“Buy Enron stock today!”  These were Jeff Skilling’s ending words to the group of civic and business leaders assembled at Southern Methodist University in Dallas in 2001.

We had just finished interviewing him for an upcoming McCuistion TV program on the energy situation in California. (Under Skilling, Enron adopted market-to-market accounting, in which anticipated future profits from any deal were accounted at their present market value rather than any historic or future value.) Skilling joked about the California energy crisis at one meeting of Enron employees by asking, “What is the difference between California and the Titanic? At least when the Titanic went down, the lights were on.” Skilling later attributed the remark to frayed relations between Enron and California. His employees, meanwhile, plotted to keep the price of energy high in California.

Off the record I had asked about Enron’s ethics policy- as I was writing a paper on corporate ethics for an MBA class. “Solid,” he said. “We have an ethics policy that covers everything you can conceive of.  Not that it’s needed, you either follow an ethics policy or you have one on the shelf.”  I kid you not! Honest… that was the gist of the conversation.

We then ran to set up the camera to catch his speech. Jeff Skilling instantly captured our attention with, “Enron got hammered last week.” He proceeded to tell a joke about what you would want someone to say about you at your funeral. The punch line, “Look, he’s still moving!” got laughs. He added, “After the equity markets last week, I hope they say that about us too.”  In hindsight – rather ironic.

Jeff Skilling addressed Enron’s pioneering spirit, the changes in the energy business and a tale of two cities, telecom and the efficiency of communications and the gas and oil industry.  He made an argument for vertical integration and the breaking down of the monolithic corporations that have for so long dominated the landscape in these fields.

With obvious pride he told us that Enron is the Toyota of the energy industry; delivering a package of energy cheaply. He warned us of California’s deregulation issues, yet stated, “California is the most regulated market in the US right now.” Throughout his speech and the TV interview he’d held with us earlier, he was composed, cordial and gracious as he became the head of the then most innovative company in the world- according to Fortune magazine- lauding it for 6 years in a row. And at its Houston headquarters- on a can’t miss it banner- Enron self-proclaimed itself, “The World’s Leading Company.”

So what went wrong?  It wasn’t supposed to happen this way? How did this successful giant topple so quickly? What did we miss? Or did we just not question their, “Anyone who doesn’t understand our business just doesn’t get it” inference? Yet even Goldman Sachs, at the top of the heap back then, would admit they had to take the company’s [Enron’s] word on its numbers. Who really cared about its convoluted finances, its numbers, as long as Enron delivered? What Wall Street most cared about was smoothly growing earnings.

Enron may have been the world’s leading company and that may have contributed to the culture of arrogance and hubris. Here was a company that encouraged flouting of rules. Yes, a pioneer, generating more than 80% of its earnings from wholesale energy operations and services. Reports increasingly warned, “they predict earnings practically to the penny;” and, “they have Wall Street beaten into submission.” In early 2001, Jim Chanos of Kynikos Associates commented that no-one could explain how Enron made money. Doug Millet, COO of Kynikos said, “they’re a giant hedge fund sitting on top of a pipe line.” And one with low returns at that.

On February 12, 2001, Skilling was named CEO of Enron, receiving $132 million in a single year.  On March 28, 2001, PBS’s Frontline interviewed Skilling, where he claimed Enron was one of “the good guys”.  In August of 2001, Jeff Skilling stepped down as CEO of Enron.  A former employee, one of the many left financially decimated, said, “He saw what was coming and didn’t have the emotional fortitude to deal with it.”

Was it greed? Compensation was geared toward enriching executives rather than generating profits for shareholders. And hubris, not only did Jeff Skilling not give a reasonable explanation for leaving, but the company itself dismissed any suggestions that his departure was related to any problems within the company. Conjecture had it that Skilling knew the falling stock prices would wreak havoc on the various partnerships and cause Enron’s eventual exposure.

Stepping back into his role as CEO, Ken Lay said,”There was no accounting, trading or reserve issues.” Really Mr. Lay? While admitting Enron’s disclosure practices were less than adequate, Lay continued burying important information. In an October 16th press release, perhaps the one contributing to the beginning of the end, Enron reported a $618 million dollar loss, writing down shareholder equity by $1.2 billion. The big question remains; f Enron had ceased its game playing could the company had survived? Instead, a public company with thousands of employees were left unemployed, without retirement funds, investors lost billions in unsecured loans and derivative exposure; JP Morgan with $500 million; Citi, the same, Dynergy, $75 million; and the list goes on.

And so, a $100 billion dollar company, with 30,000 miles of pipeline in 44 countries, the leading electricity, natural gas provider in the world… a public company whose employees and shareholders counted on management, the Board and auditors to look out for their hard earned interest- fell- hard!  A senior Wall Street executive said of Enron’s debacle, “It disgusts me and frightens me.”

Yet, ten years later, we haven’t learned our Enron lesson and so to some degree, similar situations keep happening, over and over and over. Kind of reminds me of the movie Ground Hog Day.

And speaking of Ground Hog Day- this February 12th- we present you another recurring corporate story of greed and hubris- as told by Citigroup whistle blower, Dick Bowen. who tried over and over to call attention to the quality of its mortgage portfolio.

Join us as we continue talking about things that matter… with people who care.

Niki Nicastro McCuistion
Executive Producer/ Producer McCuistion
Speaker/ Author on leadership and governance inspiring transformational change, through conversations that matter.

