Enron's Lay Turns Down Severance Pay
The Wall Street Journal, 11/14/01
Enron CEO Cut Stakes in Firms Where He Sits in Director's Seat
The Wall Street Journal, 11/14/01
Enron Chief Will Give Up Severance
The New York Times, 11/14/01
COMPANIES & FINANCE THE AMERICAS - Regulators face new boundaries in Enron deal.
Financial Times, 11/14/01
FRONT PAGE - COMPANIES & MARKETS: Enron chief will turn down Dollars 60m takeover windfall
Financial Times; Nov 14, 2001

Enron Chief Relinquishes Severance Pay
Los Angeles Times, 11/14/01
Enron CEO Says No to $60.6 Million
The Washington Post, 11/14/01
Enron's Lay Sells Shareholdings in Other Companies, WSJ Reports
Bloomberg, 11/14/01

Greenspan takes on energy at Rice award presentation
Houston Chronicle, 11/14/01
USA: Enron's Lay says no to hefty pay package.
Reuters English News Service, 11/14/01
Enron Chairman Lay Decides to Forgo $60.6 Million Severance Payment
Dow Jones Business News, 11/14/01
Enron chairman says he won't take dlrs 60 million compensation package if Dynegy deal closes
Associated Press Newswires, 11/14/01
Enron CEO to turn down $60.6 million severance pay
Houston Chronicle, 11/14/01
Enron offers reasons for selling to Dynegy
Houston Chronicle, 11/14/01
Enron chief may hit jackpot CEO's contract calls for a giant payout if control changes
The Globe and Mail, 11/14/01
City - Enron chief in line for $60m payout.
The Daily Telegraph, 11/14/01
MARK TO MARKET: Retail Sales To Surge On Free Money
Capital Markets Report, 11/14/01
Just stick it out or be a sucker
The Economic Times, 11/14/01
Deal made; now Dynegy must make it work
Chicago Tribune, 11/14/01
Dynegy defends merger partner ; CEO says Enron errors not illegal
Chicago Tribune, 11/14/01
USA: UPDATE 1-Calpers calls on Enron board to step aside in merger.
Reuters English News Service, 11/13/01
Enron CEO helps present Greenspan award
Associated Press Newswires, 11/13/01
CalPERS Opposes Enron Board Members' Appt To Dynegy Board
Dow Jones Energy Service, 11/13/01
Jesse Jackson Asks Energy Companies to Hire More Minorities
Dow Jones Business News, 11/13/01
CalPERS Speaks Out On Enron
Business Wire, 11/13/01
Enron Names Raymond Bowen Treasurer
Dow Jones News Service, 11/13/01
USA: Enron names Raymond Bowen treasurer.
Reuters English News Service, 11/13/01
USA: Enron earnings restatement a sign of deceit-suits.
Reuters English News Service, 11/13/01
USA: S&P says Dynegy deal saves Enron from junk rating.
Reuters English News Service, 11/13/01

Enron's Board Should Step Aside From New Company, Calpers Says
Bloomberg, 11/13/01

Enron CEO Won't Accept $60.6 Mln in Severance, Spokesman Says
Bloomberg, 11/13/01

SWITZERLAND: Swiss EWZ suspends planned power venture with Enron.
Reuters English News Service, 11/14/01

Enron's Lay Turns Down Severance Pay
By Rebecca Smith and John R. Emshwiller
Staff Reporters of The Wall Street Journal

11/14/2001
The Wall Street Journal
A3
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. said its chairman, Kenneth Lay, has decided to forgo a severance payment of $60.6 million that could be triggered by Dynegy Inc.'s planned acquisition of Enron. Mr. Lay's decision capped a day in which he appears to have changed his mind on the matter at least twice.
Early in the day, an Enron filing with the Securities and Exchange Commission laid out Mr. Lay's severance package. By midday, Enron indicated that Mr. Lay would keep only one-third of the payout, which he would take in stock in the combined company, and that he intended to donate one-third to a foundation to help displaced Enron employees. The remaining third would cover income-tax liabilities.
But by the end of the day, Enron spokesman Mark Palmer said that Mr. Lay, following a meeting of Enron energy traders, had decided against taking any of the severance pay. Though Mr. Lay didn't attend the traders' meeting, senior managers told him that "opinions were expressed that he shouldn't receive the payment," Mr. Palmer said. "He decided the cleanest thing to do was to waive the payment." The opinions of traders carry particular weight because they produce most of Enron's profits. Questions for Mr. Lay were directed to Mr. Palmer, who said he had spoken with Mr. Lay and other company officials during the day.
The initial disclosure about Mr. Lay's hefty severance payment raised new questions about his willingness to sell Enron for a share price that was about a third of the market price of a month ago. Last Friday, Mr. Lay even said that Enron had other options to the Dynegy purchase, which might have allowed the energy company to remain independent, though he declined to elaborate. "Things weren't desperate . . . we had alternatives," Mr. Lay said. The 59-year-old Mr. Lay won't have an executive position at the combined company, though he might be a director.
For the 12 months ended Aug. 31, Mr. Lay received about $70 million through the exercise of Enron options, according to disclosure reports compiled by Thomson Financial. Last year, Mr. Lay was paid $8.3 million in salary and bonus and more than $10 million in stock awards and other compensation.
Enron, the nation's largest energy trader, saw its stock collapse in recent weeks following a series of disclosures about the company's extensive dealings with partnerships run by some of its own officers. Those dealings are under investigation by the SEC. Last Friday, Enron agreed to be acquired by the far smaller Houston-based Dynegy for stock, currently valued at about $10.7 billion. The merger agreement still must be approved by regulators and shareholders of the two companies.
Separately, the California Public Employees' Retirement System, which owns about three million Enron and 500,000 Dynegy shares, said it would oppose the appointment of any current Enron board member to the board of a combined company. Michael Flaherman, chair of CalPERS investment committee said that it appeared that Enron's board "failed in its responsibility" to monitor the activities of Enron executives.
Mr. Palmer, the Enron spokesman, said Mr. Lay had provisions in his employment contract to protect him against a sudden change in control from 1989 forward. In February 2000, when Enron stock was trading between $60 and $70 a share and Mr. Lay was being widely lauded for his performance, he negotiated a bigger severance package than he had previously. Last August, when Chief Executive Jeffrey Skilling quit unexpectedly, Mr. Lay assumed Mr. Skilling's duties and his contract term was extended by two years to Dec. 31, 2005.
Under the terms of his contract, Mr. Lay is entitled to payment of $20.2 million for every full calendar year left on his employment contract, in the event that his employment terminates within 60 days of a change in control. Thus, Mr. Lay is entitled to three full years of payments, or $60.6 million.
Mr. Lay, who took charge of the then-Houston Natural Gas Co. in 1984 when it was a regional pipeline company, wasn't the only member of his family to benefit from Enron's heady rise to a global energy giant. SEC filings show that in recent years a sister of Mr. Lay, Sharon Lay, and a son, Mark Lay, received millions of dollars in salary, commissions and bonuses related to Ms. Lay's travel agency and a paper-products company connected to the younger Mr. Lay.
Mr. Palmer said it is a "cheap shot" to criticize the Lay family because the pertinent transactions were reported in several annual proxy statements. "The contracts were bid out and fairly awarded," Mr. Palmer said. Ms. Lay said her travel agency, of which she is president and half-owner, had won its Enron business through competitive bidding and by providing "the very best service possible." Mark Lay couldn't be reached for comment.
Coming on top of disclosures of Enron's dealings with partnerships run by its own executives, the relationships between Lay family members and the company again raise questions about Enron's willingness to keep separate corporate and personal interests. Former Chief Financial Officer Andrew Fastow and possibly other Enron executives made millions of dollars from these partnerships.
Mark Lay's dealings with Enron date back to 1994, according to the available SEC filings. In May 1997, Mark Lay and "certain other individuals" who together had been officers, directors or shareholders of a company called Paper & Print Management Corp., or PPMC, entered into employment agreements with an Enron unit, Enron Capital & Trade Resources, according to Enron's 1998 proxy statement. The individuals helped set up "a clearinghouse for the purchase and sale of finished paper products," according to the SEC filing. Mr. Palmer said this effort formed the rudiments of Enron's profitable paper and pulp-trading business.
As part of the deal, Enron agreed to reimburse PPMC $1 million for certain expenses. Mark Lay and his colleagues also agreed to "convey" to Enron "certain intangible property rights" from PPMC.
Mark Lay also got a three-year employment contract from Enron as a vice president of Enron Capital & Trade. He got a signing bonus of $100,000, a minimum monthly salary of $12,500, a minimum annual bonus of $100,000 for 1997-1999 and an option to purchase 20,000 Enron shares. Mark Lay is no longer with Enron and is now attending a seminary, said Mr. Palmer.
Since 1985, Sharon Lay's firm, Lay/Wittenberg Travel Agency in the Park Inc., has provided travel arrangements for employees of Enron and its predecessor company. For this work the agency received $6.8 million from 1996 through 2000. In an interview yesterday, Ms. Lay said Enron accounted for more than half of her firm's revenue in some years. She said her brother's position was "more a problem" than an asset since it led some to assume she hadn't worked hard enough to get Enron's business.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Inside Track
Enron CEO Cut Stakes in Firms Where He Sits in Director's Seat
By Cassell Bryan-Low
Staff Reporter of The Wall Street Journal

