Enron paid hefty bonuses before bankruptcy
HOUSTON, Texas (CNN) -- Shortly before hundreds of Enron employees were laid off and the company declared bankruptcy in December, about 500 of the energy giant's executives were awarded hefty bonuses, according to a list reported by Salon.com on Friday.
The list of so-called retention bonuses, which was independently obtained by CNN, shows bonuses ranged from $1,000 to $5 million. The bonuses sparked anger among laid-off employees, who say the money should have been used to give them severance packages.
Many also question the motivation for the payments.
One former executive told CNN the bonuses were awarded to Enron's inner circle and to people who worked at setting up the questionable financial partnerships that led to the company's demise.
Enron officials disagree.
"The notion behind the retention payments," said Enron President Jeffrey McMahon during a congressional hearing Thursday, "was one that if we were to go into bankruptcy is that these key individuals would remain with the company to protect the businesses' and assets' values for the creditors." McMahon's bonus was $1.5 million.
Two executives -- John Lavorato and Louise Kitchen, who both worked in Enron's highly profitable energy trading company -- received the biggest payments. Lavorato got a $5 million bonus and Kitchen received $2 million.
Both now work for UBS Warburg, which got Enron's trading unit in a bankruptcy auction in January.
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