Enron Offers Sweetened Severance Deal

June 11, 2002 (PLANSPONSOR.com) - Enron, the embattled Houston energy trader now the focus of numerous court fights, and debates by lawmakers and regulators, has agreed to pay former employees another $34 million in severance, according to an announcement.

The AFL-CIO announced that the agreement between the workers, the company and the Creditors’ Committee from Enron’s pending bankruptcy case.

According to the announcement, Enron workers can accept their entire severance owed under the Enron severance plan up to a cap of $13,500 – compared to the former $4,500 cap. Former Enron workers who reject this deal can opt out and pursue their own claim individually.

The Enron severance plan entitled individual workers to payments based on their length of employment and their salary. The sweetened severance deal will be filed with the US Bankruptcy Court, according to the announcement.

Also under the agreement, the court-appointed Employee Committee can pursue more than $80 million in retention bonuses paid to Enron executives on the eve of bankruptcy. Any money recaptured will go to workers whose severance and other benefits were frozen when Enron declared bankruptcy, the announcement said.

Many employees lost their life savings when the value of their 401(k) retirement savings plan accounts was virtually wiped out in Enron’s demise last year. Employees complained they were improperly pressured into loading their retirement plan accounts up with Enron stock even as the value of those shares was plummeting as the company’s business fortunes came apart.

For more on Enron and the controversy over company stock in 401(k) plans, read our exclusive company stock index page .