<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HOUSTON INDUSTRIES INCORPORATED
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c) (1)(ii), 14a-6(i) (1), or 14a-6(j)
(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i) (3).
[ ] 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:
----------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
----------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
[ ] 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 of schedule and the date of its filing.
1) Amount previously paid:_____________________________________________________
2) Form, Schedule or Registration Statement No.:_______________________________
3) Filing party:_______________________________________________________________
4) Date filed:_________________________________________________________________
- ---------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[LOGO OF HOUSTON INDUSTRIES APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 4, 1994
AND PROXY STATEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Annual Meeting
Proxy Statement
Voting of Shares......................................................... 1
Election of Directors.................................................... 2
Nominees................................................................. 2
Continuing Directors..................................................... 3
Organization of the Board of Directors................................... 4
Compensation of Directors................................................ 5
Securities Ownership of Management....................................... 6
Securities Ownership of Certain Beneficial Owners........................ 7
Executive Compensation................................................... 7
Retirement Plans, Related Benefits and Other Agreements.................. 11
Report of the Personnel Committee on Executive Compensation.............. 13
Shareholder Return Performance Graph..................................... 18
Ratification of Appointment of Independent Auditors...................... 18
Other Matters............................................................ 19
Shareholder Proposals for 1995 Annual Meeting of Shareholders............ 19
Director Nominations for 1995 Annual Meeting of Shareholders............. 19
Annual Report to Shareholders............................................ 20
</TABLE>
<PAGE>
[LOGO OF HOUSTON INDUSTRIES APPEARS HERE]
5 Post Oak Park
4400 Post Oak Parkway, Houston, Texas 77027
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 4, 1994
To the Shareholders:
The Annual Meeting of Shareholders of Houston Industries Incorporated will be
held in the PLAZA SAN ANTONIO HOTEL IN SAN ANTONIO, TEXAS, at 9:00 a.m.,
Central Daylight Time, on Wednesday, May 4, 1994, to act upon the following
matters:
1. To elect five directors to hold office in accordance with the Amended
and Restated Bylaws of the Company;
2. To ratify the appointment of Deloitte & Touche as independent auditors
for the Company for 1994; and
3. To transact such other business that may properly come before the
meeting, or any adjournments thereof.
Only shareholders of record at the close of business on March 16, 1994 are
entitled to notice of, and to vote at, the meeting.
All shareholders are cordially invited and urged to attend the meeting. EVEN
IF YOU PLAN TO ATTEND THE MEETING, YOU ARE STILL REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ADDRESSED ENVELOPE. If you
attend, you may vote in person if you wish, even though you have sent in your
proxy.
By order of the Board of Directors,
[SIGNATURE OF HUGH RICE KELLY
APPEARS HERE]
March 25, 1994
Hugh Rice Kelly
Corporate Secretary
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
5 Post Oak Park
4400 Post Oak Parkway, Houston, Texas 77027
(713) 629-3000
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being mailed to
shareholders beginning on or about March 25, 1994. They are being furnished in
connection with the solicitation of proxies by the Board of Directors of
Houston Industries Incorporated (Company) to be voted at the Company's annual
meeting of shareholders (Annual Meeting) to be held at the time and place and
for the purposes set forth in the accompanying Notice.
The expense of this solicitation will be borne by the Company. The Company
has engaged Morrow & Co., Inc., professional proxy solicitors, to assist in the
routine solicitation of proxies at a fee of approximately $9,500, plus
expenses. The Company will also reimburse brokerage firms, nominees,
fiduciaries, custodians and other agents for their expenses in distributing
proxy material to the beneficial owners of the Company's common stock, without
par value (Common Stock), in accordance with Securities and Exchange Commission
(SEC) and New York Stock Exchange requirements. In addition, certain directors,
officers and employees of the Company may solicit proxies by telephone and
personal contact.
VOTING OF SHARES
As of March 16, 1994, the record date fixed by the Board of Directors for the
determination of shareholders entitled to vote at the Annual Meeting, the
Company had outstanding 130,708,985 shares of Common Stock, which is the only
class of the Company's securities outstanding and entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote.
Shares represented by properly executed proxies received prior to the Annual
Meeting will be voted as specified by the shareholders. If no specifications
have been given in a proxy, the shares represented thereby will be voted at the
Annual Meeting or any adjournments thereof FOR Item 1 (election of the nominees
for director), FOR Item 2 (ratification of the appointment of Deloitte & Touche
as independent auditors of the Company for 1994) and, in the discretion of the
persons named in the proxy, on any other business that may properly come before
the meeting.
A shareholder giving a proxy may revoke it at any time before it is voted at
the Annual Meeting by written revocation delivered to Mr. Robert E. Smith,
Assistant Corporate Secretary, at the Company's address shown above. A
shareholder who attends the Annual Meeting may, if he or she wishes, vote by
ballot, thereby cancelling any proxy previously given. In each case in which a
shareholder specifies by means of a ballot a choice with respect to any matter
to be acted upon, the shares covered by such ballot will be voted in accordance
with the specifications so made.
1
<PAGE>
Texas law provides that the vote for Item 1 (election of the nominees for
director) will be by a plurality of the votes cast. Under Texas law and the
Company's Amended and Restated Bylaws (Bylaws), the vote required for the
approval or adoption of the matters presented for shareholder action at the
Annual Meeting in Item 2 (ratification of independent auditors) is the
affirmative vote of a majority of shares of Common Stock entitled to vote and
represented in person or by proxy at the meeting. Abstentions and non-votes
(shares held by brokers and other nominees or fiduciaries that are present at
the meeting but not voted on a particular matter) have the same effect as a
vote "against" the matter presented for shareholder action for the purposes of
determining whether sufficient affirmative votes have been cast.
ELECTION OF DIRECTORS
The Company's Bylaws provide for a Board of Directors divided into three
classes (Class I, Class II and Class III) having staggered terms with each
class as nearly equal in size as possible. The current term of office of the
directors in Class I expires at the Annual Meeting. The terms of office of
directors in Class II and Class III will expire at the annual meetings of
shareholders to be held in 1995 and 1996, respectively. At each annual meeting
of shareholders, directors will be elected to succeed those whose terms then
expire, with each newly elected director to serve for a three-year term. All
members of the Board of Directors also serve as directors of the Company's
principal subsidiary, Houston Lighting & Power Company (HL&P), which has
publicly traded securities outstanding. On September 1, 1993, the Board of
Directors was expanded from 12 to 13 members and Dr. Bertram Wolfe was elected
to serve as a director until the Annual Meeting. With the expected retirement
of Mr. McDade noted below, the size of the Board of Directors will be reduced
to 12 members.
The Bylaws currently provide that no person is eligible to stand for re-
election to the Board of Directors at the annual meeting of shareholders on or
immediately following the tenth anniversary of such person's initial election
or appointment to the Board of Directors unless such person was serving as a
director of the Company as of April 1, 1992 or is an employee of the Company or
any of its corporate affiliates. The Bylaws also provide that no person is
eligible to serve as a director after the annual meeting of shareholders on or
after such person's seventieth birthday. The Bylaws specify that any vacancies
created by such term limitations are to be filled by the shareholders at the
appropriate annual meeting. In any case, each director shall serve until his or
her respective successor shall have been duly elected and qualified unless he
or she shall resign, become disqualified, disabled or shall otherwise be
removed. Mr. McDade is expected to retire from the Board of Directors at the
Annual Meeting pursuant to the director retirement provisions of the Bylaws. He
has served as director of the Company and of HL&P since 1980.
NOMINEES
Messrs. Cruikshank, Trotter, Ms. Deily and Dr. Schilt have been nominated for
Class I directors to serve a three-year term ending at the annual meeting in
1997. In order to balance the size of the classes of directors, Dr. Wolfe has
been nominated for Class II to serve a one-year term ending at the annual
meeting in 1995. It is intended that the persons named in the accompanying
proxy will vote shares represented by properly executed proxies for the
election of the five listed nominees as directors unless authority to vote is
withheld. If any nominee should become unavailable to serve on the Board of
Directors, the persons named in the proxy may act with discretionary authority
to vote the proxy for such other person, if any, as may be designated by the
Board of Directors. However, the Board of Directors is not aware of any
circumstances likely to render any of the nominees unavailable for election.
2
<PAGE>
The following sets forth certain information with respect to the business
experience of each nominee during the past five years and certain other
directorships held by each nominee. Unless otherwise indicated, each person has
had the same principal occupation for at least five years.
CLASS II DIRECTOR--TERM EXPIRING 1995
BERTRAM WOLFE, Ph.D., age 66, has been a director since 1993. Prior to his
retirement in 1992, Dr. Wolfe was Vice President and General Manager of General
Electric Company's nuclear energy business in San Jose, California.
