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Enron Mail |
Fran, any word from Nancy? Thanks. Michelle
---------------------- Forwarded by Michelle Cash/HOU/ECT on 11/14/2000 11:12 PM --------------------------- Michelle Cash 11/02/2000 05:17 PM To: Timothy J Detmering/HOU/ECT@ECT, Anne C Koehler/HOU/ECT@ECT, Patrick Wade/HOU/ECT@ECT cc: Fran L Mayes/HOU/ECT@ECT, fmackin@aol.com, David Oxley/HOU/ECT@ECT Subject: Project Triple Lutz -- HR Issues with Bidder D This email summarizes my conversation on employee matters with Nancy Quigg Young, which took place yesterday. Logistics. The most significant area for the employee matters involves the logistics of the buyer hiring the employees. In the original agreement that we proposed, we would allow the buyer to interview employees, select the ones they wanted to hire, and require that the buyer keep them employed for at least 2 years. Their counter proposal was that they got to hire who they wanted, have us pay severance on all others, and they would have no obligation to keep them for any length of time. Since then, there have been discussions internally that we want all employees to go with the sale, with the buyer taking the action of severing employees (although we would fund severance costs under the Enron formula). I raised that proposal with Nancy, who is going to discuss it with her business clients. In the alternative, if the buyer selects the people it hires, and we have to eliminate the jobs for those not selected, I informed her that we would require an indemnity for claims made against us based on the selection process. Base Salary. The counteroffer made by Bidder D does not provide that the employees hired from HPL would receive at least the same base salary as they earn at Enron. This is important because a severance payment could be due if an employee does not accept a job at a lower salary. Karen appeared unwilling to agree to pay divested employees outside of the buyer's salary bands (note: paying outside of a salary band in the context of an acquisition is standard procedure, but she was acting as if it were an incredibly difficult accomplishment). She claimed that one problem lies in not knowing the exact salary for each employee at issue. We pushed back on this and offered to provide average salaries for each job level, to allow her to get comfortable with the ranges. Fran Mayes will provide this information, which may eliminate this issue. Bonus. In our proposal, we asked that the hired employees receive a total bonus payment that is at least equal to what they earned their last year at Enron. Bidder D did not provide any such guarantee. Karen said that she needed our "bonus formula" before she could commit to this. I explained that we have no bonus formula and that our bonuses are based on performance of the company and the individual. We previously had provided total bonus amounts for the entire group, and she could make a determination of bonus costs on a consolidated basis for her deal folks to calculate. j She said she was "not sure if they could get there" on the bonus issue, particularly since she thinks our bonuses will be extra high this year. I offered to discuss whether we could modify the amounts by averaging the last two years, which she thought might make it better. Unvested Equity. When I explained to her that we could not supervest unvested options, she indicated that there was a "possibility" that the amount could be made up in stock options of Bidder D. I think this is the "win-win" position, but I think it will have to be pushed. Vacation. Their vacation plan maxes out at 4 weeks; ours maxes out at 5 weeks. She thinks she may be able to propose that, for the first year the employees work for the buyer, they can use the vacation accrual from Enron, but after that, they are subject to the buyer's vacation plan. This approach is reasonable. WARN Act. There is the slight possibility of WARN Act implications, in the unlikely event that closing occurs within 60 days of signing. The WARN Act requires a company to give employees 60 days notice of a plant closing or mass layoff. This situation probably would qualify. Thus, we would have to give 60 days notice to all employees who potentially may be affected. We can pay in lieu of notice, in the event that the closing (and thus the terminations) occur sooner than 60 days after closing, but we may want to spell out who bears that cost, if it is incurred. Benefits. Other than the vacation benefit described above, it appears that Bidder D has benefits that generally are of the same nature as Enron's benefits. Thus, allowing the hired employees to participate in the buyer's benefits plans, with credit for years of service at Enron, likely would be comparable to their situations here. I expect that we will hear from Bidder D with their proposals on these issues once Fran provides Nancy with the salary data. Please let me know if you have any questions. Michelle
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