Steve, in response to your request to Cynthia Barrow, attached is a stock 
option termination matrix, which indicates the typical termination provisions 
for each specific type of termination event and for each type of option grant.

Some grants may have special provisions due to the reason for the grant; 
these provisions are specified in the award agreement.

In 1996, Enron,s Board of Directors approved a change to the termination 
provisions to extend from 1 year to three years the time an employee would 
have to exercise vested options upon an involuntary termination (due to 
non-performance, business reorganization, or divestiture) or termination due 
to death, disability or retirement - no change was made to the time allowed 
for vested options to be exercised in the event of a voluntary termination, 
however.   This extension from 1 year to 3 years increased the value of an 
option which was the desired effect i.e. fewer options are required to 
deliver the desired value thus decreasing overall utilization.  This change 
also reflected Enron,s desire to utilize options as a retention device with 
greater downside to an employee who voluntarily terminates i.e. only 30 days 
allowed to exercise vested options.   Prior to August, 1995, an employee had 
to exercise vested options before terminating - this was changed to the 
"within 30 days of termination" scenario in August, 1995.

The extension for time allowed to exercise vested options in the event of an 
involuntary terminations may also provide the beneficial effect of minimizing 
litigation associated with involuntary terminations due to divestiture, 
non-performance, etc.

 



Please let me know if you would like to meet to discuss or if I can provide 
additional information. My extension is x35816.  Thanks.
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