CLASS I DIRECTORS--TERM EXPIRING 1997
ROBERT J. CRUIKSHANK, age 63, has been a director since 1993. Mr. Cruikshank
is primarily engaged in managing his personal investments in Houston, Texas.
Prior to his retirement in 1993, Mr. Cruikshank was a Senior Partner in the
accounting firm of Deloitte & Touche. Mr. Cruikshank is also Vice-Chairman of
the Board of Regents of The University of Texas System. He also serves as a
director of MAXXAM Inc., Compass Bank and Texas Biotechnology Corporation.
LINNET F. DEILY, age 48, has been a director since 1993. Ms. Deily is
Chairman, Chief Executive Officer and President of First Interstate Bank of
Texas, N.A. She has served as Chairman since January 1992, Chief Executive
Officer since January 1991 and President since November 1988. (1)
ALEXANDER F. SCHILT, Ph.D., age 53, has been a director since 1992. He is
Chancellor of the University of Houston System. Prior to 1990, Dr. Schilt was
President of Eastern Washington University in Cheney and Spokane, Washington.
JACK T. TROTTER, age 67, has been a director since 1985. Mr. Trotter is
primarily engaged in managing his personal investments in Houston, Texas. He
also serves as a director of First Interstate Bank of Texas, N.A., Howell
Corporation, Weingarten Realty Investors, Zapata Corporation and Continental
Airlines, Inc.
- --------
(1) First Interstate Bank of Texas, N.A. and certain of its affiliates
participate in various credit facilities with the Company, certain of its
subsidiaries and other entities in which the Company has an ownership
interest. Under these agreements, First Interstate and certain of its
affiliates have maximum aggregate loans and commitments to lend of
approximately $81.24 million.
CONTINUING DIRECTORS
The following sets forth certain information with respect to all members of
the Company's Board of Directors whose current terms will continue after the
Annual Meeting. Information is provided concerning the business experience of
each continuing director during the past five years and certain other
directorships held by each continuing director. Unless otherwise indicated,
each person has had the same principal occupation for at least five years.
CLASS II DIRECTORS--TERM EXPIRING 1995
MILTON CARROLL, age 43, has been a director since 1992. He is Chairman,
President and Chief Executive Officer of Instrument Products Inc., an oil field
supply manufacturing company, in Houston, Texas. Mr. Carroll currently serves
as an advisor to Lazard Freres & Co., an investment banking firm, and is a
director of Panhandle Eastern Corporation and the Federal Reserve Bank of
Dallas.
JOHN T. CATER, age 58, has been a director since 1983. Mr. Cater is Chairman,
Chief Executive Officer and a director of River Oaks Trust Company in Houston,
Texas. He also serves as President and Director of Compass Bank-Houston. Until
his retirement in July 1990, Mr. Cater served as President, Chief Operating
Officer and a director of MCorp, a Texas bank holding company. He currently
serves as a director of MCorp. (1)
3
<PAGE>
DON D. SYKORA, age 63, has been a director since 1982. Mr. Sykora has been
President and Chief Operating Officer of the Company since July 1993. He
previously served as President and Chief Operating Officer of HL&P. He also
serves as a director of Powell Industries, Inc., Pool Energy Services Company,
Inc. and TransTexas Gas Corporation.
CLASS III DIRECTORS--TERM EXPIRING 1996
JOSEPH M. HENDRIE, Ph.D., age 69, has been a director since 1985. Dr. Hendrie
is a Consulting Engineer in Bellport, New York, having previously served as
Chairman and Commissioner of the U.S. Nuclear Regulatory Commission and as
President of the American Nuclear Society. He is also a director of Entergy
Operations, Inc. of Jackson, Mississippi. (2)
HOWARD W. HORNE, age 67, has been a director since 1978. Mr. Horne is Vice-
Chairman of Cushman & Wakefield of Texas, Inc., a subsidiary of a national real
estate brokerage firm. Until 1990, he was Chairman of the Board of The Horne
Company, a Houston realty firm. (3)
DON D. JORDAN, age 61, has been a director of the Company since 1977 and of
HL&P since 1974. Mr. Jordan is Chairman and Chief Executive Officer of the
Company and Chairman and Chief Executive Officer of HL&P. Mr. Jordan also
serves as a director of Texas Commerce Bancshares, Inc. and BJ Services
Company, Inc.
KENNETH L. SCHNITZER, SR., age 64, has been a director since 1983. Mr.
Schnitzer is Chairman of the Board of Schnitzer Enterprises, Inc., a Houston
commercial real estate development company, having previously served as a
director of American Building Maintenance Industries, Incorporated and
Weingarten Realty, Inc. (4)
- --------
(1) In March 1989, the Federal Deposit Insurance Corporation declared 20 of
MCorp's 25 banks to be insolvent and transferred their assets and deposits
to another bank. In 1989, MCorp filed for protection under the Federal
Bankruptcy Code.
(2) In accordance with the director retirement provisions of the Company's
Bylaws, Dr. Hendrie is expected to retire at the date of the Company's 1995
annual meeting of shareholders, which is prior to the end of the Class III
term.
(3) Under a consulting arrangement originally with Mr. Horne which was
subsequently amended to be an agreement with Cushman & Wakefield, of which
Mr. Horne is Vice-Chairman, Cushman & Wakefield represented the Company in
negotiations concerning the purchase of an office building in 1993, for
which that firm was paid $358,000 by the Company and $78,000 by the seller
of the building.
(4) Certain of the Company's subsidiaries currently lease office space in
buildings owned or controlled by affiliates of Mr. Schnitzer. The Company's
subsidiaries paid a total of approximately $5.4 million to affiliates of
Mr. Schnitzer during 1993, and it is expected that approximately $5.6
million will be paid in 1994. The Company believes such payments are
comparable to those that would have been made to other non-affiliated firms
for comparable facilities and services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR.
ORGANIZATION OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors has established several committees to oversee
specific matters affecting the Company, including an Executive and Nominating
Committee, an Audit Committee, a Finance Committee, a Personnel Committee, a
Nuclear Committee and other committees, the responsibilities of which would not
necessarily come within the purview of the foregoing committees.
4
<PAGE>
The Executive and Nominating Committee, currently composed of Messrs. Cater,
Horne, Jordan, McDade, Trotter and Dr. Hendrie, reviews management
recommendations for organizational changes, provides consultation regarding
duties of executive officers and recommends potential candidates for election
to the Board of Directors. This committee will consider suggestions from
shareholders for nominees to serve as directors if such proposals are submitted
pursuant to the procedural requirements set forth in the Bylaws. See "Director
Nominations for 1995 Annual Meeting of Shareholders."
The Audit Committee is composed entirely of nonemployee directors, currently
Messrs. Carroll, Cruikshank, Schnitzer and Dr. Schilt. The Audit Committee
recommends to the Board of Directors the firm of independent auditors to be
engaged to examine the financial statements of the Company and its
subsidiaries; reviews the plan and scope of the audit, non-audit services and
related fees; reviews the Company's significant accounting policies and its
internal accounting controls; and has general responsibility for related
matters.
The Finance Committee, currently composed of Messrs. Cater, Jordan, McDade,
Sykora, Trotter and Ms. Deily, reviews management forecasts of the Company's
financial needs and policies; acts on management recommendations concerning the
Company's capital structure, amounts and sources of permanent financing, lines
of credit, loan agreements and dividend policies; and approves terms relevant
to specific debt and equity offerings of the Company.
The Personnel Committee is composed entirely of nonemployee directors,
currently Messrs. Cater, Cruikshank, McDade and Trotter. The Personnel
Committee approves and, in certain cases, makes recommendations to the Board of
Directors concerning compensation and benefits for officers of the Company;
reviews human resource programs regarding manpower forecasts and training; and
monitors employee benefit plans and the administration of those plans.
The Nuclear Committee is currently composed entirely of nonemployee
directors, Drs. Hendrie, Schilt, Wolfe and Mr. Schnitzer. The Nuclear Committee
reviews the activities of the Company and HL&P in all areas of nuclear
development and operations, and reports to and makes recommendations to the
Board of Directors on such matters as nuclear regulatory reports and licensing
requirements, management evaluations of nuclear engineering, construction and
operations progress and performance and monitoring of budgetary requirements.
The Board of Directors of the Company and of HL&P held ten and twelve
meetings, respectively, during 1993. During 1993 the Executive and Nominating
Committee met once, the Finance Committee met four times, the Audit Committee
met four times, the Personnel Committee met seven times, the Nuclear Committee
met eleven times and other committees met an aggregate of five times. Each
director attended at least seventy-five percent of the aggregate number of
meetings of the Boards of Directors and of committees of such boards on which
he or she served, except for Mr. Trotter who attended seventy-one percent of
such meetings.
