June 7, 2002

Last Four Holdover Members Resign From Enron's Board

Four longstanding directors of Enron Corp. resigned from the board Thursday, having remained for several months despite indications to creditors they would leave shortly after the energy company filed for bankruptcy-court protection in December 2001.

The Houston company said in a prepared statement it has recommended three candidates and was prepared to approve them Thursday at its board meeting. The statement said the vote was postponed because the creditors' committee hadn't approved the candidates. The Enron board eventually is expected to be composed of as many as nine members.

Raymond S. Troubh, meanwhile, was named interim chairman, and is expected to remain on the board indefinitely; he was named to the board in the fall shortly before Enron's collapse.

The resigning directors are: Robert Belfer, who is Enron's longest-standing director having joined prior to the formal creation of Enron in 1985; Wendy Gramm, the former chairman of the U.S. Commodity Futures Trading Commission who joined in 1993; acting board chairman Norman Blake Jr., who joined in 1993; and Herbert S. Winokur Jr., who joined in 1985. The resignations were effective Thursday.

Messrs. Blake and Winokur have both offered to stay on as unpaid advisory directors, Enron said. It will be up to the board to accept or reject the offer.

Last week, Enron announced the appointment to the board of Corbin McNeill Jr., a veteran electric-utility executive, and John Ballantine, a private investor who specializes in risk management.

In recent weeks, the creditors' committee ratcheted up the pressure on acting Chief Executive Officer Stephen Cooper to bring about the resignations, said one person involved with the creditor's committee. Another person connected to the committee said the committee had a deal with Mr. Cooper that Enron's directors who had been with the company before its bankruptcy would "disappear." The person said, "That deal wasn't being honored."

W. Neil Eggleston, who represents the departing directors, said they resigned "to permit the orderly transition of the board." He added they hope the "three remaining directors will be able to work with the creditors' committee" to elect the new members they had "unanimously recommended." The creditors' committee doesn't get to vote on the board members, but is consulted on each nomination.

Enron has said that it was seeking an orderly transition, replacing old board members with new directors as they are identified. Finding qualified directors willing to join Enron's board while the company has been in crisis has been difficult, said one person close to the process.

Enron spokesman Mark Palmer said the company has been working "with creditors committee to identify and review with them qualified candidates to become independent directors."

Mr. Troubh, a 76-year-old financial consultant and a member of eight other public company boards, said he hopes Enron's board "can be a paragon of corporate governance." He said he and Mr. Cooper are going to do everything "we can to hasten the business recovery" while maximizing returns for the creditors because "they own the company." The board and management want "to re-create a real business and keep people working," he said.

Write to Kathryn Kranhold at kathryn.kranhold@wsj.com² and Mitchell Pacelle at mitchell.pacelle@wsj.com³

Updated June 7, 2002 12:32 a.m. EDT