ENRON'S Mark A. Frevert
Mark A. Frevert, chief executive of Enron Wholesale Services: Sold 830,620 shares for $50.2 million.
Mark Frevert, 46, chairman and CEO of Enron Wholesale Services, was named vice chairman of Enron.
Lay reassumed the position of CEO, which he had handed over to Skilling six months ago.
Together, Whalley and Frevert presided over what one industry wag refers to as "the nation's largest source of cash next to the Federal Reserve" -- Enron's highly lucrative wholesale marketing and trading division.
Frevert's career with Enron goes back 16 years to the company's predecessor, Houston Natural Gas.
MARK A. FREVERT
Mark Frevert is the vice chairman of Enron. He is also a member of Enron's Management Committee.
Mr. Frevert began his energy industry career in 1981, joining Natomas North America, a Houston-based oil and gas exploration and development company, as an economist. He subsequently became responsible for managing the company's reserves, budgeting and economic planning functions.
In 1984, Mr. Frevert joined Houston Natural Gas (an Enron predecessor company) as a senior economist in the corporate planning department, and subsequently held several positions in the Enron Interstate Pipeline Group. In 1988, he was named vice president and general manager of the Citrus Marketing Companies. Mr. Frevert joined Enron Capital & Trade Resources (ECT) in 1991 as vice president of Enron Power Services and was promoted to president in 1993. He became a managing director of ECT in 1994, with responsibility for North American natural gas marketing activities. In late 1994 he assumed responsibility for international energy services activities, including Enron's London-based operations. In 1996, Mr. Frevert relocated to London as president and CEO of Enron Europe. In addition to his ongoing role as chairman of Enron Europe, he was named chairman and CEO of Enron North America in May 2000, chairman of Enron Global Markets in July 2000 and chairman of Enron Industrial Markets in August 2000. Prior to his current position, Mr. Frevert was chairman and chief executive officer of Enron Wholesale Services.
Mr. Frevert has a bachelor of arts degree in economics from Albion College in Michigan. He subsequently entered the doctoral program in economics at Rice University where he completed all requirements for a Ph.D. in economics except the final dissertation. He taught economics at Rice University for two years before joining Natamos North America in 1981.
|COMPANY PROFILE / S&P BUSINESS SUMMARY|
|Enron Corp ( NYS: ENE )|
|Company Fact Sheet|
|Address||1400 Smith Street
Houston, TX 77002-7361
|Transfer Agent||EquiServe Trust Co.|
|Chairman||Mr. Kenneth L. Lay|
|Chief Exec Officer||Mr. Kenneth L. Lay|
|Vice Chairman||Mr. Mark A. Frevert|
|President||Mr. Lawrence Whalley|
|Chief Operating Officer||Mr. Lawrence Whalley|
|Exec V-P||Mr. Raymond M. Bowen, Jr.|
|Treas||Mr. Raymond M. Bowen, Jr.|
|Exec V-P||Mr. Richard B. Buy|
|Chief Risk Officer||Mr. Richard B. Buy|
|Exec V-P||Mr. Richard A. Causey|
|Chief Accounting Officer||Mr. Richard A. Causey|
|Exec V-P||Mr. James V. Derrick, Jr.|
|General Counsel||Mr. James V. Derrick, Jr.|
|Exec V-P||Mr. Mark E. Koenig|
|Investor Contact||Mr. Mark E. Koenig|
|Chief Fin Officer||Mr. Jeffrey McMahon|
|Exec V-P||Mr. Steven J. Kean|
|Enron is leveraging its experience in gas and
electricity marketing to develop a liquid market for trading bandwidth over its nationwide
network of fiber optic cables. The company operates in several areas.
The Transportation and Distribution (T&D) division operates a 25,000 mile natural gas pipeline system through four owned and operated North American pipelines: Northern Natural Gas, Transwestern, Florida Gas Transmission (50% interest), and Northern Border (8%). Collectively, the pipelines transport 9.1 Bcf of gas daily, to 21 states, accounting for 15% of the U.S. gas transportation market. T&D is also responsible for electricity transmission and distribution to Oregon customers through the Portland General Electric subsidiary (which is being sold).
The Wholesale Energy Operations and Services division has two business lines: Commodity Sales & Services (CS&S) and Assets & Investments (A&I). CS&S provides commodity delivery and pricing through forward and other contracts. This market-making activity includes the purchase, sale, marketing and delivery of natural gas, electricity, liquids and other commodities, as well as the management of Wholesale's own contract portfolio. New product offerings include coal, metals, steel, pulp and paper. CS&S has experienced rapid growth following the late 1999 launch of EnronOnline. A&I develops, constructs and operates a large portfolio of energy-related assets, and invests in securities of other energy-related companies.
