<PAGE>
[LOGO OF ENSERCH CORPORATION APPEARS HERE]
ENSERCH CENTER
300 SOUTH ST. PAUL
DALLAS, TEXAS 75201-5598
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of ENSERCH Corporation:
The Annual Meeting of the Shareholders of ENSERCH Corporation will be held at
301 South Harwood Street, Dallas, Texas, on Tuesday, May 9, 1995, at 10 a.m.,
for the following purposes:
1. To elect a Board of Directors;
2. To ratify the Board of Directors' appointment of Deloitte & Touche as
independent auditors of the Corporation;
3. To consider and act upon such other business as may be properly
presented to the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business March 10, 1995, as the
record date for determination of the shareholders of Common Stock entitled to
notice of and to vote at the meeting or any adjournment thereof.
A form of Proxy, a Proxy Statement, and the Corporation's 1994 Annual Report
to Shareholders accompany this Notice of Annual Meeting. The Proxy covers all
shares of Common Stock held by you directly and all shares participating in the
Corporation's Dividend Reinvestment Plan.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING IN PERSON, PLEASE
PROMPTLY SIGN THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
Michael G. Fortado
Vice President and
Corporate
Secretary
March 24, 1995
<PAGE>
[LOGO OF ENSERCH CORPORATION APPEARS HERE]
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being mailed on or about March 24, 1995, to
shareholders in connection with the solicitation of proxies on behalf of the
Board of Directors of the Corporation for use at the Annual Meeting of
Shareholders to be held on May 9, 1995, at 301 South Harwood Street, Dallas,
Texas. The persons named therein as proxies were selected by the Board of
Directors of the Corporation. The enclosed proxy may be revoked at any time
before it is exercised by filing with the Corporate Secretary an instrument
revoking it; by submitting a subsequently dated proxy; or by appearing at the
meeting and voting in person.
If you do not expect to be present at the Annual Meeting in person, please
promptly sign the accompanying proxy and return it in the enclosed envelope.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
Proxy Statement, and Proxy, and the cost of further solicitation hereinafter
referred to are to be borne by the Corporation. Solicitations may further be
made by directors, officers, and regular employees of the Corporation, without
additional compensation, by use of the mails, telephone, telegraph, or by
personal interview. The Corporation has retained Hill & Knowlton, Inc., New
York, New York, to assist in the solicitation at a cost of $6,500 plus
expenses.
Holders of the Corporation's Common Stock of record at the close of business
on March 10, 1995, (the "Record Date") are entitled to vote at the meeting. On
the Record Date, the Corporation had outstanding 67,038,643 shares of Common
Stock having a par value of $4.45 per share. Each share of Common Stock is
entitled to vote at the forthcoming Annual Meeting of Shareholders.
The holders of a majority of the shares issued and outstanding and entitled
to vote, present in person or represented by proxy, will constitute a quorum
for the transaction of business at the Annual Meeting. The affirmative vote of
the holders of a majority of the shares present in person or represented by
proxy and entitled to vote at the meeting is required for each item set forth
in the Notice of Annual Meeting.
The inspectors of election will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote both for
purposes of determining the presence of a quorum and for the purposes of
determining the outcome of any matter submitted to the shareholders for a vote.
The inspectors of election will treat broker non-votes on any matter as to
which the broker has indicated on the proxy that it does not have discretionary
authority to vote as shares not entitled to vote with respect to that matter.
However, such shares will be considered present and entitled to vote for quorum
purposes so long as they are entitled to vote on other matters.
The Corporation had outstanding on the Record Date 100,000 shares of
Adjustable Rate Cumulative Preferred Stock, Series E, and 75,000 shares of
Adjustable Rate Cumulative Preferred Stock, Series F, having no par value. The
holders of the Preferred Stock do not have voting rights except under certain
conditions which are not now present.
1
<PAGE>
ELECTION OF DIRECTORS
Directors are elected to hold office until the next annual election and until
their successors shall have been duly elected and shall qualify. It is intended
that the votes of the persons designated as proxies in the accompanying proxy
will be cast for the nominees named below unless contrary instructions are set
forth on the proxy. In the event any nominee for director is not available for
election as contemplated due to circumstances not now known, it is the
intention of the proxies named in the enclosed proxy to vote for such other
person as the Board of Directors may nominate. In accordance with the
Corporation's Bylaws, the Board of Directors has fixed the number of directors
of the Corporation to be nine. Each of the nominees was elected a director of
the Corporation at the last meeting of shareholders except Odie C. Donald and
Thomas W. Luce, III.
The following biographical information sets forth the name, age, principal
occupation or employment during the past five years, Board committee
membership, certain other directorships held by each nominee for director, and
the period during which he or she has served as a director of the Corporation.