11/14/2001
The Wall Street Journal
C14
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Kenneth L. Lay, Enron Corp.'s embattled chairman and chief executive, in recent weeks has cashed in nearly $2 million of shares in companies at which he sits on the board.
Mr. Lay, 59 years, sold $1.2 million of shares, or more than a quarter of his holdings, of Compaq Computer Corp., where he has been a director for 14 years. In his first sale of the Houston-based company's shares since 1999, he disposed of 124,596 shares Oct. 29 for $9.25 each, leaving him with a 340,724 share stake. Apart from two directors who resigned, he is the only Compaq insider to have sold shares this year.
The sale comes as the computer company awaits completion of its planned merger with Hewlett-Packard Co. -- a deal the board has repeatedly said it supports. In a Nov. 7 news release, the board, including Mr. Lay, said it "reaffirmed its strong support for the proposed merger." A day earlier, H-P's founding Hewlett family, which controls 5% of H-P stock, said it intended to oppose the merger, throwing the deal's future into uncertainty. Compaq shares traded at $8.80, up $1.14, as of 4 p.m. in New York Stock Exchange composite trading yesterday.
The sale, Mr. Lay said, wasn't related to his views on the merger. "It's no negative [reflection] on Compaq," he said. Mr. Lay, who also sold shares of drug maker Eli Lilly & Co., where he has been a director since 1993, said of both sales, "I needed to have a little more liquidity."
On Oct. 31, he sold 10,000 shares of Eli Lilly, Indianapolis, representing roughly a 16% reduction of his holdings, at prices of $77.55 and $77.56 a share, or $775,550 total. That figure is $34,250 above what he paid for the same number of shares Feb. 20 at $74.13 each. After the sale, Mr. Lay owned 54,528 Eli Lilly shares.
Eli Lilly shares traded at $78.97, up 75 cents, on the NYSE yesterday. Eli Lilly had no comment on the sales, and Compaq spokesman Arch Currid said, "We don't comment on the personal financial transactions of board members."
Mr. Lay also noted that much of his net worth is tied up in Enron, shares of which tumbled by as much as 80% during the past several weeks alone. Enron shocked investors Oct. 16 when it announced a third-quarter loss of $618 million. The Houston energy company has since announced huge write-offs of assets, reductions of shareholder equity, major downward restatements of past earnings reports; and it has disclosed a regulatory probe into its complex transactions with off-balance-sheet partnerships. Shares have recovered some ground since Friday's announcement by Dynegy Inc., a rival Houston independent power producer, of plans to acquire Enron. Shares of Enron traded at $9.98, up 74 cents, or 8%, on the Big Board as of 4 p.m.
As previously reported, Mr. Lay sold $25.7 million of his Enron shares this year, as the stock fell from about $78 to under $44, and his remaining stake is valued at about $28 million. For 2000, he earned a salary of $1.3 million, a bonus of $7 million, plus $7.5 million in Enron restricted stock and other benefits, including use of a personal plane, according to Enron's proxy statement.
Mr. Lay, who was Enron's CEO from 1985 until February of this year, resumed the post after his successor, Jeffrey Skilling, stepped down in August after only six months on the job. At that time, Mr. Lay agreed to stay on through 2005, but his employment agreement provides for a lump-sum payment under a change of control, such as the proposed merger with Dynegy, according to a regulatory document filed yesterday. The deal is expected to close sometime next year, in which case Mr. Lay would be entitled to $60.6 million under his contract if he terminates his employment within 60 days of the merger. In addition, Mr. Lay is entitled to an amount for any related tax penalties if the payment was deemed to constitute an "excess parachute payment," the filing said.
Mr. Lay also serves on the board of EOTT Energy Corp. -- the general partner of EOTT Energy Partners LP -- and NewPower Holdings Co.
Mr. Lay also recently sold his stake in i2 Technologies Inc., according to his spokesman, following Mr. Lay's resignation from the board of that company Oct. 25 after serving for a year. As of March 2001, he owned 13,000 shares of the Dallas business-software company, a stake that would have been valued at about $64,000 at the time he resigned.
---
Robin Sidel contributed to this article.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business/Financial Desk; Section C
THE MARKETS: Market Place
Enron Chief Will Give Up Severance
By RICHARD A. OPPEL Jr. and FLOYD NORRIS

11/14/2001
The New York Times
Page 1, Column 5
c. 2001 New York Times Company

Trying to quell a furious reaction from employees outraged that he stood to profit from a merger with Dynegy Inc., Kenneth L. Lay, the chairman and chief executive of the Enron Corporation, decided late yesterday to give up a severance package worth more than $60 million.
The tumult at Enron's headquarters in Houston began after the company disclosed in a securities filing earlier in the day that Mr. Lay was in line to collect $60.6 million in pay after the deal closed next year, $20.2 million for every full calendar year left in his employment contract.
Mr. Lay had been a popular leader as Enron grew in the last 15 years from a pipeline operator into the nation's largest energy trader, a business largely of his invention. Employees shared in the gains, though none gained as much as Mr. Lay, who has collected more than $300 million since 1989, mostly through exercising stock options.
But the value of employees' stock options and their 401(k) accounts evaporated this fall as Enron shares plummeted amid concerns over the company's accounting practices. And traders and other workers started the day yesterday gossiping angrily about Mr. Lay's severance package.
Then, at an afternoon meeting of employees in the company's core natural gas and electricity trading operation, which provides by far the biggest part of Enron's profits, ''quite a bit of concern was raised about the news people had been seeing about this change-of-control payment,'' Mark Palmer, an Enron spokesman, said.
At about 4 p.m. Central time, two senior executives who had attended the meeting, John Lavorato and Louise Kitchen, told Mr. Lay about the reaction of employees. ''Ken made a decision shortly thereafter that the best thing to do would be to waive the payment altogether,'' Mr. Palmer said. Even if Dynegy's directors later voted to award Mr. Lay a new severance agreement, he would turn it down, Mr. Palmer added.
''What Ken said is that this is the absolute cleanest way to remove any doubts, that he was not going to profit as a result of this change of control,'' Mr. Palmer said. ''This issue was causing enough concern among employees that he wanted to deal with it.''
Severance pay had been an awkward matter for Mr. Lay in the last week. The only reason that Enron was being acquired -- putting the severance clauses in his employment contract into effect -- were the financial problems that have occurred on his watch. The company's shares have lost almost 90 percent of their value after peaking in the summer of 2000.
During merger discussions last week, Mr. Lay told Dynegy's chairman, Charles L. Watson, that he wanted to rework the severance package, Mr. Palmer said. On Monday, Mr. Watson disclosed that Mr. Lay wanted much of the severance to be in the form of stock options.
By yesterday afternoon, Enron officials were saying that Mr. Lay planned to take two-thirds of the severance in stock or other noncash compensation. And, they said, he wanted to give half of that amount, or one-third of his total package, to establish a charitable foundation to benefit Enron employees.
It was about an hour later that Enron said Mr. Lay would give up the severance entirely.
Mr. Lay has not decided whether to accept an invitation to be on the board of the combined company, which will be called Dynegy.
The deal could still fall victim to antitrust objections or disclosures of further financial problems at Enron.
Whether Mr. Lay's gesture will placate Enron's traders, who are now deluging other energy-trading companies with resumes, remains to be seen. Dynegy is known as a much more conservative firm than Enron, and analysts renewed their concerns yesterday about the cultural clash draining the talent, and value, from the combined company.
''So much of their top talent is going out the door, I don't know what Dynegy gets,'' said a senior executive at another rival firm.
The stunning near-collapse of Enron -- bankruptcy was only averted, some analysts say, by the Dynegy acquisition -- closes a chapter on one of the most influential careers in the history of the energy business.
The ugly circumstances of Enron's downfall, including the revelation that partnerships were used to move debt off the company's balance sheet and that Enron overstated profits in the last five years by almost $600 million, have left Mr. Lay's reputation in tatters.
Just months ago, Mr. Lay was widely hailed -- or decried, in some circles -- as the genius behind energy deregulation. His friend, George W. Bush, had been elected president, and policies favored by Enron were front and center in the administration's energy policy. Mr. Lay retired from day-to-day management, making plans to pursue new business interests.
But he again assumed the chief executive's post at Enron in August, after the unexpected resignation of his handpicked successor, Jeffrey K. Skilling, and the accounting problems swiftly unfolded in the weeks that followed. On Monday, Mr. Lay said he might revive the business plans he set aside during the summer, but he declined to say what those plans were.
Even without the severance package, Mr. Lay has become enormously wealthy running Enron.
All told, from 1989 through this year, Mr. Lay collected about $13 million in salary (his exact salary for this year is not known) and $26.8 million in cash bonuses. But those sums were dwarfed by the $266.7 million in profits that he received in selling stock.
The bulk of his income from exercising options came in the last four years: $13.1 million in 1998, $43.9 million in 1999, $123.4 million in 2000 and $20.7 million this year -- a year in which he sold stock by prearrangement on every trading day through July 31, and then stopped, not wanting to appear to be selling as the stock price was declining.
The options he has cashed in recent years, as well as those he now owns, are badly out of the money at Enron's current stock price of $9.98, down from a peak reached in 2000 of $90.75.
His bonus in 2000 was $7 million, an award that Enron's board said was based on the company's rising profits and high shareholder return. The company restated those profits last week, explaining that it had improperly applied accounting rules. It said that about 40 percent of its profit in 2000 came from transactions with partnerships that were controlled by Andrew S. Fastow, who was then Enron's chief financial officer.
The company's stock price, which was in free fall after questions about the Fastow partnerships prompted an investigation by the Securities and Exchange Commission, fell to $7 a share in the wake of the disclosures. That was the lowest price for the stock since 1991. It rebounded to nearly $10 after Dynegy agreed to acquire the company in a stock swap.
In January, Enron's board awarded another bonus to Mr. Lay, of $3.6 million. That was based entirely on the company's shareholder return from 1997 through 2000, which came to 294 percent, the company said. All of that return has since been wiped out.
Also in January, Mr. Lay was awarded 106,578 shares of restricted stock, to vest periodically through 2004. All the shares will now vest when the Dynegy deal is completed, and while their value has plunged, the award is still worth more than $1 million.
Still, Mr. Lay suffered huge paper losses this year.
At the end of 2000, he had 5.1 million options that could have been exercised for profits of $257.5 million, and another 1.5 million options that would have been worth another $104.1 million when enough time had passed that they could be exercised -- assuming the share price stayed level. He exercised 565,928 of those options this year, making a profit of $20.7 million, but the ones he did not exercise are now under water.

Photo: Kenneth L. Lay, the chief executive of Enron, decided to give up his severance of more than $60 million after complaints from employees. (Associated Press)(pg. C10) Graph: ''Paid to Perform'' The compensation of Kenneth L. Lay, Enron's chief executive, has risen and fallen with the performance of the company's stock. Graph tracks Mr. Lay's income and Enron's year end stock price since 1989. (pg. C10)
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

COMPANIES & FINANCE THE AMERICAS - Regulators face new boundaries in Enron deal.
By NANCY DUNNE and PETER SPIEGEL.

11/14/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

Regulators wading into the competitive landscape following Dynegy's offer to buy Enron will be scrutinising a new industry where traditional yardsticks like market definition and barriers to entry have yet to be determined. This will make gaining approval of the $10bn deal an uncertain and complicated task, experts said.
Dynegy and Enron have insisted the merger, which will combine the largest energy trading company in the world with one of its largest competitors, will be approved by federal regulators without significant conditions or divestitures.
But competition lawyers said this week that because the market for energy trading is so new - indeed, it was all but created by Enron in the 1990s - that federal agencies will have to spend months finding out how rivals compete in order to develop guidelines to measure the merger's impact.
"We don't have any track record here," said Ernest Gellhorn, an antitrust expert at George Mason University.
The deal will be reviewed by state and federal agencies, but the most critical approvals will come from the Federal Energy Regulatory Commission (FERC) and US antitrust agencies.
Central to the antitrust review will be how competition authorities define the market - how big it is, which companies are included as competitors, and how the market share is divided up.
Former antitrust officials said Enron might be forced to resort to a "failing firm" defence, which is occasionally used by companies with large market shares when attempting to add to their dominant position.
But Robert McTamaney, an antitrust partner at Carter Ledyard & Milburn, said the failing-firm route may be difficult for Dynegy and Enron to prove, since it requires a showing that without the merger, Enron's trading business would exit the market completely.
Helping the companies, however, is the relative ease with which competitors can enter the trading market, experts said.
An analysis of barriers will hinge on whether rivals can successfully argue that the level of expertise in the industry is so sophisticated - or that Enron's trading technologies are so specialised - that it would be impossible for new entrants to duplicate the company's operations.
Dynegy executives said they expect more scrutiny from FERC, though it rarely rejects mergers, and its guidelines put an emphasis on speed of reviews.
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

FRONT PAGE - COMPANIES & MARKETS: Enron chief will turn down Dollars 60m takeover windfall
Financial Times; Nov 14, 2001
By SHEILA MCNULTY and PETER THAL LARSEN

