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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SEMPRA ENERGY
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Notice of 2000 Annual Meeting of Shareholders
and Proxy Statement
SEMPRA ENERGY
ANNUAL MEETING
2000
May 2, 2000
[LOGO OF SEMPRA ENERGY]
<PAGE>
SEMPRA ENERGY
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2000
----------------
To our shareholders:
The Annual Meeting of Shareholders of Sempra Energy will be held on
Tuesday, May 2, 2000 at 9:00 a.m. at the Hyatt Regency, One Market Place, San
Diego, California. The following items of business will be discussed and voted
upon at the meeting:
1. The election of five directors for a term of three years.
2. If properly presented at the meeting, a shareholder proposal regarding
voting approval requirements.
3. Such other matters that may properly come before the meeting.
Our Board of Directors has fixed March 9, 2000 as the record date to
determine shareholders entitled to notice of, and to vote at, the meeting or
any adjournment or postponement.
Only shareholders may attend the Annual Meeting. If your shares are
registered in your name or held through our Direct Stock Purchase Plan or
Employee Savings Plans, an admission ticket is attached to the enclosed proxy
card. If you plan to attend the meeting, please bring this ticket with you. It
will admit you and a guest or family member.
If your shares are not registered in your name or you do not bring your
admission ticket, you must establish share ownership at our admission desk to
be admitted to the meeting. If your shares are registered in your name, we
will be able to verify your share ownership from the Company's share register
upon your presentation of proper identification. If your shares are not
registered in your name (which is likely to be the case if they are held by a
bank, brokerage firm, employee benefit plan or other account custodian), your
name will not appear in our share register and you must present proof of
beneficial share ownership (such as a brokerage account or employee benefit
plan statement showing shares held in your account) and proper identification
to our admission attendants.
To help us plan for the Annual Meeting, please check the attendance box on
the enclosed proxy card if you plan to attend the meeting in person. Seating
is limited and will be on a first-come, first-served basis. Doors will open at
8:30 a.m.
Thomas C. Sanger
Corporate Secretary
March 15, 2000
San Diego, California
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE YOUR SHARES
PROMPTLY BY COMPLETING AND MAILING THE ACCOMPANYING PROXY OR VOTING
INSTRUCTION OR, IF AVAILABLE TO YOU, BY SUBMITTING IT OVER THE INTERNET OR BY
TELEPHONE. PLEASE REFER TO "VOTING INFORMATION--HOW YOU CAN VOTE" ON PAGE 3 OF
THE ACCOMPANYING PROXY STATEMENT.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Proxy Statement............................................................ 1
About Sempra Energy........................................................ 1
Voting Information......................................................... 2
Shares Outstanding....................................................... 2
Voting of Shares......................................................... 2
Confidential Voting...................................................... 2
Required Votes........................................................... 3
How You Can Vote......................................................... 3
Revocation of Proxies and Voting Instructions............................ 4
Other Information........................................................ 4
Governance of the Company.................................................. 5
Share Ownership of Directors and Executive Officers........................ 7
Proposal 1: Election of Directors.......................................... 9
Proposal 2: Shareholder Proposal Regarding Voting Approval Requirements.... 13
Compensation Committee Report on Executive Compensation.................... 16
Executive Compensation..................................................... 19
Comparative Stock Performance.............................................. 27
General Information........................................................ 28
</TABLE>
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SEMPRA ENERGY
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PROXY STATEMENT
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Sempra Energy's Board of Directors is soliciting proxies to be used at the
Annual Meeting of Shareholders of Sempra Energy being held on May 2, 2000. We
are soliciting proxies to give all shareholders an opportunity to vote on
matters to be considered at the meeting. This Proxy Statement and the
accompanying proxy or voting instruction card are being mailed to shareholders
beginning March 22, 2000.
ABOUT SEMPRA ENERGY
Sempra Energy, based in San Diego, is a Fortune 500 energy services
company. Our shares are traded on the New York and Pacific Stock Exchanges
under the symbol "SRE" and we have approximately 200,000 shareholders.
Through two regulated utility subsidiaries, Southern California Gas Company
and San Diego Gas & Electric Company, we serve over 21 million consumers, the
largest customer base of any gas, electric or combination gas and electric
utility in the United States. We provide natural gas service throughout
Southern California and portions of Central California through over 5.5
million active meters. We provide electric service throughout San Diego County
and portions of Orange County, both in Southern California, through over 1.2
million active meters.
Through other subsidiaries, we also provide other energy-related products
and services. Our subsidiaries include Sempra Energy Solutions, Sempra Energy
Trading, Sempra Energy International and Sempra Energy Resources.
We are headquartered at:
<TABLE>
<S> <C>
101 Ash Street
San Diego, California 92101-
3017
Telephone (Toll-Free): ....... (877) 736-7721
In San Diego: ................ (619) 696-2034
</TABLE>
Sempra Energy was formed in connection with a business combination of
Pacific Enterprises and Enova Corporation in which the shareholders of the
combining companies became shareholders of Sempra Energy. The combination was
completed and our shares began trading in June 1998.
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VOTING INFORMATION
SHARES OUTSTANDING
A majority of our outstanding shares must be present, either in person or
represented by proxy, to conduct the Annual Meeting. On March 9, 2000, our
outstanding shares were 204,213,745 shares of Common Stock. We do not know of
anyone who beneficially owns more than 5% of our shares.
VOTING OF SHARES
All registered holders of Sempra Energy Common Stock at the close of
business of March 9, 2000 are entitled to vote at the Annual Meeting. Each
share is entitled to one vote on each matter properly brought before the
meeting. All shares represented by properly submitted proxies and voting
instructions that are timely received, and not revoked or superseded, will be
voted in accordance with the instructions specified.
If you properly submit a proxy or voting instruction but do not specify how
you want your shares to be voted, your shares will be voted in favor of the
election of all director nominees listed on the enclosed proxy or voting
instruction card and against the shareholder proposal listed on the card. The
proxy holders will vote at their discretion on any other matter that may
properly come before the meeting.
If you own shares that are registered in your name, you may vote them by
signing and returning the enclosed proxy card or by attending the meeting and
voting in person. You may also vote these shares by submitting your proxy over
the Internet or by telephone. Please refer to "How You Can Vote" on page 3 of
this Proxy Statement.
If you own shares that are not registered in your name, you may vote them
by instructing the registered owner to do so on your behalf. The enclosed
voting instruction card will instruct the registered owner how to vote your
shares. If your shares are held through a broker or bank that participates in
the Internet and telephone voting programs provided by ADP Investor
Communication Services you may also submit your voting instructions over the
Internet or by telephone. Please refer to "How You Can Vote" on page 3 of this
Proxy Statement.
Shares that you own through a brokerage firm or bank are usually registered
in the name of an account custodian. If you do not instruct the custodian as
to how you want these shares to be voted by returning the enclosed voting
instruction card or providing other proper voting instructions, the registered
owner may be authorized to vote your shares in its own discretion on some or
all of the matters to be considered at the meeting.
If you participate in the Sempra Energy Direct Stock Purchase Plan, your
proxy card represents shares that you own through the plan as well as any
other shares that are registered in the same name.
If you participate in the Sempra Energy Savings Plan, San Diego Gas &
Electric Savings Plan, Southern California Gas Company Retirement Savings
Plan, Sempra Energy Services Savings Plan or Sempra Energy Trading Retirement
Savings Plan, your proxy card represents the number of shares held in your
plan account, as well as any other shares that are registered in the same
name. The proxy card will instruct the plan trustees as to how to vote your
plan shares. If your voting instructions are not timely received by the plan
trustees, your plan shares will be voted in the same manner and proportion as
shares for which voting instructions are received from other plan
participants.
CONFIDENTIAL VOTING
The Employee Savings Plans of Sempra Energy and its subsidiaries
automatically provide for confidential voting. Other shareholders may elect
that their identity and individual vote be held confidential from Sempra
Energy. Confidentiality elections will not apply to the extent that voting
disclosure is required by law or is
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appropriate to assert or defend any claim relating to shareholder voting. They
also will not apply with respect to any matter for which shareholder votes are
solicited in opposition to the director nominees or voting recommendations of
the Board of Directors unless the persons engaged in the opposing solicitation
provide shareholders with voting confidentiality comparable to that which we
provide.
REQUIRED VOTES
Directors are elected by a plurality of votes. Consequently, the nominees
for the five director positions who receive the greatest number of votes will
be elected as directors. Each share is entitled to one vote for each of the
five director positions, but cumulative voting is not permitted. Shares for
which votes are withheld for the election of one or more director nominees
will not be counted in determining the number of votes cast for those
nominees.
Approval of the shareholder proposal listed on the enclosed proxy or voting
instruction card requires the favorable vote of a majority of the votes cast
on the proposal. In addition, the approving majority vote must also represent
more than 25% of the total outstanding shares. The outcome of other matters
that may properly come before the meeting will be determined in the same
manner.
Under certain circumstances, brokers and other registered owners of our
shares are prohibited from exercising discretionary voting authority for
beneficial owners who have not provided voting instructions to the registered
owner. In cases of these "broker non-votes" and in cases where the shareholder
abstains from voting on a matter, these shares will be counted only for the
purpose of determining if a quorum is present and not as votes cast on any
matter.
HOW YOU CAN VOTE
You may vote your shares by signing the enclosed proxy or voting
instruction card and returning it in a timely manner. Please mark the
appropriate boxes on the card and sign, date and return the card promptly. A
postage-paid return envelope is enclosed for your convenience.
