ENRON - Gave out $55m in bonuses right before bankruptcygreenspun.com : LUSENET : Current News - Homefront Preparations : One Thread
Forbes Enron Fallout Enron Execs Got $55 Million Just Before Bankruptcy Neil Weinberg and Lynn Cook, Forbes.com, 12.05.01, 4:36 PM ET
NEW YORK - Enron paid out $55 million in bonuses to executives and othe employees two days prior to filing for bankruptcy, the company confirmed today. A total of 500 employees received bonuses.
"In order to protect and maintain the value of the estate, we wanted to retain key employees in critical businesses," said Mark Palmer, an Enron (nyse: ENE - news - people) spokesman.
The so-called "stay-on" payments were made Nov. 29 in exchange for select employees' agreeing to remain at Enron for 90 days. Enron filed for restructuring Dec. 2 in the biggest bankruptcy filing in history. Enron has $50 billion in assets and booked $101 billion in sales last year.
Still unclear is the legality of the payments and whether they were disclosed by Enron in documents filed with the Securities and Exchange Commission or bankruptcy court. The bankruptcy court will likely allow the payments to stand because they are immaterial in a failure of Enron's size, says Peter Chapman, editor of Bankruptcy Creditors' Service, a Trenton, N.J., newsletter. "The $55 million is a drop in the bucket compared to Enron's annual payroll of $2.3 billion," he said. The only requirement with stay-on payments is that "the people authorized to sign the checks signed the checks."
That is likely to be little consolation to Enron employees, who caused an uproar last month when Chairman Kenneth Lay was set to walk away with $60 million after selling the troubled firm to Dynegy (nyse: DYN - news - people), another Houston energy firm. Lay agreed to forgo the payment. However, the Dynegy deal ultimately collapsed.
Meanwhile, at least 4,000 Enron employees have received pink slips since the company's bankruptcy filing, reportedly with $4,500 in severance pay. Many have lost their retirement savings, which Enron's 401(k) had invested heavily in company stock. Former employees and shareholders have both filed lawsuits against Enron
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