Ken Lay, the chairman and chief executive of Enron, is set to turn down a Dollars 60.6m pay-off to which he was entitled following the troubled power group's takeover by Dynegy.
Mr Lay, who oversaw Enron's rapid rise and its subsequent collapse and sale to Dynegy, was due the payment under an employment contract he extended when he resumed full control of the company in August 2001.
However Mr Lay decided yesterday after meeting with some Enron employees that he would turn down the payment.
"Ken Lay will not accept the Dollars 60m when he leaves," an Enron spokeswoman said. "He felt like it was not the right thing to do."
According to a filing with the Securities and Exchange Commission, Mr Lay is entitled to Dollars 20.2m in cash for every remaining year in his employment contract if he leaves Enron within 60 days of the company being taken over.
Mr Lay's decision is in sharp contrast to other senior US executives who have negotiated - and accepted - "golden parachutes" which guarantee them large payments even if they oversaw large-scale destruction in shareholder value.
Mr Lay had previously come under fire from shareholders for selling some of his Enron shareholding before the collapse in the company's stock price. Between January and July this year, he sold Enron shares with an estimated value of more than Dollars 27.5m.
At the close of trading yesterday Enron was valued at Dollars 7.5bn, compared with a peak of Dollars 65.9bn in August last year.
The terms were part of Mr Lay's original employment contract, which had been due to expire in December 2003. But in August, following the sudden departure of chief executive Jeff Skilling, Enron's board extended Mr Lay's contract by two years.
At the time, the contract extension was seen as an attempt by Mr Lay to restore investor confidence in the company. But it also ensured he would receive an additional Dollars 40.4m if he left following a sale.
After the Dollars 10.8bn Dynegy takeover, Mr Lay is expected to give up his executive responsibilities. He may join the combined group's board of directors but this will not affect his eligibility for a pay-off. The deal, which requires the approval of US competition authorities, is expected to be completed next year.
Copyright: The Financial Times Limited 1995-1998

Business; Financial Desk
Enron Chief Relinquishes Severance Pay
JERRY HIRSCH
TIMES STAFF WRITER

11/14/2001
Los Angeles Times
Home Edition
C-1
Copyright 2001 / The Times Mirror Company

Enron Corp. Chief Executive Kenneth L. Lay on Tuesday waived a severance payment of at least $60 million due him when Dynegy Inc. completes its expected acquisition of Enron next year, company officials said.
The potential payment, disclosed in a Securities and Exchange Commission regulatory filing Tuesday, would undoubtedly have sparked additional controversy, given Lay's primary role in the sharp fall of Enron's stock and worsening financial condition, which led to the Dynegy deal.
The payment would have been one of the biggest rewards for failure in corporate history, said Graef Crystal, a leading compensation expert.
The payment would have topped the nearly $40 million Mattel Inc. paid former Chief Executive Jill Barad after she was ousted in 2000 after spending $3.6 billion to purchase a money-losing software business the company eventually gave away to a technology group in return for a slice of future profit.
It would have been almost double the $35 million in severance collected by former Xerox Corp. Chief Executive Richard Thoman when he was fired in May 2000 after a disastrous reorganization of the copier company's sales force.
According to Enron spokeswoman Karen Denne, Lay spoke to a number of employees Tuesday and "decided that the best course of action would be for him to waive his right to payment."
"Instead," Denne said, "the combined company would decide the best use of those funds."
Lay and Enron have run into a storm of criticism in recent weeks after the disclosure of a series of partnerships and the dismissal of several top executives who invested in those ventures.
News of the partnerships and their losses forced the Houston-based company to restate its earnings last week, reducing corporate profits over the last four years by $586 million, or about 20%, to $2.3billion.
Shareholders have filed a series of lawsuits against Enron, charging the company with failing to disclose key information about its operations and financial structure.
The negative disclosures sparked a cash crunch and threatened Enron with collapse until it was saved by an agreement Friday to be acquired by Houston-based Dynegy for $9 billion.
Shareholders have watched the value of Enron shares decline almost 90% from a high of nearly $90 on Aug. 23, 2000. Its shares closed Tuesday at $9.98, up 74cents, on the New York Stock Exchange.
CEO Already Reaped
$150 Million in Options
According to the regulatory filing, Lay stood to collect $20.2 million a year, plus certain extraordinary tax expenses, for each of the full years remaining on his contract once the company was acquired.
If the Dynegy deal is completed as expected next year, Lay's payment would have totaled at least $60.6 million. His contract ends on Dec. 31, 2005.
Lay already reaped about $150million in stock option gains the last two years alone. Those gains were in part made possible by rosy Enron profit statements, which the company restated downward last week, Crystal said.
"It is a good move to waive the payment," Crystal said. "But that's just the down payment on what he should give back. There is probably another $100 million in option profits he should give back. Had they correctly stated the books, the stock would not have risen as high and he would not have made as much from exercising his stock options in the company."
A stock option gives the holder the right to purchase a share of a company at a predetermined price. Options are a common executive pay incentive, allowing the individual to purchase and sell the shares, pocketing the gains in their appreciation. Lay made $123 million off such transactions last year and $26 million this year, Crystal said.
Lay since 1989 has had a "change of control" clause that awards him a special payment if Enron changes hands. The company described the clause as a standard part of executive employment agreements common to many companies.
Some Wall Street analysts said the liability for the payment would be Dynegy's problem at the point the merger is completed. Enron shareholders already have suffered all the damage they are going to see.
"Enron has clearly lost the vast majority of its shareholders over the last six months with its piecemeal disclosure, destruction of shareholder value and loss of credibility," said Andre Meade of Commerzbank Securities in New York.
John Sousa, a spokesman for Dynegy, said the company was aware of the severance clause and had factored the expense into its acquisition, which "we believe is a very strong financial transaction" regardless of the potential payment to Lay.

PHOTO: Enron CEO Kenneth Lay has run into a storm of criticism recently.; ; PHOTOGRAPHER: Associated Press
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Financial
Enron CEO Says No to $60.6 Million
Peter Behr
Washington Post Staff Writer

11/14/2001
The Washington Post
FINAL
E01
Copyright 2001, The Washington Post Co. All Rights Reserved

Kenneth Lay, chairman and chief executive of Enron Corp., decided yesterday to forgo an expected $60.6 million severance payment because of the impact of Enron's plunging stock price on the company's employees, a spokesman said.
Until yesterday, Lay was preparing to accept the severance payout, which would be triggered at the completion of Enron's purchase by rival Houston energy company Dynegy Inc., a deal announced on Friday. Enron faced a cash crisis after disclosing it has overstated its earnings by $586 million over the past four years because of improper accounting treatment of its investments in outside partnerships that were managed by its chief financial officer.
The severance package was reported yesterday by Bloomberg News, which included a blistering comment by Andrew Whalley, manager of a trust that sold $5 million in Enron stock in April because of concerns with Enron's financial reports, Bloomberg said.
Whalley called the settlement "a ridiculous amount of money" to pay the chairman of a company that suffered "a textbook financial collapse, where he obviously had some knowledge of what was going on."
Enron spokesman Karen Denne said around midafternoon yesterday that Lay intended to donate one-third of the severance to Enron employees, keep one-third and use the remainder to pay taxes on the entire package. Lay, who built Enron into the world's largest energy trading company, was entitled to a payment of $20.2 million multiplied by each year remaining on his employment contract if it was terminated before it expires at the end of 2005. The purchase by Dynegy is expected to close in 2002, assuming regulatory approvals are forthcoming, giving Lay three years of payments. Lay said last week that he will retire once the deal is done.
Denne checked again with Lay later in the afternoon and was told that he had decided not to accept any of the severance payment after a meeting yesterday with Enron employees. "He realized this was extremely sensitive given the financial condition of Enron employees," Denne said.
Many Enron employees hold the company's stock in savings and retirement plans, and the stock price has fallen from a high of $90 a share in August 2000 to a low of $8.41 last Thursday.
Enron's price has picked up since the purchase announcement, closing at $9.98 yesterday. Dynegy has agreed to pay $23 billion for Enron, about $10 billion of that in stock (about $10 a share, when the deal was announced), while assuming Enron debt for the rest.
Lay's compensation was increased nearly threefold, to $18.3 million, last year, when the company's annual revenue reached $100 billion and its stock hit an all-time high.
Lay realized a gain of $123.4 million from exercising stock options last year. He is entitled to purchase 782,830 shares of Enron stock over the next seven years through stock options, according to a company filing, but those grants currently are worthless because of the collapse of Enron's stock price.

http://www.washingtonpost.com
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron's Lay Sells Shareholdings in Other Companies, WSJ Reports
2001-11-14 05:53 (New York)

     Houston, Nov. 14 (Bloomberg) -- Enron Corp. Chairman and
Chief Executive Officer Kenneth Lay has been selling shares of
companies of which he is a board member, the Wall Street Journal
said.

     Lay sold about $1.2 million, or more than 25 percent of his
interest, in Compaq Computer Corp., where he has been a director
for 14 years, the paper reported.

     He also sold 16 percent of his stake, or about 10,000 shares,
in drugmaker Eli Lilly & Co., the paper reported. Lay also sold
about $25.7 million of Enron shares. The company is being acquired
by rival Dynegy Inc.

     Lay also is a director of Eott Energy Partners LP, NewPower
Holdings Inc. and i2 Technologies Inc., in which he recently sold
his stake, the Journal reported.

Nov. 14, 2001, 11:29PM
Houston Chronicle
Greenspan takes on energy at Rice award presentation
By SHANNON BUGGS
Copyright 2001 Houston Chronicle
The audience assembled at Rice University Tuesday evening may have wanted a briefing from the world's most influential economist about the U.S. strategy for combating a recession.
What they got was Federal Reserve Chairman Alan Greenspan's assessment of the market forces and technology shaping the oil and gas industries.
Greenspan, chairman of the Fed since 1988, came to Houston to accept the Baker Institute's Enron Prize for Distinguished Public Service. Previous award recipients include Nelson Mandela, former president of South Africa; Mikhail Gorbachev, former president of the Soviet Union; and Colin Powell, U.S. secretary of state.
However, Greenspan declined the cash and crystal sculpture that accompany the prize.
It's logical that Greenspan talked about energy, considering the award is named for an energy trading company, the institute is researching energy supply and security issues, and the home of the institute is the world's energy capital.
"As we, as economic policymakers, understandably focus on the impact of the tragedy of Sept. 11 and the further weakening of the economy that followed those events, it is essential that we do not lose sight of the policies needed to ensure long-term economic growth," Greenspan said.
"One of the most important objectives of those policies should be an assured availability of energy. That imperative has, if anything, been elevated by the heightened tensions in the Middle East -- an area that harbors two-thirds of the world's proven oil reserves."
Greenspan reviewed the nation's experiences with seesawing energy prices and episodes of imbalances in supply and demand. He also discussed technologies to augment energy supplies, including coal mining, nuclear power and fusion power.
"Energy issues present policymakers and citizens with difficult decisions and trade-offs to make outside the market process; as always, national security and environmental concerns need to be addressed in setting policy," Greenspan said.
At the end of the speech, Greenspan answered pre-selected written queries from the audience of students, faculty and invited guests. One questioner asked if the state of economy caused Greenspan to second-guess his monetary policies.
Greenspan rephrased the question as to whether or not he had made a mistake. After much rhetoric, he in effect said no.
"The notion that people have that monetary policy changes one little notch and the economy goes up, clearly has never been the case and is not the case today," Greenspan said.
The evening ended with James Baker, former U.S. secretary of state and of the treasury, and Ken Lay, head of Enron, presenting Greenspan with the award.
Rice University officials said it's premature to know whether the name of the Enron Prize will be changed if the sale of Enron to Dynegy is completed.
Lay indicated the award would live on when he said, "I'm looking forward to our first woman recipient."

