Williams ( WMB) is finally making a change in its senior executive suite.

The troubled energy company -- once a merchant energy powerhouse -- announced Tuesday that longtime CFO Jack McCarthy will retire at the end of the year. The 59-year-old executive has worked at Tulsa-based Williams for 16 years, the past 10 as CFO.

During McCarthy's tenure, Williams' stock soared from $5 to $50 -- even after three splits -- before the company's fortunes took a sharp turn south following Enron's bankruptcy last year. Since then, Williams' heavy involvement in the once-sexy energy trading business, made infamous by Enron, has threatened the viability of the entire company. Williams' stock sank to an all-time low of 78 cents in July, during a close brush with bankruptcy, and has since remained below the modest price Williams commanded when McCarthy joined the company in 1986.

Williams on Tuesday applauded McCarthy's "significant contributions to the company" and described his retirement as voluntary. But investors, acting slightly skittish, pushed the stock down 4.5% to $2.55 on the retirement news.

Tuckered Out?

Tulsa money manager Fredric E. Russell, often bluntly critical of Williams, expressed little surprise at McCarthy's departure.

"If you had to figure out what mark-to-market accounting was -- and define it and explain it every day for a few years -- you'd be fatigued, too," said Russell, whose firm once owned nearly 200,000 shares of Williams.

Russell said McCarthy's job is far different from the one he enjoyed even a year ago, when Williams was still an investment-grade company reporting explosive profits from its now-skeletal trading operation. Peter Cohan, a Massachusetts author and investment strategist, read nothing ominous into McCarthy's exit. But Cohan said he also doubts that Williams' headaches will follow the company's veteran CFO out the door.

"My instinct tells me that Jack McCarthy isn't responsible for all the problems that Williams has," said Cohan, a longtime Williams critic with no position in the company's stock. "I think it's the entire management team."

McCarthy is leaving at a time when Williams is desperately attempting to raise fresh cash. The last time Williams sought out financing, during the heat of an industrywide meltdown in July, the company staved off bankruptcy only by agreeing to pay 30% interest for a one-year loan from Lehman Brothers and Warren Buffett's Berkshire Hathaway. This time around, Williams is attempting to negotiate with a potentially "friendlier" lender -- the State of Oklahoma.

In a special series last week, the Tulsa World reported that Williams is hoping to convince the state to coguarantee Williams bonds that could be sold as investments to state-run pension plans. But so far, those discussions -- described as "very preliminary" by Williams -- appear to be falling flat.

Everyone from Oklahoma House Speaker Larry Adair to Gov.-elect Brad Henry to state pension fund managers have expressed skepticism about investing retirement money for state teachers and law enforcement officials into Williams' corporate bonds.

"It's certainly something that we can look at," Tommy Beavers, executive director of the Oklahoma Teachers Retirement System, told the Tulsa World. "But it would be out of our character ... to be involved in some kind of program intended to bail out an Oklahoma company."

Larry McCullock, head of the Oklahoma Law Enforcement Retirement System, was more critical. He bluntly questioned how retired police officers would benefit from the potential addition of jobs at Williams.

Devil's Advocate?

Williams has discussed the possibility of moving some of its Houston jobs to Oklahoma during its talks with state officials. The company has also highlighted its importance to the state -- as its fourth-largest employer and largest public company -- during the recent negotiations.

During brighter days, Williams became well-known in Oklahoma for its philanthropy and political contributions. But investment experts warn that state officials should not be influenced by the company's power and generosity when handling retirement funds.

"From a purely political standpoint, Oklahoma politicians are crazy to advocate that the teacher's pension fund invest in Williams' bonds," Cohan said. "The number of jobs -- meaning potential voters -- that might be brought to Tulsa if the investment goes through are probably far fewer than the number of votes the politicians will lose if Williams defaults on the bonds and costs Oklahoma state teachers their pension benefits."

Russell also called the potential plan a "bad idea" that's riddled with risks.

"Oklahoma teachers are downtrodden and oppressed enough," Russell said. "All you'd have to do to send them over the cliff is make them wonder whether their retirement money will be sacrificed for what everybody would have to agree is a highly dubious investment."

Russell went on to say that McCarthy is probably relieved to put his "relentless" fund-raising duties -- complicated horribly by Williams' junk credit rating -- behind him. McCarthy is departing from a job that last year, during the glory days of energy trading, paid him $2.7 million in salary, bonuses and company stock. Upon retirement, McCarthy will earn $191,000 a year.

Williams spokeswoman Pat Wente said she is unaware of any special retirement bonus for McCarthy. She also said McCarthy, whose Willliams stock has dwindled in value to $1 million, will be required to pay company loans totaling five times that amount.

"Our bylaws would prohibit any type of forgiveness," she said.

If you liked this article you might like

Lessons Learned From the Hedge Fund Crisis

Lessons Learned From the Hedge Fund Crisis

Why There's Still Hope for Detroit

Why There's Still Hope for Detroit

GM's Biggest Foe Could Be Time

GM's Biggest Foe Could Be Time

Humana's Learning to Change With the Times

Humana's Learning to Change With the Times

Health Insurers See 'Universal' Opportunity

Health Insurers See 'Universal' Opportunity