SEC objects to Enron CEO
Agency says contract with acting CEO Cooper is overreaching for a bankruptcy case.
March 8, 2002: 5:06 p.m. ET
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NEW YORK (CNN/Money) - The Securities and Exchange Commission objected Friday to the hiring of Stephen Forbes Cooper as acting chief executive officer of bankrupt Enron Corp.
The SEC, in a motion filed before the United States Bankruptcy Court for the Southern District of New York, said that many of the terms of Enron's agreement with Cooper are overreaching and inappropriate for a Chapter 11 case.
"The agreement in its current form is not right and certainly does not seem right," the SEC said.
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In a bankruptcy proceeding, Enron is required to have court approval for any large expense such as Cooper's contract. A hearing is set for March 13 at 10 a.m. EST.
The agency objected to Enron's hiring of Cooper at a salary of $1.3 million and allowing him to assign up to 15 associates or more at a salary of $864,000 each. The contract absolves Cooper, who is only required to work 35 hours a week, and his associates of any fiduciary duty to Enron while also indemnifying them for liability in connection to their services.
Bankrupt energy trader Enron named Cooper, a corporate turnaround maven, as its interim CEO and chief restructuring officer in January. Cooper replaced former CEO and chairman Kenneth Lay, who has declined to testify before Congressional investigators about his role in the company's collapse.
Enron filed the largest bankruptcy in United States history last December and laid off thousands of workers.
Cooper's contract also guarantees him a minimum $5 million bonus if Enron confirms a "consensual" organization or liquidation plan. Cooper is also allowed to assign additional associates without court approval, the SEC said.
"These terms cast doubt on the fairness of Enron's handling of its bankruptcy case and on the bankruptcy process as a whole," the SEC said.
Enron's attorneys told CNNfn that they have drafted a new contract for Cooper that deletes his $5 million bonus and requires him to assume a fiduciary duty to Enron. The contract is to be made available shortly on the New York bankruptcy Web site, the attorneys said late Friday. 
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