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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 © 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 © 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 © 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. © 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 © 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 © 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 © 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 © 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 © 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
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