As guests assembled in the glass-walled entrance to the new Carnegie Center headquarters for New Jersey’s newest power company, NRG Energy, snowy weather was the chief topic of conversational banter, with much being made of the notion that "NRG brought Minnesota weather to New Jersey."

But when the flag raising and speechmaking began at 211 Carnegie Center, the real message emerged, never mind the weather. The message: that CEO David Crane had brought the Minnesota-based company to Central New Jersey, and for good reasons.

The January 19th official opening of NRG’s 47,000 square foot headquarters represented the biggest coup for central New Jersey in 2004. Another big company, Kos Pharmaceuticals, brought 200 jobs when it opened an office at Cedar Brook Corporate Center, but NRG’s 230 jobs came all the way from Minneapolis. It occupied temporary quarters at the Carnegie Center until this space was ready.

Various agencies of the State of New Jersey had danced to NRG’s tune but, according to CEO David Crane, Princeton’s traditional strengths were the deciding factors – the right building in a beautiful office park and the availability of skilled workers who can commute from as far as New York and Philadelphia.

Founded in 1989, originally as a subsidiary of Xcel Energy, NRG is a wholesale electricity provider with a $3 billion market capitalization. In just over 10 years it built or bought more than 50 power plants that sold electricity on a long term or short-term basis. (It still owns 41 of these, with the nearest one the Arthur Kill plant on Staten Island.) The majority of its power plants, mostly fossil-fueled, are in North America. In addition to electricity, it also trades in natural gas and oil. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production, and energy resource recovery facilities.

The company’s move from Minneapolis is bringing 230 new professional jobs, and 180 of them are new hires. Because of all the new jobs, NRG could receive Business Employment Incentive grants from the New Jersey Economic Development Authority; the grants would amount to as much as $6 million over 10 years.

The company has emerged from Chapter 11 bankruptcy, having kept its name and stock symbol, which is intended to sound like the word "energy." But starting in January of this year, the company has a new management team, a new board, a new organization, and a new logo. Its new headquarters reflects company policies – that NRG is an open, egalitarian, and a non-hierarchical organization, where every person makes decisions and has value.

At the grand opening Crane said that these values are represented by the new layout. "Communication across functions is critical in our business," says Crane, "and there is no better communication than to sit people on top of each other."

The building does represent a paradigm shift for NRG and for the hidebound energy industry. Its former quarters in Minneapolis were set up in the old fashioned way, offices with doors, but in this building, the walls are glass and the view extends as far as the eye can see, seemingly to the back wall. Here, as Crane says, "You have to go out of your way NOT to communicate with your fellow worker."

This layout required a Class A one-story building that totaled nearly 50,000 square feet; Crane jokes that when he gave his Cushman Wakefield brokers his specifications, they turned pale. Central Jersey has more buildings like this than most areas, and even here they are scarce.

This one, owned by Boston Properties, was designed by the New York-based Phillips Group and is laid out with the triangular trading floor at the core. Walk into the entrance at the point of the triangle, and the first thing you see, through the walls of glass, are the banks of computers for the traders. Against the blue parabolic wall at the back of this huge triangle-shaped room will be a huge electronic scoreboard running the up-to-the-moment energy prices.

"The great thing about this triangle-shaped building," says Crane, "is that everyone can feed off the energy of the trading floor – we are a wholesale trading company, and that is where we sell our product. The visitor, the staff member, everyone who walks in the door will see where electricity prices are, where the gas prices are."

"It’s different, particularly given the history of companies in our sector, which was very hierarchical and very cubicalized. This was the radical departure that we needed, to do what we are supposed to do. We make big investment decisions – $200 to $300 million a year – and this office layout is all about having the best data possible from all the professional expertise within the walls so that we can make the most informed decision in real time."

Everyone in the company, from Crane on down, has the same workspace configuration: a table with a computer monitor and, behind them, six file drawers. Way in the back are conference rooms, "quiet" rooms, and a storage room for file cabinets.

Crane gives an example of why he rejected the traditional big corner office: "When we make a $20 to $30 million investment decision, ultimately I’m going to make this call, subject to the approval of the board, but the basic instrument is a valuation model which, in the first instance, was produced by someone in their 20s sitting in a desk down from me. If that person gets the data inputs wrong, he could make a huge mistake, but he can walk over and talk to me while he is setting up the data. My desk is the same size as his desk." No gorgon-like assistants can protect the CEO. "By the time anybody gets to my assistant, they are already in my face."

"Part of our corporate ethic is to lead by example, and that’s why we ALL are sitting out in the open," says Crane, who emphasizes that just because everything is open does not mean that nobody has any privacy. "This is not some sort of Orwellian situation. We have four or five quiet rooms and 20 conference rooms in the building that you can use if you need to make a personal phone call, or if you need to read something with 120 percent concentration. But you can’t murmur behind someone’s back, because they are right there."

Hearing other people’s conversations is not only good for the business, it is also good for one’s career, Crane believes. As a young lawyer he worked on the same assignment for three years and found it hard to segue into another field. In contrast any NRG employee can feel free to attend any meeting in which they have an interest, and this freedom may open up a wider variety of career paths.

