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Dynegy Chairman, CEO Watson Resigns

May 28, 2002

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HOUSTON (AP) _ The chairman and chief executive of energy marketer Dynegy Inc., a one-time suitor of bankrupt Enron Corp., has quit amid corporate woes that include almost a 90 percent decline in stock value over the past year.

The Houston-based company’s board of directors announced Tuesday that it has accepted the resignation of Chuck Watson as chairman and CEO. At the unanimous request of the independent directors, the board appointed Glenn F. Tilton, vice chairman of ChevronTexaco and a Dynegy director, as interim chairman.

Board member Daniel L. Dienstbier, who is president of Northern Natural Gas and also a Dynegy director, has been appointed interim chief executive.

At Dynegy’s annual shareholders meeting earlier this month, the company’s depreciated stock price was an area of concern. Watson had tried to reassure investors by telling them the reason the stock price has fallen so much was not due to the value of company assets but because of the energy industry’s negative perception in the wake of Enron’s bankruptcy.

Dynegy tried to buy Enron last year, then backed away.

``For 17 years, I have endeavored to build value for all of our stakeholders,″ Watson said in a prepared statement. ``As a shareholder, I fully support the combination of new and existing leadership at this stage of the company’s evolution.″

The personnel changes were effective immediately. Steve Bergstrom is continuing with the company as president and chief operating officer.

Dynegy shareholders have been told that executives are working quickly to clear their company’s name in response to an ongoing investigation by the Securities and Exchange Commission’s Fort Worth, Texas office into one of Dynegy’s natural gas contracts.

That contract provided an $80 million tax benefit in 2001 and resulted in about $300 million in net cash flow during 2001.

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