USA: Enron's Lay says no to hefty pay package.
By Andrew Kelly

11/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Nov 13 (Reuters) - Enron Corp chairman Ken Lay has turned down the chance to cash in on his company's financial troubles by refusing to accept a $60 million payment due him if a proposed buyout by power-trading rival Dynegy Inc goes through, a company spokeswoman said on Tuesday.
He decided it was not right to take the money under the circumstances now confronting the company, Enron spokeswoman Anne Denne said.
Enron, the nation's top trader of gas and electricity, agreed on Friday to be bought by the much-smaller Dynegy in a stock swap worth about $9 billion after a controversy over questionable business deals had sapped its finances to the point of near-collapse.
"After having discussions with employees today he decided that this is the right thing to do and he's going to leave it up to the combined company to determine the best use of that money," Denne told Reuters.
Lay's contract, which runs through 2005, calls for him to get $20.2 million for each full year left in his contract if Enron is taken over by another company. Enron and Dynegy officials have said they expect to complete their merger by the third quarter of next year.
Denne said the clause, which is known in corporate circles as a "golden parachute," has been in his contract since 1989 and is a "standard provision" for chief executives.
Denne said Lay told Enron employees of his decision in a company-wide e-mail.
Enron has been under the gun from Wall Street since mid-October when it said shareholder equity had been cut $1.2 billion because of off-the-balance sheet deals with partnerships run by former Chief Financial Officer Andrew Fastow.
The U.S. Securities and Exchange Commission launched an investigation into the transactions, which sent Enron's stock and credit ratings into a tailspin and drained its cash as trading partners refused to extend credit.
On Friday, Enron and Dynegy said they had agreed to merge at what seemed a firesale price for Enron, which last year had $100 billion in revenues and $1 billion in earnings.
Also, on Tuesday night, Lay presented the Enron Prize for Distinguished Public Service to Federal Reserve chairman Alan Greenspan in an event at Rice University in Houston. Previous winners have included the likes of Nelson Mandela and Mikhail Gorbachev.
Prior to accepting the award, Greenspan told students that the most important thing for anyone in the business world was to be ethical.
"I don't deny that there is an extraordinary amount of activity in the business community which is less than exemplary...but the best chance you have of making a big success in this world is to decide from square one that you're going to do it ethically," he said.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron Chairman Lay Decides to Forgo $60.6 Million Severance Payment

11/14/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. said its chairman, Kenneth Lay, has decided to forgo a severance payment of $60.6 million that could be triggered by Dynegy Inc.'s planned acquisition of Enron, Wednesday's Wall Street Journal reported.
Mr. Lay's decision capped a day in which he appears to have changed his mind on the matter at least twice.
Early in the day, an Enron filing with the Securities and Exchange Commission laid out Mr. Lay's severance package. By midday, Enron indicated that Mr. Lay would keep only one-third of the payout, which he would take in stock in the combined company, and that he intended to donate one-third to a foundation to help displaced Enron employees. The remaining third would cover income-tax liabilities.
But by the end of the day, Enron spokesman Mark Palmer said that Mr. Lay, following a meeting of Enron energy traders, had decided against taking any of the severance pay. Though Mr. Lay didn't attend the traders' meeting, senior managers told him that "opinions were expressed that he shouldn't receive the payment," Mr. Palmer said. "He decided the cleanest thing to do was to waive the payment." The opinions of traders carry particular weight because they produce most of Enron's profits. Questions for Mr. Lay were directed to Mr. Palmer, who said he had spoken with Mr. Lay and other company officials during the day.
The initial disclosure about Mr. Lay's hefty severance payment raised new questions about his willingness to sell Enron for a share price that was about a third of the market price of a month ago. Last Friday, Mr. Lay even said that Enron had other options to the Dynegy purchase, which might have allowed the energy company to remain independent, though he declined to elaborate. "Things weren't desperate . . . we had alternatives," Mr. Lay said. The 59-year-old Mr. Lay won't have an executive position at the combined company, though he might be a director.
For the 12 months ended Aug. 31, Mr. Lay received about $70 million through the exercise of Enron options, according to disclosure reports compiled by Thomson Financial. Last year, Mr. Lay was paid $8.3 million in salary and bonus and more than $10 million in stock awards and other compensation.
Enron (ENE), the nation's largest energy trader, saw its stock collapse in recent weeks following a series of disclosures about the company's extensive dealings with partnerships run by some of its own officers. Those dealings are under investigation by the SEC. Friday, Enron agreed to be acquired by the far smaller Houston-based Dynegy (DYN) for stock, currently valued at about $10.7 billion. The merger agreement still must be approved by regulators and shareholders of the two companies.
Separately, the California Public Employees' Retirement System, which owns about three million Enron and 500,000 Dynegy shares, said it would oppose the appointment of any current Enron board member to the board of a combined company. Michael Flaherman, chair of CalPERS investment committee said that it appeared that Enron's board "failed in its responsibility" to monitor the activities of Enron executives.
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron chairman says he won't take dlrs 60 million compensation package if Dynegy deal closes
By KRISTEN HAYS
Associated Press Writer

11/14/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - Enron Corp. Chairman Ken Lay turned down up to dlrs 60.6 million that he stood to receive once the nation's top buyer and seller of natural gas is merged into its smaller, but stronger rival Dynegy Inc.
"He has told the employees that he has given a lot of thought to this over the last few days and in light of the circumstances surrounding the company and after listening to the employees he has decided the best thing to do is waive his right to the payment," Enron spokesman Vance Meyer said.
Lay decided it best to forego the Enron compensation package after consulting with employees Tuesday. He let those who work for him know of his decision via voicemail.
Meyer said the compensation package was the only merger-related payment Lay was eligible for from Enron. A Dynegy spokesman, John Sousa, said the company was unsure if Lay could receive a retirement package from them.
Enron had a conference call scheduled for 1430 GMT.
Dynegy's purchase of Enron, worth at least dlrs 9.8 billion in stock, would trigger a clause in Lay's contract that gives him a lump sum of dlrs 20.2 million for each full calendar year remaining in his contract if there is a change in control of Enron, according to documents filed Tuesday with the Securities and Exchange Commission.
Lay's contract with Houston-based Enron runs through 2005.
Dynegy executives have said they hope to complete their acquisition of Enron by next summer. The Houston-based energy marketer will assume dlrs 13 billion of Enron debt. The Enron name will vanish when the deal is completed.
Investors continued to bid up both companies' shares Tuesday, in the second day of trading following announcement of the deal. Dynegy shares rose dlrs 2.63, or 6 percent, to close at dlrs 44.94 on the New York Stock Exchange, where Enron shares rose 74 cents, or 8 percent, to close at dlrs 9.98.
Enron shares have gained 17 percent since Thursday, the day before the merger was announced, but the shares are still a fraction of their 52-week high of dlrs 84.87.
Dynegy entered talks to buy Enron last month as the trading giant's stock price plunged about 80 percent in the weeks following Enron's posting of a dlrs 618 million third quarter loss. The company also disclosed a dlrs 1.2 billion reduction in shareholder equity related to partnerships run by company officers, which allowed Enron to keep about half a billion dollars in debt off its books.
Those partnerships are now under investigation by the Securities and Exchange Commission.
Enron ousted chief financial officer Andrew Fastow, who ran some of the partnerships, and restated its earnings back to 1997. But those actions failed to restore investor confidence.
Chuck Watson, Dynegy chairman and chief executive, will retain those roles for the combined company while Lay steps down when the deal is done.
Enron spokeswoman Karen Denne said Tuesday the compensation provision given a merger or other change of control has been in Lay's contract since 1989. Such protections are common for chief executive officers, she said.
In February, Jeff Skilling replaced Lay as president and CEO of Enron and Lay retained his title as chairman. Lay stepped back into the other roles when Skilling unexpectedly resigned in August, citing personal reasons.
---
On the Net:
http://www.enron.com
http://www.dynegy.com

AP Photos HT101 and HT106
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Nov. 14, 2001
Houston Chronicle
Enron's CEO to turn down $60.6 million severance pay
By LAURA GOLDBERG
Copyright 2001 Houston Chronicle
Ken Lay, Enron Corp.'s chairman and chief executive, won't take the $60.6 million in severance he would be due after Dynegy closes its deal to buy his troubled company.
Lay made his decision Tuesday after employees' sentiments about the money were relayed to him, Enron spokesman Mark Palmer said.
At a floor meeting Tuesday for energy traders and marketers and back-office employees to discuss the merger, Lay's severance "was a very active topic apparently," Palmer said, adding that "quite a bit of concern" was expressed.
Documents on a variety of Enron matters, including Lay's severance, were filed with federal securities regulators Tuesday morning.
Under his employment contract, if Lay ends his employment within 60 days of a so-called "change of control," he gets a lump-sum payment equal to the number of full calendar years left in his employment contract times $20.2 million.
The merger was announced Friday, but isn't expected to close for six to nine months. Lay's contract runs through Dec. 31, 2005.
Palmer said a change-of-control clause had been in Lay's contract since 1989.
Lay won't have a management role with the combined company to be called Dynegy. He's been offered a seat on the new board, but hasn't decided whether to take it.
Lay's contract was set to expire on Dec. 31, 2003, but was extended in August after CEO Jeff Skilling unexpectedly resigned and Lay jumped back into his former job as chief executive.
Declining the money, Palmer said, was the best way for Lay to assure employees that he wouldn't profit from the severance provision.
Last year, Lay made $18.3 million from various forms of compensation, including a $7 million bonus, according to Enron's March proxy statement.
He was also awarded options to buy 782,830 shares of Enron stock at specified prices over a number of years. The options, though, are worthless at current Enron stock prices.
This year through Aug. 21, Lay made $25.5 million by exercising options and selling those shares, Graef Crystal, a compensation expert who writes a column for Bloomberg News, said.
Lay made an average of $31.5 million a year from 1993 to 2000 in various forms of compensation, including exercising options and selling the shares, Crystal said.
Dynegy on Friday announced a deal to buy its rival for almost $9 billion in stock plus the assumption of almost $13 billion in debt and $2 billion in preferred stock.
The price came at bargain-basement rates for a company whose shares as recently as late January closed at $82. Tuesday, shares in Enron closed at $9.98.
Among Enron's woes: a Securities and Exchange Commission investigation, questions on Wall Street about its financial reporting practices and shareholder lawsuits.
Investors reacted negatively to word that Lay could get $60.6 million.
"This is ridiculous after what has happened," said Donald Coxe, who manages the Harris Insight Equity Fund, which at the end of last month owned about 78,000 shares of Enron. "The idea that there would be a golden parachute for somebody who as a parachute captain sent his stockholders out of the plane without a parachute strikes me as pretty odd."
Even before Tuesday, Lay had other ideas for the severance.
Early last week, Palmer said Lay proposed to Chuck Watson, Dynegy's chairman and chief executive, that he get two-thirds of what he was due in a noncash payment, such as stock in the merged company.
With half of the noncash payment, Lay wanted to set up a foundation to provide assistance to Enron employees in need.
A significant portion of the rest, according to his plan, would have been cash to cover taxes.
Dynegy declined immediate comment about Lay's Tuesday decision.
But Carol Coale, an analyst with Prudential Securities in Houston, quipped: "That might stave off one shareholder lawsuit."
Bottom of Form 1