Crane specifically avoids taking the credit for the open layout. "I am a bit sheepish when people say it was my vision, because at the previous company I worked with in London, we did the same thing," says Crane. "If you think the change was shocking here, you should have seen the reaction in London."

Peter Giller (a longtime Princeton resident who was Crane’s predecessor as CEO of International Power in London) had set up that layout. Giller now says he had seen how it worked in one of the private banks in Switzerland and points out that open layouts are a trademark of some trading companies, such as Salomon. (New York’s current mayor, Michael Bloomberg, apparently picked up similar ideas from Salomon about how offices should look and is notorious for trying to convert city bureaucrats to this idea).

Crane started his career at Princeton’s Woodrow Wilson School, graduating in 1981, and he has centered his life around Princeton since then, so the NRG is a homecoming for him. Crane’s father, an Amherst graduate, was in the aluminum business, and his late mother worked in real estate. He has two older sisters, and the family of five lived in the Lake Forest suburb of Chicago. After Crane earned his law degree from Harvard, he worked for the international law firm of White & Case. In 1991 he and his wife – lawyer and Lehman Brothers investment banker Isabella de la Houssaye – bought a historic house in Lawrenceville. From 1991 to 1996 he worked for ABB Energy Ventures at the Carnegie Center and in Hong Kong, and when he left he was vice president for the Asia-Pacific; the middle three of five children were born in Hong Kong.

From 1996 to 1998 Crane was commuting to New York as a senior vice president at Lehman Brothers, responsible for the power industry. In 1999 he helped Giller to launch International Power, formed from the demerger of the United Kingdom’s National Power. First he was chief operating officer at IP, and then he was promoted to chief executive officer in 2003, leaving in December 2003 to take over as CEO of NRG Energy.

At that point NRG was being sued by the state of California and was emerging from Chapter 11 bankruptcy.

As part of the national deregulation of the energy industry, NRG had been formed as a merchant power firm, a company without retail customers that could supply utilities with power. It was spun from its parent, Xcel, a utility company. NRG was in a high growth mode; from 1999 to 2001 it bought plants in Germany, Czechoslovakia, Australia, Louisiana, and California, with most of its acquisitions in New York and Connecticut. Along the way it acquired massive amounts of debt. Then the industry began to suffer from overbuilding, and the value of the half-built power plants dropped.

"The name of the game changed halfway through, and with huge capital investments, you can’t change overnight," says NRG spokesperson Meredith Moore.

In the middle of NRG’s downward stock price spiral, its parent, Xcel, had bought it back. "We were the largest contributor to their earnings," says Moore, "and they could buy us back for a good price. They didn’t understand that it was a short-term loss."

Then Enron fell, and its fraudulent accounting practices were uncovered. "The credit rating agencies had not predicted Enron’s downfall, and overnight the credit markets dried up," says Moore. "You can’t sell power plants overnight to drum up more cash."

Like many of its peers, NRG went into Chapter 11 bankruptcy. Kroll Zolfo Cooper managed the restructuring. After less than one year as CEO of International Power in London, in December, 2003, the NRG board tapped Crane as CEO. Crane was cited by NRG’s board chairman as having "extensive experience in the energy industry and strategic viewpoint" which would make him "the ideal leader to build on NRG’s strengths."

NRG paid its creditors an average of 54 cents on the dollar. Then, it was trading at $24; the stock price is around $34 now. The company’s earnings before interest, taxes, depreciation, and amortization, or EBITDA, are projected to be $875 million for this year.

"As of the last reporting period, we have $1.1 billion in cash," says Nahla Azmy, director of investor relations. Before going into Chapter 11 NRG had a net debt to total capital ratio of from 80 to 90 percent. "We have said we will maintain net debt to total capital in the 45 to 55 percent range, and as of the last reported date we were just below the 50 percent level," says Azmy. "Even though we are below an investment grade company, we have a tremendous amount of liquidity." (Coincidentally, Nahla Azmy is the daughter of Ahmed Azmy, an architect who co-founded CUH2A – the company that was the first inhabitant of NRG’s Carnegie Center building.)

In his remarks Crane recognized all the people who had made the move possible, such as Denise Wilson, the HR vice president who hired for 180 jobs in a short time frame, and Bob Henry, vice president of asset management, who headed the relocation committee.

About that logo, pictured on the company’s flag and etched at two-foot intervals into the walls of glass that rim the reception hall: "When we saw the new logo," said Crane, "we joked that it points to the Northeast, that it was an indication of where we would choose to have our headquarters. But there was no core asset within 1,000 miles."

"We chose New Jersey because we needed a type of building that was difficult to find in neighboring states. And we were advised that, here, we could hire a very large number of highly qualified people in a short time, because we could recruit from Philadelphia and New York. The mass transit link was a critical decision factor. And because housing costs would make this an expensive move, the state was able to come up with competitive business incentives. We are glad to call New Jersey our new home."

NRG Energy Inc. (NRG), 211 Carnegie Center, Princeton 08540-6213. David Crane, president and CEO. 609-524-4500; www.nrgenergy.com

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