If your shares are registered in your name or held through our Direct Stock
Purchase Plan or Employee Savings Plans, you may also vote your shares over
the Internet or by telephone. You may submit your proxy at any time (24 hours
a day, seven days a week) over the Internet at the following address on the
World Wide Web:
HTTP://WWW.EPROXYVOTE.COM/SRE
or by using a touch-tone telephone and calling the following toll-free number
from anywhere in the U.S. or Canada:
1-877-779-8683
Proxies submitted over the Internet or by telephone must be received by 11:00
p.m., Eastern Standard Time, on Monday, May 1, 2000. However, proxies that
include shares held in the Employee Savings Plans of Sempra Energy and its
subsidiaries must be received by that time on Wednesday, April 26, 2000 to
provide timely instructions for voting shares held in the plans.
If your shares are held in an account at a brokerage firm or bank that
participates in a voting program provided by ADP Investor Communication
Services, you may submit your voting instruction at any time (24 hours a day,
seven days a week) over the Internet at the following address on the World
Wide Web:
HTTP://WWW.PROXYVOTE.COM
or by using a touch-tone telephone and calling from anywhere in the United
States, the toll-free number shown on your voting instruction card.
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There may be costs associated with electronic access, such as usage charges
from Internet access providers and telephone companies, charged to you when
you submit your proxy or voting instructions over the Internet. There are no
charges to use telephone voting procedures. If you submit your proxy or voting
instruction over the Internet or by telephone, you need not mail the enclosed
proxy or voting instruction card.
If your shares are held through a broker, bank or other account custodian
that does not participate in a voting program provided by ADP Investor
Communication Services, you may vote your shares only by signing and timely
returning the enclosed voting instruction card or providing other proper
voting instructions to the registered owner of your shares.
YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY
EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON.
REVOCATION OF PROXIES AND VOTING INSTRUCTIONS
If you own shares that are registered in your name, you may revoke your
proxy at any time before it is voted by timely submitting a proxy bearing a
later date or by attending the Annual Meeting in person and casting a ballot.
If your shares are not registered in your name, you may revoke or change
your voting instructions to the registered owner of your shares only by timely
providing a proper notice or other proper voting instructions to the
registered owner.
OTHER INFORMATION
Attendance at Annual Meeting.
If you plan to attend the Annual Meeting and your shares are registered in
your name or held through our Direct Stock Purchase Plan or Employee Savings
Plans, please retain the admission ticket attached to the enclosed proxy card
and bring it with you to the meeting. If you do not bring your admission
ticket, you must establish share ownership at our admission desk to be
admitted. If your shares are registered in your name, we will be able to
verify your share ownership from the Company's share register upon your
presentation of proper identification.
If your shares are not registered in your name (which is likely to be the
case if they are held by a bank, brokerage firm, employee benefit plan or
other account custodian), your name will not appear in our share register and
you must present proof of beneficial share ownership (such as a brokerage or
employee benefit plan statement showing shares held for your account) and
proper identification at our admission desk to be admitted to the meeting.
Duplicate Annual Reports.
If you hold shares in more than one shareholder account, you may be
receiving multiple copies of our Annual Report to Shareholders. You can save
the Company money by directing us to discontinue mailing multiple reports by
marking the appropriate box on the enclosed proxy or voting instruction card.
Eliminating redundant mailings will not affect your receipt of future Proxy
Statements and proxy or voting instruction cards. To resume the mailing of an
Annual Report to a particular account, you may call Sempra Energy Shareholder
Services at 1-877-736-7727.
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GOVERNANCE OF THE COMPANY
BOARD OF DIRECTORS
Sempra Energy's business and affairs are managed under the direction of the
Board of Directors in accordance with the California General Corporation Law
as implemented by the Company's Articles of Incorporation and By-laws. We keep
our directors informed through various reports that we routinely send to them
as well as through strategic, operating and financial presentations made at
board and committee meetings by officers and others.
All of our directors are independent, non-employee directors except Richard
D. Farman and Stephen L. Baum. Mr. Farman is the Company's Chairman and Chief
Executive Officer and Mr. Baum is the Vice Chairman, President and Chief
Operating Officer. Together they comprise the Office of the Chairman.
Shareholders who wish to suggest qualified candidates for consideration by
the Corporate Governance Committee as directors of Sempra Energy should write
to: Corporate Secretary, Sempra Energy, 101 Ash Street, San Diego, CA 92101-
3017, stating in detail the qualifications of the suggested candidates.
During 1999, the Board of Directors held 16 meetings. The standing
committees listed below assisted the board in carrying out its duties.
COMMITTEES OF THE BOARD
<TABLE>
<CAPTION>
AUDIT COMPENSATION CORPORATE GOVERNANCE EXECUTIVE FINANCE
- ----------------------- ---------------------- --------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Richard A. Collato, Richard J. Stegemeier, Hyla H. Bertea, Richard D. Farman, Daniel W. Derbes,
Chair Chair Chair Chair Chair
Ann L. Burr Hyla H. Bertea Ann L. Burr Stephen L. Baum Richard A. Collato
Wilford D. Godbold, Jr. Ignacio E. Lozano, Jr. Daniel W. Derbes Herbert L. Carter Wilford D. Godbold, Jr.
Robert H. Goldsmith Ralph R. Ocampo Robert H. Goldsmith Ignacio E. Lozano, Jr. William D. Jones
William G. Ouchi Thomas C. Stickel Richard J. Stegemeier Thomas C. Stickel Diana L. Walker
Diana L. Walker
PUBLIC POLICY
------------------
<C>
Herbert L. Carter,
Chair
Stephen L. Baum
William D. Jones
Ralph R. Ocampo
William G. Ouchi
</TABLE>
Audit Committee
The Audit Committee met five times in 1999. Its duties and responsibilities
include:
. Providing oversight for management's conduct of the Company's financial
reporting processes.
. Recommending to the board the selection of independent auditors.
Compensation Committee
The Compensation Committee met five times in 1999. Its duties and
responsibilities include:
. Establishing overall strategy with respect to compensation for directors
and senior officers.
. Evaluating the performance of the Chairman and Vice Chairman of the
Board for compensation purposes.
. Reviewing and approving individual salary adjustments and awards under
incentive plans for senior officers.
. Overseeing executive succession plans.
Corporate Governance Committee
The Corporate Governance Committee met three times in 1999. Its duties and
responsibilities include:
. Reviewing and recommending nominees for election as directors.
. Assessing the performance of the Board of Directors.
. Developing guidelines for board composition.
. Reviewing and administering the Company's Corporate Governance
Guidelines and considering other issues relating to corporate
governance.
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Executive Committee
The Executive Committee did not meet in 1999. The committee meets on call
by the Office of the Chairman during the intervals between board meetings and,
subject to some limitations, has all the authority of the board.
Finance Committee
The Finance Committee met two times in 1999. Its duties and
responsibilities include:
. Reviewing long term and short term financial requirements and financing
plans.
. Reviewing trading operations, financial guarantees and derivatives
positions and exposure.
. Reviewing pension plan investment results and insurance coverages.
Public Policy Committee
The Public Policy Committee met three times in 1999. Its duties and
responsibilities include:
. Reviewing public policy issues affecting the Company, including ethnic,
social and political trends.
. Reviewing employment and contracting policies, consumer issues and
community relations.
. Reviewing charitable and political contributions and programs.
DIRECTORS' COMPENSATION
Directors who are not employees of Sempra Energy receive the following
retainer and fees:
<TABLE>
<S> <C>
Annual retainer.................................................. $26,000
Attendance fee for each Board meeting............................ $ 1,000
Attendance fee for each Committee meeting........................ $ 1,000
Additional meeting fee for each Committee meeting chaired........ $ 1,000
</TABLE>
Directors may elect to receive their fees in shares of Sempra Energy Common
Stock instead of cash or to defer their fees into an interest-bearing account,
a phantom investment fund, or a phantom share account in which the fees are
deemed invested in Sempra Energy Common Stock.
Upon becoming a director, each non-employee director is granted a ten-year
stock option to purchase 15,000 shares of Sempra Energy Common Stock. At each
annual meeting (other than the annual meeting that coincides with or first
follows the director's election to the board) each non-employee director who
continues to serve as a director is granted an additional ten-year option for
5,000 shares. Each option is granted at an option exercise price equal to the
fair market value of the option shares at the date the option is granted and
becomes fully exercisable commencing with the first annual meeting following
the date of the grant or upon the director's earlier death, disability,
retirement or involuntary termination of board service other than for cause.
Non-employee directors who were directors of Enova Corporation or Pacific
Enterprises at the time of the business combination of the two companies
(currently all of the Company's non-employee directors) continue to accrue
retirement benefits (subject to certain maximum years of service credit) for
service as non-employee directors of Sempra Energy. Benefits commence upon the
later of retirement as a director or attaining age 65 and continue for a
maximum period equal to the director's combined years of service as a director
of Sempra Energy and Enova Corporation or Pacific Enterprises. The annual
benefit is the sum of Sempra Energy's then current annual retainer and ten
times the then current board meeting fee.
Directors who are also officers of the Company are not separately
compensated for their services as directors.
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SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Sempra Energy Common
Stock beneficially owned at February 15, 2000 by each director, by each of the
six executive officers named in the executive compensation tables in this
Proxy Statement, and by all directors and executive officers as a group. These
shares total approximately 1% of the outstanding shares.
