Less than a month after abandoning plans to split into two independent businesses, Constellation Energy Group Inc. shook up its leadership ranks yesterday, announcing the departure of four high-level executives and the appointment of an Illinois energy consultant to lead its power generation division.
Michael J. Wallace, 54, a managing director and co-founder of Barrington Energy Partners LLC who has advised energy company executives on mergers and acquisitions, transaction financing and investment opportunities, will become president of Constellation Generation Group. Wallace will start Jan. 1 as leader of the new, consolidated subsidiary that will own and operate both fossil and nuclear power plants.
The shake-up is part of a string of reorganizations taking place at Constellation as its new chief executive, Mayo A. Shattuck III, tries to eliminate duplicate positions created by the failed split, trim operating expenses and fuse the company back together.
"These are my first moves," said Shattuck, who took over as president and CEO on Nov. 1. "For different reasons and a variety of reasons, the departures are good for the individuals involved and allow us to make an assertive statement of how we want the company organized.
"We're excited about making some bold moves here. There will be more to come."
Citing the slumping economy and an uncertain energy industry, Constellation announced Oct. 26 that it was canceling its plan to split at the end of this year into a wholesale power generation business that would sell electricity nationwide and a regional, retail and delivery business, BGE Corp., that would include Baltimore Gas and Electric Co.
With the demise of that plan, four top executives will be leaving: Co-Presidents Eric P. Grubman and Charles W. Shivery, who helped build up the power generation division; Robert E. Denton, president and CEO of Constellation Nuclear, which is being combined with the fossil fuel plants; and Vice Chairman Edward A. Crooke, who came out of retirement last year when the split was announced and was to have headed BGE Corp.
With the exception of Grubman, who resigned and will leave Dec. 1, the retirements will take effect Jan. 1.
Grubman, formerly of Goldman Sachs & Co., joined the company in October 2000 to lead the business separation plan. Before Shattuck's election as CEO, Grubman was widely considered the expected successor to former CEO Christian H. Poindexter, who remains chairman. Constellation is paying Goldman Sachs, which was to have owned a large stake in the post-split company, $355 million to sever ties.
Shattuck called the departure of the four executives "a natural evolution" of Constellation's decision to remain one company.
The restructuring will create three business divisions within Constellation Energy Group.
Those divisions will include: the utility, BGE, which will continue to be led by President and CEO Frank O. Heintz; the power generation group, led by Wallace; and Constellation Power Source, the marketing and trading arm, led by President Thomas V. Brooks. All three division heads will report directly to Shattuck.
Constellation also began rolling out voluntary early retirement packages late last month to more than 700 eligible employees 55 or older with at least 10 years of service. The company is hoping about 450 will take the buyout.
Shattuck said there is no approximate figure yet on how much the company will save through its efforts to streamline operations and cut costs.