Message-ID: <5792819.1075853545835.JavaMail.evans@thyme>
Date: Sun, 26 Nov 2000 18:00:00 -0800 (PST)
From: michelle.cash@enron.com
To: twanda.sweet@enron.com
Subject: Quarterly Business Review
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X-From: Michelle Cash
X-To: Twanda Sweet
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Twanda, please take the text of this email and turn it into a document that 
is presentable so that I can give it to Mark at our Quarterly Business Review 
Meeting at 2:00 Monday -- actually, I will need it by noon so that I can 
revise it.  Thanks.  Michelle



Transactions

Major Events of September - November 2000

Garden State Paper -- closing and transition.

Triple Lutz -- issues surrounding potential divestiture, including internal 
discussions, review of data requests and responses, review and comment on 
both PSA documents, negotiations with both buyer's representatives, and 
discussions with clients.  Issues include salaries of employees hired by 
buyer (effect of Enron severance plan), other benefits for divested employees 
(including unvested stock options, insurance, vacation, etc.), process for 
divesture, payment of severance obligations, possible redeployment, etc.

Crane -- monitor due diligence, PSA review and comment, client discussions.

Falcon -- review diligence reports, client discussions.

E2  -- limited involvement in PSA and schedule review, data requests.


Anticipated Issues for December 2000 - February 2001

Triple Lutz -- continued negotiations and document drafting.  Transition 
issues for divestiture will continue to be significant.  Litigation by 
persons who lose their jobs as a result of the transaction and who choose not 
to sign the waiver for double the severance benefits is possible.

East Coast Power:  If we sell our interest in ECP, there will be many 
transition issues due to Enron's providing benefits, payroll, etc. for ECP 
personnel.  Also, there will be transition issues for other services, 
including legal services that Enron has been providing for ECP.

Crane/Falcon -- could move forward; Crane is more likely.  Issues of labor 
unions and Canadian law will require attention on transition issues.


Litigation

Major Events of September - November 2000

No employee-initiated litigation for 2000.

Non-compete litigation:  Currently, suit pending against Alonzo Williams in 
Sharolyn Wood's court.  Suit filed, no TRO sought.  Service in process.

Minor litigation:  Marentz & Co. v. Enron.  Suit for non-payment of placement 
fee.  Maximum damages $75K.  Discovery period ends this week, court-ordered 
mediation to follow.

Anticipated Issues for December 2000 - February 2001

I expect that we will be filing non-compete litigation in February and March, 
as people leave after they are paid their bonuses.  

We should discuss the continued use of Bill Ogden for non-compete litigation.



Documents Generated

Major Events of September - November 2000

New Consulting Services Agreement:  I prepared a new form of Consulting 
Services Agreement to replace old Master Service Agreement and Project Work 
Description for Net Works contract personnel. I received minor comments from 
outside counsel as well as client group feedback.  I will finalize the 
agreement, so that the new document can go into effect on 1/1/01.  

Standard Agreements:

I prepared:

  ___ draft employment agreements.

 ___ draft consulting services agreements.

  ___ separation agreement and releases.

 ___ retention letter agreements.

The number of employment agreements seems low to me, particularly in 
trading.  My understanding is that Lavorato does not want to put every person 
in trading under contract, but wants to wait and see how they perform.  There 
are potential legal risks with this approach if we want to enforce our 
non-compete provisions. 

Anticipated Issues for December 2000 - February 2001

I expect that, after bonus amounts are announced, there will be a flurry of 
contract activity in efforts to pay people through means other than the bonus 
pool.  

Investigations

Major Events of September - November 2000

Anonymous Letters Sent to Office of Chairman about Energy Operations:  I 
directed the investigation and supervised outside consultants once the 
company decided to employ them.  I and the team reviewed the results with 
Sally Beck in early November and proposed methods to address the results of 
the consultants' surveys.  Sally Beck is contemplating communication to 
employees on results of survey.  [Other proposals can be discussed verbally.]

Texaco Hacker:  We had a situation where one of our employees logged onto the 
Texaco computer system using an ID of a former co-worker.  He then sent 
inappropriate emails to her co-workers, posing as her.  The investigation 
results led to termination of employment for cause.

