Posted on 01/24/2003 5:56:04 PM PST by deport
Jan. 24, 2003, 12:47AM
Enron seeking OK for $29 million in bonuses
By ERIC BERGER
Copyright 2003 Houston ChronicleIt's bonus time at Enron again.
After more than 400 days in bankruptcy, the company is seeking court permission for a new round of bonuses totaling $29 million, spread among about 900 employees.
This round follows a $140 million retention plan approved last April and $105 million in bonuses paid at the time Enron filed for bankruptcy.
Because part of the $140 million package expires at the end of February, Enron officials say the company must assure that certain employees, many of whom are liquidating the very businesses that employ them, stay on to complete the job.
When Enron proposed the $140 million retention plan to the court last spring, its attrition rate was so high that if left unchecked, 87 percent of its employees would have left within a year, the company said.
Since that plan was approved, the company went from losing an average of 34 employees a week to losing nine per week.
"We want to have continuity going forward, and there's considerable uncertainty with the first plan ending," Enron spokeswoman Karen Denne said.
Some company creditors are asking why another round of bonuses is now needed when most, if not all, of Enron's remaining assets will be auctioned within a few months, long before the February 2004 date to which the new retention plan binds workers.
"Enron has been a feast for professionals and insiders, but so far it has done nothing but have a reduced promise for any meaningful return for outside creditors," said David Bennett, a lawyer with Thompson & Knight, which represents creditors of Enron North America.
Bennett said the company has done nothing in its bankruptcy to shed its reputation for corporate excess, and the new request is suspect as a result.
Already Enron has shattered records for the most money spent on bankruptcy lawyers and accountants, racking up considerably more than $300 million to date, and is spending at a rate that will take those costs above half a billion dollars.
Payouts to the company's tens of thousands of creditors likely remain at least a year off.
Court papers Enron filed in support of its request say it cannot do without its present employees because they alone have the expertise to liquidate the company's trading books, respond to 20 investigations and resolve bankruptcy claims.
"These individuals possess unique knowledge, skills and experience, as well as customer and supplier relationships, vital to the business enterprise, all of which are in many cases impractical or impossible to replicate," wrote Enron's chief bankruptcy lawyer, Martin Bienenstock.
Enron did not provide information about how the $29 million in bonuses will be split up among the 900 employees. It averages to about $32,000 per worker.
The company also did not say who received money from the last round of bonuses or how much of that amount is left. The $140 million plan included $40 million in retention payments for 1,285 employees, up to $90 million in incentive bonuses for employees who helped sell Enron assets and manage contracts to their conclusion, and $7 million in severance for about 842 employees.
Bennett said Enron should say how much of the bonus money from all parts of the $140 million plan remains before asking for more cash.
Enron's request for additional bonus money is scheduled to be heard in bankruptcy court Feb. 6.
Denne said the company has the support of its creditors committee, made up of the largest unsecured creditors. Typically Enron's requests that are supported by the committee have been approved by Judge Arthur Gonzalez.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.