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Enron Mail |
Sheila, do you think we should meet with Rick Buy about this? Or, should we
talk about it without Rick and then respond accordingly? The bottom line is, that the non-compete probably should stay as is, even in the case of RAC. Let's discuss. Michelle ------------------------------------------------------------------------------ --------------------------- Michelle Cash Enron North America Corp. 1400 Smith Street, EB 3823 Houston, Texas 77002 (713) 853-6401 michelle.cash@enron.com This message may contain confidential information that is protected by the attorney-client and/or work product privileges. ----- Forwarded by Michelle Cash/HOU/ECT on 06/23/2000 04:46 PM ----- Ted Murphy 06/21/2000 06:25 PM To: Rick Buy, Sheila Walton/HOU/ECT@ECT, Michelle Cash/HOU/ECT@ECT cc: Subject: My Contract I have reviewed the proposed contract and have the following comments: 1) The numbers appear acceptable but only in context with the rest of my comments 2) The language is such as to even give an illusion that I could act in an independent and objective manner 3) There is no consideration given for the obligations to not compete, solicit customers and employees, and speak harsh words 4) The length of the non-compete is ludicrous, i.e. it is so long that it makes no sense for Enron to pay someone for it and the marginal 6 months adds very little incremental protection to Enron from a competition perspective. This might be appropriate for a member of the Executive Committee. Let me go into some more detail on the above. Point #2 All of Senior Management has told outside constituents (The Board, Shareholders, Investment Analysts, Rating Agencies, Regulatory Agencies, Banks and Counterparties) that the RAC Group is independent of the Business Units. That is, given that our job is to provide objective analysis of the business activities, it has provided great comfort to these interested parties that our judgment is not influenced by the people who are taking risk on behalf of the firm. Individual compensation is the foundation of this independence. These parties have made judgments to provide capital (dollar or otherwise) to us based on the knowledge that this group in this independent configuration exists and is effective. It has been specifically cited in reports as a strength and we are asked to make dozens of presentations each year to that effect. This is especially true in the Market Risk function because, unlike other transactions in the firm, there is no analysis and approval chain for risk taking other than coarse buckets and the valuation, direction, and volatility are so opaque. Independence is a cornerstone of the G-30 recommendations on derivatives. I believe that these parties are much more concerned with what they can't see as opposed to what they can. I believe that our claim to have an independent function would be jeopardized if my bonus were a function of earnings targets and a PRC full of trading MD's. This should be a simple guaranteed minimum. Point #3 If Enron wants the right to keep me on the shelf for up to 12 months, then Enron needs to pay for it. While I understand that sign on bonuses and retention bonuses are discouraged, I have firm evidence that low level commercial people are receiving both without any senior management approval. The amount should approximate the market price for the job (all in) for the period of the non-compete. This follows to point #4 - I don't expect anyone to pay me such additional amounts equal to my "target" compensation for 12 months ($500,000!!!!). The right answer is to shorten the non-compete to a maximum of 6 months and pay me for that. I think that it would be equally stupid for Enron to not have the right to put me on the shelf for a considerable period of time given that I have and must continue to have complete access to all positions, p&l and the underlying contracts. I would consider giving Enron the option (for a smaller premium) to have me non-compete which, if exercised, would trigger a larger payment. There are some other smaller points that I have discussed with Sheila Walton which can be addressed later. Please give your consideration to these items asap as I my old contract has expired. Ted
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