<TABLE>
<CAPTION>
SHARES
CURRENT SUBJECT TO
BENEFICIAL EXERCISABLE PHANTOM
HOLDINGS OPTIONS(A) SHARES(B) TOTAL
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Stephen L. Baum.................... 92,195 116,450 59,830 268,475
Hyla H. Bertea..................... 9,630 20,000 -0- 29,630
Ann L. Burr........................ 2,200 20,000 -0- 22,200
Herbert L. Carter.................. 1,551 20,000 -0- 21,551
Richard A. Collato................. 4,222 20,000 -0- 24,222
Daniel W. Derbes................... 5,828 20,000 -0- 25,828
Richard D. Farman.................. 62,889 652,608 72,850 788,347
Donald E. Felsinger................ 66,420 59,965 35,056 161,441
Wilford D. Godbold, Jr............. 3,006 20,000 -0- 23,006
Robert H. Goldsmith (C)............ 2,659 20,000 -0- 22,659
William D. Jones................... 2,174 20,000 -0- 22,174
John R. Light...................... 20,218 40,230 -0- 60,448
Ignacio E. Lozano, Jr. (C)......... 2,352 20,000 -0- 22,352
Warren I. Mitchell................. 22,565 145,446 36,991 205,002
Ralph R. Ocampo.................... 14,621 20,000 -0- 34,621
William G. Ouchi................... 10,000 20,000 -0- 30,000
Neal E. Schmale.................... 20,761 70,306 1,186 92,253
Richard J. Stegemeier.............. 1,503 20,000 -0- 21,503
Thomas C. Stickel.................. 2,037 20,000 -0- 22,037
Diana L. Walker.................... 936 20,000 -0- 20,936
Directors and Executive Officers as
a group (28 persons).............. 477,023 1,822,571 254,669 2,554,263
</TABLE>
- --------
(A) Shares which may be acquired through the exercise of stock options that
are exercisable on or before May 15, 2000.
(B) Represents deferred compensation deemed invested in shares of Sempra
Energy Common Stock. These phantom shares cannot be voted or transferred
but track the performance of Sempra Energy Common Stock.
(C) Messrs. Goldsmith and Lozano will retire as directors before the Annual
Meeting and the authorized number of directors will be reduced to 14 to
reflect their retirements.
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The Board of Directors has established share ownership guidelines for
directors and officers to further strengthen the link between Company
performance and compensation. For non-employee directors the guideline is
ownership of a number of shares having a market value equal to four times the
annual retainer. For officers, the guidelines are:
<TABLE>
<CAPTION>
SHARE OWNERSHIP
EXECUTIVE LEVEL GUIDELINES
--------------- ---------------
<S> <C>
Chief Executive Officer................................... 4 X Base Salary
President................................................. 4 X Base Salary
Group Presidents.......................................... 3 X Base Salary
Executive Vice Presidents................................. 3 X Base Salary
Senior Vice Presidents.................................... 2 X Base Salary
Other Vice Presidents..................................... 1 X Base Salary
</TABLE>
In setting the guidelines the board considered then current share ownership
levels and the desirability of encouraging further share ownership. The
officer guidelines were established in 1998 and the director guidelines in
2000. They are expected to be met or exceeded within five years from adoption.
For purposes of the guidelines, shares owned include phantom shares into which
compensation is deferred and the vested portion of certain in-the-money stock
options as well as shares owned directly or through benefit plans.
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PROPOSAL 1: ELECTION OF DIRECTORS
Sempra Energy's Board of Directors will consist of 14 members upon giving
effect to the retirement of two directors who will retire before the Annual
Meeting and a corresponding reduction in the authorized number of directors.
The board is divided into three classes whose terms are staggered so that the
term of one class expires at each Annual Meeting. Five directors will be
elected at the 2000 Annual Meeting for a three-year term expiring in 2003.
NOMINEES
The Corporate Governance Committee has selected and the Board of Directors
has approved the following five individuals, all of whom are currently
directors, as nominees for election as directors:
Herbert L. Carter
Wilford D. Godbold, Jr.
William D. Jones
Ralph R. Ocampo
William G. Ouchi
The proxies the board is soliciting will be voted for these five nominees
unless other instructions are specified. If any nominee should become
unavailable to serve, they may be voted for a substitute nominee designated by
the board or the board may reduce the authorized number of directors. If you
do not want your shares to be voted for one or more of these nominees, you may
so indicate in the space provided on your proxy or voting instruction card.
Information concerning each director nominee and the directors serving
unexpired terms that will continue after the Annual Meeting is shown below.
The year shown as first election as a director is that of election as a
director of Enova Corporation or Pacific Enterprises. Unless otherwise
indicated, each director has held his or her principal occupation or other
positions with the same or predecessor organizations for at least the last
five years.
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR TERMS EXPIRING IN 2003:
[PHOTO OF HERBERT L. CARTER]
HERBERT L. CARTER, DPA, 66, has been a director since 1991. He has
served as President of California State University, Dominguez
Hills, and Executive Vice Chancellor Emeritus and Trustee
Professor of Public Administration of the California State
University System. He was President and Chief Executive Officer of
United Way of Greater Los Angeles from 1992 until 1995, and
Executive Vice Chancellor of the California State University
System from 1987 until 1992. Dr. Carter is a director of Golden
State Mutual Insurance Company, and has served as a member of the
Board of Councilors of the School of Public Administration,
University of Southern California and the Board of Regents of
Loyola Marymount University.
[PHOTO OF WILFORD D. GODBOLD, JR.]
WILFORD D. GODBOLD, JR., 61, has been a director since 1990. He is
the retired President and Chief Executive Officer of ZERO
Corporation, an international manufacturer primarily of enclosures
and thermal management equipment for the electronics market. He is
a director of K2, Inc., a trustee of the Wellness Community, a
member of the Council on California Competitiveness, a past
President of the Board of Trustees of Marlborough School, and a
past Chairman of the Board of Directors of the California State
Chamber of Commerce and The Employers Group.
[PHOTO OF WILLIAM D. JONES]
WILLIAM D. JONES, 44, has been a director since 1994. He is the
President and Chief Executive Officer and a director of CityLink
Investment Corporation. From 1989 to 1993, he served as General
Manager/Senior Asset Manager and Investment Manager with certain
real estate subsidiaries of The Prudential. Prior to joining The
Prudential, he served as a San Diego City Council member from 1982
to 1987. Mr. Jones is a director of the Federal Reserve Bank of
San Francisco, Los Angeles Branch and a trustee of the University
of San Diego. He is a former director of The Price Real Estate
Investment Trust.
[PHOTO OF RALPH R. OCAMPO]
RALPH R. OCAMPO, M.D., F.A.C.S., 68, has been a director since
1983. He is a practicing surgeon, Governor of the American College
of Surgeons, past President of the California Medical Association
and a Clinical Professor of Surgery at the University of
California, San Diego.
[PHOTO OF WILLIAM G. OUCHI]
WILLIAM G. OUCHI, PH.D., 56, has been a director since 1998. He is
a Vice Dean and Faculty Director of Executive Education Programs
and Sanford and Betty Sigoloff Professor in Corporate Renewal in
the Anderson Graduate School of Management at UCLA. Dr. Ouchi is a
director of Allegheny Technologies, FirstFed Financial Corp., and
Water-Pik Technologies. He is a trustee of Williams College and a
director of KCET Public Service Television.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE NOMINEES.
----------------
10
<PAGE>
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2001:
[PHOTO OF STEPHEN L. BAUM]
STEPHEN L. BAUM, 59, has been a director since 1996. He is Vice
Chairman of the Board, President and Chief Operating Officer of
Sempra Energy. He will become Sempra Energy Vice Chairman, Chief
Executive Officer and President on June 26, 2000, and Chairman,
Chief Executive Officer and President on September 1, 2000. Prior
to the business combination of Enova Corporation and Pacific
Enterprises, Mr. Baum was the Chairman and Chief Executive Officer
of Enova Corporation. He is a director of Computer Sciences
Corporation.
[PHOTO OF RICHARD D. FARMAN]
RICHARD D. FARMAN, 64, has been a director since 1992. He is
Chairman of the Board and Chief Executive Officer of Sempra
Energy. Prior to the business combination of Pacific Enterprises
and Enova Corporation, he was the Chief Executive Officer of
Pacific Enterprises. He is a director of Union Bank and Catellus
Development Corporation. He is past Chairman of KCET Public
Service Television, Progress L.A. Inc., the American Gas
Association and the Natural Gas Council, and a member of the
National Petroleum Council.
[PHOTO OF RICHARD J. STEGMEIER]
RICHARD J. STEGEMEIER, 71, has been a director since 1995. He is
Chairman Emeritus of the Board of Unocal Corporation. He is a
director of Foundation Health Systems, Inc., Halliburton Company,
Montgomery Watson, Inc., and Northrop Grumman Corporation.
[PHOTO OF THOMAS C. STICKEL]
THOMAS C. STICKEL, 50, has been a director since 1994. He is the
Chairman, Chief Executive Officer and founder of University
Ventures Network. He is the founder of Americana Partners Capital
Group, Inc. He previously was the Chairman, Chief Executive
Officer and President of TCS Enterprises, Inc. and the Bank of
Southern California, both of which he founded. Mr. Stickel is
Chairman of the Board of Onyx Acceptance Corporation, a director
of Blue Shield of California and Del Mar Thoroughbred Club and
Vice Chairman of the California Chamber of Commerce.
[PHOTO OF DIANA L. WALKER]
DIANA L. WALKER, 58, has been a director since 1989. Mrs. Walker
is a partner and General Counsel of the law firm of O'Melveny &
Myers LLP. She is a former director of United Way of Greater Los
Angeles, and Emeritus Governor and former Chair of the Board of
Governors of the Institute for Corporate Counsel, a former trustee
of Marlborough School and a member of various professional
organizations. O'Melveny & Myers LLP provides legal services to
Sempra Energy and its subsidiaries.
