— In a surprise move, energy giant Enron Corp. Tuesday said CEO and Pres. Jeffrey K. Skilling had resigned for personal reasons after less than a year at the helm.
Enron Chairman Kenneth Lay will assume the added responsibilities of president and CEO, positions he held for 15 years until Skilling took over in February, the company said in a press release after the market closed. Lay has extended his employment agreement with Enron through 2005.
“I am resigning for personal reasons. I want to thank Ken Lay for his understanding of this purely personal decision, and I want to thank the board and all of my colleagues at Enron,” Skilling said in a statement. During a teleconference, Skilling said his reasons for leaving had nothing to do with Enron, based in Houston.
Skilling is credited with helping create Enron’s business in natural gas marketing and trading, contributing to the industry’s first forward markets when he joined Enron in 1990 after serving as a management consultant with McKinsey and Co.
But in the past year many top executives have left the company, the broadband business didn’t develop as projected, and the company has been involved in a costly battle with the Indian government over the $3 billion Dabhol plant. Enron also got caught in the California electricity crisis.
Since March, Enron’s stock price has fallen from a high of $90.56 in August 2000, to less than half of that. Recently, it has hovered near its 52-week low of $42. It closed Tuesday at $42.15 on the New York Stock Exchange.
Lay said there are no surprises about the company’s operations or outlook that prompted the resignation.
“There are no changes in the earnings outlook,” he said, and “no changes in business strategy.” Lay noted the board had just met for a regular two-day meeting, and there were no “accounting, trading, or reserve issues” to be concerned with.
He said the investment community could expect “continuity,” adding there will be organizational changes to fill the void left by Skilling’s departure. He said Skilling will not receive a severance package because he is leaving voluntarily and his contract doesn’t expire until 2003.
Skilling defended the company strategy of avoiding ownership of assets, noting a year ago the company was being pressured to invest in generation facilities. But, he noted, the decline in electricity and gas prices vindicates that decision.
The company has reduced its energy assets, including its natural gas and crude oil drilling company, now called EOG Resources Inc. Meanwhile, it is pursuing its goal of becoming the industry’s biggest buyer and seller of energy products. The company also trades coal, metals, paper, weather derivatives, and fiber optic bandwidth.
Skilling said he was surprised by the speed of the “meltdown” in the broadband industry, but insisted Enron is getting its cost structure in that business in line with revenue. He said problems in California are winding down.
The company earned $979 million on revenue of $100.79 billion in 2000. It owns a 25,000-mile gas pipeline and merchant power plants in the US and abroad producing 9,000 Mw of electricity.