<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ENRON CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ENRON CORP.
- --------------------------------------------------------------------------------
(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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/X/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
$125.00
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
001-03423
- --------------------------------------------------------------------------------
(3) Filing party:
Enron Corp.
- --------------------------------------------------------------------------------
(4) Date filed:
3-10-94
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- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
ENRON CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 3, 1994
TO THE STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders of Enron
Corp. ("Enron") will be held in the LaSalle Ballroom of the Doubletree Hotel at
Allen Center, 400 Dallas Street, Houston, Texas, at 10:00 a.m. Houston time on
Tuesday, May 3, 1994, for the following purposes:
1. To elect twelve directors of Enron to hold office until the next annual
meeting of stockholders and until their respective successors are duly
elected and qualified;
2. To ratify the Board of Directors' appointment of Arthur Andersen & Co.,
independent public accountants, as Enron's auditors for the year ending
December 31, 1994;
3. To amend the Restated Certificate of Incorporation of Enron to change
the dividend rate on the $10.50 Cumulative Second Preferred Convertible
Stock;
4. To approve the Enron Corp. Performance Unit Plan;
5. To approve the Enron Corp. Annual Incentive Plan;
6. To amend the Enron Corp. 1991 Stock Plan; and
7. To transact such other business as may properly be brought before the
meeting or any adjournment(s) thereof.
Holders of record of Enron Common Stock and $10.50 Cumulative Second
Preferred Convertible Stock at the close of business on March 7, 1994, will be
entitled to notice of and to vote at the meeting or any adjournment(s) thereof.
Stockholders who do not expect to attend the meeting are requested to sign
and return the enclosed proxy, for which a postage-paid, return envelope is
enclosed. The proxy must be signed and returned in order to be counted.
By Order of the Board of Directors,
PEGGY B. MENCHACA
Vice President and Secretary
Houston, Texas
March 25, 1994
<PAGE> 3
PROXY STATEMENT
The enclosed form of proxy is solicited by the Board of Directors of Enron
Corp. ("Enron") to be used at the annual meeting of stockholders to be held in
the LaSalle Ballroom of the Doubletree Hotel at Allen Center, 400 Dallas Street,
Houston, Texas, at 10:00 a.m. Houston time on Tuesday, May 3, 1994. The mailing
address of the principal executive office of Enron is 1400 Smith St., Houston,
Texas 77002-7369. This proxy statement and the related proxy are to be first
sent or given to the stockholders of Enron on approximately March 25, 1994. Any
stockholder giving a proxy may revoke it at any time provided written notice of
such revocation is received by the Vice President and Secretary of Enron before
such proxy is voted; otherwise, if received in time, properly completed proxies
will be voted at the meeting in accordance with the instructions specified
thereon. Stockholders attending the meeting may revoke their proxies and vote in
person.
Holders of record at the close of business on March 7, 1994, of Enron's
Common Stock, $.10 par value (the "Common Stock"), will be entitled to one vote
per share on all matters submitted to the meeting. Holders of record at the
close of business on March 7, 1994, of Enron's $10.50 Cumulative Second
Preferred Convertible Stock, $1 par value (the "Preferred Convertible Stock"),
will be entitled to a number of votes per share equal to the conversion rate of
13.652 shares of Common Stock for each share of Preferred Convertible Stock. On
March 7, 1994, the record date, there were outstanding 250,460,513 shares of
Common Stock and 1,418,787 shares of Preferred Convertible Stock. Included in
the number of shares of outstanding Common Stock are 7,500,000 shares of Common
Stock held by the Enron Corp. Flexible Equity Trust to be used for future
employee benefits and compensation. Such shares are not included in the
calculation of earnings per share under generally accepted accounting
principles. There are no other voting securities outstanding. Common Stock and
Preferred Convertible Stock are collectively referred to herein as "Voting
Stock". All references in this proxy statement to Common Stock reflect the
2-for-1 stock split made on August 16, 1993.
Enron's annual report to stockholders for the year ended December 31, 1993,
including financial statements, is being mailed herewith to all stockholders
entitled to vote at the annual meeting. The annual report does not constitute a
part of the proxy soliciting material.
ITEM 1.
ELECTION OF DIRECTORS
At the meeting, twelve directors are to be elected to hold office until the
next succeeding annual meeting of the stockholders and until their respective
successors have been elected and qualified. All of the nominees are currently
directors of Enron. Proxies cannot be voted for a greater number of persons than
the number of nominees named on the enclosed form of proxy. A plurality of the
votes cast in person or by proxy by the holders of Voting Stock is required to
elect a director. Accordingly, under Delaware law and Enron's Restated
Certificate of Incorporation and by-laws, abstentions and "broker non-votes"
would not have the same legal effect as a vote against a particular director. A
broker non-vote occurs if a broker or other nominee does not have discretionary
authority and has not received instructions with respect to a particular item.
Stockholders may not cumulate their votes in the election of directors.