COMPENSATION OF DIRECTORS
Each nonemployee director receives an annual retainer fee of $20,000, a fee
of $1,000 for each board meeting attended and a fee of $700 for each committee
meeting attended. Directors may defer all or a part of their annual retainer
fees (minimum deferral $2,000) and meeting fees under the Company's deferred
compensation plan.
Nonemployee directors participate in a director benefits plan pursuant to
which a director who serves at least one full year will receive an annual
benefit in cash equal to the annual retainer payable in the year the director
terminates service. Benefits under this plan will be payable to the director,
commencing the January following the later of the director's termination of
service or attainment of age 65, for a period equal to the number of full years
of service of the director.
5
<PAGE>
Nonemployee directors also participate in the Company's executive life
insurance plan effective January 1994, described under "Retirement Plans,
Related Benefits and other Agreements," under which the Company purchases
split-dollar life insurance so as to provide each nonemployee director a death
benefit equal to six times his or her annual retainer (assuming single life
coverage is elected) with coverage continuing after termination of service as a
director. This plan also permits the Company to provide for a tax gross-up
payment to make the directors whole with respect to imputed income recognized
with respect to the term portion of the annual insurance premiums. Upon death,
the Company will receive the balance of the insurance proceeds payable in
excess of the specified death benefit which, by design, is expected to be at
least sufficient to cover the Company's cumulative outlays to pay premiums and
the after-tax cost to the Company of the tax gross-up payments.
For a description of a consulting arrangement with Mr. Horne and a fee paid
to a company of which he is Vice-Chairman, see Note 3 to the table listing
continuing directors in "Class III Directors--Term Expiring 1996" under
"Nominees."
SECURITIES OWNERSHIP OF MANAGEMENT
The following table shows shares of the Company's Common Stock, beneficially
owned (as determined under SEC rules) as of March 16, 1994 by each current
director and nominee, the chief executive officer and the four other most
highly compensated executive officers of the Company and, as a group, of such
persons and other executive officers. No person or member of the group listed
owns any equity securities of HL&P or any other subsidiary of the Company.
Unless otherwise indicated, each person or member of the group listed has sole
voting and sole investment power with respect to the shares of Common Stock
listed. No ownership shown in the table represents 1% or more of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME BENEFICIALLY OWNED
---- ----------------------
<S> <C>
Milton Carroll.................................. 1,200 (1)
John T. Cater................................... 1,000 (2)
Robert J. Cruikshank............................ 1,000
Linnet F. Deily................................. 1,000 (3)
Joseph M. Hendrie............................... 415 (3)(4)
Howard W. Horne................................. 3,233 (4)
Don D. Jordan................................... 74,575 (5)(6)(7)
Hugh Rice Kelly................................. 11,542 (4)(6)(7)
R. Steve Letbetter.............................. 11,942 (6)(7)
Thomas B. McDade................................ 3,193
Alexander F. Schilt............................. 400
Kenneth L. Schnitzer, Sr........................ 4,650
Don D. Sykora................................... 33,204 (4)(6)(7)
Jack T. Trotter................................. 1,000
Gary G. Weik.................................... 9,781 (6)(7)
Bertram Wolfe................................... 110
All of the above and other executive officers as
a group (26 persons)........................... 223,568 (1)(4)(6)(7)
</TABLE>
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(1) To the Company's knowledge, based solely on its review of the copies
provided to the Company of reports of stock ownership and changes in
ownership required to be filed with the SEC, or written representations
that no such reports were required, during the fiscal year ended December
31,
6
<PAGE>
1993, all such filings were made by the Company's directors and executive
officers, except in the case of Mr. Carroll, a director of the Company, two
reports covering three transactions were not timely filed until his timely-
filed year-end Form 5 report.
(2) Mr. Cater disclaims beneficial ownership of these shares, which are owned
by his adult children.
(3) Voting power and investment power with respect to the shares listed for Ms.
Deily and Dr. Hendrie are shared with the respective spouse of each.
(4) Includes shares held under the Company's dividend reinvestment plan as of
December 31, 1993.
(5) Voting power and investment power with respect to 576 of the shares listed
are shared with Mr. Jordan's spouse.
(6) Includes shares held through the savings plans of the Company or KBLCOM
Incorporated as of December 31, 1993 (which plans merged January 1, 1994),
as to which the participant has sole voting power (subject to such power
being exercised by the plan's trustees in the same proportion as directed
shares in the savings plans are voted in the event the participant does not
exercise voting power).
(7) The ownership shown in the table includes shares which may be acquired
within 60 days on exercise of outstanding stock options granted under the
Company's long-term incentive compensation plan by each of the persons and
group, as follows: Mr. Jordan--13,115 shares; Mr. Sykora--6,994 shares; Mr.
Weik--3,662 shares; Mr. Kelly--2,652 shares; Mr. Letbetter--2,150 shares;
and the group --39,402 shares.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Shares of Common Stock are held in trust under the savings plans of the
Company and KBLCOM Incorporated (which plans merged on January 1, 1994) and the
employee stock ownership plan (ESOP) component of the Company's savings plan. A
total of 6,732,915 shares are held in the savings trust for which Texas
Commerce Bank National Association, Houston, Texas serves as trustee, and
9,431,340 shares are held in the ESOP trust for which State Street Bank and
Trust Company (State Street) of Boston, Massachusetts serves as trustee,
representing 5.2% and 7.2%, respectively, of the outstanding shares of Common
Stock as of December 31, 1993. The terms of the trust agreements between the
Company and the trustees provide for directed, pass-through voting by the
participants in the savings plans. According to a February 1994 Schedule 13G
filed by State Street with the SEC, State Street is the beneficial owner of an
aggregate of 10,465,778 shares (8.0%) of the Company's Common Stock with
respect to which it has sole voting power for 816,498 shares, shared voting
power for 9,448,780 shares, sole dispositive power for 1,012,621 shares and
shared dispositive power for 9,452,857 shares, in all cases in State Street's
capacity as a trustee for (i) the Company's savings plan, (ii) various
collective investment funds for employee benefits and other index accounts, and
(iii) various personal trust accounts. State Street disclaims beneficial
ownership of all such shares.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for the years ended December 31, 1991, 1992 and
1993, the annual, long-term and certain other compensation of the chief
executive officer and the other four most highly compensated executive officers
of the Company (Named Officers). The format and information presented are as
prescribed in SEC rules and, in accordance with transitional provisions of the
rules, information in the "All Other Compensation" column is not presented for
1991.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------------
COMPENSATION AWARDS PAYOUTS
------------------ ---------- ----------
SECURITIES
NAME AND PRINCIPAL UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY(1) BONUS(2) OPTIONS(#) PAYOUTS(3) COMPENSATION(4)
------------------ ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Don D. Jordan........... 1993 $829,500 12,965 $762,962 $647,491
Chairman and Chief 1992 785,125 $531,268 13,190 32,000 543,204
Executive Officer of 1991 745,883 334,688 29,062
the Company; Chairman
and Chief Executive
Officer of HL&P
Don D. Sykora........... 1993 559,000 6,915 510,000 410,061
President and Chief 1992 523,417 352,513 7,034 20,938 351,022
Operating Officer of 1991 499,900 200,813 18,812
the Company
Gary G. Weik............ 1993 356,200 3,514 254,339 3,538
Vice President of the 1992 325,000 156,809 3,736 4,364
Company; President and 1991 318,833 116,708
Chief Operating Officer
of KBLCOM Incorporated
Hugh Rice Kelly......... 1993 310,500 2,621 285,078 58,218
Vice President, General 1992 297,583 155,439 2,667 13,188 65,266
Counsel and Corporate 1991 283,750 86,981 12,313
Secretary of the
Company; Senior Vice
President, General
Counsel and Corporate
Secretary of HL&P
R. Steve Letbetter...... 1993 271,000 2,128 212,362 42,562
Vice President of the 1992 241,417 125,952 2,161 10,125 44,813
Company; President and 1991 224,583 70,484 9,125
Chief Operating Officer
of HL&P
</TABLE>
- --------
(1) The amounts shown include salary earned and received by the Named Officers
as well as salary earned but deferred. Also included are board of director
and committee fees paid in 1991 prior to the time such fees were eliminated
for employee directors.
(2) The amount of bonus earned for 1993 has not been determined because it was
not calculable as of the date of this proxy statement. In accordance with
the SEC's rules on executive compensation, these amounts will be included
for such year in the Company's proxy statement for the 1995 annual meeting.
(3) The amounts shown represent (i) cash paid in 1991 and 1992 under the
Company's executive incentive compensation plan for long-term awards based
on the performance periods of 1987-1990 and 1988-1991 respectively, and
(ii) the dollar value of shares of the Company's Common Stock paid out in
1993 under the Company's long-term incentive compensation plan based on the
achievement of certain performance goals for the 1990-1992 performance
cycle, plus dividend equivalent accruals during the performance period.
