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Contrarian Shattuck Took Constellation To the Top

Mayo A. Shattuck III of Constellation Energy Group is known to acquaintances to buck trends.
Mayo A. Shattuck III of Constellation Energy Group is known to acquaintances to buck trends. (By Katherine Frey -- The Washington Post)
By Michael S. Rosenwald
Washington Post Staff Writer
Monday, January 9, 2006

Mayo A. Shattuck III is the kind of guy put on earth to run companies and make multibillion-dollar deals, like last month's $11 billion planned merger of the company he runs, Baltimore's Constellation Energy Group, with FPL Group of Florida.

Shattuck was raised near Boston, the descendant of two Mayo A. Shattucks, both of whom attended Harvard. His father was managing partner of State Street Research & Management Co., an old Boston money manager, and he also ran Harvard's endowment. Shattuck III, with his third multibillion-dollar merger under his belt, is now 51. His eldest son works at Goldman Sachs & Co. His name is Mayo A. Shattuck IV.

The lineage is one of New England privilege, but it is also a pedigree that Shattuck III has sometimes chosen to flout. He has a contrarian side, and those who know him well say it accounts for much of his success. It began when Shattuck was a teenager, and he did not do something that everyone in his family expected he would do. He did not, horror of horrors, attend Harvard.

"I was a little bit of a renegade," he said recently. "This was back in the early 1970s. I applied early decision to Williams College without telling my father, who at that time was deputy treasurer of Harvard. So that was my one renegade move as a child."

While choosing Williams over Harvard may seem to some like choosing between different patterns of silver spoons, it was a choice that Shattuck's father suffered with some heartbreak. But his father, who died a short time later, acknowledged being proud of his son for having the courage to buck family custom, and Shattuck's decision may have taught him a lesson he would never have learned by following his family through Harvard Yard: When everyone is doing the same thing, advantage might present itself the other way.

As it did when he took over as chief executive of Constellation Energy Group in Baltimore four years ago. Enron Corp., which was one of the pioneers of the deregulated energy business with its high-risk energy trading operations, was collapsing, causing energy companies to dart in the other direction. Not Shattuck. He dove right in, becoming the dominant player in the sector and quickly tripling his company's revenue.

Or before that, when he became an investment banker with Alex. Brown & Co. in the 1980s. While many of his contemporaries went to work for big players like Goldman Sachs -- which at that time avoided dealings with tech companies such as Microsoft Corp., Oracle Corp. and America Online Inc. -- Shattuck helped manage their initial public offerings.

"The contrarian view is core to him being as successful as he's been," said Christian S. Johansson, for whom Shattuck has been a mentor in his role as president of the Economic Alliance of Greater Baltimore. "Very few can do it time and time again. But the higher return you are looking for, the more contrarian you have to be. If you always play the mean, you will always hit the mean in the return."

Shattuck's running of Constellation did not hit the mean. Analysts and industry observers say his strategy to buy energy assets and sell power competitively when almost everybody else would not transformed Constellation from something of an also-ran into the country's largest provider of commercial and industrial power, with revenue of $12.5 billion in 2004. Last month, he capped the turnaround with the deal to merge the firm with FPL Group.

"It's just like being an investor," Johannson said. "If you are able to understand and manage the risk, you can realize significant returns."

When Shattuck became chief executive of Constellation the risks were ample. Though he had been on Constellation's board for seven years, he admits he did not know much about the energy business. He was coming off two decades as a highflying banker, first running Alex. Brown's West Coast investment operations. It was a job made easier by a previous decision to buck his family -- attending Stanford Business School, again over Harvard -- where he met many key players in what would become the technological revolution.

Technology "was not a business that brand-name firms had been paying attention to," said Donald B. Hebb Jr., who hired Shattuck when he was chief executive of Alex. Brown, a Baltimore firm. "Clearly most people who went into investment banking went into the big firms that were paying attention to the big companies. He was certainly off the established beaten path of most of the investment banking world."

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