Published on Tuesday, June 18, 2002 in the Los Angeles Times
Enron Paid Senior Execs Millions
Court Filing Shows 140 Key Employees Got an Average of $5.3 Million Last Year.
by Thomas S. Mulligan and Nancy Rivera Brooks
NEW YORK -- Before collapsing last year, Enron Corp. paid out $744 million in salary, bonus and stock grants to the company's 140 senior officers--an average of $5.3 million each.
The company disclosed the payments Monday in a court filing that provided the most detailed accounting yet of the company's payments to executives and other employees--including $100 million in retention bonuses to about 300 workers.
The filing also details $3.6 billion in payments to creditors and others in the three months before Enron filed for bankruptcy protection Dec. 2. The sums collected by top Enron insiders provide a stark contrast with the modest severance payments to the 4,200 Enron employees who lost their jobs around the time of the bankruptcy filing.
So far, the most any of the fired workers has collected is well under $10,000, Lowell Peterson, a lawyer for a number of those workers, said Monday. In a recent settlement still awaiting court approval, the group won several additional payments up to a maximum of $13,500 per person, he said.
By comparison, former Enron Chairman Kenneth L. Lay collected $103.6 million in total payments last year, including salary of $1.07 million, a bonus of $7 million, long-term incentives of $3.6 million and $81.5 million in loan advances, according to the filing. Lay also was awarded stock options and restricted stock worth $49.1 million, the documents show.
"It sort of shocks the conscience," Peterson said. "It's just not right for a company to be run as a private piggy bank for its officers, who then proceed to run it into the ground, costing 4,200 people their jobs."
Employees and investors who lost money in Enron's collapse could seek to have the bonuses rescinded and used toward a potential damage settlement.
The Senate Finance Committee said Monday it was investigating whether the bonuses were paid into special accounts, possibly offshore, without the knowledge of tax authorities.
The salary data are part of a required 1,600-page "statement of financial affairs."
The salary and bonus figures are for all officers at the level of managing director and above. The data go beyond what already has been disclosed in Enron's regular proxy statements, which deal with a few top executives and directors, including Lay, former President and Chief Executive Jeffrey K. Skilling and former Chief Financial Officer Andrew S. Fastow.
The bulk of the information disclosed Monday concerns the nearly $3.6 billion in payments made by Enron to its creditors before its bankruptcy filing.
Those creditors include Enron's former accounting firm, Arthur Andersen, which collected $12.3 million over the three months, the filing shows. A federal jury in Houston on Saturday convicted Andersen of obstruction of justice for its role in the Enron scandal.
Other large creditors include big commercial and investment banks such as J.P. Morgan Chase, Lehman Bros., Credit Suisse First Boston, Citibank, Bank of New York and UBS Warburg. Most of the bank transactions involved foreign-currency exchanges connected with Enron's overseas operations, Enron spokesman Mark Palmer said.
The documents give a flavor--much of it ironic in light of Enron's collapse--of the minutiae of daily corporate life. Payments went for such expenses as soft drinks, burritos, limousines, party tents and silk flowers. But there also was $37,933.70 to Accountemps, $100,000 each to the Republican and Democratic senatorial committees and $90,000 to the lobbying group Americans for Tax Reform.
Monday's filing concerns just Enron Corp., the parent corporation, Palmer noted. Filings by more than 50 other Enron entities are still to come, he said.
According to the documents, here is what some key Enron executives collected last year:
* Skilling received $8.7 million in salary, bonus and other compensation last year, plus stock and options grants of $26 million. A spokeswoman for Skilling could not be reached for comment.
* Fastow in 2001 collected $2.4 million in salary, bonus and other pay, plus $1.8 million in stock-related compensation. The figures do not include the reported $40 million more that he received through his interest in controversial limited partnerships that Enron used to boost profits and conceal corporate debt.
"We know the papers were filed; we don't have a comment on any aspect of it," said Gordon Andrew, a spokesman for Fastow.
* Richard B. Buy, former chief risk officer, received $2.4 million in salary and bonus and $3.4 million in stock compensation.
* Richard A. Causey, former chief accounting officer, was paid $1.9 million in salary and bonus plus $2.5 million in stock awards.
Buy and Causey were criticized in a board report Feb. 1 that said they were not effectively policing off-the-books partnerships run by Fastow and others. Both were subsequently fired.
J.C. Nickens, a Houston lawyer who represents Buy, Causey and several other former Enron executives, said Monday that Buy and Causey put far less money into their pockets than the numbers show because they had to pay taxes on stock-related compensation that became worthless after the bankruptcy filing.
Causey, for example, lost all but $400,000 of his stock-related payments but had to pay taxes totaling $1.6 million last year, the lawyer said.
"They're not out there looking for sympathy, just a fair hearing," Nickens said.
Kelly Kimberly, a spokesman for Lay, said the figures "appear to grossly overstate the amount of compensation which Mr. Lay realized in the 12 months prior to the bankruptcy filing."
Much of his pay was in stock, stock options and other long-term compensation that, because of the bankruptcy, was never realized, she said.
Mulligan reported from New York and Rivera from Los Angeles. Reuters was used in compiling this report.
Copyright 2002 Los Angeles Times