8
<PAGE>
(4) The amounts shown include (i) Company contributions to the Company's
savings plan and accruals under its savings restoration plan for 1992 and
1993 on behalf of the Named Officers, as follows: Mr. Jordan 1992--$41,348
and 1993--$57,152; Mr. Sykora 1992--$31,743 and 1993--$38,284; Mr. Kelly
1992--$26,141 and 1993--$19,569; and Mr. Letbetter 1992--$20,225 and 1993--
$16,672; (ii) KBLCOM contributions to KBLCOM's savings plan on behalf of
Mr. Weik as follows: 1992--$4,364 and 1993--$3,538; and (iii) the portion
of accrued interest on amounts of compensation deferred under the Company's
deferred compensation plan and executive incentive compensation plan that
exceeds 120% of the applicable federal long-term rate provided under
Section 1274(d) of the Internal Revenue Code, as follows: Mr. Jordan 1992--
$501,856 and 1993--$590,339; Mr. Sykora 1992--$319,279 and 1993--$371,777;
Mr. Kelly 1992--$39,125 and 1993--$38,649; and Mr. Letbetter 1992--$24,588
and 1993--$25,890. With respect to the accrued interest on deferred amounts
referenced in (iii) of this footnote, the Company owns and is the
beneficiary under life insurance policies, and it is currently anticipated
that the benefits associated with these policies will be sufficient to
cover such accumulated interest.
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Company's long-term incentive compensation plan to the Named
Officers during 1993.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------- --------
% OF
TOTAL
OPTIONS
NUMBER OF GRANTED
SECURITIES TO EXERCISE GRANT
UNDERLYING EMPLOYEES OR BASE DATE
OPTIONS IN FISCAL PRICE PER EXPIRATION PRESENT
NAME GRANTED(#)(1) YEAR SHARE DATE VALUE(2)
- ---- ------------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Don D. Jordan............. 12,965 19.71% $46.25 01/03/03 $41,618
Don D. Sykora............. 6,915 10.51% 46.25 01/03/03 22,197
Gary G. Weik.............. 3,514 5.34% 46.25 01/03/03 11,280
Hugh Rice Kelly........... 2,621 3.98% 46.25 01/03/03 8,413
R. Steve Letbetter........ 2,128 3.24% 46.25 01/03/03 6,831
</TABLE>
- --------
(1) The nonstatutory options for shares of Common Stock included in the table
were granted on January 4, 1993, have a ten-year term and generally become
exercisable in one-third increments commencing one year after date of
grant, so long as employment with the Company or its subsidiaries
continues. If a change in control (as defined in the plan) of the Company
occurs before the options become exercisable, the options will become
immediately exercisable.
(2) The values are based on the Black-Scholes option pricing model adjusted for
the payment of dividends. The calculations were made based on the following
assumptions: volatility equal to historical volatility of the Common Stock
in the six-month period prior to grant date; risk-free interest rate equal
to the ten-year average monthly U.S. Treasury rate for January 1993; option
strike price equal to current stock price on the date of grant ($46.25);
current dividend rate of $3 per share per year; and option term equal to
the full ten-year period until the stated expiration date. No reduction has
been made in the valuations on account of non-transferability of the
options or vesting or forfeiture provisions. Valuations would change if
different assumptions were made. Option values are dependent on general
market conditions and the performance of the Common Stock. There can be no
assurance that the values in this table will be realized.
9
<PAGE>
STOCK OPTION VALUES
The following table sets forth information for each of the Named Officers
with respect to the unexercised options to purchase Common Stock granted under
the Company's long-term incentive compensation plan and held as of December 31,
1993, including the aggregate amount by which the market value of the option
shares exceeds the exercise price of the option shares at December 31, 1993. No
options were exercised by the Named Officers during 1993.
1993 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT
OPTIONS DECEMBER 31,
AT DECEMBER 31, 1993 1993(1)
---------------------- -------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ---------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Don D. Jordan.......................... 4,397 / 21,758 $18,962 / $58,178
Don D. Sykora.......................... 2,345 / 11,604 10,113 / 31,026
Gary G. Weik........................... 1,245 / 6,005 5,369 / 16,233
Hugh Rice Kelly........................ 889 / 4,399 3,834 / 11,763
R. Steve Letbetter..................... 720 / 3,569 3,105 / 9,539
</TABLE>
- --------
(1) Based on the average of the high and low sales prices of the Common Stock
on the New York Stock Exchange Composite Tape, as reported in The Wall
Street Journal for December 31, 1993.
LONG-TERM INCENTIVE COMPENSATION PLANS
The following table sets forth information concerning awards made during the
year ended December 31, 1993 under the Company's long-term incentive
compensation plan. The table represents potential payouts of awards for
performance shares of Common Stock based on the achievement of certain
performance goals over a performance cycle of three years. The performance
goals are weighted differently depending on the parent or subsidiary company by
which the Named Officer is employed. The consolidated performance goal
applicable to each of the Named Officers is achieving a superior total return
to shareholders in relation to a group of other companies. With respect to
Mr. Letbetter, subsidiary performance goals consist of (1) increasing HL&P's
competitive rate advantage by maintaining current base electric rates and (2)
achieving a superior cash flow performance in relation to a group of other
companies. Mr. Weik's subsidiary performance goal is achieving an increase in
operating profit. Performance goals for Messrs. Jordan, Sykora and Kelly
include all of the above. Each of these goals has attainment levels ranging
from 50% below to 50% above the target amounts. Target amounts for awards will
be earned if goals are achieved at the 100% level; threshold amounts if goals
are achieved at 50% of the target level and maximum amounts if goals are
achieved at 50% above the target level. If a change in control (as defined in
the plan) of the Company occurs before the end of a performance cycle, the
payouts of awards for performance shares will occur without regard to
achievement of the performance goals.
10
<PAGE>
LONG-TERM INCENTIVE COMPENSATION PLANS--AWARDS IN 1993
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-
PERFORMANCE BASED PLANS(1)
OR OTHER ------------------------
PERIOD TARGET MAXIMUM
NUMBER UNTIL THRESHOLD NUMBER NUMBER
OF MATURITY OR NUMBER OF OF OF
NAME SHARES PAYOUT SHARES SHARES SHARES
- ---- ------ ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Don D. Jordan....................... 11,659 12/31/95 5,830 11,659 17,489
Don D. Sykora....................... 7,175 12/31/95 3,588 7,175 10,763
Gary G. Weik........................ 3,646 12/31/95 1,823 3,646 5,469
Hugh Rice Kelly..................... 2,719 12/31/95 1,360 2,719 4,079
R. Steve Letbetter.................. 2,208 12/31/95 1,104 2,208 3,312
</TABLE>
- --------
(1) The table does not reflect dividend equivalent accruals during the
performance period.
RETIREMENT PLANS, RELATED BENEFITS AND OTHER AGREEMENTS
The following table shows the estimated annual benefit payable under the
Company's retirement plan, benefit restoration plan and, in certain cases,
supplemental agreements, to officers in various compensation classifications
upon retirement at age 65 after the indicated periods of service, determined on
a single-life annuity basis. The amounts in the table are not subject to any
deduction for Social Security payments or other offsetting amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL
AVERAGE ESTIMATED ANNUAL PENSION BASED ON YEARS OF SERVICE
ANNUAL ----------------------------------------------------------------------
COMPENSATION 35 OR MORE
AT AGE 65 15 YEARS 20 YEARS 25 YEARS 30 YEARS YEARS
- ------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 85,998 $114,664 $143,330 $171,996 $ 200,662
400,000 115,098 153,464 191,830 230,196 268,562
500,000 144,198 192,264 240,330 288,396 336,462
600,000 173,298 231,064 288,830 346,596 404,362
700,000 202,398 269,864 337,330 404,796 472,262
800,000 231,498 308,664 385,830 462,996 540,162
900,000 260,598 347,464 434,330 521,196 608,062
1,000,000 289,698 386,264 482,830 579,396 675,962
1,200,000 347,898 463,864 579,830 695,796 811,762
1,400,000 406,098 541,464 676,830 812,196 947,562
1,500,000 435,198 580,264 725,330 870,396 1,015,462
1,600,000 464,298 619,064 773,830 928,596 1,083,362
1,700,000 493,398 657,864 822,330 986,796 1,151,262
</TABLE>
- --------
NOTE: The qualified pension plan limits compensation in accordance with
Section 401(a)(17) of the Internal Revenue Code and also limits benefits
in accordance with Section 415 of the Internal Revenue Code. Pension
benefits based on compensation above the qualified plan limit or in
excess of the limit on annual benefits are provided through the benefit
restoration plan.
For the purpose of the pension table above, final average annual compensation
means the average of covered compensation for the 36 consecutive months out of
the 120 consecutive months immediately preceding retirement in which the
participant's covered compensation was the highest.