<PAGE> 4
It is the intention of the persons named in the enclosed proxy to vote such
proxy "FOR" the election of the nominees named herein. Should any nominee become
unavailable for election, discretionary authority is conferred to vote for a
substitute. The following information regarding the nominees, their principal
occupations, employment history and directorships in certain companies is as
reported by the respective nominees.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] ROBERT A. BELFER, 58
Director since 1983
Mr. Belfer's principal occupation is oil and gas investments. Prior to his resignation in
April, 1986 from Belco Petroleum Corporation, a wholly owned subsidiary of Enron, Mr.
Belfer was President and then Chairman of Belco. Mr. Belfer is also a director of EOTT
Energy Corp. (the general partner of EOTT Energy Partners, L.P.), NAC Re Corporation and
Smith Barney World Funds Inc.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] NORMAN P. BLAKE, JR., 52
Director since 1993
Since November, 1990, Mr. Blake has been Chairman, President and CEO of USF&G Corporation,
a holding company for United States Fidelity and Guaranty Company, a large property and
casualty insurer. Before joining USF&G, Mr. Blake was Chairman and CEO of Heller
International Corporation, a wholly owned subsidiary of The Fuji Bank, Ltd. of Tokyo,
Japan. Mr. Blake is also a director of Owens-Corning Fiberglass Corporation.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] JOHN H. DUNCAN, 66
Director since 1985
Mr. Duncan lives in Houston, Texas, and since 1990, his principal occupation has been
investments. From 1986 until 1990, he was a director and partner of Duncan, Cook & Co., an
investment banking and advisory firm. Mr. Duncan is also a director of EOTT Energy Corp.
(the general partner of EOTT Energy Partners, L.P.) Texas Commerce Bancshares, Inc. and
King Ranch, Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] JOE H. FOY, 67
Director since 1985
Mr. Foy is a retired partner of Bracewell & Patterson, Attorneys, in Houston, Texas. For
over five years prior to his retirement in 1992, Mr. Foy served as a Senior Partner at
such firm. Mr. Foy is also a director of Central and South West Corporation.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] WENDY L. GRAMM, 49
Director since 1993
Dr. Gramm is currently self employed as a consultant on economic issues. From February,
1988 until January, 1993, Dr. Gramm served as Chairman of the Commodity Futures Trading
Commission in Washington, D.C. Dr. Gramm is also a director of IBP, Inc., State Farm Life
Insurance Co. and the Chicago Mercantile Exchange.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] ROBERT K. JAEDICKE, 65
Director since 1985
Dr. Jaedicke is Professor (Emeritus) of Accounting at the Stanford University Graduate
School of Business in Stanford, California. He has been on the Stanford Faculty since 1961
and served as Dean from 1983 until 1990. Dr. Jaedicke is also a director of Homestake
Mining Co., Boise Cascade Corporation, Wells Fargo & Company, California Water Service
Company, GenCorp, Inc. and State Farm Insurance Co.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] RICHARD D. KINDER, 49
Director since 1988
Since October, 1990, Mr. Kinder has been President and Chief Operating Officer of Enron.
From December, 1988 until October, 1990, he served Enron as Vice Chairman of the Board.
For over five years prior to his election as Vice Chairman, Mr. Kinder served in various
management and legal positions with Enron and its affiliates. Mr. Kinder is also a
director of Enron Oil & Gas Company, EOTT Energy Corp. (the general partner of EOTT Energy
Partners, L.P.), Enron Liquids Pipeline Company (the general partner of Enron Liquids
Pipeline, L.P.) and Baker Hughes Incorporated.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] KENNETH L. LAY, 51
Director since 1985
For over five years, Mr. Lay has been Chairman of the Board and Chief Executive Officer of
Enron. From February, 1989 until October, 1990, he also served as President of Enron. Mr.
Lay is also a director of Eli Lilly and Company, Compaq Computer Corporation, Enron Oil &
Gas Company, EOTT Energy Corp. (the general partner of EOTT Energy Partners, L.P.) and
Trust Company of the West.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] CHARLES A. LEMAISTRE, 70
Director since 1985
For over fifteen years, Dr. LeMaistre has been President of The University of Texas M. D.
Anderson Cancer Center in Houston, Texas.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] JOHN A. URQUHART, 65
Director since 1990
Since August, 1991, Mr. Urquhart has been Vice Chairman of the Board of Enron. Since
January, 1991, Mr. Urquhart has also been President of John A. Urquhart Associates, a
management consulting firm in Fairfield, Connecticut. From 1986 through 1990, he served
General Electric Company in the roles of Senior Vice President of Industrial and Power
Systems and as Executive Vice President of two of General Electric Company's sectors --
International and Power Systems. He also serves as a director of Aquarion Company, TECO
Energy, Inc., Hubbell, Inc. and The Weir Group, PLC.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] CHARLS E. WALKER, 70
Director since 1985
For two decades, Dr. Walker has been Chairman of Walker/Free Associates, previously Charls
E. Walker Associates, Inc., a governmental relations consulting firm, in Washington, D.C.
Dr. Walker is also a director of Potomac Electric Power Company.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] HERBERT S. WINOKUR, JR., 50
Director since 1985
Since 1987, Mr. Winokur has been President of Winokur & Associates, Inc., an investment
and management services firm, and Managing General Partner of Capricorn Investors, L.P., a
private investment partnership concentrating on investments in restructure situations.