11
<PAGE>
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2002:
[PHOTO OF HYLA H. BERTEA]
HYLA H. BERTEA, 59, has been a director since 1988. She is a
realtor with Prudential California, a real estate sales company.
She is a trustee of Lewis & Clark College, a director of Orange
County Community Foundation, and a former commissioner of the
California Horse Racing Board. For a number of years she has been
involved in leadership positions with various other cultural,
educational and health organizations in the Orange County and Los
Angeles areas. Mrs. Bertea was a co-commissioner of gymnastics and
a member of the executive staff for the 1984 Olympics.
[PHOTO OF ANN L. BURR]
ANN L. BURR, 53, has been a director since 1993. She is an
Executive Vice President of Time Warner Cable. She is the former
President of Time Warner Communications in Rochester, New York and
Time Warner Cable in San Diego. Ms. Burr is a trustee of the
Rochester Institute of Technology. She served as Chairman of the
Board of Directors of the California Cable Television Association
and chaired its Telecommunications Policy Committee. She is a
former Chair of the Greater San Diego Chamber of Commerce Board of
Directors and the founder and former Chair of the Chamber's
Business Roundtable for Education and the San Diego Communications
Council.
[PHOTO OF RICHARD A. COLLATO]
RICHARD A. COLLATO, 56, has been a director since 1993. He is
President and Chief Executive Officer of the YMCA of San Diego
County. He is a former director of Y-Mutual Ltd., a reinsurance
company, and The Bank of San Diego. Mr. Collato is a former
trustee of Springfield College, and currently is a trustee of the
YMCA Retirement Fund and Bauce Foundation, and a director of
Project Design Consultants.
[PHOTO OF DANIEL W. DERBES]
DANIEL W. DERBES, 69, has been a director since 1983. He is
President of Signal Ventures. From 1985 until 1988, he was
President of Allied-Signal International Inc. and Executive Vice
President of Allied-Signal Inc., a multi-national advanced
technologies company. Mr. Derbes is a director of WD-40 Company
and a trustee of the University of San Diego.
12
<PAGE>
PROPOSAL 2: SHAREHOLDER PROPOSAL REGARDING
VOTING APPROVAL REQUIREMENTS
The shareholder proposal set forth on the following page has been included
in this Proxy Statement in accordance with the Shareholder Proposal Rule of
the Securities and Exchange Commission. It will be voted upon at the Annual
Meeting if properly presented by the shareholder proponent or the proponent's
qualified representative.
To be approved by shareholders, the proposal must receive the favorable
vote of a majority of the votes cast and the approving majority must also
represent more than 25% of the total outstanding shares. The proxies that the
Board of Directors is soliciting will be voted against the proposal unless
other instructions are specified.
FOR THE REASONS STATED BELOW, YOUR BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THIS PROPOSAL
----------------
13
<PAGE>
-- BEGINNING OF SHAREHOLDER PROPOSAL --
PROPOSAL 2:
RECOMMEND REINSTATE SIMPLE-MAJORITY VOTE
John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, California 90278,
presents this resolution on behalf of Ray T. Chevedden and Veronica G.
Chevedden, owners of 4503 shares of Sempra Energy stock.
RESOLVED:
RECOMMEND REINSTATE SIMPLE-MAJORITY VOTE
Recommend simple majority vote on all issues that are submitted to shareholder
vote. Recommend delete Sempra requirements for greater than a majority
shareholder vote. Recommend reinstate the simple-majority vote that was the
rule prior to the Sempra merger.
SUPER-MAJORITY REQUIREMENTS OF ANY KIND ARE WIDELY OPPOSED.
The bi-partisan National Conference of State Legislatures urged States to ban
super-majority requirements. Major pension funds, including those holding
Sempra stock, declare that super-majority provisions are not in the best
interest of the shareholders.
Also, require that any future super-majority proposal be put to shareholder
vote--as a separate resolution.
Proponents of the simple-majority vote said that super-majority vote
requirements may stifle bidder interest in the company and therefore devaluate
the stock. A competitive management does not need the power to override a
shareholder majority.
Simple-majority resolutions won 54% APPROVAL from shareholders in 1999--
Investor Responsibility Research Center's Corporate Governance Bulletin,
April - June 1999.
WHAT INCENTIVE IS THERE FOR GOOD CORPORATE GOVERNANCE--HIGHLIGHTED BY
SIMPLE-MAJORITY VOTE?
A number of recent studies show that well-governed companies not only make
more money than poorly governed, but investors are likely to give them a
higher stock market value.
Fifty institutional investors, managing a total of $840 million, told
McKinsey & Co. they would pay an 11% average premium for the stock of a
company with good governance practices.
Why the big jump? Some investors said they believed that good governance
will boost performance over time. Others felt good governance decreases the
risk of bad news--and when trouble occurs, they rebound faster.
<TABLE>
<S> <C>
Business Week Sept. 15, 1997
</TABLE>
Institutional Shareholder Services said the super-majority votes serve to
lock in provisions that are harmful to shareholders. ISS said that super-
majority may entrench management by preventing action that may benefit
shareholders.
To increase shareholder value:
RECOMMEND REINSTATE SIMPLE-MAJORITY VOTE
YES ON 2
-- END OF SHAREHOLDER PROPOSAL --
----------------
14
<PAGE>
-- THE BOARD OF DIRECTORS POSITION --
FOR THE REASONS STATED BELOW, YOUR BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST PROPOSAL 2
Sempra Energy's Articles of Incorporation require approval by at least two-
thirds of our outstanding shares before certain fundamental changes can be
made in the Company's governing instruments. For example, this approval is
required for the adoption, amendment or repeal by shareholders of the
Company's bylaws including those relating to the number of directors. It is
also required to amend or repeal provisions of the articles relating to the
classification of the board and the election of directors; provisions
eliminating the liability of directors for monetary damages and permitting
indemnification of corporate agents; and provisions requiring, unless waived
by two-thirds of the authorized number of directors, that shareholder action
be taken only at an annual or special meeting of shareholders or by
shareholder unanimous written consent. These provisions comprise the
fundamental framework of the Company's governance structure. Two-thirds or
even higher vote requirements for changing these provisions are included in
the governing instruments of many public corporations.
These two-thirds vote requirements, of course, do not preclude changes to
the related corporate governance provisions. They merely ensure that such
fundamental changes can only be made when a broad consensus of shareholders
agrees that a change is prudent.
Two-thirds vote requirements are particularly critical in ensuring that
persons who may seek to acquire control of the Company can do so only by
paying shareholders a fair price. Subjecting changes in fundamental corporate
governance provisions to a two-thirds vote requirement encourages potential
acquirors to negotiate the terms of an acquisition with the Board of
Directors. They thus enhance the ability of the board to negotiate the best
results for shareholders.
It is important to keep in mind that while the two-thirds vote requirements
can enhance the board's ability to negotiate favorable terms with a proponent
of an unfriendly or unsolicited proposal, they do not preclude takeover
offers. They do, however, help ensure that such offers are only successful
when a broad consensus of shareholders finds them compelling.
Accordingly, the Board of Directors believes that the Company's two-thirds
vote requirements are in the best interests of shareholders.
Approval of the shareholder proposal would not in itself effect the
elimination of the Company's two-thirds vote requirements. To do so would
require further action to amend the Company's Articles of Incorporation and,
under the articles, these amendments would require approval by at least two-
thirds of the outstanding shares. In addition, under the California General
Corporation Law to which the Company is subject, the amendments would also
require approval by the Board of Directors. While the board would consider
these amendments, it would do so consistent with its fiduciary duty to act in
a manner it believes to be in the best interests of the Company and its
shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL 2
15
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has the responsibility
for establishing Sempra Energy's compensation principles and strategies, as
well as designing a compensation program for the Chairman and Chief Executive
Officer, the Vice Chairman, President and Chief Operating Officer and other
senior executive officers of the Company. Its responsibilities also include
administering the Company's base salary program, executive annual and long
term incentive plans, executive benefit and perquisite programs, and
recommending to the Board of Directors changes to the board compensation
program. The committee is comprised of five independent directors.
During 1999, the Compensation Committee conducted a review of the
compensation programs and policies of the Company that were originally
developed in 1998 in connection with the business combination of Pacific
Enterprises and Enova Corporation. The committee sought the assistance of
nationally recognized compensation and benefit consultants to assist with the
review of the Company's executive compensation principles and practices which
are designed to assist Sempra Energy to realize the key objective of creating
superior shareholder value in a rapidly changing and increasingly competitive
business environment. The committee, with the assistance of a nationally
recognized compensation firm, also reviewed board compensation during 1999.
COMPENSATION PRINCIPLES AND STRATEGIES
In developing the Company's compensation principles and strategies, the
Compensation Committee considered the current and prospective business
environment for Sempra Energy and took into account numerous factors,
including:
. The rapidly changing and increasingly competitive environment in which
Sempra Energy operates.
. The need to retain experienced executives of outstanding ability and to
motivate them to achieve superior performance.
. The need to attract executive talent from broader markets as the utility
and energy industries continue to rapidly evolve.
. The need to strongly link executive compensation to both annual and long
term corporate, business unit and individual performance.
. The need to strongly align the interests of executives with those of
shareholders.
As a result of this review, the Compensation Committee approved the
continuation of the compensation program that had been developed in 1998 to
meet these objectives and encourage executives to achieve superior shareholder
returns. The program includes the following elements.
. An emphasis on "pay-for-performance" with a substantial portion of total
compensation reflecting corporate, business unit and individual
performance.