11
<PAGE>
Covered compensation only includes the amounts shown in the "Salary" and
"Bonus" columns of the Summary Compensation Table. At December 31, 1993 the
credited years of service for the following persons are: Mr. Jordan, 35 years;
Mr. Sykora, 35 years; Mr. Kelly, 19 years, 10 of which result from a
supplemental agreement; and Mr. Letbetter, 20 years.
KBLCOM also maintains a noncontributory retirement plan for substantially all
employees of KBLCOM and its subsidiaries. The KBLCOM retirement plan is
substantially similar to the Company's retirement plan, except that the
benefits are calculated pursuant to a different formula. Covered compensation
is that shown in the "Salary" column of the Summary Compensation Table. Annual
benefits payable upon normal retirement under the KBLCOM retirement plan are
equal to 1.35% of aggregate compensation earned after 1988 during service with
KBLCOM or its subsidiaries, plus the benefit, if any, accrued under a prior
plan formula for pre-1989 service. Mr. Weik is also covered by a supplemental
agreement which provides for retirement benefits based on covered compensation
in excess of the qualified plan limits. The estimated annual benefit payable to
Mr. Weik upon retirement at age 65 (after 21 years of service) pursuant to the
KBLCOM retirement plan and his supplemental agreement is approximately $99,000.
The Company maintains an executive benefits plan that provides certain salary
continuation, disability and death benefits to key officers of the Company and
its subsidiaries, excluding KBLCOM and its subsidiaries. The Named Officers
participate in this plan pursuant to individual agreements. The agreements
generally provide for (1) a salary continuation benefit of 100% of the
officer's current salary for twelve months after death during active employment
and then 50% of salary for nine years or until the deceased officer would have
attained age 65, if later, and (2) if the officer retires after attainment of
age 65, an annual post-retirement death benefit of 50% of the officer's
preretirement annual salary payable for six years.
Effective in 1994, the Company authorized an executive life insurance plan
providing for split-dollar life insurance to be maintained on the lives of
certain officers and all members of the Board of Directors. Pursuant to the
plan, the Personnel Committee has authorized the Company to obtain coverage for
the Named Officers. The amounts of their coverages are not finalized, pending
completion of arrangements with the insurance carrier and certain elections by
participants, but are expected to range from approximately two times current
salary to six times current salary assuming single life coverage is elected.
The death benefit for the Company's nonemployee directors is six times the
annual retainer assuming single life coverage is elected. The plan also
provides that the Company may make payments to the covered individuals designed
to compensate for tax consequences with respect to imputed income that they
must recognize for federal income tax purposes based on the term portion of the
annual premiums. If a covered executive retires at age 65 or at an earlier age
under circumstances approved for this purpose by the Board of Directors, rights
under the plan vest so that coverage is continued based on the same death
benefit in effect at the time of retirement. Upon death, the Company will
receive the balance of the insurance proceeds payable in excess of the
specified death benefit which by design is expected to be at least sufficient
to cover the Company's cumulative outlays to pay premiums and the after-tax
cost to the Company of the tax gross-up payments.
KBLCOM and Mr. Weik have entered into an agreement under which Mr. Weik is
entitled to severance benefits in the event of termination of his employment
within 36 months following either (1) such time as a person or group other than
the Company becomes the beneficial owner of 30% or more of KBLCOM's voting
securities, a merger or consolidation occurs as a result of which less than 70%
of the voting securities of the surviving corporation are owned by shareholders
of KBLCOM immediately prior to the transaction, or KBLCOM transfers
substantially all of its assets to an entity not wholly owned by KBLCOM or the
Company, or (2) while there is pending an agreement which if consummated would
cause any of the foregoing to occur. The specified termination circumstances
include termination by KBLCOM without cause and termination by Mr. Weik
following certain changes
12
<PAGE>
in his job responsibilities, job location or compensation and benefits. The
amount of the severance benefit is 2.99 times average annual compensation paid
by KBLCOM or the Company which was includible in gross income for federal
income tax purposes for the most recent five years. The severance agreement
also provides for continuation of medical and dental coverage at active
employee rates for 36 months following termination. Benefits under the
severance agreement are conditional on the employee entering into a three-year
non-competition agreement and are subject to reduction to the extent they would
result in the disallowance of a deduction to KBLCOM under the parachute payment
provisions of Section 280G of the Internal Revenue Code.
REPORT OF THE PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
INTRODUCTION
The Personnel Committee is composed entirely of nonemployee directors who
have no "interlocking" relationships as defined by the Securities and Exchange
Commission. The Personnel Committee reviews and recommends, for Board approval,
all salary arrangements, other non-incentive remuneration for executives and
the design of the Company's incentive compensation plans. The Personnel
Committee is directly responsible for assessing the effectiveness of and
administering the Company's incentive compensation programs. The Board of
Directors approves executive officer compensation based upon the Personnel
Committee's recommendations which are based on evaluation of executive officer
performance and comparative data provided by independent consulting firms as
discussed below. In the case of Mr. Jordan, the Chief Executive Officer, the
Personnel Committee's recommendations are based on its evaluation of
performance; for all other executive officers, the recommendations are based on
management's evaluation of performance.
COMPENSATION POLICY
The Personnel Committee's executive compensation policy is designed to (1)
strengthen the relationship between pay and performance by emphasizing
variable, at-risk performance-based compensation; (2) attract, retain, and
encourage the development of highly qualified and experienced executives upon
whom, in large part, the successful operation and management of the Company
depends; (3) promote overall corporate performance; and (4) ensure compensation
that is competitive externally and equitable internally.
The Company retains independent consulting firms to review and report, at
least biennially, on the total compensation, represented by base salary and
short-term and long-term incentive compensation practices of peer groups of
companies that are considered comparable to the Company in terms of size,
performance, position, and compensation philosophy (Reference Group). For the
Company and HL&P, these peer groups are composed of companies in the utility
industry and some companies in other industries. For KBLCOM, the Company's
cable television subsidiary, the peer group is composed of companies in the
cable television industry.
The companies chosen for the Reference Group used for total compensation
purposes generally are not the same companies which comprise the Dow Jones
Utilities Average in the Performance Graph included in this proxy statement.
The Personnel Committee believes that the Dow Jones Utilities Average, while
useful for general reference purposes, does not afford a good reference for
determining the Company's most direct competitors for executive talent. In
addition, while the Committee may use the Reference Group of companies to
establish opportunity levels for base salary and short-term and long-term
incentive compensation, the actual achievement of incentive compensation is
based on performance goals measured with reference to other groups of companies
more directly related to specific performance factors for the Company or its
subsidiaries. For example, the achievement of the
13
<PAGE>
total return goal which applies to both short-term and long-term incentive
compensation is measured in relation to a group of 75 other electric utilities
and electric utility holding companies. The Personnel Committee believes that
group is a more appropriate reference for such a performance goal because of
its focus on the electric utility sector of the securities market. Similarly,
one of the performance goals for HL&P under the short-term incentive program
involves achieving a high ranking in terms of return on capital employed, as
compared to 20 similar, large electric utility companies that are comparable to
HL&P in terms of size and percentage of revenues attributable to sales of
electricity.
COMPONENTS OF COMPENSATION
The key elements of the Company's executive compensation program are base
salary, short-term incentive compensation, and long-term incentive
compensation. In determining each component of compensation, the Personnel
Committee considers all elements of an executive's total compensation package
which, compared to the Reference Group, may vary from low to high depending on
an executive officer's tenure, experience, leadership and level of
responsibility. Because a significant portion of an executive officer's
compensation includes at-risk components based on Company performance, if
Company performance exceeds that of the peer group, compensation should be
above the targeted levels; likewise, if Company performance falls below that of
the peer group, compensation should be below the targeted level. At least 37%
of an executive officer's total targeted compensation consists of incentive or
at-risk compensation that includes cash awards under the Company's short-term
incentive compensation program ("short-term plan") and stock-based incentives
under the Company's long-term incentive compensation program ("long-term
plan"). Of the total at-risk compensation, approximately one-half consists of
the long-term plan stock-based incentives. The key elements of the compensation
package for executive officers are addressed in greater detail below.
BASE SALARIES
The Personnel Committee establishes the salary range for each executive
officer annually in June and recommends those amounts to the Board for its
approval. Increases in base salary are determined by the Personnel Committee's
analysis of salary levels for comparable executive officer positions at
companies in the Reference Group and its subjective evaluation of each
executive officer's individual performance and level of responsibility.
SHORT-TERM INCENTIVE COMPENSATION
Under the short-term plan the Company provides executive officers with direct
financial incentives in the form of annual cash awards based on the achievement
of certain performance goals. Each year, the Personnel Committee approves
performance goals that include the Company's consolidated goal, subsidiary
goals and individual goals for the awards to be earned for that year. The
short-term plan awards for 1993 were not calculable by the date of this report.
