Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
February 14, 2002
Deferred Comp at Center of More Enron Charges
For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!
Just before filing for Chapter 11 bankruptcy protection, Enron allowed a small group of executives to withdraw their money from a deferred compensation program, according to The New York Times.

Moreover, the Times reports, Enron gave these executives preferential treatment over some former managers who had also requested early withdrawal. These managers' requests were denied.

As a result of the bankruptcy filing, about 400 senior executives and former executives who were part of Enron's deferred compensation program became under the rules governing the plans, unsecured creditors of the company.

That placed their claims behind those of secured banks and other creditors in the bankruptcy court. It left them exposed to losing most, if not all, of the money in their accounts.

The Times says it's unclear whether top executives like the former chairman, Kenneth L. Lay, withdrew money from the deferred compensation plan just before the collapse. It's also unclear, according to the newspaper, whether Enron violated any rules or laws in making the preferential payments.

But some former Enron employees are considering a lawsuit in hopes of recovering millions of dollars in deferred compensation they say they are owed.

In the 1980's and 1990's, Enron, like other corporations, allowed midlevel and high-level employees to save on taxes and build up a larger nest egg for retirement by deferring a portion of salary and annual bonuses in an investment program similar to a 401(k) retirement plan. But unlike a 401(k), the money in the plan remained in company trust accounts and did not belong directly to the executives.

When Enron disclosed its financial troubles late last year, some employees and former employees elected to accept a 10 percent penalty and an immediate tax bill to get their money out of an Enron deferred compensation plan established in 1994. By mid- to late November, however, at least a dozen former employees said they had their requests denied, even as friends and colleagues still working at the company had their requests granted.

"The fact that payments were made at all means officers inside knew the company was going down," said Dan Ryser, a former high-level executive at Enron who retired in 1993. "It's pretty apparent Enron was not being fair in the treatment of these early withdrawal demands."

Several current executives at Enron told the Times that they knew the company had processed checks for Enron employees ahead of those for former employees. They noted that Enron officials might have been guided by bankruptcy lawyers, who probably argued that paying current employees helped protect the company and its value.

Enron had several deferred compensation plans, according to the Times. Its 1994 plan allowed employees to make investment choices and purchase "phantom" Enron stock, which would have tracked the value of Enron shares. Hundreds of employees put substantial bonuses into the plan in recent years.


Featured Free Resource:
Cost Per Hire Calculator
Twitter  Facebook  Linked In
Follow Us
Copyright © 2018 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on
Document URL: