The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

by Bethany McLean

And so it was that in June 1990, after several months of negotiations, Jeff Skilling joined Enron. Though it’s rare for a McKinsey partner to leave the storied firm, Skilling felt he couldn’t pass up the opportunity to test his theory about how to fix the natural-gas business. His title was chairman and CEO of something called Enron Finance, a new division that was established so that he could run it. His mandate was to make the Gas Bank work. His salary was $275,000, a far cry from the $1 million or so that a McKinsey partner typically makes. But the real reward was not supposed to come from his salary. Instead, Skilling’s contract gave him something called phantom equity in his division, which would allow him to share in whatever economic value he created. If Enron Finance was a success, he’d be far richer than any mere management consultant, even a McKinsey consultant, could ever hope to be.