Constellation Energy Group's chief executive, Mayo A. Shattuck III, blaming himself for the company's financial troubles, announced yesterday that the firm is cutting its dividend in half after losing $1.4 billion in the fourth quarter of 2008.
The company said yesterday that it will seek a rate increase for delivering electricity and natural gas next year to 1.2 million customers of its subsidiary Baltimore Gas and Electric Co., though it did not provide details. And Shattuck said he will forgo his 2008 bonus because of the company's financial problems.
After emerging from near-bankruptcy in September by eventually selling half of its nuclear power business, Constellation will focus on strengthening itself during the next 12 to 24 months, Shattuck said. The company has sold assets and laid off workers to ease its cash problems during the recession.
FOR THE RECORD - An information box accompanying yesterday's article about Constellation Energy Group incorrectly stated the year of the company's last request for a distribution rate increase for natural gas. It was in 2005.
The Baltimore Sun regrets the error.
"Over the past year, it was nearly impossible to be a business leader anywhere in America without feeling humbled. And I feel that sense of humility very much myself," Shattuck said during a conference call with analysts. "As CEO, I take full responsibility for what has occurred at Constellation and for the steps we have taken and we'll take as we weather this storm."
Shattuck said he is giving up the 2008 bonus as a "modest and firm signal that I'll do all that I can do to help steer this great company back to health with renewed growth."
It was unclear yesterday what that bonus would be worth, but Shattuck was awarded a $5.5 million bonus as part of his nearly $14 million compensation package for 2007, which included salary, stock awards and options. The company's board of directors is working on determining executive compensation for 2008, a year in which Constellation's stock plummeted 75 percent.
Shares dropped $1.97, or 8 percent, to close at $22.30 yesterday.
Shattuck's comments in shouldering the blame came as the Baltimore utility reported a fourth-quarter loss due mostly to costs related to its terminated sale to MidAmerican Energy Holdings Co. To break off the deal, Constellation paid $593 million in cash and gave MidAmerican 10 percent of the company's stock, among other financial incentives.
Constellation will pay a dividend of 96 cents per share annually, down from $1.91 a share, affecting many Maryland stockholders who bought the stock for the quarterly payments. The dividend cut is expected to save $190 million a year.