D. W. BIEGLER
Chairman and President, Chief Executive Officer, ENSERCH Corporation
Mr. Biegler, age 48, is Chairman and President, Chief Executive Officer of
the Corporation. Prior to his election to his present position in 1993, he
served Lone Star Gas Company, the utility division of the Corporation, as
President from 1985 and as Chairman from 1989 and was elected President and
Chief Operating Officer of the Corporation in 1991. Mr. Biegler is a Director
of Enserch Exploration, Inc., Texas Commerce Bank National Association, and
Trinity Industries, Inc. He has been a Director of the Corporation since 1991.
FREDERICK S. ADDY
Retired Executive Vice President, Amoco Corporation
Mr. Addy, age 63, is retired Executive Vice President, Chief Financial
Officer, and Director of Amoco Corporation, an international integrated oil and
gas company. Mr. Addy has been a Director of the Corporation since 1994 and is
a member of the Audit Committee and the Compensation Committee. He is a
Director of Enserch Exploration, Inc., Baker, Fentress & Company, and The
Pierpont Funds.
B. A. BRIDGEWATER, JR.
Chairman, President and Chief Executive Officer, Brown Group, Inc.
Mr. Bridgewater, age 61, is Chairman, President and Chief Executive Officer,
and Director, Brown Group, Inc., a consumer products company with operations in
footwear. Mr. Bridgewater has been a Director of the Corporation since 1987 and
serves as Chairman of the Policy Committee and is a member of the Audit
Committee. He is a Director of Enserch Exploration, Inc., Boatmen's Bancshares,
Inc., FMC Corporation, and McDonnell Douglas Corporation.
ODIE C. DONALD
President, BellSouth Mobility, Inc.
Mr. Donald, age 45, is President, BellSouth Mobility, Inc., a cellular
telecommunications company. Mr. Donald has served in his present position since
1992. He previously served BellSouth as Vice President, Marketing and various
other positions. He was elected a Director of the Corporation in 1995.
2
<PAGE>
MARVIN J. GIROUARD
President and Chief Operating Officer, Pier 1 Imports, Inc.
Mr. Girouard, age 55, is President and Chief Operating Officer, and Director,
Pier 1 Imports, Inc. Mr. Girouard has been a Director of the Corporation since
1992 and is a member of the Audit Committee and the Compensation Committee.
J. M. HAGGAR, JR.
Retired Chairman of the Board, Haggar Apparel Company
Mr. Haggar, age 70, is retired Chairman of the Board, Haggar Apparel Company,
a manufacturer of apparel for men. Mr. Haggar has been a Director of the
Corporation since 1988 and is a member of the Directors' Nominating Committee
and the Policy Committee. He is a Director of Brinker International, Inc.
THOMAS W. LUCE, III
Partner, Hughes & Luce
Mr. Luce, age 54, is a partner of Hughes & Luce, a law firm he co-founded in
1973. From October 1991 to July of 1992, he served as Chairman and Chief
Executive Officer of First Southwest Company, a diversified investment banking
services firm. Mr. Luce has been appointed by Governors of Texas to four major
state positions. He is a Director of Dell Computer Corporation. He was elected
a Director of the Corporation in 1995.
W. C. MCCORD
Retired Chairman and Chief Executive Officer, ENSERCH Corporation
Mr. McCord, age 66, is retired Chairman and Chief Executive Officer of the
Corporation. Mr. McCord has been a Director of the Corporation since 1970. He
is a Director of Lone Star Technologies, Inc. and Pool Energy Services Co.
DIANA S. NATALICIO
President, University of Texas at El Paso
Dr. Natalicio, age 55, is President, University of Texas at El Paso. Dr.
Natalicio has been a Director of the Corporation since 1993 and is a member of
the Directors' Nominating Committee and the Policy Committee. She is a Director
of Sandia Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Corporation is aware of the following beneficial owner, as of December
31, 1994, of more than 5% of its Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Wellington Management Company 7,557,610(/1/) 11.34%
75 State Street
Boston, MA 02109
</TABLE>
----------
(1) These common shares were reported as being owned primarily by The
Vanguard/Windsor Fund, Inc. of the Vanguard Group of Investment Companies
whom Wellington Management Company serves as investment adviser. Wellington
Management Company reported the beneficial ownership of 549,930 shares with
shared voting power and 7,557,610 shares with shared dispositive power. The
shares beneficially owned by The Vanguard/Windsor Fund, Inc. include
6,603,300 shares with sole voting power and shared dispositive power.
3
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND BOARD OF DIRECTORS
Each director, the named executive officers, and all directors and executive
officers as a group, reported beneficial ownership as of the Record Date of
Common Stock of the Corporation and Enserch Exploration, Inc. as follows:
<TABLE>
<CAPTION>
ENSERCH CORPORATION ENSERCH EXPLORATION, INC.