Twenty-five percent of the short-term plan award is based on the Company's
consolidated goal of a total return to shareholders in relation to a group of
75 other electric utilities and utility holding companies. Up to seventy-five
percent of the short-term plan award is based on the achievement of subsidiary
or business unit goals. For the Company's executive officers, the subsidiary
goals are a blend of the HL&P and KBLCOM goals. HL&P's goals are to achieve a
high ranking in terms of return on capital employed when compared to a group of
approximately 20 similar, large electric utility companies, and to achieve a
high ranking on a customer value index developed by HL&P in conjunction with an
independent consultant. KBLCOM's goals are to improve quality service
standards, achieve a material net increase in operating profit, attain a
material net increase in cable subscribers, and achieve a material net increase
in revenues.
14
<PAGE>
Finally, up to twenty-five percent of the short-term plan award for certain
executive officers can be earned through the attainment of individual goals
which are designed to improve the productivity and the quality of work within
individual departments.
Computation of short-term plan awards for the executive officers is based on
target awards that range from 30% to 60% of base salary depending on the
executive officer's position. A threshold level of performance results in an
award that is 50% of target, and a maximum level of performance results in an
award that is 50% above the target level. The actual short-term plan award is
computed based on the performance levels achieved in relation to the
established performance goals. However, for each executive officer, that
officer's subsidiary goals must be met at least at the threshold level in order
for a short-term plan award to be granted. The aggregate amount of the awards
cannot exceed two percent of the Company's net income for the year.
LONG-TERM INCENTIVE COMPENSATION
Under the long-term plan the Company may provide long-term incentive
compensation for executive officers in the form of grants of (1) performance
shares; (2) stock options; and (3) stock appreciation rights, each of which
reflects the stock price of the Company's Common Stock. The long-term plan in
its original form was adopted by shareholders in 1989; a new but substantially
similar long-term plan was adopted by shareholders in 1993 and became effective
January 1, 1994.
In keeping with the Company's commitment to provide a total compensation
package which favors at-risk components of pay, the long-term plan awards
comprise approximately 25% of an executive officer's total targeted
compensation. In addition, the Personnel Committee has adopted a stock
ownership guideline that applies to all of the executive officers participating
in the long-term plan. The guideline establishes a goal of ownership of the
Company's Common Stock representing a value of at least two times the officer's
base salary.
Performance Shares. At the beginning of each performance cycle the Personnel
Committee establishes long-term plan performance goals that include the Company
consolidated goal and subsidiary goals that are weighted 25% and 75% of the
total, respectively. The Company's consolidated goal for the performance cycle
that ended in 1992, under which payments were made in 1993, was total return to
shareholders as compared to a group of approximately 75 other electric
utilities and utility holding companies. These are the same companies used as a
reference for the Company's consolidated goal under the short-term plan.
Maximum performance is achieved if the Company places in the top 10% of the
group; target performance is accomplished if the Company places in the top 30%
of the group; and threshold performance is attained if the Company is in the
top 50%. The same Company consolidated goal applies to the performance cycle
that commenced in 1993.
Subsidiary goals for the performance cycle that ended in 1992 were, (1) for
HL&P, improving the quality of service (determined with reference to such items
as efficient fuel plant operations, completion or settlement of various legal
proceedings, completion of various restructuring programs, maintaining low fuel
costs, meeting certain targets in demand side management programs and the
like); (2) for a former Company subsidiary since merged into HL&P, holding
costs of coal and lignite sold at the lowest practical cost and increasing
business from nonaffiliated companies; and (3) for KBLCOM, increasing operating
profits. For the performance cycle that commenced in 1993, the HL&P subsidiary
goal is based half on maintaining current base electric rates and half on cash
flow, and the KBLCOM subsidiary goal is based on operating profit.
The target number of performance shares is based on a percentage of base
salary and the average market price of Common Stock at the beginning of the
performance cycle. In determining the size of the grant, the Personnel
Committee reviews comparative data for the companies in the Reference Group and
considers the level of responsibility of each of the Company's executive
officers, then makes a subjective determination that targets the award
percentages ranging from 30% to 65% of base salary, depending on the
executive's position.
15
<PAGE>
Achievement of the performance goals at the target level will result in the
award of 100% of the performance shares for both the performance cycle that
paid out in 1993 and the performance cycle that commenced in 1993. For both
such performance cycles, attainment of the threshold level of performance,
i.e., 50% of the target, results in one-half the target number of shares being
awarded. Achievement of performance at the maximum level results in additional
shares being awarded (up to an amount equal to the target number of shares for
the performance cycle that paid out in 1993 and up to 50% over the target
number of shares for the performance cycle that commenced in 1993).
For the three-year cycle concluding in 1992 (under which payments were made
in 1993), the Company's total return to shareholders ranked in the top 30% of
the comparison group of companies. This resulted in the attainment of
performance at the target level for the Company's consolidated goal. The
subsidiary goals for HL&P, KBLCOM and the former Company subsidiary since
merged into HL&P, were each met at 85%, 64% and 52% above the target level,
respectively.
Stock Options. Stock options are granted at an option price not less than the
fair market value of the Common Stock on the date of grant. Accordingly, stock
options have value only if the Company's Common Stock price appreciates from
the date the options are granted. This design focuses executive officers on the
creation of shareholder value over the long-term and encourages equity
ownership in the Company.
In determining the size of stock option grants for the Company's executive
officers under the long-term plan, the Personnel Committee reviews comparative
data for the companies in the Reference Group as well as prior stock option
grants. Because the policies of Reference Group companies with respect to stock
options vary widely, the Personnel Committee's objective of delivering a
competitive award opportunity based on the dollar value of the award granted
necessarily involves a subjective process. As a result, the number of shares
underlying stock option awards varies and is dependent on the stock price on
the date of grant. For 1993 grants, the percentages of grant date option value
to base salary ranged from 30% to 75%, depending on the executive officer's
position. The Personnel Committee's objective is to deliver a competitive award
opportunity.
Stock Appreciation Rights. Under the provisions of the long-term plan, the
Personnel Committee may also grant stock appreciation rights in connection with
stock options. None have been granted under the terms of the long-term plan to
date.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Personnel Committee applies the executive compensation policies and
programs described above in determining Mr. Jordan's total compensation. As
reflected in the Summary Compensation Table on page 8, Mr. Jordan's base salary
was increased in 1993 by $60,000 (7.5%). In determining Mr. Jordan's base
salary in 1993, the Personnel Committee considered Mr. Jordan's contributions
to the overall success of the Company through his individual performance and
experience level with the Company, as well as his significant leadership in the
electric utility industry as a whole. The Personnel Committee also compared Mr.
Jordan's base salary to the base salary of chief executive officers of the
Reference Group companies and determined that his relative position should be
at the upper end of the range for those companies. The at-risk portion of his
total compensation paid in 1993 represented by the short-term plan and long-
term plan compensation was 61%. Under the short-term plan, Mr. Jordan's target
short-term plan award is 60% of base salary, with the Company's consolidated
goal accounting for 25% of his award and the subsidiary goals for HL&P and
KBLCOM (55% and 20%, respectively) together comprising the remaining 75% of his
award. As noted above, the short-term plan awards for 1993 were not calculable
by the date of this report. For 1992, however, Mr. Jordan's short-term plan
award was $531,268, or 68% of his salary as reflected in the Summary
Compensation Table on page 8. This award was based on the achievement of the
prespecified performance goals at 10% over the target level.
16
<PAGE>
Under the long-term plan, the target number of performance shares awarded for
Mr. Jordan was 50% of his base salary for the performance cycle that paid out
in 1993 and 65% for the performance cycle that commenced in 1993. Mr. Jordan's
long-term plan performance share awards are based 25% on achievement of the
Company's consolidated goal and 75% on achievement of subsidiary goals (50% for
HL&P, 20% for KBLCOM, and 5% for the former subsidiary since merged into HL&P).
In 1993, Mr. Jordan received a total long-term plan award valued at $762,962
(see Summary Compensation Table on page 8) based on a composite achievement of
69% above the target level of performance. In 1993 under the long-term plan,
Mr. Jordan was granted options to purchase 12,965 shares with an exercise price
of $46.25 per share, as shown in the table on page 9. This represents a grant
date option value of approximately 75% of Mr. Jordan's 1992 year-end base
salary.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
New provisions of the Internal Revenue Code limit deductibility for federal
income tax purposes of compensation in excess of $1 million for certain
executive officers (those named in the Summary Compensation Table who are
executive officers as of the last day of the tax year). An exception to the
deductibility limit exists for certain performance-based compensation. Among
the requirements that must be satisfied in order to qualify for the
performance-based exception are that the compensation must be calculable based
on preestablished, completely objective performance goals and that the goals be
approved by shareholders. Furthermore, the committee administering the plan
must not retain any discretion with respect to the preestablished goals other
than discretion to reduce the compensation otherwise payable. The Personnel
Committee's present policy is generally to structure stock incentive grants
under the long-term plan so that they will qualify for the performance-based
exception whenever it is reasonably practicable to do so, consistent with the
Committee's determinations as to the most appropriate compensation policies.
