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Enron Mail |
Pat, I am keeping you busy these days. Any comments on below? Michelle
-----Original Message----- From: =09Butler, Pam =20 Sent:=09Tuesday, July 31, 2001 3:03 PM To:=09Cash, Michelle Subject:=09FW: Question on stock grants - legal clarification requested Michelle, can you give this opinion or arrange to get one? Please let me k= now how we need to proceed and and expected turnaround. Thanks! -----Original Message----- From: =09Butler, Pam =20 Sent:=09Tuesday, July 24, 2001 6:39 PM To:=09Cash, Michelle Cc:=09Oxley, David Subject:=09FW: Question on stock grants - legal clarification requested Michelle, I've been seeking an accounting opinion from a FIN 44 perspective= the impact on delaying vesting of options if someone goes on an unpaid lea= ve of absense (like a sabbatical). Besides below documentation, I've made = the case verbally that we can point to the following to show that someone o= n leave is still an employee: 401k account distribution is not triggered can continue in Enron medical benefits Cash balance vesting continues i.e. service is bridged employee can't compete or work for someone else, will sign waiver to that a= ffect Accountants will not answer my question unless I obtain legal opinion that = employment status is maintained. Can you give legal opinion? If not, Da= vid, shall we incur expense of seeking outside opinion of counsel to get th= is question answered? -----Original Message----- From: =09Butler, Pam =20 Sent:=09Thursday, July 19, 2001 3:12 PM To:=09Tyler, Tracy Cc:=09Farmer, Stanley Subject:=09RE: Question on stock grants - legal clarification requested Tracy, currently someone is placed on inactive status when they go on unpai= d leave of absence; they cease participation in all plans but can continue = to have medical coverage if they choose to make the necessary 100% contribu= tions; since they are on no pay status, no FICA or SUTA/FUTA is paid in; fo= r headcount purposes they cease to be included in total headcount reporting= . So it is hard to say whether it qualifies under the below provisions. For the sake of this opinion, however, if we wanted to pursue sabbaticals f= or a select few and could code them as "active - sabbatical" and thus show = them up for headcount purposes, then what would the answer be? -----Original Message----- From: =09Tyler, Tracy =20 Sent:=09Monday, July 16, 2001 5:11 PM To:=09Butler, Pam Cc:=09Farmer, Stanley Subject:=09RE: Question on stock grants - legal clarification requested Pam, Just to make sure we are clear on our end, what you are saying is that the = grantee would be considered an Enron employee under common law under the st= andards set forth in Question 1(b) in FIN 44 as follows: A grantee is an employee if the grantor exercises or has the right to exer= cise sufficient control over that individual to establish an employer-emplo= yee relationship. That relationship shall be determined based on common law= as illustrated in case law and currently under U.S. Internal Revenue Servi= ce Revenue Ruling 87-41. Accordingly, for purposes of applying Opinion 25, = a grantee meets the definition of an employee if the grantor consistently r= epresents that individual to be an employee under common law. The definitio= n of an employee for payroll tax purposes under the U.S. Internal Revenue C= ode includes common law employees. Accordingly, a grantor that classifies a= grantee potentially subject to U.S. payroll taxes as an employee under Opi= nion 25 must also (except as provided in paragraph 6) represent that indivi= dual as an employee for payroll tax purposes. A grantee does not meet the d= efinition of an employee under Opinion 25 solely because the grantor repres= ents that individual as an employee for some, but not all, purposes. For ex= ample, a requirement or decision to classify a grantee as an employee for U= .S. payroll tax purposes does not, by itself, indicate that the grantee is = an employee for purposes of Opinion 25 because the grantee must also be an = employee of the grantor under common law. We will base part of our conclusion on the answer we are provided. Thanks f= or the clarification in advance. Tracy A. Tyler Manager=20 Enron Corporate Transaction Support direct: 713-345-2860 mobile: 832-651-3121 -----Original Message----- From: =09Butler, Pam =20 Sent:=09Monday, July 16, 2001 4:34 PM To:=09Tyler, Tracy Cc:=09Farmer, Stanley Subject:=09RE: Question on stock grants - legal clarification requested Tracy, someone on leave of absence without pay is changed to inactive statu= s but is not terminated. During this inactive phase, no payments generally= would be made to the employee. If any payment were made to the employee, = he/she would be charged US FICA/Medicare, etc. For example, an employee on= inactive status could exercise vested options while on leave; this income = would be reported as employee compensation and to the extent FICA limits ha= d not been reached, would be FICA/Medicare taxed at time of payout. Since = they are not earning a salary, per se, during the leave, no FUTA/SUTA taxes= are withheld. What other additional information do I need to provide? Would a screen pri= nt of someone who's on leave from our SAP system be helpful? -----Original Message----- From: =09Tyler, Tracy =20 Sent:=09Monday, July 16, 2001 1:40 PM To:=09Butler, Pam Cc:=09Farmer, Stanley Subject:=09Question on stock grants - legal clarification requested Pam,=20 Stan Farmer and I have been working per your request on the compensation is= sue related to leaves of absence. We need further legal clarification rega= rding one point before we can properly assess the situation you described i= n your previous e-mail. =20 When you state, "It is also assumed that employees on unpaid leaves maintai= n their "active" employment status," we need to know the manner in which yo= u are defining an active employee. For purposes of evaluation under FIN 44= , the definition of an employee is a person under common law as illustrated= under US Internal Revenue Ruling 87-41 potentially subject to US payroll t= axes as an employee of the grantor of the options. During the leave of abs= ence, does the grantee continue to meet the definition of an employee under= this statute?=20 We need a legal opinion as to employee qualification under the Revenue Ruli= ng above before we can further investigate proper accounting procedure. As= soon as we receive your response we will continue our research and provide= you with the requested guidance in a timely manner. Thanks for your assistance. =20 Tracy A. Tyler Manager=20 Enron Corporate Transaction Support direct: 713-345-2860 mobile: 832-651-3121
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