Prior to his current appointment, Mr. Winokur was Senior Executive Vice President and
Director of Penn Central Corporation. Mr. Winokur is also a director of NAC Re
Corporation, NHP, Inc., DynCorp and Marine Drilling Companies.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Enron knows of no one who beneficially owns in excess of five percent of a
class of Enron's Voting Stock except as set forth in the table below.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
NAME AND OWNERSHIP
ADDRESS OF AS OF
BENEFICIAL JANUARY 31, PERCENT
OWNER TITLE OF CLASS 1994 OF CLASS
--------- -------------- ----------- --------
<S> <C> <C> <C>
Estate of Arthur B. Belfer Preferred Convertible 85,000 5.91657
767 Fifth Ave. Common 162,116(1) *
New York, New York 10153
Robert A. Belfer Preferred Convertible 261,803(2) 17.9554
767 Fifth Ave. Common 1,291,734(3)(4)(5)(6) *
New York, New York 10153
Mr. and Mrs. Lawrence Ruben Preferred Convertible 232,497(7) 15.9455
600 Madison Ave. Common 1,000,300(8) *
New York, New York 10022
Enron Corp. Employee Stock Common 32,486,545(9) 13.0096
Ownership Plan
1400 Smith St.
Houston, Texas 77002-7369
</TABLE>
- ---------------
* Less than 1 percent.
(1) If the Estate of Arthur B. Belfer converted the Preferred Convertible Stock
that it owns directly into Common Stock, it would beneficially own
1,322,536 shares, or approximately .53%, of the Common Stock that would be
outstanding after giving effect to such conversion.
(2) Does not include 85,000 shares held by the Estate of Arthur B. Belfer of
which Robert A. Belfer is executor; 625 shares held by Mr. Belfer's wife;
22,000 shares held by a trust of which Mr. Belfer's wife is co-trustee; and
63,797 shares held by trusts of which Mr. Belfer is trustee or co-trustee,
in all of which shares Mr. Belfer disclaims beneficial ownership.
(3) Includes restricted shares of Common Stock held under Enron's 1988 and 1991
Stock Plans. Participants in those Plans have sole voting power and no
investment power for restricted shares awarded under the Plan until such
shares vest in accordance with Plan provisions. After vesting, the
participant has sole investment and voting powers.
(4) The number of shares of Common Stock subject to stock options exercisable
within 60 days after January 31, 1994, which number is included in the
number of shares shown as beneficially owned as of such date, is 11,872
shares.
(5) Includes shares held under Enron's Savings Plan. Participants in the
Savings Plan have sole voting power and limited investment power with
respect to shares in the Plan.
(6) Does not include 162,116 shares held by the Estate of Arthur B. Belfer, of
which Robert A. Belfer is executor; 6,180 shares held by Mr. Belfer's wife;
372,000 shares held by a trust of which Mr. Belfer's wife is co-trustee and
13,248 shares held by a trust of which Mr. Belfer is trustee, in all of
which shares Mr. Belfer disclaims beneficial ownership. If Robert A. Belfer
converted the Preferred Convertible Stock that he owns directly into Common
Stock, he would own 4,865,869 shares, or approximately 1.9%, of the Common
Stock that would be outstanding after giving effect to such conversion.
(7) Does not include 960 shares held as co-trustees for their children; 68,824
shares held by Mrs. Ruben as trustee and co-trustee for her children; and
11,051 shares held by Mr. Ruben as co-trustee for his nieces and nephews,
in which shares Mr. Ruben disclaims beneficial ownership.
(8) Does not include 9,480 shares held as co-trustees for their children;
240,896 shares held by Mrs. Ruben as trustee and co-trustee for her
children; 179,696 shares held by Mr. Ruben as co-trustee for his children;
332,280 shares held by Mr. Ruben as co-trustee for his nieces and nephews;
and 89,800 shares held by the Selma and Lawrence Ruben Foundation in which
shares Mr. and Mrs. Ruben disclaim beneficial ownership. If Mr. and Mrs.
Ruben converted the Preferred Convertible Stock that they own directly into
Common Stock, they would own 4,174,349 shares, or approximately 1.7%, of
the Common Stock that would be outstanding after giving effect to such
conversion.
(9) Pursuant to the terms of Enron's Employee Stock Ownership Plan ("ESOP"),
shares allocated to employee accounts are voted by the respective
employees. The ESOP administrative committee has the power to vote Enron's
Common Stock which has not been allocated to any employee accounts. If the
ESOP trustee receives no voting directions from the ESOP administrative
committee as to unallocated shares or from the respective employees as to
allocated shares, then all such shares are to be voted by the trustee in
the same proportion as the allocated shares that are voted by employees.
6
<PAGE> 9
STOCK OWNERSHIP OF MANAGEMENT AND BOARD OF DIRECTORS
<TABLE>
<CAPTION>
PREFERRED COMMON STOCK COMMON UNITS
CONVERTIBLE STOCK ENRON OIL & ENRON LIQUIDS
COMMON STOCK ENRON CORP. GAS COMPANY PIPELINE, L.P.
