The year-end performance evaluation process is a great opportunity for 
employees and their supervisors to review accomplishments for the year and 
identify opportunities for personal growth.  Additionally, it is an 
opportunity for each of us to provide meaningful performance feedback to help 
others.  This memo is intended to summarize the major elements of this 
important process and clarify the timeline for year-end 2001.

(Note: ETS employees on self-directed work teams that participate in the 
Skill-based Pay program will complete team and peer performance reviews as 
they have in the past and are exempted from the discussion that follows.)

Feedback and Evaluation
Employees will solicit 360 feedback on their performance via the PEP system. 
The supervisor will use this feedback, along with other performance data 
about the employee, to prepare a written evaluation of the employee,s 
performance for the year.  The employee and supervisor will then meet and 
discuss this evaluation which provides an objective measure of the employee,s 
performance against expectations.  The performance evaluation is an 
opportunity to discuss accomplishments, areas for improvement and goals for 
the next year.  No overall performance rating will be designated.

? PEP System open for feedback   November 19 - December 7
? Performance discussions with supervisor December 10 - January 14
? Written evaluations due to HR   January 15

Training for all employees on how to use the PEP system will be available via 
online tutorials.

Compensation
Increases in an employee,s base pay for merit, promotion or equity can be 
recommended by an individual supervisor based on the employee,s performance, 
current responsibilities and salary.  Division Head approval is required.

As always, incentive awards are paid at the discretion of the Enron Board 
Compensation Committee and the Enron Office of the Chairman based on company 
and business unit performance. Once bonus pools are approved, individual 
bonuses will be determined by division and department heads based on employee 
performance.

Relative Talent Reviews
Relative talent reviews will occur beginning January 16, 2002 and will 
include discussions of Managers and above.  The focus is not on relative 
ranking but on identifying employees who best demonstrate the performance, 
skills and behaviors that are valued at Enron.  Each Division will identify 
its top 10% and discuss the utilization of its top talent.  Employees who may 
be ready to assume greater responsibilities will be discussed.  
Recommendations for promotions will be considered up through Senior Director. 
 EGS executive management will review Vice Presidents and Managing Directors 
and identify the top 10% in this officer group.  Nomination for promotions to 
Vice President and Managing Director levels will be made to the Enron 
Management Committee, which will make final decisions on these promotions.

If you have any questions about any aspect of this year-end process, I 
encourage you to contact your HR representative.

Gary