Investor relations chief must be the real McCoy

Enron prosecution puts the role of investor-relations executives in the spotlight.

By Lou Gelfand, Star Tribune

Last update: February 26, 2006 - 5:19 PM

On the first day of the fraud-and-conspiracy trial of former Enron executives Jeffrey Schilling and Kenneth Lay, the role of the corporate investor-relations executive who managed the company's bridge to the financial community became the target of the prosecutor's inquisition.

According to the New York Times, Mark Koenig, 50, Enron's former head of investor relations, under questioning, said "he spoke to no avail to Schilling and Lay about financial disclosures months before the company declared bankruptcy in late 2001."

Koenig said Lay directed members of the communications team to do damage control about an entity controlled by chief financial officer Andrew Fastow that was facing increased scrutiny from analysts and investors.

Koenig testified that he fought for more disclosure to stem the tide, "but I was the lone wolf."

Koenig, who has pleaded guilty to Enron-related crimes, is testifying for the government.

That illustrates how critical the integrity of the company's investor-relations manager is to the financial community, said Leonard Teitelbaum, Merrill Lynch's dean of the investment industry's food analysts in New York.

He recalled Warren McCoy, named in 1973 as the Pillsbury Company's first investor-relations manager.

"There were few food industry analysts in those days and McCoy educated us about the business. There was no better teacher," he said. "No question. He was a man of immense integrity."

McCoy's credibility was the strongest when his employer hit a bump. The company enjoyed a streak of 10-percent-or-better profit years in the 1970s, but an internal battle developed over whether the broiler division, a cyclical business, should be sold.

The analysts were aware of the dispute, and McCoy was at his best steering the company's investor relationships without compromising its integrity until the business was sold.

McCoy's ethics and values were widely known among senior management. So there was bitter disillusion when, in 1975, the chairman sent a staff officer to fire McCoy.

His retirement party drew investment firm analysts from New York and Chicago plus the whole retinue of Pillsbury financial executives.

What drew the loudest cheers was a T-shirt gift emblazoned with the airline schedule to Omaha.

By the afternoon of McCoy's firing, word had reached then-ConAgra Chairman Charles (Mike) Harper, a former Pillsbury vice president, in Omaha. Two days later McCoy was in Omaha with a big raise and an investor-relations vice presidency.

It was probably the most satisfying day of his life except for the afternoon in 1945 when, as a field artilleryman in World War II, he was awarded the Silver Star for bravery.

As you have concluded by now, the investment industry food analysts flocked to Omaha and Harper made flour miller ConAgra into a force in the consumer food industry. McCoy retired in 1982 and died in 2003.

Enron needed a McCoy.