Giving charitable donations is the focus of today’s episode on women and philanthropy.  The Boom generation may be one of the most talked about cohorts in history. Born between 1946 and 1964, (though some experts, such as William Strauss and Neil Howe, state 1943 to 1960) they changed the social landscape.

Panelists include:

• Margaret May Damen, CFP, CLU: President of the Institute for Women and Wealth and co-author of Women, Wealth and Giving
• Niki Nicastro McCuistion, CSP: Co-founder and producer of The McCuistion Program, consultant for non-profits internationally, and co-author of Women, Wealth and Giving
• Becky Sykes, President, CEO of the Dallas Women’s Foundation
• Jim Falk, CFRE, President, CEO of the World Affairs Council of DFW

After World War 11, American couples married in unprecedented numbers. In the next several years the US experienced a birth explosion, 78 million baby boomers were born. This generation became one of the most polled, analyzed, interviewed and criticized generations ever. Who they are, what they want and how they have influenced America continues to be news today. The references, beliefs, values, and convictions of our society have been largely shaped by boomers. They control the wealth, direct governments, businesses and the social and political policy of America. Today the producers of most TV shows and movies are boomers.  Our technology wizards, from Bill Gates to Steve Jobs are boomers. The President of the Federal Reserve, Ben Bernanke, as well as the President of the United States, Barack Obama- yes- they are boomers. As is Hilary Clinton and our first lady, Michelle Obama. And the list goes on.

Every hour 330 baby boomers turn 60 years of age and 50.8% of these are women. Retirement is fast approaching for many in this group, although the economy in the last couple of years has changed this expectation somewhat. There is much that ties this generation together, not the least of which was the advent and influence of television. In 1948, 172,000 US households had TV sets. In 1952 that figure had jumped to 15,000,000. Music, news, lifestyle and politics greatly influenced this generation, much of it watched on our TV sets.

This was the generation of flower power and free love, civil rights and women’s rights, marches, protests and picketing, the Beatles, Motown and Woodstock, Haight Ashbury, sex, drugs and rock and roll.  The outcome was a free-wheeling, free-spirited, individualistic group, of activists and idealists, oriented to social causes and who absolutely believed in their capacity to change the world. Not just their capacity, but their mandate to. From President Kennedy’s, Ted Kennedy’s and Martin Luther King’s assassinations to Nixon, Watergate, oil embargoes and high divorce rates, it was a generation raised not to trust anyone over 30.

Yet this activism and skepticism was channeled into an idealism that made the boomer want to change society for the better, most especially since they as a collective group had formed much of the damage. It is of the good as well as the history, that Women, Wealth and Giving focuses. The television program airing this Sunday talks about a small part of the of the research undertaken by Margaret May Damen and myself, that chronicles, through extensive research and interviews, the Boom generation and what they want today.

The resulting work of the same title focuses on the Boomer woman, and how she has turned her idealism toward a new frontier philanthropy. Our research showed that Americans are the most generous group on the planet. In fact more Americans  give charitable donations than vote. In 2008, even when the economy took a downturn, Americans gave over $307 billion dollars tin charitable donations. And of this group it is women who are the most generous. Management guru Tom Peters says, “women are the largest national economy on Earth.” The Harvard Business Review, September 2009 issue backed this up, “As a market women represent a bigger market opportunity than China and India combined.”

Women today control 60% of the wealth in the US, initiate 74% of all new business startups and employ 13,000,000 people.

An economic force to be reckoned with, they are opening up their purses and giving charitable donations that systemically impact society, and as program guest Becky Sykes, President and CEO of the Dallas Women’s Foundation states, “most especially to women and children’s issues.” Currently there are approximately 175 women’s foundations in the US, with the Dallas Women’s Foundation the largest in asset size.

Jim Falk, President and CEO of the World Affairs Council of Dallas Ft. Worth, says,

“Women do sometimes have a different objective.  A man I recently met with for fund raising for the WACDFW was interested and talked about networking. On the other hand, a woman I met with later that day asked and talked about, how can I make a difference, in this society? It really crystallized the difference for me.”

And as Margaret mentions: “It’s not about conspicuous consumption anymore. Women are rewriting the rules for a caring society.” I believe, that more than in any other venue, the achievement of financial independence, the freedom to decide the use of money, has made women equal partners in the decisions to save the worlds we have created. The “power of the purse” is the power to rewrite the rules for a caring society, not only through its use in philanthropic endeavors but also in how money is invested in the financial and business institutions that control our capitalist system. The “power of the purse” has an exponential advantage as women unite, network and agree on the importance of particular causes.

As one of our book interviewees, Dallas boomer, Brenda Pejovich said,

“By increasing our participation in the competition for ideas, women will continue to contribute to a better society. It’s our checks that influence and it’s never been more important to open our wallets and give.”

Her sentiments are echoed by Marilyn Wechter, a Clayton, Missouri boomer and psychologist, who tells us,

“We are experiencing a paradigm shift that well may change our lives forever. This new world has us moving from consumption to collaboration and we’re staring to realize what’s really important- and recognize how little it takes to make us feel valued.”

In the aftermath of the financial debacle, credit crisis and government mishap of the last couple of years, Women, Wealth and Giving offers more than hope; it offers a philanthropic business strategy to direct all of our, men and women’s philanthropic initiatives to put us back on course.

Thank you for joining us as we talk about things that matter… with people who care.

Niki Nicastro McCuistion, Co-author of Women, Wealth and Giving

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1821 – 05.02.10

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