Nov. 14, 2001, 11:25PM
Houston Chronicle
Enron offers reasons for selling to Dynegy
Underperforming assets, heavy debt cited
By LAURA GOLDBERG
Copyright 2001 Houston Chronicle
Among Enron Corp.'s reasons for agreeing to be bought out by rival Dynegy: Underperforming assets were draining cash and earnings, and debt load was stretching the company.
That Enron faced a loss of confidence from financial markets and departures of some senior executives also played into the decision, documents filed by Enron on Tuesday with federal securities regulators said.
Before agreeing to a merger with Dynegy, Enron also considered staying independent, an infusion of private equity and an infusion from a strategic partner.
Friday, the two companies announced Dynegy would buy Enron for almost $9 billion in stock plus the assumption of almost $13 billion in debt and $2 billion in preferred stock.
Under the deal, Enron shareholders get 0.2685 share of Dynegy per Enron share. The ratio is subject to "downward revision" under certain circumstances, the documents said.
Also, ChevronTexaco, a Dynegy shareholder, gave Dynegy $1.5 billion. Dynegy on Tuesday injected that money into Enron, aiming to shore up its core energy trading operation.
In return for the money, Dynegy gets preferred stock and other rights in Enron's Northern Natural Gas pipeline system. If the deal doesn't close, Dynegy could buy all of Northern Natural Gas, which includes about 17,000 miles of natural gas pipeline.
The filings say Dynegy's right to buy Northern Natural Gas is first subject to a right of Enron to repurchase Northern Natural Gas. If the merger should not close, Dynegy, under certain circumstances, has the option instead to convert its stake in Northern Natural Gas to Enron stock.
Also of note in the documents:
? Enron will finish its second downtown office tower, now under construction, and will keep moving employees into the new building "at this time."
? The merged company will assume the "rights and obligations" under Enron's naming-rights deal for Enron Field.
Enron also made filings with the Securities and Exchange Commission concerning agreements announced Nov. 1 to get $1 billion in credit lines from J.P. Morgan Chase & Co. and Citigroup.
The filing detailed a provision in those agreements that, based on Enron's current credit rating, would have prevented it from tapping those lines. An Enron spokesman said Tuesday the banks have waived that provision.
Also Tuesday, Enron said it named company executive Raymond Bowen Jr. as treasurer to replace Ben Glisan, who was fired last week.
Dynegy stock continued its upward movement Tuesday, closing $2.63 higher at $46.94.
Bottom of Form 1

Report on Business: International
Enron chief may hit jackpot CEO's contract calls for a giant payout if control changes
KRISTEN HAYS
Associated Press, Bloomberg Business News

11/14/2001
The Globe and Mail
Metro
B9
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licensors. All rights reserved."

HOUSTON -- Enron Corp. chairman and chief executive officer Kenneth Lay stands to receive up to $60.6-million (U.S.) once the top buyer and seller of natural gas in the United States is merged into its smaller, but stronger rival Dynegy Inc.
Dynegy's purchase of Enron, worth at least $9.8-billion in stock, would trigger a clause in Mr. Lay's contract that gives him a lump sum of $20.2-million for each full calendar year remaining in his contract if there is a change in control of Enron, according to documents filed yesterday with the U.S. Securities and Exchange Commission.
Mr. Lay's contract with Houston-based Enron runs through 2005.
Dynegy executives have said they hope to complete their acquisition of Enron by next summer. The Houston-based energy marketer will assume $13-billion of Enron debt. The Enron name will vanish when the deal is completed.
"That's a ridiculous amount of money for a man who's already made himself probably tens of millions of dollars," said Andrew Whalley, manager of the Legg Mason International Utilities Trust, which sold a $5-million stake in Enron in April because of concern about its bookkeeping.
"It's a classic golden parachute," said Raymond James analyst Jon Kyle Cartwright, noting that it is comparable to financial safety nets in other top corporate contracts.
But shareholders might not appreciate the parachute given the once-mighty company's recent troubles, Mr. Cartwright said.
"That's a tough call," he said. "It certainly would have been fair if you had been looking at Enron up to a couple of months ago. Following that it gets dicey, and I'm not sure how shareholders are going to take it."
Investors continued to bid up both companies' shares yesterday in the second day of trading following announcement of the deal. Dynegy shares rose $2.63, or 6 per cent, to close at $44.94 on the New York Stock Exchange, where Enron shares rose 74 cents, or 8 per cent, to close at $9.98.
Enron shares have gained 17 per cent since Thursday, the day before the merger was announced, but the shares are still a fraction of their 52-week high of $84.87.
Dynegy entered talks to buy Enron last month as the trading giant's stock price plunged about 80 per cent in the weeks following Enron's posting of a $618-million third-quarter loss. The company also disclosed a $1.2-billion reduction in shareholder equity related to partnerships run by company officers, which allowed Enron to keep about half a billion dollars in debt off its books.
Those partnerships are now under investigation by the SEC.
Enron ousted chief financial officer Andrew Fastow, who ran some of the partnerships, and restated its earnings back to 1997. But those actions failed to restore investor confidence.
Chuck Watson, Dynegy chairman and CEO, will retain those roles for the combined company while Mr. Lay steps down.
Dynegy spokesman Steve Stengel declined comment yesterday on Mr. Lay's agreement with Enron, noting that the companies will operate independently until the merger is finished.
Enron spokeswoman Karen Denne said yesterday the compensation provision given a merger or other change of control has been in Mr. Lay's contract since 1989.
In February, Jeff Skilling replaced Mr. Lay as president and CEO of Enron and Mr. Lay retained his title as chairman. Mr. Lay stepped back into the other roles when Mr. Skilling unexpectedly resigned in August, citing personal reasons.

Illustration
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

City - Enron chief in line for $60m payout.
By Andrew Cave.

11/14/2001
The Daily Telegraph
P38
(c) Telegraph Group Limited, London, 2001

Associate City Editor
KENNETH Lay, chairman and chief executive of Enron, is in line for compensation of more than $60m ( #42m) if he leaves the US company following its $8 billion rescue by its smaller rival Dynegy.
According to documents filed with America's Securities & Exchange Commission, Mr Lay is entitled to receive a lump sum payment equal to $20.2m for every year remaining on his contract. His contract expires at the end of 2005, while Dynegy's takeover of Enron, announced on Friday, is due to be completed in the third quarter of next year.
The contract was extended by two years in August, when he resumed chief executive duties following the departure of Jeffrey Skilling. It provides that, in addition to his compensation, he will receive an extra amount to cover tax penalties if the sum he gets is considered to be an "excess parachute payment".
Enron, once valued at $80 billion, has seen its shares lose 80pc in the past three weeks after announcing a $586m loss, an equity write-down and a regulatory inquiry into off balance sheet dealings.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

MARK TO MARKET: Retail Sales To Surge On Free Money
By Jim Murphy

11/14/2001
Capital Markets Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

A Dow Jones Newswires Column

NEW YORK -(Dow Jones)- Professionals and amateurs alike agree that at 8:30 a.m. EST the Commerce Department will report that U.S. retail sales rose in October.
Some observers believe that retail sales not only rose last month, but that they surged - 5.5% being the top of the forecast range.
All again agree that the main stimulant was the zero-percent financing offered by the major automakers.
In September, sadness and other negative emotions engendered by the events of 9/11 helped to fashion a 2.4% drop in overall retail sales and a 1.6% decline when auto sales were excluded.
The Dow Jones Newswires median forecast of 21 economists has it that overall retail sales rose 2.5% in October, while they were ahead only 0.4% when auto sales were excluded.
While it is difficult to believe that any market will move lower in response to a notable improvement in retail sales, the most compelling ways in which the report can be "spun" are all negative.
A few examples. The October increase will be from a depressed September level.
Yes, October retail sales were goosed by zero-percent financing, but November won't get such a lift even though the zero-percent sales campaign isn't over yet.
That's because even if "free" money lured me out of my shell and into the showroom in October, it will have no effect on me in November or in December. I already bought a new car. Unless I'm a rich collector, that's it for at least year or two.
The more metaphysical of commentators will also note that many October car sales spurred by zero-percent financing were "in a very real sense" stolen from subsequent months. Without "free" money, I might, for example, have waited until April of 2002 before buying a new car.
Then, too, there is the cost to the automakers of the zero-interest loans. GM's General Motors Acceptance Corp., which finances the parent's cars, will remain a profit center, but it won't be from auto loans made in October.
I'll leave the summing to a professional (because I agree with him).
"Retail sales probably reversed the plunge in September, although mainly because of a spike in autos that is unlikely to be sustained for more than one month," said Jim O'Sullivan, economist at UBS Warburg.

Vienna Meeting Overshadowed

Oil ministers of the Organization of Petroleum Exporting Ministers began meeting today in Vienna.
Most oil traders are looking for them to cut daily output by around 1.5 million barrels. But who ever really knows with OPEC, which I have cleverly punned, more than once, into opaque.
Besides there's a war going on in Afghanistan and oil-rich Iraq may be next - and who knows but that the House of Saud won't be toppled by Islamic fundamentalists. To name but a few topics that are more compelling than a periodic quota buck-and-wing by OPEC.

Would You Believe The Enron Award?

I told you in Tuesday's mornings M2M that I failed after searching for an hour to find out what Fed Chairman Greenspan was doing at Rice University Tuesday evening.
Wouldn't you just know it? I found out this morning what Mr. Greenspan was doing in a dispatch from the Associated Press. He went to Rice to receive the Enron Prize for Distinguished Public Service from the University's Baker Institute for Public Policy. Enron will be taken over by Dynegy Inc. So this will probably be the final Enron award, and no I'm not going to avail myself of a handy invitation to irony.
Mr. Greenspan had some things of interest to say to the folks at Rice, but none that we haven't heard from him before. Such as, " ... there is no evidence that we have, in this process of events since March of the year 2000, significantly altered the long-term underlying structure of productivity growth."
With all due respect, Al, productivity growth is not likely to be exponential as in a nuclear reaction, but appears tied to earth by the Law of Diminishing Returns.
The big guy is on the stump again today.
Mr. Greenspan gives the keynote address at an "economic forum" in Washington D.C. sponsored by the board of directors of the U.S. Chamber of Commerce.
Dow Jones Newswires says the speech begins at 3:00 p.m. EST. That's our story and we're sticking to it.
Another major wire service says, depending on which calendar or story you look at, that the speech begins at both 3:00 p.m. and 3:15 p.m. In this business, mistakes are made.
Anyhow, no big deal. If you might need to hear what the big guy might say just begin paying attention at 3:00 p.m.

Universal Point Of View

Bob, my e-mail buddy in British Columbia, writes: "The two most common elements in the known universe are hydrogen and human stupidity." Bob, are you sure about hydrogen?

