Enron seeks court approval for to pay retention bonuses, legal expenses of top executives

NEW YORK (AP) _ Enron is seeking the right to pay many of its employees lucrative retention bonuses and severance packages, saying such spending is ``critical'' to its plan to rebuild. <br><br>Enron

Saturday, March 30th 2002, 12:00 am

By: News On 6

NEW YORK (AP) _ Enron is seeking the right to pay many of its employees lucrative retention bonuses and severance packages, saying such spending is ``critical'' to its plan to rebuild.

Enron asked a bankruptcy court Friday to approve the payments as part of an effort to recruit new employees and keep current ones from leaving. It also sought payment for the legal expenses of current executives and board members.

Each component requires bankruptcy court approval.

Part of the plan would allow the company to pay up to $90 million in bonuses to hundreds of senior managers and employees working on asset sales. The payments would be funded with a small portion of the cash they collect from those sales.

Additional retention bonuses of up to $40 million would be paid to others involved in day-to-day operations.

``Clearly, some security must be afforded to these employees,'' the company said in its filing with U.S Bankruptcy Court. ``Otherwise, they have little or no reason to defer finding new jobs.''

For people now working at Enron but who might be laid off, the company is proposing a new severance package that would be based on years of service, with a maximum of eight weeks base pay and a minimum of $4,500. Total severance would not exceed $7 million.

Enron has cut about 4,500 workers since Dec. 2, when it filed for protection from creditors under Chapter 11 of federal bankruptcy law.

In its filing, the company said compensation opportunities at Enron have greatly diminished since the loss in value of its 401(k) plan, other stock-incentive programs and the depletion of previous retirement plans.

``Key employees are not being compensated at competitive market levels,'' the company said.

In addition to the retention and severance proposals, Enron also requested authorization to pay certain legal expenses for directors and officers still with the company.

It said its insurance policies, which are supposed to cover the legal expenses of current and former directors and officers, ``may be inadequate.'' Several insurers have balked at honoring those policies, saying they were misled by Enron.

The payments proposed Friday would not cover legal costs of Enron's former top executives and directors, who are named in a multitude of employee and shareholder lawsuits and face investigations by Congress, the Securities and Exchange Commission and the Justice Department.