. An emphasis on stock incentives closely aligning the interests of
executives with those of shareholders.
. An emphasis on total compensation with base salaries generally targeted
at or near median general industry levels for comparable sized companies
and with annual cash and long term equity incentives providing
opportunities to earn total compensation at significantly higher levels
for superior corporate, business unit and individual performance.
. An appropriate balance of short term and long term compensation to
retain talented executives, reward effective long term strategic results
and encourage share ownership.
. An emphasis on placing at risk, through equity and other performance-
based incentives, a greater portion of an executive's total compensation
as levels of responsibility increase.
The Compensation Committee also considered provisions of the Internal
Revenue Code limiting to $1 million the annual amount of compensation that
does not qualify as "qualified performance-based compensation"
16
<PAGE>
that Sempra Energy and other publicly held corporations may deduct for federal
income tax purposes as compensation expense for each of certain executive
officers. The committee considers tax deductibility to be an important factor
but only one factor to be considered in evaluating any executive officer
compensation program. Accordingly, the committee intends to design programs
that will maximize the Company's federal income tax deductions for
compensation expense to the extent that doing so is consistent with the
Company's compensation principles and strategies. The committee believes,
however, that there are circumstances in which the interests of the Company
and its shareholders may be best served by providing compensation that is not
fully tax deductible, and may exercise discretion to provide compensation that
will not qualify as a tax deductible compensation expense.
COMPENSATION PROGRAM
The primary components of Sempra Energy's compensation program are base
salaries, annual cash incentive opportunities and long term equity and equity-
based incentive opportunities.
Base Salaries
Base salaries for executives are reviewed annually by the Compensation
Committee and, in general, are targeted at the median of salaries for
similarly sized general industry companies. The committee believes that this
strategy, along with annual and long term incentive opportunities at general
industry levels, will allow the Company to retain and attract top quality
executive talent. However, the committee will continue to monitor this
strategy as the markets for executive talent change. In determining base
salary adjustments, the committee also takes into account individual
performance, executive responsibilities, market characteristics and other
factors.
Survey data for assessing base salaries are based upon companies in the
Fortune 1000 and size-adjusted based upon Sempra Energy's revenues using
regression analysis. This group is broader than that used for the peer group
index described under the caption "Comparative Stock Performance." The
Compensation Committee believes that Sempra Energy's most direct competitors
for executive talent will not be limited to companies used as the peer group
to compare shareholder returns and the Fortune 1000 appropriately reflects a
broader group with which the Company competes to attract and retain highly
skilled and talented executives.
Annual base salaries for Sempra Energy executive officers have been set at
the approximate mid-point of these salary data. For 1999, annual base salaries
for Richard D. Farman, the Company's Chairman and Chief Executive Officer, and
Stephen L. Baum, the Company's Vice Chairman, President and Chief Operating
Officer, were set at $915,000 and $763,000, respectively.
Annual Incentives
Annual cash bonus performance-based incentive opportunities are provided to
executive officers through an Executive Incentive Plan approved by
shareholders in 1999. The plan permits the payment of bonuses based upon the
attainment of objective financial performance goals. Bonus opportunities vary
with the individual officer's position and prospective contribution to the
attainment of these goals and no bonuses are paid unless a threshold
performance level is attained for the related performance period. Bonus
opportunities increase for performance above the threshold level. Performance
at targeted levels is intended to compensate executive officers with bonuses
at the mid-point for bonuses for comparable levels of responsibility at
Fortune 1000 companies.
Executive Incentive Plan award levels for 1999 were based on attainment of
earnings per share goals with target award levels ranging from 80% of base
salary for Messrs. Farman and Baum to 45% of base salary for Vice Presidents,
with maximum award levels ranging from 160% to 90% of base salary. Performance
for the year was at 150% of targeted performance and resulted in cash bonuses
of 120% of base salary for Messrs. Farman and Baum ($1,098,000 and $915,600,
respectively), with corresponding lesser amounts for other executive officers.
17
<PAGE>
Long Term Incentives
Long term incentive opportunities are provided by equity and equity-based
awards under a Long Term Incentive Plan approved by shareholders in 1999. The
plan permits a wide variety of equity and equity-based incentive awards to
permit the Compensation Committee to respond to changes in the market
conditions and compensation practices. The committee expects, however, that
most awards under the plan will be in the form of non-qualified stock options.
During 1999, Sempra Energy granted to executives and other employees non-
qualified stock options to purchase Sempra Energy Common Stock under the Long
Term Incentive Plan. These option grants are described in this Proxy Statement
under the caption "Executive Compensation--Stock Options and Stock
Appreciation Rights."
During 1999, the Compensation Committee also awarded grants of performance-
based restricted shares under the Long Term Incentive Plan. These awards and
related total shareholder return vesting standards are discussed in this Proxy
Statement under the caption "Executive Compensation--Restricted Stock Grants.
SHARE OWNERSHIP GUIDELINES
The Compensation Committee believes that a commitment to increased share
ownership by executives is an important element in aligning the interests of
executives with those of shareholders. This belief has influenced the design
of the Company's compensation plans and, in addition, the Board of Directors
has established share ownership guidelines to further strengthen the link
between Company performance and compensation. These guidelines are summarized
under the caption "Share Ownership of Directors and Executive Officers."
COMPENSATION COMMITTEE
Richard J. Stegemeier, Chairman
Hyla H. Bertea
Ignacio E. Lozano, Jr.
Ralph R. Ocampo
Thomas C. Stickel
March 7, 2000
18
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The table below summarizes, for the last three years, the compensation paid
or accrued by Sempra Energy and its predecessors and subsidiaries to each of
the six named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------------
AWARDS PAYOUTS
---------------- -----------
SECURITIES LTIP ALL OTHER
SALARY UNDERLYING PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) OPTIONS/SARS (#) ($ )(A) (B) ($) (C)
- --------------------------- ---- -------- ---------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Farman............. 1999 $914,307 $1,098,000 301,200 $ -0- $ 199,288
Chairman and Chief 1998 $728,718 $1,019,640 274,593 $ -0- $1,689,295
Executive Officer 1997 $478,208 $ 500,000 45,000 $ -0- $ 108,049
Stephen L. Baum............... 1999 $762,616 $ 915,600 297,900 $179,465 $ 144,516
Vice Chairman, President 1998 $681,577 $ 891,136 167,900 $247,746 $1,494,258
and Chief Operating Officer 1997 $554,872 $ 509,000 -0- $259,778 $ 138,230
Donald E. Felsinger........... 1999 $474,769 $ 498,750 153,700 $126,314 $ 79,600
Group President - Unregulated 1998 $453,269 $ 565,230 86,160 $178,956 $ 862,045
Business Units 1997 $414,387 $ 364,000 -0- $206,531 $ 56,266
Warren I. Mitchell............ 1999 $474,769 $ 498,750 128,700 $ -0- $ 61,368
Group President - Regulated 1998 $437,409 $ 506,230 140,296 $ -0- $ 816,659
Business Units 1997 $337,947 $ 280,000 40,602 $ -0- $ 27,446
John R. Light (D)............. 1999 $415,754 $ 374,400 96,700 $ 29,308 $ 118,971
Executive Vice President 1998 $292,308 $ 431,600 64,220 $ 35,539 $ 155,045
and General Counsel
Neal E. Schmale (D)........... 1999 $415,754 $ 374,400 96,700 $ -0- $ 51,461
Executive Vice President 1998 $414,731 $ 371,600 109,334 $ -0- $ 107,932
and Chief Financial Officer
</TABLE>
- --------
(A) Long term incentive plan payouts represent the fair market value of shares
of restricted stock for which forfeiture and transfer restrictions
terminated during the year based upon satisfaction of long term performance
goals. Restricted stock awarded in 1999 is reported below under the caption
"Restricted Stock Grants."
(B) The aggregate holdings/value of restricted stock held on December 31, 1999
by the individuals listed in the table are: 30,724 shares/$533,983 for Mr.
Farman; 40,769 shares/$708,565 for Mr. Baum; 23,151 shares/ $402,364 for
Mr. Felsinger; 13,256 shares/$230,389 for Mr. Mitchell; 13,146
shares/$228,477 for Mr. Light; and 9,956 shares/$173,035 for Mr. Schmale.
Regular quarterly dividends are paid on restricted stock held by these
individuals.
(C) All other compensation includes amounts paid as (i) interest on deferred
compensation above 120% of the applicable federal rate, (ii) life insurance
premiums, (iii) financial and estate planning services, (iv) contributions
to defined benefit plans and related supplemental plans, and (v) car
allowances. The respective amounts paid in 1999 were $104,522, $16,999,
$12,569, $58,198 and $7,000 for Mr. Farman; $4,998, $75,092, $7,313,
$49,613 and $7,500 for Mr. Baum; $6,797, $31,290, $2,813, $31,200 and
$7,500 for Mr. Felsinger; $4,523, $7,109, $13,126, $29,610 and $7,000 for
Mr. Mitchell; $0, $111,971, $0, $0 and $7,000 for Mr. Light; and $8,712,
$1,628, $10,500, $23,621 and $7,000 for Mr. Schmale.
19
<PAGE>
Amounts for 1998 also include incentive/retention bonus accruals under
agreements entered into in 1997 in connection with the business combination
of Pacific Enterprises and Enova Corporation. Under the agreements,
deferral accounts were established for Messrs. Farman, Baum, Felsinger and
Mitchell upon the June 26, 1998 completion of the business combination and
credited with incentive/retention bonus amounts of $1,566,000, $1,328,000,
$782,000 and $782,000, respectively, which were deemed invested (together
with reinvestment of dividend equivalents) in shares of Sempra Energy
Common Stock. Each executive will become entitled to his bonus upon
continued employment with Sempra Energy through June 26, 2000 and will be
paid in cash an amount equal to the then fair market value of the shares
credited to the executive's account.
