The tumultuous energy market just terminated its latest chief executive. After announcing sweeping changes to its strategic plan last week, including selling another $2.9 billion in assets and cutting its dividend 82%, El Paso Corp. said Tuesday morning that CEO William Wise will be stepping down at the end of the year.
El Paso’s board said that Wise will continue in his current role as CEO until another chief executive can be found and will remain chairman until his retirement at the end of 2003. The board will appoint a search committee to analyze qualified external and internal candidates to lead the company.
“While the last year has been unprecedented in what our industry and our company have faced, we are aggressively implementing a business plan to preserve and enhance the value of our core operations,” said Wise. “We are focused on creating value for our shareholders by generating stable earnings and cash flow in our core businesses, strengthening and simplifying our balance sheet, maximizing liquidity, reducing our debt, and resolving our other outstanding issues. I intend to continue to implement this plan while assisting the board in achieving a smooth and successful transition.”
Wise has been CEO since 1990 and chairman since 1994. Over the past decade, he led El Paso through dramatic growth, taking the company from a small sleepy pipeline operator to an energy giant with strengths in every aspect of the energy chain. While Wise was at the helm, El Paso purchased Tenneco Inc. and its Tennessee Gas Pipeline Co; Sonat Inc. with its large production and pipeline units; Coastal Corp., including its massive pipeline, production and refining operations; and PG&E’s Texas gas transmission and storage assets just to name a few.
Wise also has witnessed El Paso’s equally dramatic decline from its struggles through charges of market manipulation in California (still unresolved) through nearly $4 billion in asset sales last year and another $2.9 billion this year. El Paso’s stock prices has gone from more than $60/share in February 2001 to about $5/share today, a 92% drop.
He joins numerous other top executives who have become victims of the energy crisis following Enron’s fall. They include former CMS Energy CEO William McCormack, Dynegy CEO Chuck Watson, Aquila CEO Robert Green, AES Corp. CEO Dennis Bakke, NRG’s Chairman David H. Peterson, and of course Enron Chairman Kenneth Lay, among many other top energy officials.
Credit Suisse First Boston analyst Curt Launer speculated that Wise has chosen to “avoid the spotlight of personal attacks” in an upcoming proxy battle expected to be launched by an investor group led by Selim Zilhka, El Paso’s largest individual shareholder. Zilhka is trying to wrest control of the board and oust much of the management team. Former Coastal Corp. CEO Oscar Wyatt, one of El Paso’s largest shareholders, also has been a vocal opponent of the company’s recent changes. Wyatt has alleged that El Paso engaged in fraudulent accounting schemes and other misconduct (see Daily GPI, Nov. 25, 2002). The proxy battle would diminish El Paso’s recovery plans.
“In some ways we view this news as an indication that the expected proxy battle may not develop, but we still expect some actions to be proposed relative to other board members and possibilities for future chairman and CEO roles,” said Launer.
Prior to being chairman Wise served as president and COO of El Paso from April 1989 to December 1989. From March 1987 to April 1989 he was an executive vice president of El Paso. He began his career as counsel to El Paso Natural Gas in 1970.
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