Enron Files for New Bonuses, Severance

By Frank Ahrens
Washington Post Staff Writer
Saturday, March 30, 2002; Page D13

HOUSTON, March 29 -- Enron Corp. is asking a bankruptcy court judge for approval to spend up to $130 million in a new round of employee retention bonuses and severance payments.

Today's filing in U.S. bankruptcy court in New York includes a request for a new kind of bonus: incentives forsome Enron employees who quickly sell off chunks of the company.

The retention bonuses would total $40 million for 1,700 of the20,000 employees "whose skills or knowledge are required indefinitely, or for a predetermined duration of the restructuring," reads a memo sent to employees today from the office of Enron's chief executive, Stephen F. Cooper. "Regrettably, not all employees will receive retention."

Twenty-five percent of each retention bonus will be paid at the end of the quarter in which it is approved, with the remaining 75 percent coming after Feb. 28, 2003. If an employee quits before then, the bonus is voided.

The second pool of bonuses will come from a new source: a "liquidation incentive pool" of between $7.4 million and $90 million. Enron employees whose job it is to sell what the company calls "non-core assets" will receive bonuses as they reach sales goals. Creditors have asked the company to liquidate $9 billion in assets.

In addition, bonus-eligible workers would receive severance payments if they are terminated, a company spokesman said.

The plan does not include additional severance payments for4,500 workers laid off earlier, he added, though negotiations on the issue are continuing. Those workers received $4,500 each in severance.

Enron was criticized by labor and civil rights groups for paying about $55 million in retention bonuses to 540 employees just before filing for bankruptcy in December. The company defended the practice as standard procedure during bankruptcy to keep key personnel during uncertain times.

The company agreed last month to set up a $5 million fund for laid-off workers, which meant they received about $1,100 more apiece.

The company said it anticipates an early April hearing before Judge Arthur Gonzalez on the new plan.

The proposal to pay liquidation bonuses may not be "a sign that the company is looking for full liquidation," said Alan Hyman, a lawyer with New York's Proskauer Rose who has worked with Cooper in the past but is not involved in the Enron restructuring.

Cooper has said he hopes to remake Enron into a smaller, more focused firm along the lines of the pipeline company it was originally.

The memo came with a piece of financial advice, underlining just how unstable employment is at the failed energy trader, even for key staffers:

"Depending on an employee's personal circumstances," it said, "a participant in the retention program may wish to consider setting aside some portion of retention as a financial safety net in the event he or she is involuntarily terminated."