-------------------------- -----------------------------
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY PERCENT OF BENEFICIALLY PERCENT OF
NAME OWNED(/1/) CLASS OWNED(/2/) CLASS
---- ------------ ---------- -------------- -----------
<S> <C> <C> <C> <C>
D. W. Biegler 230,161(/3/) * 11,000 *
Frederick S. Addy 2,500 * 2,000 *
William B. Boyd 1,506 * 0
B. A. Bridgewater, Jr. 3,000 * 1,000 *
Odie C. Donald 0 0
L. E. Fouraker 1,000 * 0
Preston M. Geren, Jr. 30,170 * 0
Marvin J. Girouard 1,200 * 0
J. M. Haggar, Jr. 2,488 * 0
Thomas W. Luce, III 1,500 * 0
W. C. McCord 312,606(/3/) * 0
Diana S. Natalicio 500 * 0
W. Ray Wallace 7,500(/4/) * 0
G. R. Bryan 62,410(/5/) * 0
G. J. Junco 78,670(/3/) * 15,100 *
W. T. Satterwhite 114,883(/3/) * 2,000 *
S. R. Singer 120,804(/3/) * 0
All Directors and
Executive
Officers as a Group 970,898(/3/) 1.45 31,100 *
</TABLE>
----------
* Less than 1%
(1) The number of shares owned includes shares held in the Corporation's
Employee Stock Purchase and Savings Plan and restricted shares awarded
under the ENSERCH Corporation 1991 Stock Incentive Plan, where applicable.
(2) The number of shares owned includes restricted shares awarded under the
Enserch Exploration, Inc. 1994 Stock Incentive Plan, where applicable.
(3) The totals include shares subject to stock options exercisable within 60
days of the Record Date: D. W. Biegler 168,750 shares; W. C. McCord 300,000
shares; G. R. Bryan 34,275 shares; G. J. Junco 60,500 shares; W. T.
Satterwhite 74,775 shares; S. R. Singer 105,556 shares; and all directors
and executive officers as a group 743,856 shares.
(4) Of the shares listed, 500 are shares deemed beneficially owned by Mr.
Wallace because of sole or shared voting or investment power.
(5) Of the shares listed, 62 are shares deemed beneficially owned by Mr. Bryan
because of sole or shared voting or investment power.
BOARD COMMITTEES
The standing committees of the Board of Directors are the Audit Committee,
Directors' Nominating Committee, Compensation Committee, and Policy Committee.
4
<PAGE>
The functions of the Audit Committee include meeting periodically with the
independent and internal auditors; reviewing annual financial statements and
the independent auditors' work and report thereon; reviewing the independent
auditors' report on internal controls and related matters; selecting and
recommending to the Board of Directors the appointment of the independent
auditors, subject to the ratification by shareholders; reviewing the letter of
engagement and statement of fees which pertain to the scope of the annual audit
and certain special audit and non-audit work which may be required or suggested
by the independent auditors; receiving and reviewing information pertaining to
internal audits; directing and supervising special investigations; and
performing any other functions deemed appropriate by the Board of Directors.
The Audit Committee met three times during 1994.
The Directors' Nominating Committee was created to receive and initiate
recommendations of potential candidates for election to the Board of Directors.
The Committee will consider persons recommended by shareholders as potential
future nominees for the Board of Directors if shareholders submit the names of
such persons in writing to the Chairman of the Directors' Nominating Committee
in care of the Corporate Secretary of the Corporation together with a full
statement of their qualifications and an indication of their willingness to
serve. The Directors' Nominating Committee met two times in 1994.
The function of the Compensation Committee is to establish, approve, or
recommend to the Board of Directors, in those instances where its approval is
required, the compensation and major items related to compensation of directors
and of officers and other employees whose annual base compensation exceeds a
certain amount as determined by the Board of Directors. The Committee also
administers the Corporation's 1991 Stock Incentive Plan. The Compensation
Committee met four times in 1994.
The responsibilities of the Policy Committee are to review the Corporate
Statement of Policy and recommend changes that are considered appropriate; to
review the Corporation's procedure for communicating policies, and confirm that
steps to monitor and ensure compliance have been taken; to review the
Corporation's Annual Compliance Reports for its Compliance Programs for
Environmental, Antitrust, Insider Trading, Antiboycott, Foreign Corrupt
Practices Act, and Employment and Human Resources; and to review areas of
potential conflict of interest between the Corporation and its executives. The
Policy Committee met two times in 1994.
During 1994, the Board of Directors met eight times. No director attended
fewer than 75 percent of the aggregate of the total number of Board meetings
and meetings of a committee on which he or she served.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On the recommendation of the Audit Committee, the Board of Directors has,
subject to ratification by the shareholders, appointed Deloitte & Touche as
Independent Certified Public Accountants of the Corporation for the year 1995.
It is intended that the persons named in the accompanying proxy will vote to
ratify such appointment.