(Jim Murphy can be reached at (201) 938-2145 or By e-mail at Jim.Murphy@DowJones.Com)

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Just stick it out or be a sucker
Abracadabra / Shubhrangshu Roy

11/14/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

YOU move a step forward and you are a sucker, you move a step backward and you are a sucker still. That just about sums up Indias predicament in trying to get one-time US energy trading giant Enron off its back and off the 2,100 MW Dabhol power plant for some time now.
For the past fortnight or so, the institutions have been bargaining hard to find a buyer for Enrons assets in Maharashtra, having committed over Rs 6,200 crore in loans. Last weekend, they even went into a huddle in Singapore to sew up the loose ends of a bail-out.
Little seems to have been thrashed out so far. Little possibly will. Unless, of course, the FIs tighten the screws with a take-it or leave-it offer. The time to make that choice is now.
A gentleman in pin-stripes whos done a lot of running around these past few weeks to help sew up the deal, told me the other day that Enron had indeed agreed to part with its stake in DPC at a 30 per cent discount.
That would have fetched it just about $800-odd million spread over a five-year period. So, why hasnt a deal been struck?
Its probably not worked out because of what Enron considers a fair discount on what it has sunk into the project. Prospective buyers consider this too high an asking price.
For the record, Enron claims to have sunk in $1.2 billion in the project together with its partners GE and Bechtel who have supplied equipment and helped construct the plant.
But my gentleman friend in pin-stripes suggests that $1.2 billion isnt exactly their equity contribution in Dabhol. That amount works out to just about $800 million.
Enron, actually splurged close to $200 million on development expenses, which in gentlemens lingo is another way of saying that the energy giant could have ended up bribing its way to see the once coveted project through besides fighting sundry court cases in India.
And it wants part of that money back. Now which prospective buyer will compensate Enron for possible bribes or for making court appearances?
Enron, it appears, has also claimed another $140 million as its share of Dabhols retained earnings, which should eventually go to all stake-holders in DPC (the MSEB included) once the companys board passes a resolution that the amount is shared proportionately among all those who have invested in Dabhols equity capital. Till then, leave the retained earnings aside.
So, what Enron should work on is a fair discount on its equity contribution in the project, which is no more than $800 million. Now given its willingness to take a 30 per cent knock, Enron should not expect more than $560 million as the asking price for walking out of Dabhol.
Add to that, if you will, another $140 million by way of retained earnings and Enron should not be getting more than $700 million at the most. Is Enron willing to take this knock?
Given a choice, it could resist this offer. But Enron has no choice. And thats reason for cheer. Last week, Enron, close to the present American dispensation (chairman Ken Lay was the biggest fund-raiser for President George Bushs campaign effort last year) opted for a $7.8 billion rescue offer from smaller Houston rival Dynegy after narrowly escaping credit ratings cut to junk status.
For the past several months Enron had been using its clout with Mr Bush to push through a bail-out package on Dabhol that suited its terms. That privilege now seems to be gone as the company grapples to stave off a Securities Exchange Commission inquiry into off-balancesheet transactions.
And until Enron clears several questions back home about its finances, it will remain suspect in the eyes of US investors.
In India, where Enrons made more news for its misses than its hits, the timing couldnt have been more opportune than now for prospective private bidders to strike a potentially lucrative deal.
Two such bidders, Tata Power and BSES, are said to have offered no more than $400 million to buy out Enrons stake in DPC. Its time they stuck to that price. Or else, we could still end up being suckers. What?

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business
Deal made; now Dynegy must make it work
David Greising

11/14/2001
Chicago Tribune
North Sports Final ; N
1
(Copyright 2001 by the Chicago Tribune)

When three top Enron Corp. executives proposed a merger to one of his lieutenants two weeks ago, no one needed to tell Chuck Watson that Enron was desperate.
The founder and chairman of Dynegy Inc. is a wily old energy trader. He can smell desperate two oil fields away. Or three city blocks away, as was the case between these Houston rivals.
A liquidity crisis threatened to reduce Enron's credit rating to junk status. Wall Street analysts were hostile after disclosures about conflicts of interest and huge losses on outside trading partnerships. Investors had fled.
When the approach came, Watson didn't jump. He sat. He sent word to have Enron Chief Executive Kenneth Lay call him if the offer was serious.
A nice negotiating move, for sure. Watson put the seller at a minor tactical disadvantage. But Watson adds a kindlier spin: He didn't want to appear to be pouncing on Enron's troubles.
Two weeks of negotiations and demi-due-diligence later, Watson and Lay had their deal. Dynegy would buy Enron, a company three times its size, in a $24 billion deal.
Watson takes satisfaction that Dynegy, the company that was always smaller and stodgier than Enron, became the buyer. Most of his career, Watson has operated in Enron's shadow.
The two companies were formed the same year, 1985. After 15 years at Conoco, Watson persuaded Morgan Stanley to give him a line of credit to form a small energy trading company. Lay, meanwhile, engineered the merger of Houston Natural Gas and InterNorth of Omaha.
"Ken put two pipelines together to make that company. I had six people and a smile," Watson told me during the Chicago stop of an East Coast-to-Texas barnstorming to sell the deal to investors.
Enron was always the bigger glamor play. Lay's move from a base of trading natural gas and electric power into the engineering of exotic financial deals in areas as diverse as communications bandwidth, paper, steel and media won a huge Wall Street following and doubled Enron's stock price last year, to above $80 a share.
Dynegy by contrast seemed downright dull. Though it dabbled in broadband communications, Dynegy stuck mainly to the business of generating, trading and delivering gas and electricity. Though Dynegy's stock price nearly quadrupled last year to $59, Dynegy never turned heads the way Enron did.
Today, Enron has no friends left. The messy breakdown of Enron's trades with outside partnerships has forced it into Dynegy's embrace. Watson thinks Wall Street went hard on Enron because of the company's high-handed manner when it was on top. "If you have that personality and things go wrong, I mean, everybody's going to take your legs off," Watson says.
This would be a tidy tortoise-and-hare tale except for one thing: Enron's problems are such a mess, they could make for rough going at Dynegy, too.
Watson thinks he has protected himself. He can walk from the deal if Enron's legal entanglements exceed $3.5 billion. If, on the other hand, Enron's problems don't get worse and other bidders emerge, he gets a healthy $350 million break-up fee and ownership of a key Enron pipeline.
That's better than nothing. But it's hardly a failsafe. Some Enron trades with the outside partnerships don't unwind for years, so problems might not emerge until after Dynegy has closed its deal.
There are more mainstream challenges, too.
Roughly half of Enron's operating profits last year came from off- balance sheet transactions Watson wants to eliminate. Replacing that won't be easy. And Watson needs to handle at least $14 billion in Enron debt.
Enron's high rollers might not fit into Dynegy's careful culture. Watson's team also must stretch to run a company that, even with divestitures, will jump to at least three times Dynegy's current size.
Watson's personality can be aw-shucks disarming. Born at Great Lakes Naval Air Station in Illinois, the son of a Navy officer, he lived in 22 places before he graduated high school. Now, if he closes the deal, he'll be running one of the country's largest companies.
No one would get a kick from taking Watson down a notch. But that hardly means investors won't knock him if he can't make the Enron deal work.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business
Dynegy defends merger partner ; CEO says Enron errors not illegal
Melita Marie Garza, Tribune staff reporter

11/14/2001
Chicago Tribune
North Sports Final ; N
1
(Copyright 2001 by the Chicago Tribune)

The downfall of energy-trading titan Enron Corp. was the result of "bad business practices" rather than illegal activity, says Chuck Watson, chief executive of Dynegy Inc., the company acquiring Enron in a deal valued at $24 billion.
"I'm not persuaded that you'll find anything illegal," Watson said Tuesday, commenting on the Securities and Exchange Commission's probe into Enron's off-balance sheet transactions in energy partnerships.
Watson's comments came as Enron, in a filing with the SEC, disclosed that Kenneth Lay, the company's chairman and chief executive, could walk away with a golden parachute worth more than $80 million if the merger succeeds. Under terms of a pre-existing employment contract, Lay would receive $20.2 million a year for each full year outstanding on his contract if control of Enron changes hands during his employment.
At the same time, Enron issued a letter to employees warning that the deal with Dynegy was likely to result in workforce reductions at Enron. "As with any merger," the letter said, "some elimination of positions is almost inevitable."
Enron, the nation's largest trader of natural gas and electricity, has seen its stock price collapse in recent weeks largely because of soured transactions with energy partnerships run by one of its former executives and additional revelations about questionable accounting practices at Enron.
Power-trading rival Dynegy, owner of downstate utility Illinois Power, moved last week to acquire its hobbled competitor, agreeing to pay the equivalent of about $10 a share for a company that as recently as last January traded above $80 a share.
In a wide-ranging interview, Watson criticized the practice at Dynegy of permitting Enron executives to sit on the partnership boards and profit from them. "You don't let that happen," Watson said. "It would never have gotten by me."
Watson sees the distinction between illegal conduct and bad judgment at Enron as significant because the absence of illegality would minimize grounds for shareholder lawsuits.
Dynegy has said the merger is contingent on litigation costs over Enron's problems staying under $3.5 billion. "I don't think it's going to be anywhere near that level," Watson said.
Enron's misfortunes, Watson said, paved the way for Dynegy's opportunity. "This is all about brand," he said. "They lost credibility and investor confidence."
Dynegy's takeover of its higher-profile rival is a coup for Dynegy, which has been viewed by some as an "Enron wannabe." But Watson brushed off the description. "That's actually not true," Watson said. "It's clearly not true now."
Watson asserted that nothing had gone wrong with Enron's core businesses. That fact, he said, had been lost--by investors and potential Enron suitors--in the controversy surrounding the off- balance sheet transactions.
"Maybe the tires fell off the car and the paint was chipped, but the engine was still strong," Watson said, referring to Enron's core businesses.
In an apparent conundrum, Dynegy's bid for Enron at what is viewed as a bargain basement price has not brought any other companies to the bargaining table. Enron's problems reportedly scared off some prospective bidders, such as Warren Buffett's Berkshire Hathaway.
Watson argued that Dynegy was uniquely positioned to pursue the Enron deal, in large part because the rivals had extensive business dealings together.
"It took our guys days--not months--to do due diligence," Watson said. "We were right there in town. It was the time factor, the knowledge that we had of the industry and the business."
For example, Watson said Shell Oil Co., another company thought to have an interest in acquiring Enron, would not have had the background to move as quickly as Dynegy had in putting together the merger.
While saying that he had respect for the regulatory approval process, Watson reiterated his belief that the merger posed no antitrust concerns. "We don't have a pipeline business, they do," Watson said. "They don't have a generation business, we do."

PHOTO; Caption: PHOTO: Dynegy CEO Chuck Watson discusses his company's purchase of troubled energy rival Enron in Chicago Tuesday. Tribune photo by David Klobucar.
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: UPDATE 1-Calpers calls on Enron board to step aside in merger.

11/13/2001
Reuters English News Service
(C) Reuters Limited 2001.