Amounts for Messrs. Light and Schmale for 1998 also include $150,000 and
$100,000, respectively, paid as signing bonuses.
(D) Messrs. Light and Schmale became executive officers in April 1998 and
December 1997, respectively.
20
<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options during 1999 to the executive officers named in the Summary
Compensation Table. All options were granted at an exercise price of 100% of
the fair market value of the option shares on the date of the grant and for a
ten-year term subject to earlier expiration following termination of
employment.
OPTION / SAR GRANTS IN 1999
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF SHARES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) 1999 ($/SH) DATE PRESENT VALUE
- ---- ---------------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Richard D. Farman....... 85,900(A) 5.92% $21.00 5/4/09 $621,916
215,300(B) 11.21% $21.00 5/4/09 $622,217
Stephen L. Baum......... 85,000(A) 5.86% $21.00 5/4/09 $615,400
212,900(B) 11.08% $21.00 5/4/09 $615,281
Donald E. Felsinger..... 43,900(A) 3.03% $21.00 5/4/09 $317,836
109,800(B) 5.71% $21.00 5/4/09 $317,322
Warren I. Mitchell...... 36,700(A) 2.53% $21.00 5/4/09 $265,708
92,000(B) 4.79% $21.00 5/4/09 $265,880
John R. Light........... 27,600(A) 1.90% $21.00 5/4/09 $199,824
69,100(B) 3.60% $21.00 5/4/09 $199,699
Neal E. Schmale......... 27,600(A) 1.90% $21.00 5/4/09 $199,824
69,100(B) 3.60% $21.00 5/4/09 $199,699
</TABLE>
- --------
(A) Exercisable in cumulative installments of one-fourth of the shares
initially subject to the option on each of the first four anniversaries of
the grant date. Granted with performance-based dividend equivalents on
unexercised shares for the four-year period ending December 31, 2003. No
dividend equivalents will be paid unless Sempra Energy meets annual or
four-year threshold performance goals based on total return to
shareholders ranking within the peer group of companies listed under the
caption "Comparative Stock Performance" or the S&P 500 and the percentage
of dividends paid as dividend equivalents (to a maximum of all dividends
that would have been paid on the shares for the four-year period) will
depend upon the extent to which the threshold goals are exceeded.
(B) Exercisable in cumulative annual installments of one-fourth of the shares
initially subject to the option on each of the first four anniversaries of
the grant date. Granted without dividend equivalents.
The Company used a modified Black-Scholes option pricing model to develop
the theoretical values set forth under the "Grant Date Present Value" column.
Grant date present values were based on an option value of $2.89 and, for
options granted with dividend equivalents, a dividend equivalent value of
$4.35. These are based on the following assumptions: share volatility-17.9%;
dividend yield-5.49%; risk-free rate of return-5.66%; and outstanding term-10
years.
21
<PAGE>
The following table shows information as to the exercise of options and
stock appreciation rights during 1999 and unexercised options and stock
appreciation rights held on December 31, 1999 by the executive officers named
in the Summary Compensation Table.
OPTION / SAR EXERCISES AND HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON AT YEAR-END (#) AT YEAR-END ($)(A)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Farman....... -0- $ -0- 547,232 523,310 $677,687 $ -0-
Stephen L. Baum......... -0- $ -0- 41,975 423,825 $ -0- $ -0-
Donald E. Felsinger..... -0- $ -0- 21,540 218,320 $ -0- $ -0-
Warren I. Mitchell...... 31,579 $160,349 92,970 242,944 $ -0- $ -0-
John R. Light........... -0- $ -0- 16,055 144,865 $ -0- $ -0-
Neal E. Schmale......... -0- $ -0- 31,093 174,941 $ -0- $ -0-
</TABLE>
- --------
(A) The exercise price of outstanding options ranges from $12.80 to $31.
22
<PAGE>
RESTRICTED STOCK GRANTS
The following table shows information as to grants of restricted stock
during 1999 to the executive officers named in the Summary Compensation Table.
RESTRICTED STOCK GRANTS IN 1999
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER
NUMBER OF NON-STOCK
RESTRICTED PERFORMANCE PERIOD PRICE-BASED
NAME SHARES UNTIL PAYOUT PLANS (A)
- ---- ---------- ------------------- ----------------
<S> <C> <C> <C>
Richard D. Farman............... 13,600 Four Annual Periods $310,624
Stephen L. Baum................. 13,500 Four Annual Periods $308,340
Donald E. Felsinger............. 6,900 Four Annual Periods $157,596
Warren I. Mitchell.............. 5,800 Four Annual Periods $132,472
John R. Light................... 4,400 Four Annual Periods $100,496
Neal E. Schmale................. 4,400 Four Annual Periods $100,496
</TABLE>
- --------
(A) The payout amount represents the fair market value on the May 4, 1999
grant date of the restricted shares that will become vested upon the
achievement of all performance goals. The actual payout (if any) will
depend upon the extent to which the performance goals are achieved and
upon the then fair market value of Sempra Energy Common Stock.
Restricted shares awarded to executives are subject to forfeiture and
transfer restrictions that terminate upon the satisfaction of long term
objective corporate performance criteria. During the performance period, the
executive receives dividends on the restricted shares and is entitled to vote
them but the shares cannot be sold or otherwise transferred. If the
performance criteria are not satisfied or the executive's employment is
terminated during the performance period, the shares are forfeited to the
Company and canceled.
The forfeiture and transfer restrictions on one-fourth of the shares
initially subject to each of the awards shown in the table will terminate at
the end of years 2000, 2001, 2002 and 2003 if the executive is then employed
by Sempra Energy and the Company has achieved a total return to shareholders
for the year that places it among the top 25% of a peer group comprised of the
Company and the other energy and energy services companies named in the peer
group index discussed under the caption "Comparative Stock Performance." If
these annual performance criteria are not met, the forfeiture and transfer
restrictions on all or a portion of the shares remaining subject to the
restrictions may be terminated based upon the satisfaction of cumulative
shareholder return performance criteria for the four year period ending
December 31, 2003.
The restrictions on all remaining shares will terminate at the end of 2003
if the executive is then employed by Sempra Energy and the Company has
achieved a four-year cumulative total return to shareholders that either
places it among the top 50% of the peer group companies or equals or exceeds
the four-year cumulative return of the companies then comprising the Standard
& Poor's 500 Composite Stock Price Index. If neither of these performance
criteria is satisfied, the restrictions may be terminated as to a portion of
the shares if the Company's four-year cumulative total shareholder return is
among the top 70% of the peer group. Restrictions will terminate as to 80% of
the shares for performance among the top 55% of the peer group with the
percentage of shares as to which the restrictions may terminate declining
ratably to 20% for performance among the top 70% of the peer group. Any
restricted shares for which forfeiture and transfer restrictions are not
terminated by or as of the end of the year 2003 will be forfeited to the
Company and canceled.
23
<PAGE>
PENSION PLANS
The following table shows the estimated single life annual pension annuity
benefit provided to executive officers under the Sempra Energy Supplemental
Executive Retirement Plan (combined with benefits payable under the Company's
other pension plans in which the officers also participate) based on the
specified compensation levels and years of credited service and retirement at
age 65.
PENSION PLAN TABLE
($000'S)
<TABLE>
<CAPTION>
YEARS OF SERVICE
PENSION PLAN ---------------------------------------------------------------------------
COMPENSATION 5 10 20 30 40
------------ ---- ---- ------ ------ ------
<S> <C> <C> <C> <C> <C>
$ 400 $ 80 $160 $ 240 $ 250 $ 260
$ 600 $120 $240 $ 360 $ 375 $ 390
$ 800 $160 $320 $ 480 $ 500 $ 520
$1,000 $200 $400 $ 600 $ 625 $ 650
$1,200 $240 $480 $ 720 $ 750 $ 780
$1,400 $280 $560 $ 840 $ 875 $ 910
$1,600 $320 $640 $ 960 $1,000 $1,040
$1,800 $360 $720 $1,080 $1,125 $1,170
</TABLE>
Pension benefits are based on average salary for the highest two years of
service and the average of the three highest annual bonuses during the last
ten years of service. Years of service for the executive officers named in the
Summary Compensation Table are 21 years for Mr. Farman, 15 years for Mr. Baum,
27 years for Mr. Felsinger, 41 years for Mr. Mitchell, 2 years for Mr. Light
and 2 years for Mr. Schmale.
Messrs. Baum, Felsinger and Light are each entitled to pension benefits at
the greater of that provided by Sempra Energy's pension plans or that to which
they would have been entitled under the Enova Corporation pension plans
(including a supplemental pension plan) had those plans remained in effect.
Under the Enova Corporation plans and retirement after attaining age 62,
Messrs. Baum and Felsinger would each be entitled to a monthly pension benefit
of 60% of his final pay and Mr. Light to a pension benefit of 50% of his final
pay. Final pay is defined as the monthly base pay rate in effect during the
month immediately preceding retirement, plus one-twelfth of the average of the
highest three years' gross bonus awards. The plans provide for reduced pension
benefits for retirement between the ages of 55 and 61, and surviving spouse
and disability benefits equal to 50% and 100%, respectively, of pension
benefits.
EMPLOYMENT AND EMPLOYMENT-RELATED AGREEMENTS
Employment Agreements
In connection with the business combination of Pacific Enterprises and
Enova Corporation, Sempra Energy entered into employment agreements with
Richard D. Farman, Stephen L. Baum, Donald E. Felsinger and Warren I.
