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Enron bonuses in final days under scrutiny

Enron Corp gave millions in bonuses to top executives two days before filing for bankruptcy last year, then fired thousands of employees without the severance pay to which they were entitled, a tearful former company worker told Congress on Tuesday.

"We have to wait in line behind the big banks in bankruptcy court. For employees, there won't be much, if anything, once it is all said and done," said Deborah Perrotta, a former senior administrative assistant at Enron.

Perrotta's testimony contrasted with that of two current Enron executives. One got one of the bonuses in question and the other sold Enron stock options by March last year to net a cool $6.5 million.

Sen Joseph Lieberman, the Connecticut Democrat who chairs the Governmental Affairs Committee, said his panel would dig deeper into the bonus issue. "It does add insult to injury," he said.

Enron's tumble last year from energy trading giant to the biggest US bankruptcy filing ever has cost the jobs of thousands of people, wiped out billions of dollars in shareholder equity and devastated retirement accounts.

At first, Enron benefits manager Mikie Rath said she didn't remember the size of her bonus. When this produced a titter of disbelief in the committee room, Rath added: "In excess of $20,000."

Cindy Olson, Enron's executive vice president for human resources and a former member of Enron's executive committee, said she unloaded her stock options on the advice of an independent financial adviser.

Perrotta, who worked five years for Enron, said the $105 million in bonuses, designed to keep top employees despite Enron's financial difficulties, compared to about $150 million in severance payments owed to 4,500 fired employees, like herself.

At one point the company had promised payments averaging about $37,000, but many had received checks for just $4,500, Perrotta said.

"We thought we could give the employees severance," said Olson. "We found out at the 11th hour -- everybody was devastated by this -- we could only give $4,500," she said.

Olson and Rath also explained why they went ahead with a change of administrators in Enron's 401(K) retirement plan last year that prevented employees from shifting to other investments as Enron's stock price reeled from an earnings restatement going back four years.

The administrator switch and blackout period that prevented 401(K) changes between October 29 and November 13 was long-planned, Olson said, and lawyers advised them not to delay.

They also had hopes that the already-sliding Enron stock price would revive. "We actually thought we were going to get out of it," Rath said. "If someone would have told me we were going to file bankruptcy, I never would have believed it."

In response to the Enron debacle, President George W Bush has proposed barring executives from selling company stock while employees are in 401(K) blackout periods.

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