Deloitte & Touche has served continuously as auditors of the Corporation
since its formation. Neither the firm nor any of its members has any direct
financial interest or any material indirect financial interest in the
Corporation or any of its affiliates. A representative of Deloitte & Touche is
expected to be present at the annual meeting and will be provided the
opportunity to make a statement and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth annual compensation, long-term compensation, and
all other compensation paid by the Corporation and its subsidiaries for
services rendered during the periods shown for each individual serving as the
chief executive officer and each of the other four most highly compensated
executive officers in 1994 (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------- --------------------- ----------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING LONG-TERM ALL OTHER
PRINCIPAL COMPEN- AWARDS OPTIONS INCENTIVE COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($)(1) (#) (#) PAYOUTS($) SATION($)(4)
--------- ---- --------- -------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. W. Biegler 1994 550,000 317,625 4,050 (2) 0 0 28,394
Chairman and President, 1993 525,000 210,000 833 0 40,000 5,000(3) 32,919
Chief Executive Officer 1992 406,250 60,938 3,333 0 40,000 0 39,094
G. R. Bryan 1994 242,417 101,815 1,530 (2) 0 0 3,000
President, Power Group 1993 237,000 94,800 150 0 7,500 0 5,449
1992 221,417 36,753 600 0 7,500 0 7,398
G. J. Junco 1994 264,583 141,883 1,620 (2) 0 0 3,750
President, Enserch 1993 250,000 95,000 500 0 15,000 0 8,398
Exploration, Inc. 1992 247,917 92,969 2,000 0 11,000 0 15,628
W. T. Satterwhite 1994 265,000 116,600 855 (2) 0 0 25,542
Senior Vice President, 1993 253,333 70,933 563 0 7,500 0 27,663
General Counsel 1992 245,000 25,725 2,250 0 7,500 0 34,936
S. R. Singer 1994 347,000 145,740 1,770 (2) 0 0 46,908
Senior Vice President, 1993 337,083 94,383 563 0 15,000 0 42,903
Finance and Corporate 1992 330,000 34,650 2,250 0 11,000 0 49,265
Development
</TABLE>
----------
(1) For 1992 and 1993 represents for each individual the amounts earned and
paid during the year for Credits (dividend equivalents) under the
Corporation's Management Incentive Program Unit Plan ("MIP-Unit Plan"). The
MIP-Unit Plan was terminated in 1994. For 1994, includes non-preferential
dividends paid on non-vested restricted stock.
(2) The restricted stock awards to named executive officers under the 1991
Stock Incentive Plan are subject to performance based criteria. Restricted
stock awards in 1994 to the named executive officers are reported under the
"Long-Term Incentive Plan Awards" table, and reference is made to such
table for information on the number of restricted shares awarded in 1994.
At December 31, 1994, the number and value of the aggregate restricted
stock holding for each of the persons named above were as follows: D. W.
Biegler: 27,000 shares, $354,375; G. R. Bryan: 10,200 shares, $133,875; G.
J. Junco: 10,800 shares, $141,750; W. T. Satterwhite: 5,700 shares,
$74,813; and S. R. Singer: 11,800 shares, $154,875. Dividends are paid on
restricted shares at the same rate paid to all shareholders.
(3) Amount paid for the value of Units under the MIP-Unit Plan.
(4) For 1994 includes company contributions to the Employee Stock Purchase and
Savings Plan, respectively, as follows: D. W. Biegler $5,369; G. R. Bryan
$3,000; G. J. Junco $3,750; W. T. Satterwhite $5,400; and S. R. Singer
$5,432. Also includes accruals for deferred compensation payable upon
retirement, death or disability retirement pursuant (a) to an expired
employment contract for Messrs. Satterwhite and Singer, of $20,142, and
$41,476, respectively, and (b) to a Special Supplemental Compensation Plan
for Mr. Biegler of $23,025.
6
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AGGREGATED OPTION EXERCISE TABLE
The table below shows, for each of the named executive officers, the
information specified with respect to exercised, exercisable and unexercisable
options under all existing stock option plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEARAND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1994 DECEMBER 31, 1994
ACQUIRED VALUE # ($)
ON EXERCISE REALIZED ------------------------- -------------------------
# $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. W. Biegler 0 0 142,500 63,398 2,500 10,290
G. R. Bryan 0 0 27,525 13,050 2,344 8,199
G. J. Junco 0 0 44,000 33,000 3,438 3,438
W. T. Satterwhite 4,222 34,515 68,025 12,375 2,344 2,344
S. R. Singer 0 0 94,556 21,250 3,438 3,438
</TABLE>
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE
The table below shows for each of the named executive officers, certain
information with respect to awards of performance-based restricted stock made
pursuant to the Corporation's 1991 Stock Incentive Plan.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS (/1/)
PERFORMANCE PERIOD ---------------------------------------
NUMBER OF UNTIL MATURATION THRESHOLD(/2/) TARGET(/2/) MAXIMUM(/2/)
NAME SHARES OR PAYOUT(/3/) (#) (#) (#)
---- --------- ------------------ -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
D. W. Biegler 27,000 01/01/94-12/31/96 1,350 27,000 27,000
G. R. Bryan 10,200 01/01/94-12/31/96 510 10,200 10,200
G. J. Junco 10,800 01/01/94-12/31/96 540 10,800 10,800
W. T. Satterwhite 5,700 01/01/94-12/31/96 285 5,700 5,700
S. R. Singer 11,800 01/01/94-12/31/96 590 11,800 11,800
</TABLE>
----------
(1) Performance-based restricted shares have been awarded and will be earned at
the end of a three-year performance period based upon the three year total
shareholder return of the Corporation compared to the weighted average of
the total shareholder return of the peer group of Companies used in the
performance graph in the 1994 Proxy Statement. Regular cash dividends are
paid on the restricted shares prior to vesting at the same rate as paid to
all shareholders. All restrictions are lifted in the event of a "change in
control" and are subject to allocation in the event of retirement,
disability or death during the performance period.
