Enron Execs Reap $744 Milliongreenspun.com : LUSENET : Unk's Troll-free Private Saloon : One Thread
Enron Execs Reap $744 Million
Tue Jun 18, 8:29 AM ET
By BRAD FOSS, AP Business Writer
NEW YORK (AP) - Top Enron Corp. workers reaped $744 million in payments and stock in the year leading up to its bankruptcy filing, the company disclosed late Monday.
Representatives of former workers and shareholders responded angrily, accusing the 144 senior managers of essentially raiding Enron's coffers while leaving their clients with relatively little.
Enron disclosed in a 1,436-page filing with the federal bankruptcy court in New York that the executives received $309.5 million in salary, bonuses, long-term incentives, loan advances and other payments. The executives also exercised stock options and received stock valued at $434.5 million, according to the filing.
Among the executives who shared in the pay and awards were former chairman Kenneth Lay, former chief executive Jeffrey Skilling and former chief financial officer Andrew Fastow. Army Secretary Thomas White, who ran Enron's retail energy services unit, was listed, and so was former board member Wendy Gramm, the wife of retiring U.S. Sen. Phil Gramm, R-Texas.
Combined, this group of high-profile individuals, socked away $193.7 million in the 12 months before Enron filed for Chapter 11 bankruptcy Dec. 2. The value of Lay's pay and stock awards totaled more than $152 million, according to the filing. Skilling's cut was valued at nearly $35 million, while White received more than $17 million.
Eli Gottesdiener, a Washington attorney representing 24,000 participants in Enron retirement plans who lost as much as $1 billion on the collapse of Enron's stock, said: "It's outrageous. My clients find it outrageous and it's just more evidence that people at the top knew that they better get, while the getting was good.
"And they did, and my clients are left holding the bag. They drained the company of hundreds of millions of dollars," Gottesdiener said.
The more than 4,500 people who lost their jobs when Enron filed for bankruptcy have received a combined $43 million in severance and a tentative agreement has been reached whereby they would receive an additional $30 million or so.
Gottesdiener and other lawyers representing current and former Enron employees who lost hundreds of millions of dollars in the company's 401(k) plans could try to recover some of the money. They would need to prove that preferential payments were made, obstructing creditors from getting their fair share.
About a dozen lawsuits have been consolidated into a single class-action case asserting that Enron violated federal pension rules. The case, to be heard in a Houston court, will be used to determine how much the class would be entitled to as an unsecured creditor, while any actual distribution of funds would be decided by the New York bankruptcy court.
Figuring out when the payments were made will be critical. Enron retirees and former executives who were denied the ability to withdraw compensation and bonuses they had deferred say they were discriminated against because they had already left the company. Federal law prohibits "preferential payments" in the 90 days leading up to a bankruptcy filing.
Employees would get no more than $13,500, minus any payments they have already received, based on their salary and length of employment.
Besides the executives pay and awards, Enron funded one retention bonus plan in the fall of 2001 with $50 million to keep 76 employees "deemed critical" to the energy company's wholesale trading operations. Two prominent players in the company's energy trading unit, John Arnold and John Lavorato, received $8 million apiece, while another worker, Matthew Motley, received $2.3 million.
The company paid another $54.6 million in bonuses to employees in various subsidiaries, payments the company said were crucial to the "future" of these businesses.
On Nov. 28, the company's proposed merger ( news - web sites) with crosstown rival Dynegy Inc. fell apart and four days later Enron filed for bankruptcy.
The bankruptcy filing followed revelations of questionable accounting that allowed Enron to hide billions in debt through the use of off-the-books partnerships, some run by Enron executives, including Fastow and Kopper.
The findings of an internal probe, made public in February, largely painted Fastow as the architect of the partnerships used to disguise Enron's true financial health. The Securities and Exchange Commission ( news - web sites) is investigating the matter. Fastow, who received more than $4 million from Enron, on top of the $30 million he made through the partnerships, has yet to offer an explanation of his own.
-- (Dumbya and Kenny Boy @ yuckin. it up), June 18, 2002
Wendy Gramm is an Asian-American female. How dare you peddle you racist/sexist crap in these hallowed halls?
-- (email@example.com), June 18, 2002.