PASADENA, Calif., Nov 13 (Reuters) - The largest U.S. pension fund said on Tuesday the board of energy trader Enron Corp should step aside if the company moves forward with its plans to be bought by Dynegy Inc
The California Public Employees Retirement System (Calpers) said it would oppose any efforts by Enron to place its current board members on the new board of a company resulting from the proposed $9 billion stock-swap merger announced on Friday.
Calpers owns about 3 million Enron shares, or about 0.4 percent of all shares outstanding. However, the public pension fund is widely watched for its stances on corporate governance.
The merger would value Houston-based Enron at a fraction of what it was worth a year ago. The shares have lost 89 percent of their value over the past 52 weeks.
A spokesman from Calpers and a spokeswoman from Enron could not be reached for comment.
In declaring its position on the merger, Calpers cited reports that Enron was seeking the right to appoint three of its current board members to the combined company's board.
Enron in recent weeks has reshuffled its management in response to a U.S. regulatory probe into murky financial transactions. The company has said that former Chief Financial Officer Andrew Fastow, who abruptly left the company last month, had made $30 million managing limited partnerships that conducted outside transactions with Enron.
"There have been serious allegations of self-dealing on the part of Enron's senior management," Michael Flaherman, chair of Calpers Investment Committee, said after a meeting of the pension's administrative board. "And it appears that Enron's board may have failed in its responsibility to monitor the activities of Enron's corporate officers."
"Until all of these issues are sorted out," he continued, "the interests of shareholders are best served by retiring all of the current directors from involvement in Enron's successor entities."
California state officials and Enron clashed last year over the state's power crisis, which triggered the bankruptcy of California's largest utility Pacific Gas & Electric, a unit of San Francisco-based PG&E Corp
California Gov. Gray Davis and others blasted Enron and other state power companies, accusing them of manipulating the market and jacking up prices.
Enron is by far the largest trader of electricity and natural gas in the United States, with analysts estimating it is involved in some 25 percent of the daily trades in those markets.
Calpers said it also has a stake in Houston-based Dynegy but it did not provide details on that investment.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron CEO helps present Greenspan award

11/13/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - Maybe they'll call it the Dynegy Prize next time.
Federal Reserve Chairman Alan Greenspan was in Houston on Tuesday night to pick up the Enron Prize for Distinguished Public Service, an award named for the teetering energy company that is being bought by rival Dynegy Inc. for about $9 billion.
At one point Greenspan expounded on the values of ethicism to the Rice University crowd while Ken Lay, whose company has been blasted on Wall Street for concealing transactions with entities run by the company's chief financial officer, looked on.
"My experience is that it really works to be as ethical as possible as one knows and to define one's values in a very succinct and important way," Greenspan said when asked by a pending college graduate about venturing into the work world.
Lay, in his first major public appearance since the merger announcement, was met with warm applause and made some brief congratulatory remarks.
No mention was made of Enron's current woes or Lay's decision earlier in the day to waive about $60 million he would be due as the merger closes.
Past winners of the Enron Prize, awarded by the Baker Institute for Public Policy at Rice, include Colin Powell, Nelson Mandela and Mikhail Gorbachev.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

CalPERS Opposes Enron Board Members' Appt To Dynegy Board

11/13/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LOS ANGELES -(Dow Jones)- The board of the California Public Employees' Retirement System Tuesday said it will oppose the appointment of any current Enron Corp (ENE) board member to a board created by the planned merger of Enron and Dynegy, Inc (DYN), a CalPERS spokesman said.
"There have been serious allegations of self-dealing on the part of Enron's senior management," said Michael Flaherman, Chair of CalPERS Investment Committee, in a release. "And it appears Enron's board may have failed in its responsibility to monitor the activities of Enron's corporate officers. Until all of these issues are sorted out, the interests of shareholders are best served by retiring all of the current directors from involvement in Enron's successor entities."
Calpers holds 3 million shares in Enron and a $500 million stake in an Enron partnership called Joint Energy Development Investments II.
Dynegy announced Friday its plans to buy Enron for $8.85 billion. As part of the deal, Enron would be able to appoint at least three members to the board of the combined company. Enron Chairman and CEO Kenneth Lay was offered a seat on the new board, but has not yet said if he will accept.
Concerns about Enron's dealings with off-balance sheet partnerships like JEDI II drove the company's stock price down 80% in the three weeks before the merger was announced. Its credit ratings were also downgraded to one level above junk.
On Oct. 30, California state Sen. Steve Peace, D-El Cajon, wrote CalPERS Chief Executive James Burton urging the pension fund to take steps to defend its investment in Enron.
"CalPERS may play a significantly larger and more active role in the governance of Enron to ensure that Enron directors do not have conflicting interests, that Enron adheres to a policy of full financial disclosure and transparency and that Enron's board is comprised of a substantial majority of truly independent directors who understand their accountability to shareholders," Peace wrote.
CalPERs, the nation's largest public pension fund with assets totaling $151 billion, has a strong history of shareholder activism. It was not immediately known if the board would take any additional action regarding Enron, a spokesman said.
-By Jessica Berthold, Dow Jones Newswires; 310-962-2843; jessica.berthold@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Jesse Jackson Asks Energy Companies to Hire More Minorities

11/13/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Associated Press
HOUSTON -- The energy industry has an untapped resource in minorities who traditionally have been overlooked by big business, including the energy sector, the Rev. Jesse Jackson said Tuesday.
Mr. Jackson has been in Houston -- dubbed the nation's energy capital -- for two days, bringing together more than 700 representatives of minority-owned businesses with those running some of the nation's largest energy companies at his inaugural Wall Street Project Energy Summit.
"We do not have a talent shortage," Mr. Jackson told the minority business owners who sat in on a discussion with representatives from Enron Corp. (ENE), Dynegy Inc. (DYN) and Shell Oil Co. (RD). "We have an opportunity shortage."
Mr. Jackson, speaking at a hotel just down the street from the headquarters of troubled Enron, said now was the time for minorities to make their presence known with the proposed Dynegy purchase of Enron, its larger rival. He said spinoff companies and other opportunities created by the proposed merger, as well as deregulation of the Texas energy market, offer possibilities for those who possess knowledge of the changing industry.
"The question is not 'Can we produce?' The question is 'Can they see our capacity to produce,'" Mr. Jackson said. "We are a knowledgeable people. We have a low profile, but we have a place in the industry."
Energy company representatives agreed. The question for them, however, was how to change what has become business as usual, they said.
"Most CEOs who do business in corporate America are comfortable with who they do business with," said Milton Scott, Dynegy's chief administrative officer and senior vice president. "Many of them are not inherently racist."
"I would call it racism 10 years ago," Mr. Jackson replied. "Today I would call it cultural blindness and part of our job is to take the patch off their eye."
Gaurdie Bannister, Shell Oil's vice president of business development, said there are a number of individuals in large companies who are willing to "break eggs" with minority-owned businesses but often run into roadblocks because those companies are unable to cushion a large risk that would be taken, for example, in an offshore project.
"If you are not big and you don't have the capital to take that risk with me, I can't use you," he said.
Mr. Scott said a way for smaller minority-owned businesses to get around such obstacles and get the big contracts is to combine their strengths.
"Join forces," he said. "Set your egos aside and you are going to have a lot more success because then you take away some of the risk."
Reducing risk isn't the goal, Mr. Jackson said. Instead, it's a level playing field for everyone.
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

CalPERS Speaks Out On Enron

11/13/2001
Business Wire
(Copyright (c) 2001, Business Wire)

PASADENA, Calif.--(BUSINESS WIRE)--Nov. 13, 2001--The California Public Employees' Retirement System's Board of Administration was briefed today about Enron's financial condition and recent disclosures of potential management conflicts of interest.
At the end of the meeting, the Board announced its intention to oppose the appointment of any current Enron Board member to the Board of any company with which Enron might be contemplating a merger. Recent press reports have suggested that Enron may be considering a merger with Houston, Texas-based Dynegy, and as part of that merger, is seeking the right to appoint three members to the combined company board.
"There have been seriously allegations of self-dealing on the part of Enron's senior management," said Michael Flaherman, Chair of CalPERS Investment Committee. "And it appears that Enron's Board may have failed in its responsibility to monitor the activities of Enron's corporate officers. Until all of these issues are sorted out, the interests of shareholders are best served by retiring all of the current directors from involvement in Enron's successor entities."
CalPERS owns approximately 3 million shares of Enron and is also invested in Dynegy.

CONTACT: CalPERS Office of Public Affairs Brad Pacheco/Pat Macht, 916/326-3991
21:11 EST NOVEMBER 13, 2001
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron Names Raymond Bowen Treasurer

11/13/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Enron Corp. (ENE) named Raymond M. Bowen, Jr., treasurer and executive vice president-finance, replacing Ben Glisan, who was fired last week.
In a press release Wednesday, the energy company said Bowen had been serving as chief operating officer of Enron Industrial Markets.
Last week, Enron, in the midst of heavy scrutiny over its finances and talks regarding a possible acquisition of Dynegy Inc. (DYN), announced plans to restate its financial statements for the past few years to account for losses related to a number of limited partnerships, including several under investigation by the Securities and Exchange Commission.
The company also said it had fired two executives - Glisan, managing director and treasurer, and Kristina Mordaunt, managing director and general counsel - for their supposed involvement with the limited partnerships formed by Enron's then chief financial officer Andrew Fastow.
Fastow earned as much as $30 million through his role with the partnerships, while a number of other Enron employees also invested in them personally.
The other employees involved, including executives Michael Kopper, Kathy Lynn and Anne Yeager, no longer worked for Enron.
-Scott Austin; Dow Jones Newswires; 201-938-5400

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: Enron names Raymond Bowen treasurer.

11/13/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Nov 13 (Reuters) - Enron Corp. , which in recent weeks has reshuffled its management in response to a U.S. regulatory probe into murky transactions, said on Tuesday it named Raymond Bowen treasurer and vice-president of finance.
The troubled energy trader said Bowen previously served as both chief operating officer of Enron Industrial Markets and treasurer of Enron Capital & Trade Resources.
Houston-based Enron has shed almost $20 billion in market value in the past month and has sufferend a series of credit rating downgrades as a result of the probe. On Friday, smaller rival Dynegy Inc. said it would buy out the beleaguered company for about $9 billion.
Enron shares rose 75 cents to close at $9.99 Tuesday on the New York Stock Exchange.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: Enron earnings restatement a sign of deceit-suits.
By David Howard Sinkman

