Message-ID: <8969651.1075862165528.JavaMail.evans@thyme> Date: Fri, 16 Nov 2001 06:37:59 -0800 (PST) From: k..allen@enron.com To: greg.whalley@enron.com, john.lavorato@enron.com Subject: FW: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Allen, Phillip K. X-To: Whalley, Greg , Lavorato, John X-cc: X-bcc: X-Folder: \PALLEN (Non-Privileged)\Allen, Phillip K.\Sent Items X-Origin: Allen-P X-FileName: PALLEN (Non-Privileged).pst Greg, After making an election in October to receive a full distribution of my de= ferral account under Section 6.3 of the plan, a disagreement has arisen reg= arding the Phantom Stock Account. =20 Section 6.3 states that a participant may elect to receive a single sum dis= tribution of all of the participant's deferral accounts subject to a 10% pe= nalty. This provision is stated to be notwithstanding any other provision = of the plan. It also states that the account balance shall be determined a= s of the last day of the month preceding the date on which the committee re= ceives the written request of the participant. In my case this would be as= of September 30th. I read this paragraph to indicate a cash payout of 90%= of the value of all deferrals as on September 30, 2001. The plan administ= rators, however, interpret this paragraph differently. Their reading yield= s a cash payout of 90% of the value for deferrals other than the Phantom St= ock Account, which they believe should be paid with 90% of Enron Corp. sha= res in the account as of September 30, 2001. Their justification is that i= n several places throughout the plan document and brochures it is stated th= at the distributions of the Phantom Stock Account shall be made in shares o= f Enron Corp. common stock. There are two reason that I do not agree with their interpretation. First,= section 6.3 begins with "notwithstanding any other provision of the Plan.= " This indicates that any other payout methodologies described in other se= ctions of the plan which deal with normal distribution at termination do no= t apply. Second, the language in section 6.3 stating "a single sum distrib= ution of all of the Participant's deferral accounts" indicates that one pay= ment will be made not a cash payment separate from a share distribution. The interpretation of the administrators goes beyond section 6.3. If that = is the case then section 7.1 should apply. This section does provide for t= he Phantom Stock Account to be paid in shares. However, it states "The val= ue of the shares, and resulting payment amount, will be based on the closin= g price of Enron Corp. common stock on the January 1 before the date of pay= ment, and such payment shall be made in shares of Enron Corp common stock".= This would result in approximately 8.3 shares to be distributed for every= share in the account on January 1, 2001. Although this would be the most = beneficial to the participants due to the decline of the value of Enron Cor= p. common stock from $83 to $10 per share, this methodology goes beyond se= ction 6.3. The calculations below illustrate the difference in the value and method of= distribution under each of the three interpretations: Section 6.3=09=09Plan Administrators=09=09Section 7.1 Number of shares=09=096,600=09shares=09=096,600=09shares=09=09=096,600 shar= es Relative share price=09=09$27.23=09=09=09=09=09=09=09$83.13 Phantom Stock Value=09=09$179,718=09=09=09=09=09=09$548,658 10% Penalty=09=09=09-17,972=09=09=09 -600=09=09=09=09-54,866 Value to be distributed=09=09$161,746=09=096,000 shares=09=09=09$493,792 Current stock price=09=09=09=09=09=09=09=09=09$10 Distribution=09=09=09$161,746=09=096,000 shares=09=09=0949,379 shares I believe my interpretation under section 6.3 is correct and fair. If the = administrators insist on distributing shares instead of cash then section 7= .1 should apply. The current interpretation of the plan administrators is = a hybrid between the two sections resulting in the lowest possible payout. = =20 In addition to myself, Tom Martin, Scott Neal, and Don Black are facing the= same issue. I would appreciate your review and consideration of this matt= er. Sincerely, Phillip Allen =20 =09=09=09=09=09=09=09=09=09=09