ENRON CORP. AS OF JANUARY 31, 1994 AS OF JANUARY 31, 1994 AS OF JANUARY 31, 1994
AS OF JANUARY 31, 1994 -------------------------- -------------------------- ----------------------
---------------------------- AMOUNT AMOUNT AMOUNT
AMOUNT AND NATURE AND NATURE AND NATURE
AND NATURE OF OF OF
OF BENEFICIAL PERCENT BENEFICIAL PERCENT BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OWNERSHIP(1)(2)(3) OF CLASS OWNERSHIP(1) OF CLASS OWNERSHIP(1) OF CLASS OWNERSHIP(1) OF CLASS
- -------------------- ------------------ -------- ------------ -------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Belfer.... 1,291,734(4)(5) * 261,803(6) 17.9554 --(7) --
Norman P. Blake,
Jr................ -- -- -- --
John H. Duncan...... 102,452 * -- 40,000 * --
Joe H. Foy.......... 30,452 * -- 1,000 * 1,800 *
Wendy L. Gramm...... 864 * -- -- --
Robert K.
Jaedicke.......... 14,724 * -- -- --
Richard D. Kinder... 806,952(4) * -- 19,619(8) * 25,000 *
Kenneth L. Lay...... 1,250,601(4)(9) * -- 15,800(8)(9) * --
Charles A.
LeMaistre......... 14,324 * -- -- --
John A. Urquhart.... 8,802 * -- --(8) --
Charls E. Walker.... 11,676(12) * -- 5,500(10)(11) * --
Herbert S. Winokur,
Jr................ 50,552 * -- -- --
Ronald J. Burns..... 621,069(4) * -- 2,500 * 1,900 *
Edmund P. Segner,
III............... 154,918(4) * -- -- --
Rodney L. Gray...... 135,738(4) * -- 650 * --
All directors and
executive officers
as a group
(22 in number).... 5,548,110(4) 2.203% 261,803 17.9554 97,589 * 28,700 *
</TABLE>
<TABLE>
<CAPTION>
COMMON UNITS
NORTHERN BORDER PARTNERS,
COMMON UNITS L.P.
ENRON CAPITAL L.L.C. AS OF JANUARY 31, 1994
AS OF JANUARY 31, 1994 ---------------------------
---------------------------- AMOUNT
AMOUNT AND NATURE
AND NATURE OF
OF BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS OWNERSHIP(1) OF CLASS
- ----------------------------------------------------------------- ------------- -------- ------------ --------
<S> <C> <C> <C> <C>
Robert A. Belfer................................................. -- --
Norman P. Blake, Jr.............................................. -- 1,500 *
John H. Duncan................................................... -- --
Joe H. Foy....................................................... -- --
Wendy L. Gramm................................................... -- --
Robert K. Jaedicke............................................... -- --
Richard D. Kinder................................................ -- --
Kenneth L. Lay................................................... -- --
Charles A. LeMaistre............................................. -- --
John A. Urquhart................................................. -- --
Charls E. Walker................................................. -- --
Herbert S. Winokur, Jr........................................... -- --
Ronald J. Burns.................................................. -- 3,100 *
Edmund P. Segner, III............................................ -- --
Rodney L. Gray................................................... -- --
All directors and executive officers
as a group (22 in number)...................................... -- 10,600 *
</TABLE>
- ---------------
* Less than 1%.
(Notes continued on following page)
7
<PAGE> 10
(1) Except as otherwise explained in the footnotes set forth below, all shares
involve sole voting power and sole investment power.
(2) Includes restricted shares of Common Stock held under Enron's 1988 and 1991
Stock Plans for certain individuals. Participants in those Plans have sole
voting power and no investment power for restricted shares awarded under
the Plan until such shares vest in accordance with Plan provisions. After
vesting, the participant has sole investment and voting powers.
(3) The number of shares of Common Stock subject to stock options exercisable
within 60 days after January 31, 1994, which number is included in the
number of shares shown as beneficially owned as of such date, is as
follows: Mr. Belfer, 11,872 shares; Mr. Duncan, 16,832 shares; Mr. Foy,
16,832 shares; Dr. Gramm, 384 shares; Dr. Jaedicke, 7,904 shares; Mr.
Kinder, 534,041 shares; Mr. Lay, 450,100 shares; Dr. LeMaistre, 7,904
shares; Mr. Urquhart, 3,968 shares; Dr. Walker, 3,504 shares; Mr. Winokur,
16,832 shares; Mr. Burns, 458,080 shares; Mr. Gray, 108,876 shares; Mr.
Segner, 117,800 shares; and all directors and executive officers as a
group, 2,185,879 shares.
(4) Includes shares held under Enron's Savings Plan and/or Employee Stock
Ownership Plan ("ESOP"). Participants in the Savings Plan have sole voting
power and limited investment power with respect to shares in the Plan.
Participants in the ESOP have sole voting power and no investment power
prior to distribution of shares from the Plan.
