In an unexpected twist, the SEC on Friday asked the U.S. Bankruptcy Court for the Southern District of New York to reject Enron Corp.’s hiring of Stephen F. Cooper as CEO, calling the terms of his million dollar contract and bonus guarantee inappropriate. Enron wants court approval to hire the bankruptcy specialist as an independent contractor as interim CEO and chief restructuring officer with an annual salary of $1.32 million a year and a bonus of at least $5 million once the restructuring is completed.
Cooper, 55, was named in late January to replace Kenneth Lay. Enron then created an office of chief executive that included Cooper as well as Enron officers Jeff McMahon and Ray Bowen. Cooper is a managing partner with New York-based consulting firm, Zolfo Cooper LLC, which specializes in bankruptcies, and he also is expected to provide the Houston-based company with up to 15 “associate restructuring officers” at an annual cost of $864,000 each under the proposed agreement, according to papers filed Friday by the SEC.
“In a Chapter 11 case with public policy implications that are as far reaching as Enron’s, creditors, security holders and the public are entitled to a chief executive officer whose selection can not be subject to question,” said the SEC filing. Cooper’s employment contract casts “doubt on the fairness of Enron’s handling of its bankruptcy and on the bankruptcy process as a whole.”
Judge Arthur Gonzalez is expected to hear the case on March 13 (Wednesday), the court said.
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