Because the short-term plan goals (consistent with customary past practice for
short-term annual cash incentive plans) have not been submitted for shareholder
approval, and because certain of the current goals under the short-term plan
are not sufficiently objective to meet the requirements of proposed Internal
Revenue Service regulations published in December 1993, future compensation
payable under the short-term plan as presently in effect will not satisfy the
requirements for the exception from the deductibility limit. The Personnel
Committee presently does not anticipate payment of compensation in 1994 or 1995
in excess of that which is deductible, taking into account expected deferrals
of short-term plan compensation by affected executive officers. The Personnel
Committee is continuing to evaluate the effect of the new tax provisions, and
may consider in the future whether or not to submit short-term plan goals for
shareholder approval and make other adjustments to the performance measures
under the short-term plan that would be necessary to qualify for the
performance-based exception. However, the Personnel Committee has made a
determination not to submit short-term plan goals for shareholder approval at
this time. The Personnel Committee believes that in some cases it is
appropriate to structure short-term annual incentive performance-based
compensation involving goals that may not meet the requirements for
deductibility and to retain a degree of discretion that would also preclude
deductibility.
John T. Cater
Robert J. Cruikshank
Thomas B. McDade
Jack T. Trotter
17
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Common Stock with the cumulative
total return of the Standard & Poor's (S&P) 500 Index and the Dow Jones
Utilities Average for the period commencing January 1, 1989 and ending December
31, 1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HOUSTON INDUSTRIES INCORPORATED, S&P 500
INDEX AND DOW JONES UTILITIES AVERAGE (1)(2)
FOR FISCAL YEAR ENDED DECEMBER 31
[PASTE UP CHART]
<TABLE>
<CAPTION>
DECEMBER 31,
- -------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Houston Industries Incorporated................ $100 $137 $157 $205 $227 $252
- -------------------------------------------------------------------------------
S&P 500 Index.................................. $100 $132 $128 $166 $179 $197
- -------------------------------------------------------------------------------
Dow Jones Utilities Average.................... $100 $136 $129 $149 $155 $170
</TABLE>
(1) Assumes that the value of the investment in Common Stock and each index was
$100 on December 31, 1988 and that all dividends were reinvested.
(2) Historical stock price performance is not necessarily indicative of future
price performance.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Deloitte & Touche as independent auditors to conduct the annual audit
of the Company's accounts for the year 1994. Deloitte & Touche (and their
predecessors) have served as independent auditors for the Company and HL&P
since 1932. Approval of Item 2 requires the affirmative vote of a majority of
shares entitled to vote and represented in person or by proxy at the Annual
Meeting. If ratification of the appointment is not approved, the Board of
Directors will reconsider the appointment.
18
<PAGE>
Representatives of Deloitte & Touche will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire. They will be
available to respond to appropriate questions from shareholders at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before the
Annual Meeting and has not been informed that any other matters are to be
properly presented to the Annual Meeting by others. In the event that other
matters properly come before the Annual Meeting or any adjournments thereof, it
is intended that the persons named in the accompanying proxy will vote pursuant
to the proxy in accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder who intends to present a proposal at the 1995 annual meeting
of shareholders must file such proposal with the Company by November 25, 1994
for possible inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
DIRECTOR NOMINATIONS FOR 1995 ANNUAL MEETING OF SHAREHOLDERS
The Company's Bylaws provide for shareholder nominations for the election of
directors subject to certain procedural requirements. The requirements include,
among other things, the timely delivery to the Company's Corporate Secretary of
(1) notice of the nomination; (2) evidence of the shareholder's status as such
and the number of shares beneficially owned; and (3) a list of the persons (if
any) with whom the shareholder is acting in concert and the number of shares
such persons beneficially own. The Bylaws also provide that to be timely in
connection with an annual meeting of shareholders, a shareholder's notice shall
be delivered to or mailed and received at the principal executive offices of
the Company not less than 90 days nor more than 180 days prior to the date on
which the immediately preceding year's annual meeting of shareholders was held.
For the 1995 annual meeting, therefore, nominations must be received no later
than February 3, 1995 nor earlier than November 5, 1994. The Bylaws further
provide that when nominating directors, the shareholder must also submit such
information with respect to the nominee as would be required by a proxy
statement. The Bylaws provide that failure to follow the required procedures
renders the person ineligible for nomination at the meeting at which such
person is proposed to be nominated. Compliance with the procedures does not
require the Company to include the proposed nominee in the Company's proxy
solicitation material. A copy of the Bylaws setting forth the requirements for
the nomination of director candidates by shareholders may be obtained by
writing Mr. Hugh Rice Kelly, Corporate Secretary, at the Company's address
shown above.
19
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders, including the Company's consolidated
financial statements, for the year ended December 31, 1993 accompanies the
proxy material being mailed to all shareholders. The Annual Report is not a
part of the proxy solicitation material.
By Order of the Board of Directors,
[SIGNATURE OF DON D. JORDAN
APPEARS HERE]
DON D. JORDAN
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
March 25, 1994
20
<PAGE>
[LOGO OF HOUSTON INDUSTRIES APPEARS HERE]
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
PROXY - COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D.D. Jordan, D.D. Sykora and H.W. Horne, and
each of them as proxies, with full power of substitution, to vote as designated
on the reverse side, all shares of common stock held by the undersigned at the
annual meeting of shareholders of Houston Industries Incorporated to be held May
4, 1994, at 9 AM (CDT) in the Hidalgo Room of the Plaza San Antonio Hotel, 555
South Alamo Street, San Antonio, Texas, or any adjournments thereof, and with
discretionary authority to vote on all other matters that may properly come
before the meeting.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS,
YOU MAY JUST SIGN AND DATE BELOW AND MAIL IN
THE POSTAGE-PAID ENVELOPE PROVIDED. SPECIFIC
CHOICES MAY BE MADE ON THE REVERSE SIDE. IN
ABSENCE OF INSTRUCTION TO THE CONTRARY, THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
Dated:________________________________, 1994
Signature:__________________________________
Signature:__________________________________
(Note: Please sign exactly as name(s)
appears hereon. Joint owners should each
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title.)
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?___
Fellow Shareholder:
Enclosed is the Houston Industries Annual Report to Shareholders and Notice of
the Annual Meeting, together with your proxy on which you are asked to vote for
five director nominees, ratification of Deloitte & Touche as independent
auditors for 1994 and any other business that may properly come before the
meeting. I urge you to make your vote count by signing and returning the proxy
card as soon as possible.
The Annual Meeting is being held in San Antonio, Texas this year marking the
first time the meeting has been held outside the City of Houston. San Antonio is
a beautiful city steeped in history and filled with Latin charm. We are
fortunate to be a part of this vibrant culture through KBLCOM's cable television
franchise in the city. After the Annual Meeting, be sure to take a stroll along
the Riverwalk, visit the Alamo or just enjoy the beauty of the city. The map on
the back of this proxy will help you find your way around San Antonio. We look
forward to seeing you at the meeting.
Don D. Jordan
Chairman and
Chief Executive Officer
<PAGE>
HOUSTON INDUSTRIES INCORPORATED - PROXY (continued)
Annual Meeting of Shareholders
The nominee for Class II director is Bertram Wolfe, whose term will expire in
1995; the nominees for Class I directors are Robert J. Cruikshank, Linnet F.
Deily, Alexander F. Schilt and Jack T. Trotter, whose terms will expire in 1997.
Your Board of Directors recommends that you vote FOR all nominees for director
and FOR the ratification of Deloitte & Touche as independent auditors for 1994.
WITH- FOR ALL
1. Election of nominees FOR HOLD EXCEPT
for Director in Class II [ ] [ ] [ ]
and Class I
Exceptions:________________________________
___________________________________________
___________________________________________
2. Ratification of Deloitte & Touche FOR AGAINST ABSTAIN
as independent auditors for 1994 [ ] [ ] [ ]
Detach and Mail Card
[MAP OF SAN ANTONIO, TEXAS APPEARS HERE]
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
PROXY - COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D.D. Jordan, D.D. Sykora and H.W. Horne, and
each of them as proxies, with full power of substitution, to vote as designated
on the reverse side, all shares of common stock held by the undersigned at the
annual meeting of shareholders of Houston Industries Incorporated to be held May
4, 1994, at 9 AM (CDT) in the Hidalgo Room of the Plaza San Antonio Hotel, 555
South Alamo Street, San Antonio, Texas, or any adjournments thereof, and with
discretionary authority to vote on all other matters that may properly come
before the meeting.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS,
YOU MAY JUST SIGN AND DATE BELOW AND MAIL IN
THE POSTAGE-PAID ENVELOPE PROVIDED. SPECIFIC
CHOICES MAY BE MADE ON THE REVERSE SIDE. IN
ABSENCE OF INSTRUCTION TO THE CONTRARY, THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
Dated:________________________________, 1994
Signature:__________________________________
Signature:__________________________________
(Note: Please sign exactly as name(s)
appears hereon. Joint owners should each
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title.)