(2) All shares are earned if at the end of the performance term the
Corporation's total shareholder return is at or above 110% of the weighted
average of the peer group. For each percentage point that the Corporation's
total shareholder return is below 110% of the weighted average of the peer
group but above 100%, 2.5% of the shares will be forfeited and for each
percentage point below 100%, 5% of the shares will be forfeited with no
shares earned below 85%.
(3) Shares earned at the end of the three-year performance period will remain
restricted, subject to continued employment for two additional years.
7
<PAGE>
PENSION PLAN TABLE
The table below illustrates the amount of annual compensation benefit payable
on a normal retirement basis beginning at normal retirement age to a person in
specified average salary and years-of-service classifications under The
Retirement and Death Benefit Program of ENSERCH Corporation and Participating
Subsidiaries (the "Program"), the Income Restoration Plan, and any annuities
previously purchased in satisfaction of the Corporation's pension obligations.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------
REMUNERATION(/1/) 15 20 25 30 35 40 45
----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$275,000 $ 69,452 $ 92,603 $115,754 $138,905 $162,056 $168,931 $175,806
350,000 89,140 118,853 148,567 178,280 207,993 216,743 225,493
425,000 108,827 145,103 181,379 217,655 253,931 264,556 275,181
500,000 128,515 171,353 214,192 257,030 299,868 312,368 324,868
575,000 148,202 197,603 247,004 296,405 345,806 360,181 374,556
650,000 167,890 223,853 279,817 335,780 391,743 407,993 424,243
725,000 187,577 250,103 312,629 375,155 437,681 455,806 473,931
</TABLE>
----------
(1) Highest average covered compensation over any consecutive five year period.
Covered compensation under the Program includes base wages and annual-
performance based bonuses. The credited years of service under the Program, as
of February 28, 1995, for Messrs. Biegler, Bryan, Junco, Satterwhite, and
Singer are 26.6, 24.5, 17.8, 28.5, and 31.8 years, respectively, and the
highest average covered compensation during any consecutive five-year period
for each of them is $584,963, $288,931, $299,759, $305,523, and $404,888,
respectively. The normal retirement benefit is in the form of a benefit
guaranteed for ten years and life thereafter and is not subject to any
deduction for Social Security or other offset amounts.
COMPENSATION OF DIRECTORS
Directors are compensated by an annual retainer fee of $20,000 plus $1,200
for each board or committee meeting attended with a maximum of $1,800 if more
than one meeting is held on the same day. In addition, a $2,400 per annum fee
is paid for services on a Board Committee, with an additional $1,200 per annum
paid to the Chairman of a Board Committee. Directors who are also officers of
the Corporation do not receive fees. Directors may elect, pursuant to a
Deferred Compensation Plan for Directors, to defer all or part of their
compensation each year. Deferred amounts, including any gain based upon the
experience of investments selected by the Director as provided in the Plan,
will be distributed upon retirement from the Board (or death) in a lump sum or
in equal annual installments over a 10-year period. A participant may elect a
lump sum payment of both principal and interest at any time reduced by a
forfeiture amount as provided in the Plan.
Each non-employee director with one or more full years of service on May 9,
1994, will be provided with deferred compensation following retirement from the
Board (or upon his or her death while serving as a member of the Board) payable
in installments totaling $25,000 annually for a period of years equal to years
of service on the Board prior to May 9, 1994, not to exceed ten. A Directors'
Deferred Compensation Trust has been established, and an amount sufficient to
pay all amounts payable under the deferred compensation arrangement is placed
in the trust from time to time. Upon the replacement of a director or the
elimination of his position following a specified change in control, a director
may elect to receive in a lump sum the principal amount discounted at 4% per
annum over the number of years payments would have otherwise been made. For
service following May 9, 1994, each non-employee director with less than ten
full years of
8
<PAGE>
service on May 9, 1994, will receive restricted stock following the completion
of each full year of service for a maximum of ten years (reduced by the number
of full years of service on May 9, 1994). Any year in which a previous award of
restricted stock is forfeited is not counted in computing such maximum number
of years. The number of shares of restricted stock awarded is determined by
dividing $25,000 by the average of the closing price of the Common Stock for
the last twenty trading days in April (the "Award Value"). The restricted
period applicable to restricted stock awarded to non-employee directors is ten
years during which time the restrictions will be lifted if the director dies,
the market value of the Common Stock increases to 1.5 times the Award Value, or
if the average closing price for the twenty trading days immediately preceding
the tenth anniversary of the award date is equal to or greater than the Award
Value. If the restrictions have not been lifted by the end of such ten year
period, the stock will be forfeited.
