February 07, 2002 >
Two Enron executives told senators on Tuesday that they scrambled to protect employees' retirement savings and severance pay as soon as they realized the company was collapsing last year.

"We did the best we could with a difficult situation," said Cindy Olson, executive vice president for human resources for the Houston energy trader.

Employees had been prevented from selling the company stock in their 401(k) retirement accounts during a transition in investment administrators last fall. It was also during this time that the company stock took its fatal plunge.

Olson and Enron benefits manager Mikie Rath told members of the Senate Governmental Affairs Committee that they considered, but ultimately rejected putting off the administrator switch in light of the falling stock prices.

Later, as the company headed for bankruptcy, Olson said she had several conversations with then Chairman Ken Lay to try to salvage employees' severance pay. She quickly concluded, she said, that employees would get only a nominal payment of $4,500 each if Enron declared bankruptcy. The realization was devastating, she said.

Several former Enron workers, who are suing Olson and other top executives, criticized the executives' testimony, the Houston Chronicle reported.

Debbie Perrotta, a laid-off senior administrative assistant who had worked at Enron for five years, testified that 4,500 Houston Enron employees lost their jobs, their retirement savings and an estimated $150 million in severance and vacation pay after the company filed for bankruptcy on Dec. 2.

But two days before that filing, Perrotta noted, "Enron cut $105 million in retention bonuses for a small number of executives."

Sen. Joseph Lieberman, D-Conn., who heads the Senate committee, said he would subpoena records on the retention bonuses.
Lieberman asked Olson to explain why she failed to warn employees to sell their Enron stock as the price was sliding.
"We didn't have a crystal ball," Olson said. "We didn't know where the stock was going to go."

She added that federal law limits what investment advice employers can give their employees. Besides, she said, the company's top executives put their faith in Lay and hoped he could save the company.

But Lieberman pointed out that something must have motivated Olson to sell $6.5 million of her own Enron stock months earlier.

Olson, who served on Enron's executive committee from 1999 until she and then Chief Executive Officer Jeff Skilling had a falling out and he removed her in early 2001 said she sold most of her company stock in late 2000 and early 2001.

Olson said she was thinking of leaving Enron after Skilling demoted her from the executive committee and took away some of her human resources duties. She said she and Skilling "did not see eye to eye" about how employees should be treated.
Olson said she and her husband hired their own financial adviser, who urged her to diversify her stock portfolio so she would not be so reliant on her company's stock.

Olson also testified that Sherron Watkins, a former Enron executive, had come to her last summer, asking Olson's advice on whether she should approach Lay with concerns about accounting problems she believed threatened to bring down the company.
Olson said Watkins was unsure whether a memo she had written to Lay on Aug. 15 was technically or legally accurate. Olson said she encouraged Watkins to talk to Lay.

Even after her conversation with Watkins, however, Olson said she did not warn her colleagues. Her talk with Watkins had been confidential, she said, and she trusted Lay to act if Watkins' fears were on target.

To read the Houston Chronicle article, click here.