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?___
Fellow Shareholder:
Enclosed is the Houston Industries Annual Report to Shareholders and Notice of
the Annual Meeting, together with your proxy on which you are asked to vote for
five director nominees, ratification of Deloitte & Touche as independent
auditors for 1994 and any other business that may properly come before the
meeting. I urge you to make your vote count by signing and returning the proxy
card as soon as possible.
The Annual Meeting is being held in San Antonio, Texas this year marking the
first time the meeting has been held outside the City of Houston. San Antonio is
a beautiful city steeped in history and filled with Latin charm. We are
fortunate to be a part of this vibrant culture through KBLCOM's cable television
franchise in the city. After the Annual Meeting, be sure to take a stroll along
the Riverwalk, visit the Alamo or just enjoy the beauty of the city. The map on
the back of this proxy will help you find your way around San Antonio. We look
forward to seeing you at the meeting.
Don D. Jordan
Chairman and
Chief Executive Officer
<PAGE>
HOUSTON INDUSTRIES INCORPORATED - PROXY (continued)
Annual Meeting of Shareholders
The nominee for Class II director is Bertram Wolfe, whose term will expire in
1995; the nominees for Class I directors are Robert J. Cruikshank, Linnet F.
Deily, Alexander F. Schilt and Jack T. Trotter, whose terms will expire in 1997.
Your Board of Directors recommends that you vote FOR all nominees for director
and FOR the ratification of Deloitte & Touche as independent auditors for 1994.
WITH- FOR ALL
1. Election of nominees FOR HOLD EXCEPT
for Director in Class II [ ] [ ] [ ]
and Class I
Exceptions:________________________________
___________________________________________
___________________________________________
2. Ratification of Deloitte & Touche FOR AGAINST ABSTAIN
as independent auditors for 1994 [ ] [ ] [ ]
Detach and Mail Card
[MAP OF SAN ANTONIO, TEXAS APPEARS HERE]
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
CONFIDENTIAL VOTING DIRECTIONS TO TRUSTEE - COMMON STOCK
THIS CARD RELATES TO THE SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby directs the Trustee of the Paragon Communication
Employees Stock Savings Plan to vote as designated on the reverse side, all
shares of common stock attributable to the account of the undersigned at the
annual meeting of shareholders of Houston Industries Incorporated to be held
May 4, 1994, at 9 AM (CDT) in the Hidalgo Room of the Plaza San Antonio Hotel,
555 South Alamo Street, San Antonio, Texas, or any adjournments thereof, and
with discretionary authority to vote on all other matters that may properly come
before the meeting.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS,
YOU MAY JUST SIGN AND DATE BELOW AND MAIL IN
THE POSTAGE-PAID ENVELOPE PROVIDED. SPECIFIC
CHOICES MAY BE MADE ON THE REVERSE SIDE. IN
ABSENCE OF INSTRUCTION TO THE CONTRARY, THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
Dated:________________________________, 1994
Signature:__________________________________
Signature:__________________________________
(Note: Please sign exactly as name(s)
appears hereon. Joint owners should each
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title.)
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?___
Fellow Shareholder:
Enclosed is the Houston Industries Annual Report to Shareholders and Notice of
the Annual Meeting, together with your proxy on which you are asked to vote for
five director nominees, ratification of Deloitte & Touche as independent
auditors for 1994 and any other business that may properly come before the
meeting. I urge you to make your vote count by signing and returning the proxy
card as soon as possible.
The Annual Meeting is being held in San Antonio, Texas this year marking the
first time the meeting has been held outside the City of Houston. San Antonio is
a beautiful city steeped in history and filled with Latin charm. We are
fortunate to be a part of this vibrant culture through KBLCOM's cable television
franchise in the city. After the Annual Meeting, be sure to take a stroll along
the Riverwalk, visit the Alamo or just enjoy the beauty of the city. The map on
the back of this proxy will help you find your way around San Antonio. We look
forward to seeing you at the meeting.
Don D. Jordan
Chairman and
Chief Executive Officer
<PAGE>
HOUSTON INDUSTRIES INCORPORATED - PROXY (continued)
Annual Meeting of Shareholders
The nominee for Class II director is Bertram Wolfe, whose term will expire in
1995; the nominees for Class I directors are Robert J. Cruikshank, Linnet F.
Deily, Alexander F. Schilt and Jack T. Trotter, whose terms will expire in 1997.
Your Board of Directors recommends that you vote FOR all nominees for director
and FOR the ratification of Deloitte & Touche as independent auditors for 1994.
WITH- FOR ALL
1. Election of nominees FOR HOLD EXCEPT
for Director in Class II [ ] [ ] [ ]
and Class I
Exceptions:________________________________
___________________________________________
___________________________________________
2. Ratification of Deloitte & Touche FOR AGAINST ABSTAIN
as independent auditors for 1994 [ ] [ ] [ ]
Detach and Mail Card
[MAP OF SAN ANTONIO, TEXAS APPEARS HERE]
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
VOTING DIRECTIONS TO TRUSTEES - COMMON STOCK
THIS CARD RELATES TO THE SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby directs the Trustees of the Houston Industries
Incorporated Savings Plan to vote as designated on the reverse side, all shares
of common stock attributable to the account of the undersigned at the annual
meeting of shareholders of Houston Industries Incorporated to be held May 4,
1994, at 9 AM (CDT} in the Hidalgo Room of the Plaza San Antonio Hotel, 555
South Alamo Street, San Antonio, Texas, or any adjournments thereof, and with
discretionary authority to vote on all other matters that may properly come
before the meeting.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS,
YOU MAY JUST SIGN AND DATE BELOW AND MAIL IN
THE POSTAGE-PAID ENVELOPE PROVIDED. SPECIFIC
CHOICES MAY BE MADE ON THE REVERSE SIDE. IN
ABSENCE OF INSTRUCTION TO THE CONTRARY, THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
Dated:________________________________, 1994
Signature:__________________________________
Signature:__________________________________
(Note: Please sign exactly as name(s)
appears hereon. Joint owners should each
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title.)
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?___
Fellow Shareholder:
Enclosed is the Houston Industries Annual Report to Shareholders and Notice of
the Annual Meeting, together with your proxy on which you are asked to vote for
five director nominees, ratification of Deloitte & Touche as independent
auditors for 1994 and any other business that may properly come before the
meeting. I urge you to make your vote count by signing and returning the proxy
card as soon as possible.
The Annual Meeting is being held in San Antonio, Texas this year marking the
first time the meeting has been held outside the City of Houston. San Antonio is
a beautiful city steeped in history and filled with Latin charm. We are
fortunate to be a part of this vibrant culture through KBLCOM's cable television
franchise in the city. After the Annual Meeting, be sure to take a stroll along
the Riverwalk, visit the Alamo or just enjoy the beauty of the city. The map on
the back of this proxy will help you find your way around San Antonio. We look
forward to seeing you at the meeting.
Don D. Jordan
Chairman and
Chief Executive Officer
<PAGE>
HOUSTON INDUSTRIES INCORPORATED - PROXY (continued)
Annual Meeting of Shareholders
The nominee for Class II director is Bertram Wolfe, whose term will expire in
1995; the nominees for Class I directors are Robert J. Cruikshank, Linnet F.
Deily, Alexander F. Schilt and Jack T. Trotter, whose terms will expire in 1997.
Your Board of Directors recommends that you vote FOR all nominees for director
and FOR the ratification of Deloitte & Touche as independent auditors for 1994.
WITH- FOR ALL
1. Election of nominees FOR HOLD EXCEPT
for Director in Class II [ ] [ ] [ ]
and Class I
Exceptions:________________________________
___________________________________________
___________________________________________
2. Ratification of Deloitte & Touche FOR AGAINST ABSTAIN
as independent auditors for 1994 [ ] [ ] [ ]
Detach and Mail Card
[MAP OF SAN ANTONIO, TEXAS APPEARS HERE]
<PAGE>
GRAPHICS APPENDIX/LIST
EDGAR Version Typeset Version
- ------------- ---------------
Pages pc1]2, A map of the highways and major roads of
pc2]2, pc3]2 San Antonio, Texas with the location of the
and pc4]2 shareholder meeting place marked appears on
pages pc1]2, pc2]2, pc3]2 and pc4]2.