Enron Energy Services, part of the Retail Energy Services division, offers energy outsourcing products and services to commercial and industrial end-users. Products and services include delivery of natural gas and power, energy tariff and information management, demand side services to reduce energy consumption, and financial services, such as price risk management.
During 2000, Enron Broadband Services (EBS) essentially completed the Enron Intelligent Network (EIN), a high capacity, global fiber optic network that, through 25 pooling points, can switch capacity from one independent network to another, and create scalability. Broadband Operating System, proprietary software, provides EIN with intelligence. Through EIN, EBS provides bandwidth management and intermediation services. By aggregating bandwidth supplies from its bandwidth contracts portfolio, EBS reduces customer costs, letting customers pay only for bandwidth used, at current market prices.
In November 2001, ENE failed to complete its proposed merger with Dynegy after its credit ratings were lowered to below investment grade; it is facing total debt obligations of more than $20 billion. As a result, ENE's core trading business practically ceased operations, leaving the company in a very difficult financial position.
Energy executives making fortunes in California
Enron, the nation's largest wholesale energy marketer, sells both natural gas and electricity in California. Enron also paid CEO Jeffrey K. Skilling $72.6 million and Enron Wholesale chief Mark A. Frevert $35.8 million.
"If you could spray dye on dollars and trace them through, you would see pipelines out of Houston carrying energy and pipelines coming back carrying dollars," said Graef Crystal, a former executive pay consultant to Fortune 500 companies who now writes and lectures on executive compensation.
Enron's Power Crisis
By Bethany Mclean, September 2001 Issue
"Bizarre" is how everyone describes it. On Aug. 14, Enron CEO Jeff Skilling--a self-described "brilliant" 47-year-old who says he's never suffered any kind of failure--announced he was relinquishing his title and leaving the company after a mere six months in the top job. Skilling insisted that the parting was voluntary, laying the blame on unspecified personal, non-health-related reasons. But by leaving when and how he did, Skilling forfeited a roughly $20 million severance package and gained the responsibility of repaying a $2 million loan that Enron would have forgiven had he stuck around until the end of the year.
More bizarre than his timing is how quickly Enron's once tight relationship with Wall Street deteriorated during Skilling's reign. The ex-CEO was famously boastful--insisting that Enron's nascent broadband trading business was worth $35 billion--and thin-skinned, declaring on a conference call that a money manager who dared ask for a balance sheet was an "asshole."
The task of restoring Enron's glory falls to Ken Lay, the company's chairman and former CEO, who has replaced Skilling. He's got his work cut out. Enron's "overall quality of earnings has deteriorated, its level of behind-the-scenes financial engineering has increased, and its overall standing with the Street has plunged," wrote UBS Warburg analyst Ron Barone in a recent report--and Barone is one of the bulls. Despite Lay's insistence that there aren't any "accounting issues, trading issues, or reserve issues" at Enron, investors are hesitant to bid the company back up. Indeed, Enron now trades at around $38, down some 60% from its 52-week high.
One reason Lay's job is so tough is that, as FORTUNE pointed out in March (see "Is Enron Overpriced?" on fortune.com), Enron's financials are on the dim side of opaque. While Wall Street was once willing to take the company's word on financial performance, it no longer is. And because Enron gives analysts so little to work with, building independent models is next to impossible. Enron's major business, the trading and marketing of energy, is relatively new and extremely complicated. Seemingly basic questions--like the effects of lower natural gas prices and less volatility in the energy markets on Enron's profits--are still unanswered. And there's confusion about the relationship between Enron's reported earnings, which reflect changes in the value of its energy-trading portfolio, and the actual cash coming in. In the first half of the year, Enron reported net income of $810 million and cash flow from operations of negative $1.3 billion.
Then there's the challenge of convincing investors that Enron itself believes it has a rosy future. High-level executives besides Skilling have recently left, and analysts like Jeff Dietert at Simmons say insider selling has been "aggressive" recently. While Enron executives still hold big chunks of stock, according to Thomson Financial/Lancer Analytics, insiders have sold 1.75 million shares in 2001--and they've sold as the stock has fallen, which is generally regarded as a bad sign. Among the biggest sellers: Lay, who has sold 408,000 shares at prices ranging from $81 last winter to $43 in July. Other sellers have included two executives who have since resigned: new business unit head Lou Pai and broadband chief Kenneth Rice. Enron says that sales are related to the pending expiration of options.
Lay is moving swiftly to address those concerns. He's promised the Street more disclosure about Enron's operations, and to combat criticism about Enron's weak bench he recently announced a new office of the chairman, anointing veterans Greg Whalley and Mark Frevert to help him run the company. No word yet on whether he plans to start buying Enron stock.