Enron Corp. said its board has accepted the resignation of Jeffrey K. Skilling, CEO and president. Kenneth L. Lay, currently chairman, will assume the additional responsibilities of president and resume his function as CEO. He has agreed to extend his employment agreement with the company through the end of 2005 to ensure a smooth transition. Skilling will continue to serve as a consultant to Enron and its board.

“I am resigning for personal reasons,” said Skilling in a conference call Tuesday evening after the market closed. “I want to thank Ken Lay for his understanding of this purely personal decision, and I want to thank the board and all of my colleagues at Enron.” Skilling, 47, said the resignation had “nothing to do with Enron….I feel real bad that anything I do is construed as related to the performance of the company.”

The announcement came suddenly. Skilling, who took over the CEO position from Lay earlier this year, had long been groomed for the post. He served as chief operating officer for four years before taking over as CEO. Skilling, noted for his drive and some brilliant initiatives, has been credited with changing the company’s strategy from one tied to energy delivery and marketing to one focused on diverse e-commerce ventures involving multiple commodities and risk management activities. Lay, who served as CEO from 1985 until Skilling’s advancement, transformed Enron from a regional natural gas pipeline company into one of the largest energy marketing and trading companies in the world. Over his 15 years as CEO Enron’s market capitalization increased from $2 billion to $70 billion.

Lay, also taking part in the conference call, said the corporation regrets Skilling’s decision, “as he has been a big part of our success for over 11 years. But we have the strongest and deepest talent we have ever had in the organization, our business is extremely strong, and our growth prospects have never been better.” He said there were no company problems related to Skilling’s departure. “There are no accounting issues, no trading issues associated with Jeff’s departure,” Lay said.

Speculation immediately started up over whether Skilling’s resignation had anything to do with the fact that Enron’s stock price has fallen in recent months from more than $90/share to around $42/share as criticism of marketers and power generators related to the energy crisis in California has increased. While other marketers’ stock also has dropped, Enron, which also has suffered losses in its infant broadband division and has had continuing problems with its massive power project in India, has taken one of the biggest hits. In addition, Skilling has caught the attention of the media with his informal “tell-it-like-it-is” style and flip, humorous remarks that may not have amused more conservative board members.

Lay said he personally regrets Skilling’s departure, and he sees “no change” in business direction and strategy. “The company is in the strongest and best shape it has ever been. I see continuing strong growth in our wholesale business,” the company’s single largest income-producer. Lay also noted the repeated doubling of income from retail operations in recent years, saying “most believe the Enron Energy Services component could become larger than wholesale in six years.”

Lay said there would be no severance payment to Skilling since the resignation was voluntary. However, there is a “very tough non-compete clause” in Skilling’s contract.

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