Former Shell Co. financial executive Nick J. Caruso, who once worked with Dynegy Inc.’s new CEO, was appointed CFO and executive vice president of the Houston company last week in a move that analysts see as a positive.

Caruso was named to oversee Dynegy’s entire financial operations, replacing a short-term strategy Dynegy set up in August that gave three people the responsibility. Louis Dorey had been named Dynegy’s CFO less than six months ago, however, in August, the CFO role was split three ways and Dorey’s role was diminished. In a written statement, Dynegy said Dorey had been given a “transitional” role through the rest of the year, but it was unclear whether he would move to another position in 2003.

Caruso, 56, had retired from Shell only last year after spending more than 30 years with the company. At his retirement, Caruso was vice president of finance and CFO, responsible for the controller’s organization and the company’s treasury, insurance and audit functions.

In addition, Caruso worked directly with Shell’s board of directors to develop and implement internal controls, review financial results and prepare financial statements. Before becoming Shell’s CFO, he had been controller and general auditor for the oil major, where he had been responsible for internal control systems, accounting policies and procedures, as well as the audit program.

“During my 14 years working with Nick at Shell Oil Co. and throughout his career, he has demonstrated a proven ability to manage comprehensive financial management programs and procedures while meeting the highest standards of corporate governance and compliance,” said Dynegy CEO Bruce Williamson, himself a former Shell and Duke Energy executive. “Nick’s previous experience as a corporate CFO and strong knowledge in all facets of finance will be invaluable to our company as we continue to emphasize transparency and accuracy in our financial reporting, comply with the new regulatory and disclosure requirements and work closely with all of our stakeholders to create the new Dynegy.”

Caruso’s appointment moved out not only Dorey from the financial offices, but two other legacy Dynegy executives, Hugh Tarpley and Margaret Nollen, who both resigned to “pursue other interests.”

Tarpley, who joined Dynegy in 1997, had been promoted to executive vice president of strategic investments, a new division within the CFO office since September, sharing financial duties with Dorey and Michael Mott. Tarpley was responsible for Dynegy’s unit performance reviews, financial and strategic planning, investor relations, all mergers and acquisitions and asset disposals, as well as the company’s strategic equity investments.

Among other things, Tarpley had been involved in the company’s Destec acquisition and the Illinova merger. Nollen, senior vice president of investor relations, was also familiar to analysts and the media through conference calls and for investor questions.

Mott, senior vice president, chief accounting officer (CAO) and controller, will remain with Dynegy, but his role within the financial offices has changed. He no longer will have the CAO title. Instead, Dynegy said Mott would “continue to be responsible for the development and application of the company’s accounting policies and procedures, coordination of the organization’s financial and operational accounting functions, transaction support and internal and external financial reporting.”

Dorey, who took over the top financial spot at Dynegy last June, had been promoted in August as part of a financial triumvirate, which included Tarpley and Mott (see Daily GPI, Aug. 28). Dorey had been responsible for financing transactions, the treasury and managing relationships with lenders and credit rating agencies. A long-time Dynegy employee even before the CFO appointment, Dorey had formerly been responsible for the management of the company’s wholesale power and gas marketing and origination business, and additionally was executive vice president of strategy and planning for Dynegy Marketing and Trade. Dorey had replaced Rob Doty, who resigned in June (see NGI, July 1).

In his second promotion in two months, Blake Young, executive vice president, administration and technology, assumes the duties of strategic planning, budgeting and analysis and the disposition of non-strategic lines of business to his areas of responsibility — formerly some of Tarpley’s responsibilities. Formerly president of Global Technology, Young was promoted in October to oversee Dynegy’s internal audit, risk management, corporate communications, human resources and corporate-shared services (see NGI, Oct. 21).

Several other appointments expanded Dynegy’s new financial management team, and all of them will report to Caruso. Robert Ray was promoted to senior vice president and treasurer, and will focus on all of Dynegy’s financings, including banks, bondholders and project debt. He also will work on Dynegy’s relationships with lenders and credit rating agencies.

Katie Pipkin has been promoted to senior director of investor relations. She will act as the liaison between Dynegy and the investment community, including portfolio managers and research analysts. Glenn Labhart, vice president and chief risk officer, will continue to be responsible for Dynegy’s risk oversight, including credit risk and insurance risk management. Also, Gene Foster, vice president of tax, will be responsible for all tax matters related to Dynegy and its subsidiaries.

Last week, following conversations with CEO Williamson, Caruso and Dynegy’s Alec Dreyer, in charge of the company’s generation unit, analyst Christopher R. Ellinghaus said he was impressed. Ellinghaus works for The Williams Capital Group LP.

“Williamson is obviously eager to be a proactive, communicative CEO, and we expect a significantly simpler business model and considerably more disclosure for investors in the future,” Ellinghaus said. “Overall, the new CEO projected an image of optimism and hope for Dynegy that at this juncture is exactly the bare minimum that Dynegy needed.” He said, “we also liked Dynegy’s new CFO Nick Caruso;…he does appear to have the conservative personality famous in major oil company management. At this point in Dynegy’s life cycle, we consider that a major positive personality trait.”

Regarding Dynegy’s Alec Dreyer, who has been promoted to lead “aspects” of the trading and origination operations, Ellinghaus called him a “fountain of interesting and valuable information on power generation trends in the U.S. He reports that the Illinois generation fleet has set annual records for production through November and should break the record by as much as 8-10% with almost a full month to go in 2002.” Ellinghaus added that Dreyer’s unit is “doing just fine.”

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