Kinder Morgan’s Kean to Become CEO of Company He UnifiedJoe Carroll
When Kinder Morgan Inc. lost more than $2 billion in market value over four days, the company’s billionaire founder turned to Steven Kean to help restore shareholders’ faith.
It was September 2013. A stock analyst claimed the company wasn’t spending enough to maintain its vast pipeline network, and had urged investors to dump the shares. In an early-morning conference call, Chairman and Chief Executive Officer Richard Kinder asked Kean to field questions.
Kean, a former chief lobbyist for Enron Corp., provided nuanced details on Kinder Morgan’s expenses that helped persuade investors the company was doing what it could to prevent spills. The performance was widely seen as spurring the biggest one-day advance in the shares in 19 months. Now, the 53-year-old Kean is once again getting a key assignment -- Kinder, 70, has asked him to be the next CEO.
“There’s a continuity there with Rich” that will help the company prosper, said Bradley Olsen, vice president of midstream research at Tudor Pickering Holt & Co.
Kean’s appeal is that he has learned at the elbow of one of the most successful architects of the modern pipeline industry, said Olsen, who has followed Kinder Morgan for six years.
When Kean assumes the CEO’s job, he’ll inherit a company that he helped his boss streamline this year with a complex series of transactions valued at about $44 billion that merged four sister companies. The deal has drastically reduced Kinder Morgan’s borrowing costs, and unified the pipeline empire under a single stock ticker that can be used as currency to buy rivals.
Investors will be watching Kean closely as the company attempts to play catch-up with competitors in terms of generating returns. Over the past three years, Kinder Morgan posted a 51 percent total return, compared with 95 percent for Williams Cos and Enterprise Products Partners LP’s 73 percent.
Kinder rose 44 cents to $39.88 at the close in New York trading. The stock has increased 22 percent in the past year.
Analysts like Olsen are certain about one thing: Kean’s nose-to-the-grindstone work ethic and unflappability in the face of conflict, as evidenced by that 2013 conference call with investors, when he refuted advice from Hedgeye Risk Management analyst Kevin Kaiser that investors should sell their shares.
“Even when getting attacked by things like Hedgeye, he never got worked up,” Olsen said. “He’s a pretty buttoned-up guy and doesn’t betray much emotion.”
Jason Stevens, an analyst who follows the company at Morningstar Inc., agrees, saying Kean “‘seems like a pretty stable operator.’’
A University of Iowa-trained lawyer, Kean joined Kinder in 2002 after departing from Enron during its collapse. He followed Kinder, who served as Enron’s president and exited the energy trader a half-decade before it collapsed in what was then the biggest corporate bankruptcy in U.S. history.
While Kean declined through a spokesman to be interviewed for this article, he confirmed the succession plan during a presentation at an energy conference sponsored by Wells Fargo Securities yesterday. Kinder will stay on as executive chairman and remain deeply involved in decision-making and strategy.
No timeline was provided for the transition and the appointment still needs the approval of directors at Kinder, operator of an oil and natural gas pipeline network that could circle the Earth three times.
The CEO-to-be’s personal fortune is closely tied to Kinder Morgan’s performance. Of his $30.8 million compensation package last year, more than 97 percent was stock awards. His 7.5 million shares have a market value of almost $300 million.
Kean resides in Houston’s tony River Oaks neighborhood, a leafy precinct of multimillion-dollar mansions and sprawling lawns about 8 miles (13 kilometers) from the downtown business district. His home is also listed as the headquarters for the Steven J. and Melissa C. Kean Charitable Foundation, of which he is president.
Despite the posh surroundings, investors and analysts said Kean is a good fit for a down-to-earth outfit like Kinder Morgan.
‘‘He’s not a guy who’s going out wearing flashy tuxedos to events,” Olsen said.