Gary Neale has stepped down as chairman of NiSource Inc., just weeks after selling 191,000 shares of the company's stock for a total of $4.044 million.

A company spokeswoman at the time said Neale was restructuring his personal portfolio.

Replacing him as NiSource chairman, effective today, is Ian M. Rolland, who currently serves as NiSource's lead director and chairman of its audit committee.

Neale's executive leadership at the utility company began in 1989, when he became chief executive officer. He became chairman, president and CEO in March 1993. On July 1, 2005, he was succeeded as CEO and president by Robert C. Skaggs Jr.

Under his tenure, Merrillville-based NiSource -- parent company of Northern Indiana Public Service Co. -- rose to Fortune 500 heights. But it also became the target of criticism for high utility prices -- the company was ranked as the most expensive electricity provider in 1994 in Indiana -- and for a $6 billion takeover of Columbia Energy Group, which critics contend is still dragging down the corporation.

The company has also struggled with Northwest Indiana unions and complaints from consumer groups.

Neale received a total compensation package of $10.3 million in 2004, when he was still president and CEO. His agreement and pay figures since stepping down as CEO will be made public today.

NiSource officials said that succeeding Rolland as audit committee chair will be current board member Dennis E. Foster.

NiSource made the announcement Tuesday amid speculation that the Fortune 500 corporation could spin off Columbia Energy Group only six years after merging with it. NiSource is undergoing a financial and strategic review of its company.

Neale said in a news statement that his departure as chairman is part of a change.

"My decision to leave the board in the spring is the next step in a planned, orderly transition at NiSource," he said.

Neale sold 191,000 shares of the company's stock from Aug. 28 to 29 for a total of $4.044 million. The shares were worth between $21.06 and $21.18 each.

Kris Falzone, NiSource vice president of communications, reiterated Tuesday that Neale's sales were part of a personal portfolio shuffling, and that Neale still maintains a substantial interest in NiSource.

Phil Adams, a Chicago-based senior bond analyst for Gimme Credit Publications LLC, had just issued a brief report on NiSource's lack of comment on its strategic changes when he got the news of Neale's stepping down.

Adams said NiSource had announced the decision to review its business plans but has said little since the second quarter. But it's not unusual for a corporation to have leadership changes during a time of re-evaluation, he said.

"I don't know how it affects the (financial and strategic review)," said Adams. "It perhaps facilitates it."

The announcement also comes at a time of bitter disputes between union workers and NIPSCO.

Jim Blythe, president of United Steelworkers Local 12775, which represents the physical bargaining unit at NIPSCO, said there was little dialogue with Neale.

Blythe said employees are hoping for a "cultural shift" at NiSource, so there will be more openness and dialogue with union members in the future.

"I am going to remain optimistic," Blythe said.

Neale joined NiSource in August 1989 as president and chief operating officer. He also is a director of Modine Manufacturing Co. and Chicago Bridge and Iron Co.

He has been a NiSource director since 1989. Neale will not seek election to the NiSource board in its May 2007 elections.

NiSource is the only Fortune 500 company headquartered in Northwest Indiana.

Contact Jim Stinson at 648-3076 or jstinson@post-trib.com

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