CEO has reputation as consummate dealmaker

December 15, 2005|By LAURA SMITHERMAN | LAURA SMITHERMAN,SUN REPORTER

Six weeks ago, Constellation Energy Group's board sweetened the severance agreements of Chairman and CEO Mayo A. Shattuck and five other senior executives to increase their benefits in the event the company is sold or merged with another company.

Yesterday, the possibility that a so-called change-in-control event would be triggered soon - perhaps in days - was raised with news that Constellation is in negotiations with FPL Group Inc., owner of Florida's biggest electric utility. Constellation owns Baltimore Gas and Electric Co.

The amended severance agreement, disclosed in a quarterly Securities and Exchange Commission filing, increases the stakes in any talks for Shattuck, who would reap millions of dollars in one lump payment as well as other perks if the right conditions are met in a transaction. While industry observers said it's not clear that the 51-year-old Shattuck is ready to leave the Baltimore-based company, the deal could set up another chapter in the career of the executive who is known as a consummate dealmaker.

From making a name at Baltimore's venerated Alex. Brown & Sons and helping to orchestrate the investment firm's sale more than a decade ago, to taking the reins at a struggling Constellation and building it into one of the fastest-growing Fortune 500 companies this year, Shattuck has been given much credit for the successes.

"At Alex. Brown, we were a rocket ship growing very quickly, and he was a major factor," said Thomas Schweizer Jr., a longtime friend of Shattuck's and president of the brokerage arm of Brown Advisory, which broke off from Alex. Brown. "At Constellation, he saw an opportunity, and I thought it was brilliant what he did there."

Constellation and FPL officials declined to comment yesterday on possible negotiations, and spokesman David H. Nevins said Shattuck would not be available for an interview.

News of the talks leaked this week, adding to a tumultuous past few weeks for the company and for Shattuck. Just last month, the company lost in a bid to acquire the British utility Drax Group, owner of Europe's biggest coal-fired plant, which would have enabled Constellation to expand its presence in the United Kingdom.

Also in mid-November, Shattuck was hospitalized with stomach pains. Doctors initially were puzzled by his case, and the executive spent about 10 days at Johns Hopkins Hospital. Then doctors narrowed the problem to his gall bladder, which was removed in surgery last week.

"He's great; he's got a clean bill of health," Nevins said yesterday. "He's in the office, and it's business as usual."

Earlier in November, Constellation's board had approved amendments to Shattuck's change-in-control severance agreement. The changes included adding three years to his age for the purposes of calculating his retirement benefits, ensuring that his stock options are replaced, and providing for the severance to go to his estate if he dies.

The same changes were applied to similar agreements with other Constellation executives, including E. Follin Smith, chief financial officer, and Thomas F. Brady, an executive vice president.

"There's nothing outlandish about any of these changes," said Andrew Oelbaum, president of ExecPay Inc., a consulting firm. "It sounds like they may have been entering into negotiations, and they just wanted to tighten up the agreements. When a company is contemplating a merger, they often look at their change-of-control agreements."

Shattuck, who's involved with charities such as the United Way and whose wife, Molly, is a cheerleader for the Ravens football team, has brought other prominent Baltimoreans to Constellation's board, such as Mercantile Bankshares Corp. CEO Edward J. Kelly III. Shattuck also acted as a sounding board for Cal Ripken Jr. on his transition from the baseball diamond to business.

"He's borderline genius, but he's down to earth at the same time. He explains things to me in a simple way and always provides a good perspective," said Ripken, also a golfing buddy of Shattuck's. "He's motivated by his work; it's sort of like his identity."

Shattuck got his start at Alex. Brown, which traced its history in Baltimore back nearly two centuries, as an investment banker in its San Francisco office. There he played a key role in bringing in high-tech clients and helping to arrange the public offerings of such companies as Microsoft Corp. and America Online.

In 1991, he became president and chief operating officer at Alex. Brown and ran the company with A.B. "Buzzy" Krongard. In 1997, they helped engineer the company's sale to Bankers Trust Corp. for $1.7 billion. Executives said at the time that the two companies complemented each other. Bankers Trust provided bond advisory services and Alex. Brown was primarily focused on stocks.

Two years later, after the collapse of the hedge fund Long-Term Capital Management LP - in which Bankers Trust was heavily invested - the company was sold to Deutsche Bank for $10.6 billion.

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