(5) Does not include 162,116 shares held by the Estate of Arthur B. Belfer, of
which Robert A. Belfer is executor; 6,180 shares held by Mr. Belfer's wife,
372,000 shares held by a trust of which Mr. Belfer's wife is co-trustee and
13,248 shares held by a trust of which Mr. Belfer is trustee, in all of
which shares Mr. Belfer disclaims beneficial ownership. If Robert A. Belfer
converted the Preferred Convertible Stock that he owns directly into Common
Stock, he would own 4,865,869 shares, or approximately 1.9%, of the Common
Stock that would be outstanding after giving effect to such conversion.
(6) Does not include 85,000 shares held by the Estate of Arthur B. Belfer, of
which Robert A. Belfer is executor; 625 shares held by Mr. Belfer's wife;
22,000 shares held by a trust of which Mr. Belfer's wife is co-trustee; and
63,797 shares held by trusts of which Mr. Belfer is trustee or co-trustee,
in all of which shares Mr. Belfer disclaims beneficial ownership.
(7) Does not include 10,000 shares held by trusts of which Mr. Belfer's wife is
trustee for their children, in all of which shares Mr. Belfer disclaims
beneficial ownership.
(8) Does not include 64,000,000 shares owned by Enron in which each of Messrs.
Lay, Urquhart and Kinder, in their capacities as Chairman of the Board,
Vice Chairman of the Board and President, respectively, of Enron, has sole
voting and investment power pursuant to the provisions of Enron's by-laws.
(9) Includes 7,530 shares with respect to Enron Common Stock and 800 shares
with respect to Enron Oil & Gas Company Common Stock held by Mr. Lay's
children and stepchildren in which Mr. Lay has shared voting and investment
power.
(10) Does not include 6,088 shares owned by Dr. Walker's wife and in which Dr.
Walker disclaims beneficial ownership.
(11) Includes 3,500 shares which may be purchased at $45.00 pursuant to a call
option which expires on April 16, 1994.
As of January 31, 1994, management and the Board of Directors held no
ownership interest in common units of EOTT Energy Partners, L.P. Such units
first traded publicly on March 18, 1994.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held five regularly scheduled meetings and three
specially scheduled meetings during the year ended December 31, 1993. The
Executive Committee meets on a less formal basis and may exercise all of the
powers of the Board of Directors, except where restricted by Enron's by-laws or
by applicable law. During the year ended December 31, 1993, the Executive
Committee met five times. The Executive Committee is currently composed of
Messrs. Duncan (Chairman), Belfer, Foy, Kinder, Lay, LeMaistre and Winokur.
The Board of Directors uses working committees with functional
responsibility in the more complex recurring areas where disinterested oversight
is required. The Audit Committee is the communication link between the Board and
Enron's independent auditors. At four meetings during the
8
<PAGE> 11
year ended December 31, 1993, the Audit Committee met with the independent
auditors, as well as Enron officers and employees who are responsible for legal,
financial and accounting matters. In addition to recommending the appointment of
the independent auditors to the Board of Directors, the Audit Committee reviews
the scope and fee related to the audit, the accounting policies and reporting
practices, contract and internal auditing and internal control, compliance with
Enron's policies regarding business conduct and other matters as deemed
appropriate. The Audit Committee is currently composed of Messrs. Jaedicke
(Chairman), Blake and Walker and Ms. Gramm.
The Compensation Committee is responsible for approving the compensation
arrangements of senior management and recommending approval by the Board of
Directors of the creation of and amendments to Enron benefit plans. In meeting
eleven times during the year ended December 31, 1993, the Compensation Committee
also continued to monitor and approve awards earned pursuant to Enron's
comprehensive executive compensation program. The Compensation Committee is
currently composed of Messrs. LeMaistre (Chairman), Belfer, Duncan and Foy.
The Finance Committee serves as a focal point of communication between
management of Enron and the Board of Directors on financial matters. In meeting
twice during the year ended December 31, 1993, the Finance Committee reviewed
the financial plans and proposals of management, as well as recommended action
with regard thereto to the Board of Directors. The Finance Committee is
currently composed of Messrs. Winokur (Chairman), Blake, Jaedicke and Urquhart.
The Board's Nominating Committee is responsible for continuing studies of
the size and composition of the Board. In meeting twice during the year ended
December 31, 1993, the Committee reviewed information regarding proposed
nominees to the Board. The Nominating Committee is currently composed of Messrs.
Walker (Chairman) and Urquhart and Ms. Gramm.
During the year ended December 31, 1993, each Director attended at least
75% of the total number of meetings of the Board and the committees on which the
Director served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
During 1993, each non-employee director of Enron received a fee of $22,000
for serving as a director. Each non-employee director was also paid $4,000
annually for each committee on which such director served. Chairs of the
committees received an additional $2,000 annually. Meeting fees were $1,250 for
each Board meeting attended and $1,000 for each committee meeting attended.
Total directors' fees paid or deferred in 1993 were $550,833.