Mr. McCord represents the Corporation's interest in a foreign company in
which the Corporation once had an investment and has continuing obligations for
which he is paid a fee by the Corporation of $5,000 for each board meeting of
the foreign company attended. During 1994 such Board met one time.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
W. T. Satterwhite and S. R. Singer are beneficiaries under a trust holding
deferred compensation amounts accrued under an expired employment contract.
Upon retirement, they will receive deferred compensation payable over a 10-year
period equal to a total of 150% of their salary at the time of retirement. The
amount so payable may be accelerated following a specified change in control of
the Corporation. Mr. Biegler is a participant in a Special Supplemental
Compensation Plan providing for a continuation of salary for six months in the
event of involuntary termination other than by retirement, death, or disability
and having similar provisions for deferred compensation. Amounts accrued under
such arrangements with these individuals are disclosed in the Summary
Compensation Table.
Each named executive officer has executed a change in control agreement with
the Corporation that sets forth certain benefits in the event their employment
is terminated subsequent to a change in control of the Corporation (as defined
in the Agreements). The Agreements continue in effect until terminated by the
Corporation upon specified notice and continue for three years following a
change in control of the Corporation. The Agreements provide that if the
officer is terminated or if the officer elects to terminate employment under
certain circumstances, within three years following a change in control of the
Corporation, the officer shall be entitled to a lump-sum severance payment of
three times the officer's base salary (but not in excess of the aggregate base
salary that could be earned up to the officer's normal retirement date), the
largest bonus paid during the preceding three years, the unpaid balance in the
Unit Plan, the value over exercise price of certain unexercised stock options,
deferred compensation payable from previous employment contracts or under the
Special Supplemental Compensation Plan, a three-year continuation of employee
benefits, two years of service credit under the retirement program, and
reimbursement of certain legal fees, expenses, and any excise taxes.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Board of Directors delegates responsibility for executive compensation to
the Compensation Committee, except compensation matters relating to the
Chairman and President, Chief Executive Officer are decided by the full Board,
after recommendation by the Committee. No member of the Committee is a former
officer or employee of the Corporation or any of its subsidiaries and no member
of the Committee participates in the compensation described in the following
report. The Committee retains its own consultant to advise on matters related
to executive compensation. The Corporation has used a consultant since 1981 to
assist in such matters. The following is the Committee's report on executive
compensation for 1994.
9
<PAGE>
In determining executive compensation, the Committee is guided by three
primary objectives:
. Offer incentive for business success by putting a significant portion of
each executive's total pay at risk, based on company performance
(observing in the short term desirable operating results and, in the long
term, total shareholder return).
. Attract and keep outstanding executives by providing compensation
opportunities consistent with those observed in the Corporation's
industry for similar positions.
. Encourage career service by providing retirement income consistent with
industry practice.
Salary levels for the named executive officers are based upon assessment of
each individual's performance, experience and value in attaining corporate
financial and strategic objectives and are set within salary ranges based on
surveys of prevailing practice with the mid-point targeted for the expected
level of performance, experience and value. The Committee, in its salary
decisions, is guided by these comparative data, and by the annual rate of
salary movement in industries in which the Corporation competes for executives.
The Corporation compares its annual cash payments (both salary and annual
incentive) for named executive officers to recognized annual surveys of
practice both in its industry and in industry generally. General industry
practice is observed, as it has been for over a decade, from Management
Compensation Service's (MCS) annual survey of executive compensation (385
companies participated in 1994). Gas and petroleum industry practice is
observed from surveys conducted by the American Gas Association and by a major
national consulting firm. Together they constitute a statistically valid data
base for this purpose and the Committee is guided by it. Many of the companies
in the MCS survey are in the S&P 500; the industry specific surveys used
include many of those companies found in the performance graph's gas industry
peer group. The sole use of the smaller number of companies in that peer group
would produce pay data comparisons that are not statistically meaningful or
useful for the purpose of salary comparisons, nor does the group of companies
in that peer group include necessarily all of the companies that are the most
direct competitors for executive talent.
During 1994, the aggregate salaries of the named executive officers summed to
an amount equal to 101% of the sum of the median survey salaries for their
positions. Two named executive officers received salary increases during 1994,
which, on an annualized basis, amounted to 1.2% of the named executive
officers' aggregate salaries.
It is the practice of the Corporation, which is endorsed and effected by the
Committee, to encourage both desirable annual operating results and long term
total shareholder return by annual incentive opportunities that put an
important portion of total pay at risk subject to the achievement of financial
and operating goals. The portion of compensation at risk is intentionally
higher at higher levels in the Corporation. Consequently much of a named
executive officer's compensation is at risk, with potential annual and long-
term incentives, at target levels, placing up to 50% of total compensation
opportunity at risk. The Committee also considers comparative data when
determining the size of long-term incentive awards.
