Suggested course in uncertain times

-----Original Message-----
From: Holst, Keith
Sent: Wednesday, November 14, 2001 8:11 AM
To: Allen, Phillip K.
Subject: Suggested course in uncertain times

John,

Let me begin by recognizing that you are now entrusted to resolve issues that were not of your own creation. I also appreciate the tremendous amount of stress that you have been under especially considering the birth of your second child. I do not envy you now, yet I am sincerely grateful that it is you and Greg leading us through these times.

The message that you have sent throughout my six years with Enron has been "trust the system until it fails you". We would all be disappointed if our troubled times were a result of a few (rather large) ill-conceived investments, but the violation of trust comes from the deliberate misrepresentation of facts. Namely the restatement of earnings and balance sheet items back to 1997. We have all based our decisions to continue employment with Enron upon publicly available information. Has fraudulence been proven in a court of law? No. However, the court of public opinion has already had it its trial, the perpetrators have been convicted and the victims now await retribution. In this matter, the corporation is responsible to the court of public opinions jurisdiction. I write you now to offer my version of justice.

From 1997 to date I have received restricted stock and options with a notional value of approximately $700,000 (by memory). At the end of each compensation period, I based my decision to continue my employment with Enron on all publicly available information. This corporation has deliberately and knowingly misrepresented these facts. Today, I call on Enron to repurchase my entire equity portfolio and replace it with a one time lump sum payment equal to the exact notional value.

My situation is certainly unique. I can save you the effort and inform you that my net career to date contribution is $zero. To this I have four responses: (1) At no time did I falter from the highest ethical standard, whereas Enron has; (2) I am calling for Enron to address its misrepresentations made prior to my 2001 misfortune. It would be an injustice for Enron to use my 2001 performance to justify its prior unethical compensation program; (3) I am fully prepared to accept zero performance bonus for this year; and (4) Despite my expectation of zero bonus I have continued to work diligently (including nights and weekends at your suggestion) at rebuilding this team.

Enron may not be able to offer this solution to all of its employees. You may need to make decisions on who to keep. Perhaps Enron should offer to release those less desired individuals from any contractual obligations.

John, I recognize that these issues cannot be resolved over night. I will be as patient as I can be.

Sincerely,
Keith