-----Original Message-----
From: 	Oxley, David  
Sent:	Monday, October 29, 2001 2:45 PM
To:	Olson, Cindy; Corteselli, Gina; Inglis, Elspeth
Cc:	Jones, Robert W.- HR Exec; Cash, Michelle; Joyce, Mary
Subject:	Draft ENE OTC Memo Re. y/e PRC

Spoke with Delainey this morning he suggested I draft below and send to him and Greg. Can you help critique (in particular I think this is too detailed);


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To: All ENE employees (bar EEL)
From : ENE OTC
Re: Year-end Performance Evaluations, Promotion Nominations, PRC Meetings and Annual Bonus process.

Many employees have been asking questions related to the above and some have asked for further clarification of the changes announced in the Lay it on the line survey results memo relating to the PRC. In this regard and particularly in mind of the significant business matters we must attend to over the next couple of months, we hope the following summary of the above related processes will provide everyone with a clearer picture of how each of these processes will be handled, why, when and by whom.

Performance Evaluations
The ENE OTC believe strongly that all employees should receive a written evaluation summarizing their achievements over the last 6 months, illustrating successes and constructive areas for development and opportunity. It is our intent that this should not replace day to day communication, coaching and feedback to all employees by supervisors, it is an important formal appointment we expect all Enron business units and functional areas to meet. 

Summary of Process			Timeframe				Applicable to	 		Notable changes from the past

PEP the 360 degree, intranet		1. System opens November 9		ALL full, part/reduced time	None	
enabled feedback system will		2. System closes November 30		employees, who joined 
drive the process as follows:		3. Final evaluations are due		Enron prior to October 1, 
1. EE's will select up to 7 		no later than January 31, 2002		2001.
Reviewers they have work with
over last 6 months. These should
be a reasonable selection of
direct reports, peers and managers.
2. Their Supervisor will discuss and
possible edit the above list with them
before approving on-line for distribution.
3. Recipients of f/b requests are
notified electronically and may decline
if they feel they have insufficient data.
4. Managers collate the feedback and
prepare a summarized final performance
evaluation form balancing their views
with those received on-line and setting
any appropriate objectives for next 6
months.

Training for the on-line PEP 360 degree tool will be available from ........................... contact ............. to register. A helpdesk is also available for employees to call with any questions ext...................


PRC Meetings and Promotion nominations
The lay-it-on-the-line survey response outlined our desire to make some changes to the PRC process. As a management team, we believe strongly in the value of regular discussions surrounding what performance and skills are currently valuable, on a relative basis where are they being demonstrated most, who is ready to assume a greater role in the organization and where are they currently deployed. Equally, regularly questioning areas where overall performance may have been disappointing is also critical. Continuing this process is core to our desire to maintain a meritocractic culture and identify new opportunities for employees. In this regard, the ENE OTC has directed Business Units and Functional areas to undertake a very limited number of discussions to focus on the following:

Summary of Process			Timeframe			Applicable to	 		Notable changes from the past
1. Each BU/Functional area will		1.Meetings held between	Analyst, Associates		1. No preferred distribution
conduct a single discussion to		December 1 and 15th		all Manager and above		2. Process not linked to employees feedback
identify it's top 10% and bottom		2. VP/MD promotion		titles employed prior to		(ie no label attached to evaluation document)
10% against the following, criteria:	discussion mid Dec.		July 1, 2001. All other 		3. No longer prime driver of bonus process
Leadership potential							ee's not required to go   		4. Primary purpose; to identify and agree 
Teamwork								thru this forum, promotion	candidates, leadership candidates, 
Enron Intrinsic skills and qualities					recommendations by		deployment of talent within BU's/Functions.
BU/Functional area specific measures				supervisor to BU OTC		5. No prescribed outcome to either top 10%
2. Promotion nominations up to Snr Director				or Functional lead for approval.	or bottom 10%.
decide by each BU/Functional area.									6. No cross calibration of employees outside
3. Attendee's of meetings to be each									BU/Functional area.
BU/Functional areas management team. 									7. Discussions held by each Management team
4. Results of meetings reviewed with ENE								not "committee".
OTC.													
5. Management committee meeting to
discuss and agree VP and MD promotion
candidates submitted from each area.

Additional information will follow from each of your BU OTC's or Functional leads regarding the details. Initial plans discussed with the senior management teams indicated no more than 22 meetings in total, which compares with over 200 at the mid year.



Annual Incentive Plan and Equity Award process
The Executive Compensation Committee of the Board will review and agree an appropriate Bonus and Equity pool for eligible employee's in January 2002, based on recurring earnings and in line with the plan. The ENE OTC will allocate this appropriately to each BU and Functional area based on unit perfromance against plan and competitive market data obtained from our external consulting partners. Given our strong pay for perfromance culture, these annual awards are a key element of the Enron compnesation arrangements, with a clear correlation to the Company's overall perfromance against plan, each indivdiual areas perfromance against plan and each individuals contribution. We and the board are committed to ensure our key employees are paid appropriately:

Summary of Process and Timeframe			Applicable to	 		

1. Each area allocated initial				All full part/reduced time employees
Bonus/Equity pools Jan 4, 2002.				as of November 1, 2001.
2. Human Resources provides
quidelines for individual targets
based on market data.
3. Each area recommends payments
to ENE OTC by Jan 11, 2002.
4. ENE OTC reviews numbers and
recommends pool to Board Jan
24, 2002.
5. Employees receive notification
of any awards Jan 28 thru Feb 8, 2002.
6. Cash bonuses scheduled for
payment week of February 8, 2002.
7. Equity awards scheduled for 
approval by board week of Jan 18, 2002.
 


It is our design to reduce significantly the burden of these processes on our personnel, ensure that all understand