The named executive officers participate in the Corporation's Performance
Incentive Plan. The level of this opportunity is designed to be consistent with
industry practice. Their target awards in 1994 ranged from 40% to 55% of
salary. In 1994, Plan funding required the achievement of goals set by our
Committee at the beginning of the year including earnings per share (operating
income from their respective operations for Messrs. Bryan and Junco), total
shareholder return and specific operating performance criteria. Earnings per
share (or operating income goals) were weighted between 45% and 70%. The
weightings of the other goals were varied to adopt goals most important for the
individual position. Funding, based on results, could have ranged from zero to
150% of the target awards.
Named executive officers at the corporate level received incentive awards for
1994 for meeting goals established by the Committee. Because the total
shareholder return goal was not met, no payment was made for that goal.
Attainment of the corporate earnings goal, which was judged taking into account
non-recurring unusual events, caused incentive awards for the named executive
officers. Messrs. Bryan and Junco also
10
<PAGE>
earned awards for achieving operating income goals at the unit level. Total
annual cash payments (salary plus annual incentive) for the named executives
summed to 96% of the median survey observations, an increase over the prior
year primarily due to increases in annual incentive payments.
The Corporation in 1994 offered additional incentive for stock price growth
and total shareholder return through the award of performance-based Restricted
Stock under the 1991 Stock Incentive Plan, in which all named executive
officers participated. Restricted Stock awards to them in 1994 and options held
by them at year end are described in the Tables. The awards of performance-
based Restricted Stock are subject to forfeiture in whole or in part unless
specific goals which have been determined by the Compensation Committee are
achieved. The goals compare the three year total shareholder return of the
Corporation to the weighted average of the peer group of companies used in the
performance graph in the proxy statement. In addition, after the three year
goals are met, the restricted stock is subject to a requirement of continued
employment for two more years. Awards in 1994 were made to achieve the earlier
stated objective of causing a significant portion of each executive's total pay
to be at risk and dependent on total shareholder return primarily through stock
price growth as well as the objective of keeping outstanding executives by
providing compensation opportunities similar to those provided in the
Corporation's industry. In doing so, it considered the number of options
already owned by each named executive and the objective that he have an
important incentive for stock price gain. In determining the size of Restricted
Stock awards, the Committee used its discretion and was not bound by any pre-
adopted formulas.
The Corporation encourages career employment and it is endorsed by our
Committee. Its retirement benefits are an essential part of that policy. They
are described, for the named executive officers, in the Retirement Benefit
Table and its footnotes. The Committee periodically reviews executive
retirement benefits to ensure that they continue to meet the Corporation's
needs and are consistent with good corporate practice.
No formal policy has been adopted by the Corporation with respect to
qualifying compensation paid to its executive officers for deductibility under
Section 162(m) of the Internal Revenue Code. In the event that any new
compensation programs are proposed in the future, it is expected that they will
be structured with a view toward qualifying for deductibility just as were the
amendments to the 1991 Stock Option Plan as approved by shareholders in 1994.
The Committee does not anticipate that current compensation levels would result
in loss of any tax deductibility.
Mr. Biegler has served as Chief Executive Officer since May 1993. He has had
a major influence on the Company's 1994 results which are judged by the Board
to be a constructive response to difficult circumstances. Major restructuring
goals were accomplished and meaningful improvement in financial performance
caused earnings goals to be met. The favorable conclusion of the sale of
Enserch Environmental Corporation further strengthened the Corporation's
balance sheet and permits focus on its core businesses. Both improve future
prospects for the Corporation. Mr. Biegler's salary was unchanged during 1994.
It remains below 95% of the market median observed for that position. A portion
of the annual incentive award was earned for 1994 based on partial achievement
of target goals established by the Committee. He received a performance-based
restricted stock award in keeping with the Committee's judgment as described
above. The size of the award of restricted stock was based on comparative data
and with consideration of the number of stock options held. Accrued credits
were paid him from his long held rights in the Unit Plan, which was terminated
early in 1994. Mr. Biegler exercised no options in 1994 and realized no option
gain. Mr. Biegler made important contributions during the year to achievement
of the Corporation's financial goals and to its restructuring for the future.
The Committee considers his compensation appropriate given these achievements.