Enron maintains a Deferral Plan for directors under which fees can be
deferred to a later specified date. Interest is credited to all amounts
deferred. Currently six Directors participate in the Plan. Directors also
participate in the Enron Corp. 1988 and 1991 Stock Plans. During 1993, each non-
employee director received 480 shares of restricted stock (valued at $29.00 per
share on the date of grant) and stock options to purchase a total of 1,920
shares (with an exercise price of $29.00 per share) pursuant to the 1991 Stock
Plan.
9
<PAGE> 12
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for developing Enron's executive compensation philosophy. It is the
duty of the Committee to administer the philosophy and its relationship with the
compensation paid to the Chief Executive Officer and each of the other executive
officers.
The basic philosophy behind executive compensation at Enron is to reward
the executive's performance that creates long-term stockholder value. This
pay-for-performance tenet is embedded in most aspects of an executive's total
compensation package. Salary increases, annual incentive awards and long-term
incentive grants are reviewed annually to ensure consistency with Enron's total
compensation philosophy.
Base Salary
All decisions regarding base salary are made based upon individual
performance as measured against pre-established individual objectives and
competitive practice as measured by annual compensation surveys. Base salaries
are targeted at the median of an industry comparator group, comparable to the
peer group reflected in the performance graph set forth in "Comparative Stock
Performance" in this proxy statement.
Annual Incentive Awards
The Annual Incentive Plan is funded as a percentage of after-tax net income
as approved by the Committee each year based upon company performance and
competitive industry practice. Downward adjustment of the fund is at the sole
discretion of the Committee based on performance against other goals such as
cash flow, strengthening the balance sheet and total stockholder return. These
factors are not weighted but are applied at the sole discretion of the
Committee. However, upward adjustment of the fund, over the formula-driven
amount, is not allowed. Since Enron's performance goal is net income, the fund
increases or decreases based on Enron's earnings performance. All decisions
regarding individual incentive awards are made based upon individual performance
as measured against pre-established individual objectives and competitive
practice as measured by annual compensation surveys, but in no event will an
individual incentive award exceed one-half of one percent of after-tax net
income. Annual incentive awards are intended to result in total direct
compensation (base plus annual incentive) at the top quartile of the industry
comparator group, given top quartile performance.
Long-Term Incentive Grants
Long-term incentive grants are made annually to each executive and are
targeted at the top quartile of the industry comparator group. One-half of the
grants' intended value is made in performance units under Enron's Performance
Unit Plan and one-half is made in stock options. Aggregate stock holdings of the
executives have no bearing on the size of long-term incentive grants.
Occasionally, restricted stock is granted for specific reasons, such as: (i)
individual performance, (ii) company performance, (iii) to accommodate special
situations such as promotions, (iv) in lieu of other benefits or (v) to remain
market competitive.
Enron's long-term incentive program is focused on increasing stockholder
value. For example, performance units compare Enron's total stockholder return
versus peer group performance over a
10
<PAGE> 13
four-year period. In order for top quartile compensation to be realized, Enron's
total stockholder return must rank at least third among the peer group of 12
companies. Stock options are granted at market price. Thus, for any compensation
to be realized pursuant to stock options, the market price of Common Stock must
increase.
Total Compensation
Approximately 70% of the total compensation of Enron's most senior
executives is "at risk", growing or shrinking based strictly upon the
performance of Enron and return to the stockholders. Also, two significant
elements in the employee benefit package, the Employee Stock Ownership Plan and
Enron Corp. Savings Plan (which own over 16% of Enron Voting Stock), are driven
by increasing stockholder value.
Inherent in this "at-risk" component is a heavy weighting toward long-term
performance. At Enron, long-term incentives for the most senior executives are
more than double the size of annual incentives. We believe this feature provides
Enron management with a long-term strategic incentive that will encourage the
continued creation of stockholder value. In addition, the executive officers who
are employees and are listed in Enron's annual report to stockholders are each
expected to hold Common Stock having a value of at least their annual salary.
The Committee has access to Hewitt Associates, a national consulting firm
experienced in executive compensation, other nationally recognized compensation
consulting firms, national compensation surveys and Enron's financial records.
Each year the Committee reviews each element of compensation to ensure that the
total compensation delivered is reflective of company performance with input on
market competitiveness. The executive compensation program is designed to
provide top quartile compensation for top quartile performance.
Chief Executive Officer Compensation
As part of an annual review, the Committee applies the executive
compensation philosophy to the total compensation package of the Chief Executive
Officer and the other executives. In May, 1993, Mr. Lay received a $90,000
increase in his base salary, to reflect accomplishment of objectives and top
quartile performance relative to industry peers. In recognition of Enron's
superior performance relative to its peer group, Mr. Lay received a cash annual
incentive award of $1,040,000 and a stock option grant, at market value, of
48,000 shares. The Committee determined the amount of the annual incentive award
taking into consideration the annual performance report presented by management,
Enron's 43% increase in earnings from operations, 26% increase in net income
(exclusive of a one time charge related to the increase in the corporate federal
income tax rate) and Enron's 28% total stockholder return for 1993 as compared
to the S&P 500's 10% and industry peers' 17% annual return.
