Nothing about bankruptcy is easy, and because of Enron's size, ours is especially complex.  So it is understandable that there might be confusion among employees of Enron's various debtor and non-debtor companies surrounding the bankruptcy.

To clarify, debtor-in-possession, or debtor, companies are the legal entities of Enron that have filed for bankruptcy - their business activities are subject to the review and approval of the Creditors' Committee and the bankruptcy court.  Non-debtor companies are legal entities owned or controlled by Enron that have not filed for bankruptcy - for the most part, non-debtor companies are able to operate their business as usual.  The estate is made up of the combined assets and liabilities of Enron, which include some holdings in non-debtor companies.  It is important to note that at the beginning of March there were approximately 20,000 Enron employees in non-debtor companies, and about 3,500 Enron employees in debtor companies.

Distinctions between debtor and non-debtor companies become especially relevant for employees as we begin to roll out components of a transitional compensation program.  As we work through restructuring, components of the program will apply differently to employees of debtor and non-debtor companies.  For example, earlier this year some non-debtor companies were able to pay performance bonuses and merit increases to their employees as part of the ordinary course of business.

Another example is severance.  Going forward, we can anticipate gradual reductions in our workforce.  Given the uncertainty of our situation, we realize the importance of providing a "safety net."  Severance provides employees a degree of financial security in the event their jobs are terminated in the future.  Some non-debtor companies were able to recently institute a new severance plan for their employees.  This was possible because the plan did not require the approval of the bankruptcy court.  While the severance plan for debtor companies will be different than the plan for non-debtor companies, severance is part of a comprehensive retention and severance plan that will go to the bankruptcy court for approval.  Employees of debtor companies will be covered by either severance or retention.

Retention will become part of the compensation program for some employees, primarily those in debtor companies.  Retention offers employees an incentive to stay with the company to help develop a new business entity, to liquidate non-core assets, or to unwind the affairs of the estate.  Retention is not a measure of past performance, but is intended to retain key employees whose skills or historical knowledge are critical to preserve or generate the greatest value for the estate and its creditors.

Additionally, we are now finalizing merit increases and promotions for employees of debtor companies.  Supervisors in those companies will soon begin communicating merit increases or promotions to their employees.

We hope this information further clarifies the bankruptcy's impact on our individual businesses, but more importantly, we hope it helps to establish realistic expectations and reduce some uncertainty for you as employees.

To review a current list of Enron's debtor companies, click on the following link:
http://home.enron.com/updates/filedentities.html