Enron executives got bonuses while inflating company profits

In criminal prosecution, payment could be motive

March 01, 2002|By NEW YORK TIMES NEWS SERVICE

Enron Corp. paid its executives huge one-time bonuses last year as a reward for hitting a series of stock-price targets in 2000 - at the time, investigators say, when those executives were improperly inflating the company's profits by as much as a billion dollars.

The bonus payments and other special cash distributions include $320 million paid just 10 months before Enron's collapse into bankruptcy, company records show.

Legal experts said the payments could provide strong evidence of a motive for the financial machinations that investigators think distorted the company's reported performance and ultimately led to its demise.

Without those efforts, the profit and stock price levels required to obtain the money almost certainly would not have been reached.

Details of the bonuses - as well as other payments totaling more than $432 million made to almost 2,000 corporate executives during the two years before Enron's collapse - are described in spreadsheets and data maintained on the corporate computers, obtained by federal prosecutors. Copies of the spreadsheets were also obtained by The New York Times.

An Enron spokesman said that bonus payments at the company were linked to a variety of factors and did not differ significantly from similar programs offered by other companies. "They were all performance-based programs, which is pretty standard for most corporations," Eric Thode said.

Current and former Enron executives said the one-time payments had been anticipated for several years, and their distribution ultimately contributed to an exodus of executives throughout the ranks of the company beginning last year in March and continuing through the early fall.

"Everybody knew that money was coming, and was hanging on for it," one former executive said. "Once it was paid, a lot of people who wanted to move on decided that the time had come."

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