Mr. Lay also received a cash payment of $900,000 in 1993 under the
Performance Unit Plan for the 1990-1993 performance period. Payments are made
under the Performance Unit Plan only if Enron's total stockholder returns are
greater than returns stockholders would have received if they invested in stock
of industry peers. The payout for the measurement period from 1990-1993
reflected Enron's return to its stockholders of 95.08% compared with a negative
3.4% for industry peers, 43.64% for the S&P 500, and 19.86% for 90-day U.S.
Treasury Bills. This performance earned Enron a ranking of Number 1 and valued
the units at $2.00.
11
<PAGE> 14
During 1993, long term incentive grants of stock options and performance
units were made to Mr. Lay and were consistent with the design of the overall
program. Special one time grants of 400,000 stock options and 47,200 shares of
restricted stock were made to Mr. Lay to supplement the actual value that had
been realized from prior long-term grants, which the Committee determined to be
insufficient relative to the market in light of Enron's superior performance
during the past several years. The options were granted at market value.
In connection with certain advances to purchase Common Stock, Mr. Lay
received a cash payment of $1,095,128 in 1993 under the stock finance agreement
which was part of his September 1989 employment agreement (see "Employment
Contracts," pages 20 and 21 below). Under the stock finance agreement, Mr. Lay
was advanced $5 million to buy Enron Common Stock, which served as collateral
for the advance. The cash payment in 1993 was provided to equalize the increased
value and dividends that would have been realized based on the purchase of
100,000 shares (currently, 400,000 shares on a post-split basis), assuming a $50
purchase price (or $12.50 on a post-split basis), which Mr. Lay agreed to buy
under the agreement, compared to the number of shares that were actually
purchased in the open market at varying prices above $50 (or $12.50 on a
post-split basis).
Renewed Employment Contracts
The existing five year employment contracts for Mr. Lay and Mr. Kinder were
scheduled to expire on August 31, 1994. To ensure that Enron retains what the
Executive and Compensation Committees consider to be the top management team in
the industry, which increased stockholder value by 296% from 1988 to 1993 and
outperformed the S&P 500 and the industry peer group average for each of the
past five years, as evidenced by the performance graph set forth in "Comparative
Stock Performance" in this proxy statement, the Committee entered into contract
renewal discussions with Mr. Lay and Mr. Kinder during 1993. The Committee is
pleased to announce that effective February 8, 1994, Mr. Lay and Mr. Kinder have
agreed to renew their employment contracts through February 8, 1999, although
each has the right to terminate his agreement as of February 8, 1997. The
Committee and Board of Directors agree that retaining and motivating these top
two executives is critical if Enron is to achieve or exceed its targeted
earnings per share growth rate of 15% in 1994 and beyond, and at the same time
expand its business globally. To assure that management interests are properly
aligned with stockholder interests, the Committee granted Mr. Lay and Mr. Kinder
1,200,000 and 1,000,000 stock options at market value, respectively, under the
renewed employment contracts. The vesting of up to 80% of these stock options
will not occur during the five year term of the renewed employment contracts
unless Enron achieves a compound growth in earnings per share of at least 15%
per year. The Committee believes these significant stock option grants provide
the necessary linkage between stockholder returns and management rewards. The
details of the grants and renewed contracts are explained in the "Employment
Contracts" section of this proxy statement.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the company's Chief Executive Officer and four other most highly
compensated executive officers, as reported in the proxy statement. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Enron intends to structure the performance-based
portion of the compensation of its executive officers (which currently consists
of stock option grants, certain
12
<PAGE> 15
restricted stock grants, performance unit grants and annual incentive awards) in
a manner that complies with the new statute, including presentation of each of
these plans to stockholders for approval (see Annual Meeting Items 4, 5 and 6 in
this proxy statement). Occasionally, Enron may grant restricted stock for
specific reasons which would not qualify as performance-based compensation.
Summary
Executive compensation at Enron is taken seriously by the Committee, the
Board of Directors and senior management. The Committee believes that there has
been a strong link between the success of the stockholder and the rewards of the
executives. The Committee also strongly believes that Mr. Lay and Mr. Kinder
have had significant influence in the success of Enron. This success is
evidenced by the increase in stockholder value from 1988 to 1993, during which
time a stockholder who invested $100 in Enron Common Stock would have received
$396.30 or a 296% increase in value compared to 97% for the S&P 500 and 23% for
industry peers, as evidenced by the performance graph set forth in "Comparative
Stock Performance" in this proxy statement. The Committee believes that with the
present plan designs, and the employment contract extensions for Messrs. Lay and
Kinder, management will continue to strive to increase stockholder value.
COMPENSATION COMMITTEE
Charles A. LeMaistre -- Chairman
Robert A. Belfer
John H. Duncan
Joe H. Foy
COMPARATIVE STOCK PERFORMANCE
The performance graph shown below was prepared by Value Line, Inc., for use
in this proxy statement. As required by applicable rules of the Securities and
Exchange Commission (the "SEC"), the graph was prepared based upon the following
assumptions:
1. $100 was invested in Enron Common Stock, the S&P 500 and the Peer
Group (as defined below) on January 1, 1989.