Anticipated Issues for December 2000 - February 2001

I expect that there will be some claims that will need to be investigated 
following PRC/bonus discussions. 


Training

Major Events of September - November 2000

 Increased role as trainer.  I provided interview training for all Net Works 
employees who are involved in the Technology Track (about 10 sessions).  

Anticipated Issues for December 2000 - February 2001  

EIM:  Ray Bowen has asked Julia and I to provide training to the Industrials 
Group.  The focus will be on labor and employment issues in the acquisition 
of assets as well as the integration of assets into the Enron family.  

All of Wholesale:  The harassment prevention training is going to be repeated 
early next year for all persons hired in the last 18 months.  Refresher 
training is being developed and will be delivered for those who already went 
through the first round.

Pre-Hire Testing 

Major Events of September - November 2000

Many Wholesale groups are looking at pre-employment testing as a method of 
screening out applicants.  I am working with the Training and Development 
groups to ensure that the tests meet legal standards.  I have suggested 
experts for HR to use in validation of such tests to ensure that the tests 
will result in a successful employee.

Re-Skilling:  One aptitude test is being employed in the selection of 
potential employees who may be re-skilled to perform IT jobs working under 
Beth Perlman. 

Anticipated Issues for December 2000 - February 2001

I expect the testing issue to continue to be hot, particularly since John 
Lavorato likes the concept for use in the Trading Track rotations for the A&A 
program.


Employee Relations/Terminations  

Much of my time is spent providing advice on employee relations/termination 
issues -- approximately 10-15 per week (total).  No two situations are alike, 
and they require significant time.

Anticipated Issues for December 2000 - February 2001

After PRC/bonus time, this area of practice will be exceptionally busy.  The 
company will put persons who received a Needs Improvement or lower rating on 
a performance improvement plan.  Generally, I review those before they are 
put in place.  If they are not successful, then terminations are likely 
(probably early in the first half of 2001).  Those issues are time-consuming 
and full of risks.

Work for Portfolio Assets

Major Events of September - November 2000

Ecogas:  wind-down issues.

Mariner:  Change of Control Agreements.

CGAS:  harassment prevention training -- arranged for Littler, Mendelson to 
provide training for CGAS personnel.

East Coast Power:  Agreements, advice and counselling on various issues.

Anticipated Issues for December 2000 - February 2001

CGAS:  Revising employment agreements for key personnel.

Mariner:  Employment agreement negotiation.


Conclusions


ENA:  ENA has not been able to hire commercial talent at the levels of 
manager and above.  I expect to see a great emphasis on hiring.  Lavorato has 
placed processes in place for hiring at that level, including the requirement 
of an interview with the OOC before someone can be hired at the level of 
manager or above.  

Salaries need to be reviewed for equity (by gender as well as by race).

Net Works:  Net Works has hired over 800 employees and contractors in 2000.  
I expect that a portion of those will be bad hires and will have to be 
managed out.  Generally, the IT personnel are not the best about counselling 
and documentation, so there may be significant work to be done to  ensure 
that risks are managed in that situation.  I have seen improvement in that 
group working with HR, and they have invited me to conduct training, so it 
may improve over time.

Contractors are another issue at Net Works.  A significant portion of the 
work force is contract personnel.  Microsoft issues could arise if 
contractors are allowed to stay on too long.

Misclassification under the FLSA is another issue.  Net Works has too many 
employees in the "exempt" category who should be classified as "non-exempt."  
I have raised this issue with HR, and they are working through it.  It will 
not be an easy fix.

EIM:  The biggest issues facing EIM include the attraction and retention of 
talent as well as M&A activity.  HR has hired a person from Azurix to handle 
diligence for EIM, but only time will tell whether she will be able to handle 
the job.  

EGM:  EGM has the same issues of hiring and retention of talent as other 
groups within Wholesale.  That, plus the added earnings pressures, will make 
retention of key personnel essential.  I expect to see continued pressure to 
shorten the non-compete duration for this group.
