Enron Says 'Fresh Start' Means a New Name
Firm Plans to Pay More 'Retention Bonuses'

By Frank Ahrens
Washington Post Staff Writer
Friday, February 22, 2002; Page E01

HOUSTON, Feb. 21 -- In life during bankruptcy, everything is on the table: Enron confirmed today that it would ditch its befouled corporate name and move out of its shimmering, 50-story skyscraper, which has become the television backdrop for corporate scandal.

The company also said it would seek to pay additional "retention bonuses" to key personnel, a practice that has drawn criticism in the past. Twice before, once just days before the company sought bankruptcy protection from its creditors, Enron paid retention bonuses totaling more than $100 million to about 600 employees deemed essential to keep the company running as it reorganized itself.

Those bonuses stood in stark contrast to the layoff of 4,500 Enron workers. The employees each received $4,500 severance, as mandated by a U.S. bankruptcy judge, but for some employees that was well below the amount called for under Enron's severance policy.

Enron spokesman Mark Palmer said the name change and the bonuses make sense.

"If we're going to have a reorganized company that's coming out of bankruptcy, we need a new name and a fresh start," Palmer said today. "Unfortunately, the name has been tainted by the actions of a handful, so it's unfortunately come to mean a lot of things. None of them are good."

The retention bonuses would have to be approved by U.S. Bankruptcy Judge Arthur J. Gonzalez in New York, who is presiding over the Enron case. Palmer called such bonuses a standard business practice during bankruptcy.

"To preserve value in the estate, you have to have employees minding the store," he said. "Often, to retain employees, you have to have something more than salary."

Some Wall Street analysts, however, believe the company is liquidating rather than reorganizing. Enron announced that it is leaving its mirrored downtown skyscraper and leasing smaller, less-showy office space elsewhere in downtown. Enron has occupied the tower, at 1400 Smith St., since 1986.

In addition, Enron apparently is giving up a second, 40-story mirrored tower it is building across the street, which is about 90-percent finished. The Enron towers are connected by a Jetsonian skywalk over Smith Street. As part of the bankruptcy proceedings, the company received $40 million to finish the tower so it could be sold. Enron had planned to shift parts of its once-expanding empire to the new tower, moving its wholesale trading business, broadband services and Enron Energy units across the street, Palmer said.

Instead, that building has been put up for sale. Enron's former energy-trading unit, purchased in bankruptcy by UBS Warburg, operates out of the unfinished tower.

The infrastructure downsizing corresponds to a reduction in Enron's workforce. The company employs about 20,000 people worldwide, about 2,500 at 1400 Smith St. In December, the company laid off 4,500 workers. Over the next two years, the company will rely primarily on attrition to trim its workforce but will also use layoffs.

A name change is unlikely to occur right away. Enron is preparing a reorganization plan; it's due out in the next couple of months, Palmer said. As creditors review and approve the plan, the name change will commence.

Once connoting can-do dynamism and limitless potential, the name "Enron" has entered the pop lexicon as a pejorative, meaning greed and corporate malfeasance, as laid-off employees complain of being "Enronned."

Palmer said the new name likely will not be created by an outside branding company at great cost -- as had "Enron." More likely, he said, the name would be generated from within whatever is left of the company after bankruptcy. Enron executives had been talking about a name change for the past two to three weeks, Palmer said.

"Enron" was a made-up name picked for the new company created out of the merger of Internorth and HNG in 1986. Naming consultants originally came up with "Enteron," but -- hours before it was to be made public -- an employee of the combined companies consulted a medical dictionary and discovered that "enteron" is another name for the intestines. Consultants truncated the name, keeping the "En-" prefix, denoting "energy," and the "-ron" suffix, which was meant to express vigor.

In theory, a name change for Enron is a good idea, said Alan Siegel, a New York corporate branding consultant.

"We've been through all kinds of crises, but this somehow has struck sort of a synthesis of everything that went wrong in the last 10 years in capital markets and energy deregulation and unrestrained greed and the individual making money at the expense of the average person," Siegel said.

But he called it a "silly Band-Aid" for Enron to change its name until it has a "future vision" of what it wants to be. Siegel added that he wrote Enron restructuring chief executive Stephen Cooper, offering consulting help to the foundering energy trader. He has not heard back from Enron, Siegel added.

As for the two tilted "E" logos outside of the corporate headquarters -- which may soon have Berlin-Wall scavenger value -- Palmer said he did not know their fate.