5/9/2014 Two Are Promoted as Enron Seeks Executive Stability - New York Times

http://www.nytimes.com/2001/08/29/business/two-are-promoted-as-enron-seeks-executive-stability.html 1/2
Search All NYTimes.com

Two Are Promoted as Enron Seeks Executive Stability
By RICHARD A. OPPEL Jr.
Publ i shed: August 29, 2001
With its stock still suffering after the unexpected departure of its chief executive, the Enron
Corporation today promoted a top official in its core energy-trading business to be the
company's No. 2 executive as it begins finding new leadership.
Greg Whalley, 39, was named president and chief operating officer. Also, the company
promoted Mark A. Frevert, 46, to vice chairman. Both will join Kenneth L. Lay, the chairman
and chief executive, in an office of the chairman.
The moves come two weeks after Jeffrey K. Skilling, a longtime protg of Mr. Lay who was the
architect of Enron's wholesale energy-trading business, quit unexpectedly after just six months
as chief executive. Mr. Lay, 59, has reassumed the role of chief executive and has extended his
commitment to stay at the company until the end of 2005.
Mr. Skilling's departure, which he said was for ''purely personal'' reasons that he would not
disclose, stunned investors, and the company's shares fell 14 percent in the next two days. In
trading today, shares of Enron rose 40 cents, to $38.16, after peaking at $90 a year ago.
Mr. Whalley was president and chief operating officer of Enron Wholesale Services, the energy-
trading unit that provides most of the company's operating income and revenue. A former
officer in the Army, Mr. Whalley joined the company in 1992. He will ''be somewhat more kind
of the operations person on a day-to-day basis,'' Mr. Lay said in an interview.
Mr. Frevert was previously Mr. Whalley's boss as chairman and chief executive of Enron
Wholesale Services. He started with a predecessor company to Enron, Houston Natural Gas, in
1984, and is completing a doctorate in economics from Rice University.
The announcement today clearly makes the two men, in particular Mr. Whalley, leading
candidates to become chief executive, but Mr. Lay asserted that others at Enron, whom he
declined to identify, were also potential successors.
''Obviously, these would be two of the people on the list,'' Mr. Lay said, but he said others include
''various people depending on how they do the next two to three years.'' Finding a new chief
executive, however, may take as long as four or five years, he said. ''The main thing I need to
convey is that I and the board are not in a big hurry on that.''
In the interview, Mr. Lay said no one from Enron's board ever voiced disapproval of Mr. Skilling
or in any way played a role in his departure, and Mr. Lay said that on several occasions he had
asked Mr. Skilling to reconsider his decision to leave. He also said Mr. Skilling's personal reasons
for leaving, while not health related, were ''things with fairly short time fuses on them'' and were
Archives
HOME PAGE TODAY'S PAPER VIDEO MOST POPULAR
Log In Register Now Help SUBSCRIBE NOW
5/9/2014 Two Are Promoted as Enron Seeks Executive Stability - New York Times
http://www.nytimes.com/2001/08/29/business/two-are-promoted-as-enron-seeks-executive-stability.html 2/2
Home Times Topics Member Center
Copyright 2013 The New York Times Company Privacy Policy Help Contact Us Work f or Us Site Map Index by Keyword
''something he can't wait two or three years to address.''
An immediate test for both Mr. Whalley and Mr. Frevert will be winning the respect and
confidence of investors after the sharp slide in Enron shares this year as analysts questioned
whether the company can continue to improve earnings as prices for natural gas and electricity
-- its two biggest products -- have declined. The stock has also been hit by fallout from a number
of missteps, including the troubled Dabhol power plant project in India and an expensive and
unprofitable foray into trading telecommunications bandwidth.
Andre Meade, head of United States utilities research at Commerzbank Securities, said a chief
problem was that energy trading and marketing account for a far bigger part of Enron's market
capitalization than they do at other unregulated energy companies, but Enron's financial
disclosures largely do not break down this business to show the profitability of different products
and different regions.
''All that is compressed into one set of numbers, and it's really hard for analysts to determine
where they are making money in a given quarter and where they are losing money,'' Mr. Meade
said.
He added that Enron's having so much of its market capitalization tied up in a business that is so
difficult for investors to understand ''is really disconcerting.''
Neither Mr. Whalley nor Mr. Frevert were available for comment, an Enron spokesman said. In
the interview today, Mr. Lay, reiterating comments made to The Wall Street Journal, said he
would try to make Enron's financials and business model more easily understood to investors.
''Analysts have expressed some concerns about that, and we're addressing those concerns,'' he
said, though he added that ''they'll probably never get all the information they want.'' Enron will
break out more information on business segments and geographic results, he said, but he also
said the company would probably not provide profit and loss numbers for natural gas and
electricity -- by far the biggest products it trades.
He also confirmed that Enron has ''unwound'' a series of complex deals it had entered into with
partnerships that included Enron's chief financial officer, Andrew Fastow. The transactions had
been done for hedging and tax reasons, he said.
Enron's financial statements include other complex transactions. For example, the most recent
10-K states that Enron might be required to issue new shares of common stock if the price falls
below levels ranging from $28.20 to $55 because of ''certain financial contracts.'' Enron's stock
has been below $55 for the last three months, but the company has not had to issue shares, a
spokesman said. Enron may end up not having to issue any shares, he said, and any that are
issued are already accounted for in diluted earnings per share.
Photo: Greg Whalley was named president and chief operating officer. He joined Enron in 1992.
(Bloomberg News)