Message-ID: <28867674.1075848220228.JavaMail.evans@thyme>
Date: Fri, 18 May 2001 02:48:00 -0700 (PDT)
From: pam.butler@enron.com
To: steven.kean@enron.com
Subject: Option Termination Provisions
Cc: mary.joyce@enron.com
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Steve, in response to your request to Cynthia Barrow, attached is a stock=
=20
option termination matrix, which indicates the typical termination provisio=
ns=20
for each specific type of termination event and for each type of option gra=
nt.

Some grants may have special provisions due to the reason for the grant;=20
these provisions are specified in the award agreement.

In 1996, Enron=01,s Board of Directors approved a change to the termination=
=20
provisions to extend from 1 year to three years the time an employee would=
=20
have to exercise vested options upon an involuntary termination (due to=20
non-performance, business reorganization, or divestiture) or termination du=
e=20
to death, disability or retirement - no change was made to the time allowed=
=20
for vested options to be exercised in the event of a voluntary termination,=
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however.   This extension from 1 year to 3 years increased the value of an=
=20
option which was the desired effect i.e. fewer options are required to=20
deliver the desired value thus decreasing overall utilization.  This change=
=20
also reflected Enron=01,s desire to utilize options as a retention device w=
ith=20
greater downside to an employee who voluntarily terminates i.e. only 30 day=
s=20
allowed to exercise vested options.   Prior to August, 1995, an employee ha=
d=20
to exercise vested options before terminating - this was changed to the=20
"within 30 days of termination" scenario in August, 1995.

The extension for time allowed to exercise vested options in the event of a=
n=20
involuntary terminations may also provide the beneficial effect of minimizi=
ng=20
litigation associated with involuntary terminations due to divestiture,=20
non-performance, etc.

=20



Please let me know if you would like to meet to discuss or if I can provide=
=20
additional information. My extension is x35816.  Thanks.