Compensation Committee
W. Ray Wallace, Chairman
William B. Boyd
Lawrence E. Fouraker
Marvin J. Girouard
Frederick S. Addy
11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing for the last five fiscal years the
yearly percentage change in the cumulative total shareholder return on the
Corporation's Common Stock against the cumulative total return of the S&P 500
Composite Stock Index and the American Gas Association Diversified/Integrated
Companies Index (the "AGA Index"). The graph assumes that the value of the
investment in the Corporation's Common Stock and each index was $100 at
December 31, 1989, and that all dividends are reinvested. The AGA Index is a
self-constructed peer index that has been calculated by the American Gas
Association. The returns of each component company have been weighted according
to their respective stock market capitalization at the beginning of each period
for which a return is indicated.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DECEMBER 31, 1989 1990 1991 1992 1993 1994
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ENSERCH 100 80 56 62 72 59
S&P 500 100 97 126 136 150 152
AGA Diversified/Integrated(/1/) 100 89 78 82 93 81
</TABLE>
(1) Companies included in the American Gas Association Diversified/Integrated
company index are Chesapeake Utilities, Columbia Gas System, Consolidated
Natural Gas, Eastern Enterprises, Energen Corporation, ENSERCH Corporation,
Equitable Resources, K N Energy Inc., Nicor Inc., Noram Energy Corporation,
ONEOK Inc., Pacific Enterprises, Pennsylvania Enterprises, Questar Corporation,
South Jersey Enterprises, Southwest Gas Corporation, Southwestern Energy, UGI
Corporation, Valley Resources, Washington Energy, and Wicor Inc.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, W. Ray Wallace (Chairman), William B.
Boyd, Lawrence E. Fouraker, Marvin J. Girouard, and Frederick S. Addy, served
as members of the Compensation Committee. Mr. D. W. Biegler, an executive
officer of ENSERCH Corporation, serves on the Board of Directors of Trinity
Industries, Inc., a company for which W. Ray Wallace serves as an executive
officer. Mr. Wallace has served on the Board of ENSERCH Corporation since 1978
and has been on the Compensation Committee since 1980. Mr. Biegler joined the
Trinity Board in 1992. The Board of Directors of ENSERCH Corporation is fully
informed of these positions and believes that no conflict of interest has been
or will be created thereby. Mr. Wallace will retire from the Board on May 8,
1995.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Corporation's proxy statement
relating to the 1996 Annual Meeting of Shareholders, a shareholder proposal
must be received by the Corporation no later than November 25, 1995. The date
of the 1996 Annual Meeting of Shareholders will be May 14, 1996.
The Corporation's Bylaws provide that in addition to any other applicable
requirements, in order for a shareholder to properly bring business before the
annual meeting or nominate a person for election to the Board, the shareholder
must give timely written notice to the Corporate Secretary and provide certain
specified information. Details regarding the procedural requirements for
presenting a matter before a shareholders meeting are available upon written
request to the Corporate Secretary.
OTHER MATTERS
The Management does not intend to bring any other business before the meeting
and has no reason to believe any will be presented to the meeting. If, however,
any other business should be properly presented at the meeting, the proxies
named in the enclosed form of proxy will vote the proxy in accordance with
their best judgment.
By Order of the Board of Directors,
Michael G. Fortado
Vice President and
Corporate
Secretary
Dallas, Texas
March 24, 1995
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUDING CERTAIN OF THE EXHIBITS THERETO, MAY BE OBTAINED
WITHOUT CHARGE BY WRITING TO MICHAEL G. FORTADO, VICE PRESIDENT AND CORPORATE
SECRETARY, ENSERCH CORPORATION, ENSERCH CENTER, 300 SOUTH ST. PAUL STREET,
DALLAS, TEXAS 75201-5598.
13
<PAGE>
PROXY [LOGO OF ENSERCH CORPORATION APPEARS HERE] PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION FOR ANNUAL MEETING MAY 9, 1995
The undersigned hereby appoints D. W. Biegler, B. A. Bridgewater, Jr. and J.
M. Haggar, Jr., or any of them, the attorneys and proxies of the undersigned,
each with full power of substitution, to vote on behalf of the undersigned at
the Annual Meeting of Shareholders of ENSERCH Corporation, to be held at 301
South Harwood Street, Dallas, Texas, on Tuesday, May 9, 1995, at 10 a.m., and
at any adjournments of said meeting, all the shares of Common Stock of said
Corporation in the name of the undersigned or which the undersigned may be
entitled to vote; hereby revoking any proxy or proxies heretofore given by the
undersigned.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3. IT IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
ENSERCH CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [/]
1. Election of Directors--Nominees:
D. W. Biegler, F. S. Addy, B. A. Bridgewater, Jr., O. C. Donald, M. J.
Girouard, J. M. Haggar, Jr., T. W. Luce, III, W. C. McCord and D. S.
Natalicio.
FOR WITHHOLD FOR ALL EXCEPT NOMINEE(S) LISTED BELOW:
[_] [_] [_]
________________________________________________________________________________
2. Ratification of auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, upon such other matters as may properly come before the
meeting.
DATED:____________________________________________________________________, 1995
________________________________________________________________________________
________________________________________________________________________________
Signature of Shareholder(s)
THIS PROXY MUST BE SIGNED EXACTLY AS NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD GIVE FULL TITLE AS SUCH. IF THE SIGNER
IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER.
