprised.

Shattuck, who had a three-year contract with Deutsche Bank worth about $40 million, said he isn't taking the job for the money.

"You don't leave the investment banking business to go into a conventional industry because it is a better economic deal," Shattuck said. "I will have an equity stake in this thing. The idea will be to improve shareholder value."

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