2 top executives leave Constellation

Brooks, Persky resign

insider Hyle to take over responsibilities of both

November 12, 2008|By Hanah Cho | Hanah Cho,hanah.cho@baltsun.com

Constellation Energy Group shook up its leadership ranks yesterday, announcing the departure of two top executives overseeing its competitive energy businesses, including the commodities trading unit, and it appointed an insider to lead those operations.

The shake-up is part of a series of management and other changes at Constellation since the Baltimore company agreed in September to sell itself to Warren Buffett's MidAmerican Energy Holdings Co. for $4.7 billion to avoid possible bankruptcy.

Thomas V. Brooks, president of Constellation Energy Resources, resigned effective immediately, as did George E. Persky, chief commercial officer of Constellation Energy Resources. Brooks also was executive vice president for the corporate parent; Persky was senior vice president.

They could not be reached yesterday to comment.

Constellation named Kathleen W. Hyle, senior vice president of finance, to lead Constellation Energy Resources as chief operating officer. Constellation Energy Resources oversees the trading group as well as retail and wholesale energy supply operations.

Since joining the company in 2001, Brooks and Persky had helped develop Constellation's energy marketing and commodities trading business, which became the source of concern as the credit crunch widened this summer. Questions about whether the trading operations had enough access to cash and credit contributed to Constellation's takeover in September.

Hyle, a Baltimore native who joined Constellation in 2003, also served as chief financial officer for Constellation Energy Nuclear Group.

"Since the announcement of our merger ... we have been working diligently to de-risk our portfolio and reshape our businesses to address a radically changed environment," Constellation Chief Executive Officer Mayo A. Shattuck III said in a statement.

"As we continue to execute on these strategic objectives, it is imperative to appoint a leadership team that embraces our vision, is agile in capitalizing on new strategies and is committed to achieving our collective goals."

Last week, Constellation announced it is selling its Houston gas-trading business, on top of previously announced sales of another portion of its natural gas assets and international coal and freight business. Constellation expects the moves to increase its liquidity by up to $1.5 billion through the return of collateral, which is required in its trading operations.

And MidAmerican will contribute up to $350 million in additional liquidity, on top of $1 billion it has already provided as part of the deal, which still needs shareholder and regulatory approval.

Paul Patterson, an analyst with Glenrock Associates in New York, said the management departures are not surprising, given the "changes happening there in the middle of a big merger and you have a change in business objectives."

Constellation, the parent of Baltimore Gas & Electric Co., enlarged its trading operation to rival Wall Street banks during the past seven years.

Brooks and Persky helped Constellation in that strategy and were rewarded for it as the trading operations boosted profits. Combined, the two executives have more than three decades of experience in the energy sector, including stints at Enron.

Brooks was paid $11 million in total compensation last year and Persky received $8.9 million, making them among the highest-paid Constellation executives. Their compensation packages, which include salary, bonuses, stock awards and options, also rivaled those of other Baltimore-area executives.

They will not receive a severance package, according to filings with the Securities and Exchange Commission, because they resigned.

Brooks joined Constellation in April 2001 as vice president of business development and strategy. Before that, he was vice president at Goldman Sachs Group.

Persky, also from Goldman Sachs, joined Constellation as managing director at the same time. Persky was promoted to chief commercial officer for the commodities group in October 2004.

Brooks served as president of Constellation's global commodities group for four years before he was named the unit's chairman and vice chairman of Constellation in August 2005.

Persky took over for Brooks as co-president and co-chief executive officer of the commodities group.

Brooks became president of Constellation Energy Resources in 2006. Persky became chief commercial officer of Constellation Energy Resources this year.

Constellation spokesman Rob Gould declined to comment further on their resignations.

Shares of Constellation fell 10 cents to close at $23.57 yesterday.

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