Mitchell. Each agreement provides for an initial employment term of five years
(subject to earlier mandatory retirement at age 65) which commenced on the
June 26, 1998 completion of the business combination. The term of each
agreement is automatically extended by one year on June 26, 2002 and on each
June 26 thereafter unless the executive or Sempra Energy elects not to extend
it.
Mr. Farman's employment agreement provides that he will serve as the
Chairman of the Board and Chief Executive Officer of Sempra Energy and as a
member of its Office of the Chairman until June 26, 2000, the second
anniversary of the business combination. Thereafter, until September 1, 2000,
he will serve as the Chairman of the Board. For these services he will receive
an annual base salary of not less than $760,000 and be entitled to participate
in (i) annual incentive compensation plans providing him with annual bonus
opportunities of not less than 60% of his annual base salary at target
performance and 120% of his annual base salary at
24
<PAGE>
maximum performance, (ii) long term compensation plans and (iii) all
retirement and welfare benefit plans applicable generally to employees or
senior executives of Sempra Energy.
Mr. Baum's employment agreement provides that he will serve as the Vice
Chairman of the Board, President and Chief Operating Officer of Sempra Energy
and as a member of its Office of the Chairman until June 26, 2000, the second
anniversary of the business combination; as the Vice-Chairman of the Board,
Chief Executive Officer and President from June 26, 2000 until September 1,
2000; and thereafter as the Chairman, Chief Executive Officer and President.
For these services, Mr. Baum will receive an annual base salary of not less
than $645,000 until June 26, 2000 (the period during which he serves as the
President and Chief Operating Officer) and thereafter (during the period in
which he will serve as the Chief Executive Officer and President) will receive
an annual base salary of no less than that of his predecessor as Chief
Executive Officer. He also will be entitled to participate in (i) annual
incentive compensation plans and long term compensation plans and awards
providing him with the opportunity to earn on a year-by-year basis, short term
and long term compensation at least equal (in terms of target, maximum and
minimum awards, expressed as a percentage of annual base salary) to the
greater of his opportunities in effect at Enova Corporation prior to the
completion of the business combination and the awards granted to the Chief
Executive Officer during the period in which Mr. Baum serves as the President
and Chief Operating Officer and (ii) all retirement and welfare benefit plans
applicable generally to employees or senior executive officers of Sempra
Energy.
Mr. Mitchell's employment agreement provides that he will serve as
President and the principal executive officer of the businesses of Sempra
Energy and its subsidiaries that are economically regulated by the California
Public Utilities Commission. Mr. Felsinger's employment agreement provides
that he will serve as the President and principal executive officer of the
businesses of Sempra Energy and its subsidiaries that are not so regulated. As
compensation for these services, Messrs. Mitchell and Felsinger will each
receive an annual base salary of not less than $440,000 and be entitled to
participate in (i) annual incentive compensation plans and long term
compensation plans and awards providing them with an annual bonus opportunity
at least equal (in terms of target, maximum and minimum awards expressed as a
percentage of annual base salary) to their opportunities in effect at Pacific
Enterprises and Enova Corporation, respectively, prior to the completion of
the business combination and (ii) in all retirement and welfare benefit plans
applicable generally to employees or senior executive officers of Sempra
Energy.
The employment agreement of each of the four executives also provides that
if Sempra Energy terminates the executive's employment (other than for cause,
death or disability) or the executive terminates his employment for good
reason, the executive will be entitled to receive an amount equal to (i) the
sum of his annual base salary and annual incentive compensation (equal to the
greater of his target bonus for the year of termination or the average of the
three years' highest gross bonus awards in the five years preceding
termination) multiplied by two (or, in the case of Messrs. Baum and Felsinger,
the number of years remaining in the term of his agreement but in no event
less than two) provided that in the event of termination following a change in
control such multiplier will be three; (ii) a pro rata portion of the target
amount payable under any annual incentive compensation awards for the year or,
if greater, the average of the three years' highest gross bonus awards paid to
the executive in the five years preceding the year of termination; and (iii)
certain additional retirement benefits. In the case of Messrs. Farman and
Mitchell, the additional retirement benefit is the present value of the
benefits to which he would be entitled under Sempra Energy's defined benefit
pension and retirement plans if he continued working for an additional two
years and had increased his age by two years as of termination (in each case
three years in the event of a termination following a change of control), but
not beyond mandatory retirement age of 65. In the case of Messrs. Baum and
Felsinger, the additional retirement benefit is the present value of the
benefits attributable to additional years of age and service credit (but in no
event less than two years) for purposes of the calculation of retirement
benefits under the Enova Corporation Supplemental Executive Retirement Plan as
if he had remained employed for the remainder of the term of his agreement.
Each agreement also provides for immediate vesting and exercisability of all
equity-based long term incentive compensation awards; pro rata payment of
cash-based long term incentive awards at target performance; continued
participation in welfare benefit plans for three years; payment of
compensation previously deferred; and financial planning
25
<PAGE>
and outplacement services. The agreements also provide for a gross-up payment
to offset the effects of any excise taxes imposed on the executive under
Section 4999 of the Internal Revenue Code.
Good reason is defined in the employment agreements to include an adverse
change in the executive's title, authority, duties, responsibilities or
reporting lines; a reduction in the executive's base salary or aggregate
annualized compensation and benefit opportunities; the relocation of the
executive's principal place of employment; and a substantial increase in
business travel obligations. A change in control is defined to include the
acquisition by one person or group of 20% or more of the voting power of
Sempra Energy's shares; the election of a new majority of the board comprised
of individuals who are not recommended for election by two-thirds of the
current directors or successors to the current directors who were so
recommended for election; certain mergers, consolidations or sales of assets
that result in the shareholders of the Company owning less than 60% of the
voting power of the Company or of the surviving entity or its parent; and
shareholder approval of the liquidation or dissolution of the Company.
Mr. Mitchell has announced that he will retire on July 1, 2000. Upon his
retirement he will receive a cash payment of approximately $1.8 million,
reflective of amounts he would be entitled to under his employment agreement.
In addition, the forfeiture and transfer restrictions on his shares of
restricted stock will immediately terminate and his stock options will become
immediately and fully exercisable.
Severance Agreements
Sempra Energy has entered into severance agreements with each of its
executive officers, other than Messrs. Farman, Baum, Felsinger and Mitchell
for whom severance arrangements are contained in their respective employment
agreements summarized above. The severance agreements provide for the payment
of benefits in the event Sempra Energy terminates the executive's employment
(other than for cause, death or disability) or the executive terminates his or
her employment for good reason.
The benefits payable under the severance agreements include (i) a lump sum
cash payment equal to the executive's annual base salary and average annual
bonus for the two years prior to termination which in certain cases, depending
upon the officer's position, is multiplied by as much as two; (ii)
continuation of health benefits for a period of two years; and (iii) financial
planning and outplacement services. In addition, if the termination occurs
within two years after a change in control of Sempra Energy, (i) the lump sum
cash payment multiple is increased to as much as three; (ii) all equity-based
incentive awards immediately vest and become exercisable or payable and all
restrictions on such awards immediately lapse; (iii) all deferred compensation
is paid out in a lump sum; (iv) a lump sum cash payment is made equal to the
present value of the executive's benefits under the Supplemental Executive
Retirement Plan calculated as if the executive had attained age 62 (or, if the
executive is older than 62, based on the executive's actual age) and applying
certain early retirement factors; and (v) continued life, disability, accident
and health insurance for three years. The agreements also provide for a gross
up payment to offset the effects of any excise tax imposed on the executive
under Section 4999 of the Internal Revenue Code.
Good reason is defined in the severance agreements to include the
assignment to the executive of duties materially inconsistent with those
appropriate for an executive of the Company, a material reduction in the
executive's overall standing and responsibilities within the Company and a
material reduction in the executive's annualized compensation and benefit
opportunities other than across-the-board reductions affecting all similarly
situated executives of comparable rank. In addition, following a change in
control of the Company, good reason also includes an adverse change in the
executive's title, authority, duties, responsibilities or reporting lines, a
10% or greater reduction in the executive's annualized compensation and
benefit opportunities, relocation of the executive's principal place of
employment by more than 30 miles or a substantial increase in business travel
obligations. A change in control is defined in the same manner as in the
employment agreements summarized above.
26
<PAGE>
COMPARATIVE STOCK PERFORMANCE
Sempra Energy was formed in connection with a business combination of
Pacific Enterprises and Enova Corporation that was completed on June 26, 1998.
In the combination, the common shares of the combining companies were converted
into shares of Sempra Energy which began trading on June 29, 1998.
The following graph compares the percentage change in the cumulative total
shareholder return on Sempra Energy Common Stock through December 31, 1999 with
the performance over the same period of the Standard & Poor's 500 Composite
Stock Price Index and an Energy Company Peer Group Index comprised of energy
and energy-related companies selected by Sempra Energy. These returns were
calculated assuming an initial investment of $100 in Sempra Energy Common
Stock, the S&P 500 and the Energy Company Peer Group on June 29, 1998 (the date
on which Sempra Energy Common Stock became publicly traded) and the
reinvestment of all dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SEMPRA ENERGY, S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period SEMPRA S&P
(Fiscal Year Covered) ENERGY 500 INDEX PEER GROUP
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-6/98 $100 $100 $100
FYE 09/98/ $95 $90 $105
FYE 12/98/ $94 $109 $105
FYE 03/99/ $73 $115 $93
FYE 06/99/ $87 $123 $104
FYE 09/99/ $82 $115 $99
FYE 12/99/ $70 $132 $95
</TABLE>
The companies comprising the Energy Company Peer Group are Cinergy Corp.,
CMS Energy Corporation, Columbia Energy Group, Dominion Resources, Inc., Duke
Energy Corp., Edison International, Enron Corp., FPL Group, Inc., Kinder
Morgan, Inc., MCN Energy Group, Inc., Nicor, Inc., NiSource, Inc., PG&E Corp.,
Reliant Energy, Inc., Southern Company, Texas Utilities Company, and Western
Resources, Inc. Cumulative total returns for companies comprising the Energy
Company Peer Group Index have been weighted according to the companies' market
capitalizations at the beginning of the comparison period.