11/13/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Nov 13 (Reuters) - Lawyers filing lawsuits against Enron Corp. on Tuesday said the restatement last week of more than four years of earnings is a clear sign the energy trader and its chief executives misled investors.
At least 10 law firms are seeking class action status on behalf of plaintiffs they said were deceived by false and misleading statements or because adverse information was concealed, causing Enron's shares to be artificially inflated.
"Enron restating its earnings is certainly going to help our case. It demonstrates that in their opinion their earnings were false when initially published," said lawyer Arthur Stock of Berger & Montague PC in Philadelphia, one of the law firms seeking class-action status.
Enron declined to comment.
The lawsuits name the company, Chairman and Chief Executive Kenneth Lay, former CEO Jeffrey Skilling and Andrew Fastow, a former chief financial officer, as defendants.
In another blow to its damaged reputation among investors, the Houston-based company last week admitted it erred in reporting past results. It reduced its earnings from 1997 to 2000 by $591 million, or 22 percent of the amount that had previously been released on its financial statements. Earnings for the first two quarters of 2001 also were restated.
Enron has garnered investor ire since it unexpectedly reduced shareholder equity by $1.2 billion in mid-October, saying off-balance sheet transactions had contributed to that and to $1 billion in charges.
The company's stock plunged as almost daily developments sullied investors. It lost almost 80 percent of value from the day the company reported its first quarterly loss in more than four years on Oct. 16, to the announcement last week that rival Dynegy Inc. would buy Enron for about $9 billion in stock and the assumption of about $13 billion in debt.
Enron shares closed Tuesday 75 cents higher at $9.99 on the New York Stock Exchange, far off its August 2000 high of $90.56.
INCREASED TIME FRAME
In the latest lawsuit to be filed against Enron since it was rocked by a U.S. regulatory probe in October, the law firm of Cauley Geller Bowman & Coates said misrepresentations and omissions by the defendants violated their duty to release accurate and truthful information on the company's finances.
"Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Enron common stock by disseminating materially false and misleading statements," said Cauley Geller in a lawsuit filed in Texarkana, Texas.
The suit was filed Nov. 9, the day after the restated earnings were released, in the U.S. District Court for the Eastern District of Texas.
Prior to the restatement of results, prompted by concerns raised by the U.S. Securities and Exchange Commission, the lawsuits filed against Enron were on the behalf of shareholders who bought common stock between Jan. 18, 2000 and Oct. 17.
However, since Enron restated its results, Cauley Geller increased the time frame, or "class period" on behalf of investors who bought Enron stock, from Jan. 18, 1999 to Nov. 8.
"The effect of the restatement was dramatic," said Cauley Geller. "Enron insiders disposed of over $73 million of their personally held Enron common stock to unsuspecting investors."
Cauley Geller said selling of Enron stock by key executives was "unusual and suspicious given its timing." Lay sold $11.2 million worth of shares during the period, and Skilling sold $6.41 million in stock, the law firm said.
"People who have lost hundreds of thousands of dollars are naturally angry, Stock said. "It is expected in this type of situation."
In a filing with the SEC on Tuesday, it was reported Lay could walk away with more than $80 million if the acquisiton by Dnyegy closes this year.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: S&P says Dynegy deal saves Enron from junk rating.
By Nancy Leinfuss

11/13/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Nov 13 (Reuters) - Enron Corp. , teetering on the brink of junk status, got a reprieve late Friday when Standard & Poor's cut the troubled energy trading company's credit ratings but stopped a notch short of the speculative-grade category, after news of its potential acquisition by Dynegy Inc.
"The way to look at the Dynegy transaction is it really in a sense maintains the investment-grade quality to Enron's credit rating," said Todd Shipman, analyst at S&P. "It's safe to say that absent a Dynegy deal, Enron was quite likely to end up non-investment-grade quality because of what had happened," Shipman said.
Enron, the nation's largest energy trader, has been struggling to overcome a plummeting stock price and falling credit ratings in the past month following disclosures of off-balance sheet deals now under investigation by the U.S. Securities and Exchange Commission for possible conflict of interest.
S&P lowered its long-term corporate credit rating on Enron to BBB-minus from BBB, its lowest investment-grade rating. A cut below that, to junk, would make it tougher for Enron to issue debt and run its day-to-day business.
The rating agency also placed the ratings of Dynegy on creditwatch negative after the energy provider said it had agreed to acquire Enron for about $9.5 billion.
Terms of the Dynegy transaction call for Dynegy to swap 0.2685 shares of its own stock for each Enron share, the companies said. That would value Houston-based Enron at $10.41 per share, including convertible stock, a premium of about 21 percent over Friday's closing price of $8.63.
The takeover announcement halted a free-fall in Enron's stock, which has lost about 75 percent of its market capitalization in the past month. On Tuesday,, Enron shares closed at $9.99, up $0.75 cents, or 8.12 percent, on the New York Stock Exchange.
Enron's debt, which has been trading at levels associated with higher-risk junk bonds, moved higher on the news. The company's 7.875 percent notes due 2003 were traded at 92 cents on the dollar, up from the mid-80's range last week, traders said.
Industry experts said the most critical component of the deal was an immediate cash infusion by Dynegy shareholder ChevronTexaco into Enron.
ChevronTexaco, which owns a 27 percent stake in Dynegy, has agreed to infuse $1.5 billion immediately into Enron to support it until the deal closes. It would inject another $1 billion into the merged company once the deal closes.
"That was an important part of that whole deal, not just Dynegy coming in and offering money to buy Enron out, but also providing that up-front liquidity to protect the value of Enron's trading business, which is really the crown jewel, so to speak, that Dynegy is interested in," said Shipman.
S&P said Dynegy's corporate credit rating is likely to remain within the BBB category, as a result of its purchase of Enron, "We saw an investment-grade company, within a range of BBB-plus to BBB." said Shipman. "If things go as planned, Dynegy would keep its credit rating."
S&P said it will continue to monitor the planned acquisition by Dynegy of Enron and warned that a downgrade to junk status for Enron would be likely if the transaction is not completed.
"The main thing we'll be monitoring at this point is Enron's liquidity and the value of its trading franchise, because that's really what Dynegy is interested in," said Shipman.
"If there were to be an effect on Enron's trading business that would be significant enough to reduce Dynegy's interest in Enron, that would raise the possibility that the merger would not be completed, then the possibility of downgrade would be very strong for Enron," Shipman said.
Moody's Investors Service, another major U.S. rating agency, could not immediately be reached for comment on any potential rating actions after news of Enron's buyout by Dynegy. Moody's rates Enron debt in line with S&P, at "Baa3," its lowest investment-grade rating.
Enron, with $100 billion in revenues and $1 billion in profits last year, is fifth on Fortune 500's list of largest U.S. companies. Dynegy, 54th on the Fortune list, had $29 billion in revenues and $500 million in earnings.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron's Board Should Step Aside From New Company, Calpers Says
2001-11-14 00:22 (New York)

Enron's Board Should Step Aside From New Company, Calpers Says

     Pasadena, California, Nov. 13 (Bloomberg) -- Enron Corp.'s
board should not be allowed to stay if Dynegy Inc. completes its
proposed purchase of the energy trader, the California Public
Employees' Retirement System said.

     Calpers, which owns about 3 million Enron shares, said it
intends to oppose any such appointments because the company's
board failed to properly monitor Enron's senior management. Fund
officials couldn't immediately be reached for comment on a press
release distributed by Business Wire.

     Enron partnerships run by the company's former chief
financial officer, Andrew Fastow, are being investigated by the
Securities and Exchange Commission. The entities bought and sold
Enron shares and assets. Enron ousted Fastow in October.

     ``Until all of these issues are sorted out, the interests of
shareholders are best served by retiring all of the current
directors from involvement in Enron's successor entities,''
Michael Flaherman, chair of Calpers Investment Committee, said in
the statement.

     Calpers is the country's largest public pension fund.

     Enron shares rose 74 cents to $9.98. Dynegy shares rose $2.63
to $46.94. Both companies are based in Houston.

--Vivien Lou Chen in San Francisco, (415) 743-3506

Enron CEO Won't Accept $60.6 Mln in Severance, Spokesman Says
2001-11-13 18:04 (New York)

Enron CEO Won't Accept $60.6 Mln in Severance, Spokesman Says

     Houston, Nov. 13 (Bloomberg) -- Enron Corp. Chairman and
Chief Executive Officer Kenneth Lay will not accept severance pay
of more than $60 million that he would have received after Dynegy
Inc. took over the company.

     ``He decided the best thing was to waive it altogether after
speaking to employees at a meeting this afternoon,'' Enron
spokesman Mark Palmer said. Lay declined to comment.

     Lay is entitled to receive a lump sum payment equal to $20.2
million, multiplied by the number of full calendar years remaining
on his contract, if he terminates his employment under certain
circumstances, such as the acquisition by Dynegy, Enron said in a
filing with the Securities and Exchange Commission today.

    ``That's a ridiculous amount of money for a man who's already
made himself probably tens of millions of dollars,'' said Andrew
Whalley, manager of the Legg Mason International Utilities Trust,
which sold a $5 million stake in Enron in April because of concern
about its bookkeeping.

     Lay had gains of $123.4 million from the exercise of options
in 2000, in addition to his regular salary.  Robert Doty, Dynegy's
chief financial officer, refused to discuss severance packages for
departing Enron executives at a meeting with investors in Boston
today.

                           Mind Changed

      Dynegy says its buyout of Enron, the biggest energy trader,
is expected to close in 2002's third quarter. Lay's contract runs
through the end of 2005.  If the Enron buyout were to close this
year, or if there were another form of ``change of control'' at
Enron, Lay would be entitled to receive $80.8 million, the Enron
filing indicates. If it closes next year as planned, he'll get at
least $60.6 million.

     Lay's contract provides that he also could receive an amount
to cover tax penalties if the payment he gets is deemed to be an
``excess parachute payment'' under tax rules, the filing said.

Palmer said Lay was unlikely to qualify for the additional money.

     Earlier today, Lay planned to propose to Dynegy that he take
two-thirds of his severance pay in ``non-cash form,'' presumably
Dynegy stock and use half of the stock to set up a fund to provide
``need-based assistance'' to former Enron employees, Palmer said.

     After the employee meeting this afternoon, Lay decided the
employees would prefer to have him waive it altogether. It will be
up to Dynegy to decide if a fund should be set up for former Enron
employees, Palmer said.

                        $23 Billion Buyout

     Enron agreed on Friday to be acquired by rival Dynegy for at
least $23 billion in stock and assumed debt, ending a financial
crisis that threatened to bankrupt Enron and disrupt U.S. power
and natural-gas markets.

     Lay, 59 years old, has said he won't be an active manager in
the new company, which will be led by Dynegy Chairman and CEO
Charles Watson. No decision has been made about whether he might
serve on Dynegy's board, the companies said.

     ``They need Ken Lay to close the deal because of his skill
with regulators,'' said Mark Maloney, who helps manage $1.1
billion in the John Hancock Patriot Funds, who attended a
presentation to investors by the two companies in Boston today.
``Lay is close to the Bush administration, and that couldn't
hurt.''  The Patriot Funds don't own shares of Enron or Dynegy.

      Lay has been chairman since February 1986. His contract was
extended by two years, to the end of 2005, when he resumed the
CEO's job following the departure of Jeffrey Skilling in August.
Skilling didn't get a severance package because he quit, Enron has
said.

     The company more than tripled Lay's pay package last year to
$18.3 million following its best share-price performance in 20
years, according to a proxy filed in March with the SEC. Enron
shares have plunged 90 percent this year. Lay made $5.97 million
in 1999, according to Enron's proxy.

     Lay also received options to buy 782,830 shares over seven
years, most at $47.31 each, the March filing said. Those options
are now worthless because Enron's stock price is below the price
at which they could be exercised.

     Shares of Enron rose 74 cents to $9.98. Dynegy rose $2.63 to
$46.94. Both companies are based in Houston.

--Margot Habiby in Dallas, (214) 954-9452

SWITZERLAND: Swiss EWZ suspends planned power venture with Enron.

11/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

ZURICH, Nov 14 (Reuters) - Swiss utility Elektrizitaetswerk der Stadt Zuerich (EWZ) has suspended its planned power trading joint venture with Enron Corp that was supposed to start up in January, EWZ said on Wednesday.
Enron, hit by financial problems, is on the verge of being taken over by smaller rival Dynergy Inc , which agreed last week to buy Enron in a stock swap worth about $9 billion.
"Given these circumstances, EWZ...has decided to suspend the prepared start of a joint trading company of EWZ and Enron and to review the strategy of future cooperation with Enron or Dynergy," it said in a statement.
It said the review would determine which aspects of the cooperation accord could still be attractive and if the proposed venture could be revived at some future date.

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