Enron Offers Some Stock Options, Others Get Pink Slip

As the dust begins to settle in the second coming of Ken Lay as CEO of Houston-based Enron Corp., there was no word at the end of last week as to who will become part of Lay's brain trust on the top floor. Assuaging worries of analysts and investors, Lay and his executive team laid low last week, after acknowledging in previous days that Enron is offering some employees new stock options, which would be worth up to 5% of their salaries. However, Enron also plans to cut more than half of the 900 employees in its sagging broadband unit, moving 250 to other positions and offering severance packages to the other 250.

Lay also confirmed that Enron is again in talks to sell its Oregon-based Portland General Electric unit, and the United Kingdom press also reported that the company wants to shed its wind turbine manufacturing business.

The announced changes came on the heels of the resignation of CEO Jeffrey Skilling, who had only held the top spot for the past six months (see NGI, Aug. 20). To quell rumors that there were bigger problems within the world's leading energy trader, Lay and other executives met with industry analysts to explain the changes, and to reassure investors. Last week, Enron's stock fell slightly, stabilizing on Friday to close at $36.35. It has been as high as $90.75 in the past year, but has fallen dramatically since May.

Enron's stock options will not be a repricing, but rather a one-time additional grant. It usually gives employees options in five-year plans in amounts that reflect the year they join, and most employees are eligible for the new program. Within its troubled broadband unit, Enron plans to offer employees who are laid off the option of applying for other jobs within the company, but no specifics were given on where there would be openings.

Enron also is again attempting to sell Portland General Electric. It was to have been acquired by Sierra Pacific Resources for $3.1 billion, but the deal fell apart earlier this year (see NGI, April 30). Scottish Power Plc reportedly has made an offer for the power utility, which would fit geographically with its Portland-based PacifiCorp (see NGI, May 7). Scot Power operates in six U.S. states. There was no confirmation on whether the Portland General buyer would be Scot Power.

Meanwhile, over the weekend, London's Sunday Business reported that Enron is in talks to sell its wind turbine business and has appointed Credit Suisse First Boston to handle the transaction. The newspaper reported there is one possible buyer, with speculation mounting that Vestas Wind Systems and NEG Micron, both based in Denmark, could be possible suitors. NGI reported in July that Enron might sell its wind subsidiary.

Last year, Enron held a 6% share of the world market for installed wind turbines, compared to the world's largest turbine maker, Vestas, which holds an 18% share. Enron Wind currently has production capacity in several U.S. states, including Texas, California, Minnesota and Iowa, with other production facilities in Europe and Asia.

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