27
<PAGE>
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Sempra Energy does not know of any matter to be voted upon at the Annual
Meeting other than the election of directors and the shareholder proposal
described in this Proxy Statement. The holders of the proxies are authorized
to vote the shares represented by the proxies solicited by this Proxy
Statement in accordance with their best judgement or any other business that
may be voted upon at the meeting and on matters incident to the conduct of the
meeting.
SHAREHOLDER PROPOSALS FOR THE 2001 PROXY STATEMENT
Any shareholder satisfying Securities and Exchange Commission requirements
and wishing to submit a proposal to be included in the Proxy Statement for the
2001 Annual Meeting of Shareholders should submit the proposal in writing to
the Corporate Secretary, Sempra Energy, 101 Ash Street, San Diego, California
92101-3017. The Company must receive the proposal by November 21, 2000 in
order to consider it for inclusion in the Proxy Statement for the meeting.
DIRECTOR NOMINEES OR OTHER BUSINESS FOR PRESENTATION AT ANNUAL MEETINGS
Shareholders who wish to present director nominations or other business at
an annual meeting are required to notify the Corporate Secretary of their
intention to do so at least 60 days, but not more than 120 days, before the
date corresponding to the date of the last annual meeting and the notice must
provide information as required in the By-laws. A copy of these By-law
requirements will be provided upon request in writing to the Corporate
Secretary, Sempra Energy, 101 Ash Street, San Diego, California 92101-3017.
The deadline for notification of these matters for the 2000 Annual Meeting has
passed. The period for notification for the 2001 Annual Meeting will begin on
January 2, 2001 and end on March 2, 2001. This requirement does not apply to
the deadline for submitting shareholder proposals for inclusion in the Proxy
Statement that is described above or to questions a shareholder may wish to
ask at the meeting.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, our independent auditors, are
expected to be present at the Annual Meeting. They will have the opportunity
to make a statement if they desire to do so and to respond to appropriate
questions from shareholders.
SHARE OWNERSHIP REPORTING COMPLIANCE
Our directors and executive officers are required to file with the
Securities and Exchange Commission reports regarding their ownership of Sempra
Energy Common Stock. Based solely on a review of copies of the reports that
have been furnished to us and written representations from directors and
officers that no other reports were required, we believe that all filing
requirements were met during 1999.
28
<PAGE>
OTHER INFORMATION
Sempra Energy's consolidated financial statements are included in our
Annual Report to Shareholders that is being mailed to shareholders together
with this Proxy Statement. Other information regarding the Company is included
in our Annual Report on Form 10-K which we file with the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
New York and Pacific Stock Exchanges. We will furnish a copy of the 1999 Form
10-K (excluding exhibits) without charge to any shareholder who requests the
report by writing to the Corporate Secretary, Sempra Energy, 101 Ash Street,
San Diego, California 92101-3017. The Form 10-K, as well as other reports we
file with the SEC and other information regarding the company is also
available at our home page on the Internet's World Wide Web at
http://www.sempra.com.
SOLICITATION OF PROXIES
We will pay the cost of soliciting proxies. We have retained D. F. King &
Co., Inc. to assist us in the solicitation. D.F. King may solicit proxies by
mail, in person or by telephone at an estimated cost to us of $12,500 plus
reimbursement of reasonable out-of-pocket expenses. In addition, our employees
may likewise solicit proxies on behalf of the Company. We also may be assisted
by Batchelder & Partners, Inc. which we have engaged to provide general
corporate advisory services and will receive no additional fee for the
solicitation of proxies.
----------------
This Notice of Annual Meeting and Proxy Statement are sent by order of the
Sempra Energy Board of Directors.
Thomas C. Sanger
Corporate Secretary
Dated March 15, 2000
29
<PAGE>
DIRECTIONS TO THE HYATT REGENCY, SAN DIEGO
[Map Appears Here]
FROM THE EAST--DRIVING WEST ON INTERSTATE 8
Take I-8 West to Hwy. 163 South towards downtown. Continue on Hwy. 163 South
straight into the city. The highway will will become into 10th Avenue. Follow
10th Avenue to Market Street and turn right. Follow Market Street 13 blocks,
across Harbor Drive, into the main entrance of the hotel.
FROM THE NORTHEAST--DRIVING SOUTH ON INTERSTATE 15
Take I-15 South to Hwy. 163 South. Continue on Hwy. 163 South straight into the
city. The highway will become 10th Avenue. Follow 10th Avenue to Market Street
and turn right. Follow Market Street 13 blocks, across Harbor Drive, into the
main entrance of the hotel.
FROM THE NORTH--DRIVING SOUTH ON INTERSTATE 5
Take I-5 South to the Front Street exit. Follow Front Street to Market Street.
Turn right onto Market Street and continue across Harbor Drive into the main
entrance of the hotel.
FROM THE SOUTH--DRIVING NORTH ON INTERSTATE 5
Take I-5 North to the Hawthorn Street exit. Continue on Hawthorn Street heading
west toward the bay. Turn left onto Pacific Hwy. heading south. Turn left onto
Harbor Drive (where Pacific Hwy. ends at Seaport Village). Turn right onto
Market Place into the main entrance of the hotel.
<PAGE>
[LOGO OF SEMPRA ENERGY]
101 Ash Street
San Diego, CA 92101-3017
www.sempra.com
<PAGE>
PROXY
P
R Solicited on Behalf of the Board of Directors of
O
X SEMPRA ENERGY
Y
101 Ash Street, San Diego, California 92101-3017
Annual Meeting of Shareholders - May 2, 2000
STEPHEN L. BAUM, RICHARD D. FARMAN and THOMAS C. SANGER, jointly or individually
and with full power of substitution, are authorized to represent and vote the
shares of the undersigned at the 2000 Annual Meeting of Shareholders of Sempra
Energy, and at any adjournment or postponement thereof, in the manner directed
on the reverse side of this card and in their discretion on all other matters
that may properly come before the meeting.
This card also provides voting instructions for shares held in the Sempra Energy
Direct Stock Purchase Plan and Employee Savings Plans of Sempra Energy and its
subsidiaries, as described under "Voting Information" in the accompanying Proxy
Statement.
(Continued and to be signed on other side)
[SEE REVERSE SIDE]
-- FOLD AND DETACH HERE --
[LOGO FOR SEMPRA ENERGY]
2000 ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------
ADMISSION TICKET
-----------------------------------
Tuesday, May 2, 2000. 9:00 A.M.
----------------------------------
ADMIT ONE SHAREHOLDER AND GUEST
----------------------------------
Hyatt Regency
One Market Place
San Diego, California
(See map in proxy statement for directions)
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT:
Even if you plan to attend the Annual Meeting in person,
please vote your shares.
- --------------------------------------------------------------------------------
Doors will be open at 8:30 a.m. Cameras, tape recorders and similar devices
will not be allowed in the meeting room.
<PAGE>
[X] Please mark your 3278
votes as in this
example.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this Proxy will be
voted FOR Item 1 and AGAINST Item 2.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" the nominees. The Board of Directors recommends a vote "AGAINST" the following:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] 2. PROPOSAL RE VOTING [ ] [ ] [ ]
DIRECTORS NOMINEES: APPROVAL REQUIREMENTS
For, except vote withheld from the 01. Herbert L. Carter --------------------------------------------------------
following nominee(s): 02. Wilford D. Godbold, Jr.
03. William D. Jones Please check here if you are planning to
------------------------------------- 04. Ralph R. Ocampo attend the Annual Meeting in person. [ ]
05. William G. Ouchi
- ------------------------------------------------------------------------- Please check here if you want confidential
voting. [ ]
Please check here if you receive more than
one Annual Report and do not wish to receive
the extra copy(ies). This will not affect
the distribution of dividends or proxy
statements. [ ]
</TABLE>
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
SIGNATURE (S) --------------------------- DATE --------------------------
--FOLD AND DETACH HERE--
[LOGO FOR SEMPRA ENERGY]
PROXY VOTING INSTRUCTION CARD
YOUR VOTE IS IMPORTANT. You may vote the shares held in this account in any one
of the following three ways.
. VOTE BY INTERNET. Access the Web site at http://www.eproxyvote.com/sre 24
hours a day, 7 days a week.
. VOTE BY PHONE. Call toll free, 1-977-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week from the U.S. and Canada to vote your proxy.
. VOTE BY MAIL. Complete, date, sign and mail your proxy card (above) in the
enclosed postage-paid envelope or, otherwise, return it to Sempra Energy
c/o First Chicago Trust Company, P.O. Box 8543, Edison, New Jersey 08818-
9410.
If you vote by telephone or via the Internet, please have your social security
number and this proxy card readily available. Your social security number and
the control number printed at the top of this card are necessary to verify your
vote. A telephone or Internet vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned this proxy card.
IF YOU VOTE BY PHONE OR VOTE USING THE INTERNET, THERE IS NO NEED FOR YOU TO
MAIL BACK YOUR PROXY CARD.
