Richard Kinder: The Smartest Guy in the Room?

Richard Kinder is probably one of the forgotten names of Enron because he left the company long before things got out of control. Kinder was at one point next in line for the CEO throne, working as the company’s COO for six years and one of the main reasons for its success. Ken Lay himself had promised that he would step down as CEO when his contract expired at the end of 1996 and that Kinder would fill his position. However in 1996, Lay decided he was not ready to leave Enron and so Kinder left the company. This was a major turning point in Enron’s history. Although Kinder might have done some things that initially led Enron down in its road of financial fraud, nothing illegal happened on his watch. He was one of the few Enron executives who knew what the limits were and knew how to stay within them.

So why was Kinder the smartest guy in the room? For one, he got out of Enron while the company was on the rise in the late 1990’s, taking his compensation from Enron stock and turning it into even more money. In addition, he purchased some of the company’s most valuable assets, Enron’s Liquids Pipeline, for the small price of $40 million. This was a brilliant move because these assets were worth much more than that and Kinder knew this part of the business extremely well. Shortly there after, Kinder formed his own company called Kinder Morgan, which has been very successful over the last decade. The company’s website claims it is worth more than $29 billion dollars and has delivered a consistent 25% annual return to shareholders over the last 12 years.

Kinder has learned from the mistakes he saw at Enron, both as an employee and as a witness to the company’s downfall. He has made sure that his new company is financially transparent and follows the rules and regulations of the SEC. Kinder does not allow his employees to run up huge expenses. As CEO, Kinder has worked for a $1 salary every year since he has held the position, in an effort to prove to his employees and shareholders that he is a different kind of executive who wants what is best for the company, and not what is best for himself.

Kinder Morgan’s website states that the company has no unnecessary overhead expenses such as corporate jets, sponsorships, or executive perks. Also, the company does no give out donations to political candidates. All of these things partially contributed to the downfall of Enron and Kinder has done a solid job in making sure that these factors will not negatively influence his own company.

In 2010, Forbes listed Kinder as the 249th richest person in the world. So yes, Kinder probably was the smartest guy in the room.

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7 Responses

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  2. This is a really good point. Kinder not only removed himself for a compromising position, but also learned from the mistakes that were made in Enron. Making him a great example for other executives as well as the smarted guy in the room. Perhaps if Kinder had taken the reins of Enron the company would have gone down a different path. One way or the other, I think it is important to remember the lessons in the management of an organization that Kinder displays.

    • I’m not sure that anyone can truly argue that Enron wouldn’t have collapsed if Kinder had stayed but it is interesting to think about how different the company’s culture would have been. Kinder was more on top of things than the other Enron executives and I think he would have been a lot more effective at eliminating excessive company spending, overseeing Fastow’s outside financial deals, etc. if he had become the CEO. It is also very telling that his own company Kinder Morgan has been so successful in the past decade.

      • Your right, there might have been simply too much with the way Enron functioned for one individual to change the fate of the company. It just seems to me that Kinder’s use of both formal and informal power was significantly different then other Enron executives. It is interesting to think about how Kinder would have dealt with Fastow as a result. I find it hard to believe that Enron would have been taken advantage of in the way Fastow managed to with Kinder in control.

  3. This guy is really interseting to read about. I have a strange affinity to read endless Wikipedia articles about people that are successful, and Kinder is no exception. I like how he was able to get away before the meltdown (whether he knew it was coming or not) and really make a legitimate company out of his compensation package.

    It is interesting to note that on his new company’s website, it makes no mention of Enron or that the founder ever worked there…wonder why? Either way, he has found a high degree of success and his hard work has paid off. However, it was still started with Enron money. Do you think he should donate some funds to help those still hurt by Enron’s collapse? Or do you think that he is immune from the subject altogether?

    • I think that it is intentional that any mention of his time at Enron is left off his new company’s website. There are simply too many negative connotations linked to Enron for a man as intelligent as Kinder to openly remind people that he was involved in the company. I believe for a similar reason you won’t see Kinder donating to funds to help those hurt by Enron’s collapse. While I don’t believe that he is completely immune from the subject, it seems that Kinder has avoided addressing the issue because he has no desire to link himself to the failure of Enron. As a result, I doubt that he will involve himself in funds aimed to help those who were hurt by Enron’s failure.

  4. I agree with Derek here. I think that Kinder wants to separate himself from Enron entirely and does not want to remind the American public that he was at one point an employee of the company. Not only does he want to maintain his own personal image, he always wants to make sure that Kinder Morgan does not lose out on investors. At the same time, I really don’t think that he should have to donate any of his money to an Enron related fund. He left the company before things got out of control and the decisions that ran Enron into the ground were made by others after he was long gone.

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