2. Peer Group investment is weighted based on the market
capitalization of each individual company within the Peer Group at
the beginning of each year.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise Enron's Peer Group are as follows: Arkla, Inc.;
Burlington Resources Inc.; Coastal Corp.; Columbia Gas Systems, Inc.;
Consolidated Natural Gas Co.; Occidental Petroleum Corp.; Panhandle Eastern
Corp.; Sonat Inc.; Tenneco, Inc.; Transco Energy Company; and The Williams
Companies, Inc.
13
<PAGE> 16
Although this method of calculating stockholder return differs from the
method that Enron uses for purposes of its long-term incentive plan (which is
based upon quarterly period returns), it does display a similar trend.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
ENRON CORP., S&P 500, PEER GROUP
(PERFORMANCE RESULTS THROUGH DECEMBER 31, 1993)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ENRON CORP. S&P 500 PEER GROUP
<S> <C> <C> <C>
1/1/89 100.00 100.00 100.00
12/31/89 $166.03 $131.49 $138.72
12/31/90 $165.05 $127.32 $109.88
12/31/91 $219.68 $166.21 $ 94.35
12/31/92 $309.66 $179.30 $ 104.9
12/31/93 $396.29 $197.23 $122.78
</TABLE>
14
<PAGE> 17
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding compensation
paid or accrued during each of Enron's last three fiscal years to Enron's Chief
Executive Officer and each of Enron's four other most highly compensated
executive officers (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- -----------------------------------
OTHER ALL OTHER
ANNUAL RESTRICTED OPTIONS/ LTIP COMPENSATION
NAME & PRINCIPAL SALARY BONUS COMPENSATION STOCK SARS PAYOUTS ------------
POSITION YEAR $ $ ($)(1)(2) AWARDS($)(3) (#) ($)(4) ($)(2)(5)
- --------------------- ---- -------- ---------- -------- ---------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay............. 1993 $960,000 $1,040,000 $375,232 $1,283,250 648,000 $900,000 $1,137,035
Chairman of the Board and 1992 $875,000 $1,100,000 $326,709 $ 60,270 187,500 $739,200 $ 35,624
Chief Executive Officer 1991 $800,000 $ 900,000 $ 656,073 156,000 $714,000
Executive Officer
Richard D. Kinder.......... 1993 $640,044 $ 720,000 $218,410 $ 853,688 433,233 $550,044 $ 404,913
President and Chief 1992 $583,377 $ 750,000 $100,344 $ 32,646 125,000 $475,200 $ 35,624
Operating Officer 1991 $533,376 $ 600,000 $ 418,223 114,000 $300,000
Ronald J. Burns............ 1993 $433,333 $ 320,000 $129,212 $ 426,844 199,950 $216,810 $ 41,907
Co-Chairman and Chief 1992 $368,021 $ 325,000 $ 46,089 $ 11,839 62,500 $208,440 $ 35,624
Executive Officer, Enron 1991 $335,000 $ 250,000 $ 286,030 262,500 $175,050
Gas Services Corp.
Edmund P. Segner, III...... 1993 $297,500 $ 260,000 $ 8,450 $ 511,125 240,000 $ 70,070 $ 41,907
Executive Vice President 1992 $195,631 $ 250,000 $ 8,400 $ 0 41,700 $ 67,376 $ 30,679
and Chief of Staff 1991 $168,340 $ 150,000 $ 101,000 53,300 $ 53,184
Rodney L. Gray............. 1993 $287,292 $ 260,000 $ 6,250 $ 266,438 252,950 $ 84,150 $ 41,907
Chairman and Chief 1992 $187,545 $ 165,000 $ 5,100 $ 0 29,200 $ 80,904 $ 29,303
Executive Officer, Enron 1991 $170,672 $ 120,000 $ 75,750 29,200 $ 80,904
International, Inc.
</TABLE>
- ------------
(1) Includes "Perquisites and Other Personal Benefits" if value is greater than
the lesser of $50,000 or 10% of reported salary and bonus. Personal plane
usage of $132,829 has been reported for Mr. Lay. Also, Enron maintains two
deferral plans for key employees under which payment of base salary, annual
bonus and long-term incentive awards may be deferred to a later specified
date. Under the 1985 Deferral Plan, interest is credited on amounts deferred
based on 150% of Moody's seasoned corporate bond yield index, which for 1992
was 13.845% and for 1993 was 12.825%. Interest in excess of 120% of the
December, 1992 long-term Applicable Federal Rate (8.5%) has been reported as
other annual compensation for 1993, and interest in excess of 120% of the
December, 1991 long-term Applicable Federal Rate (9.5%) has been reported as
other annual compensation for 1992. No interest has been reported as other
annual compensation under the 1992 Deferral Plan, which credits interest at
Enron's mid-term borrowing rate, since the crediting rates for 1992 and 1993
of 7.5% and 7.06%, respectively, did not exceed 120% of the Applicable
Federal Rate. Other Annual Compensation also includes miscellaneous cash
payments for items such as cash perquisite allowances and lost benefits due
to statutory earnings limits.
(2) Only 1992 and 1993 data is provided, since the rules adopted by the SEC
allow a three-year phase-in for this category.
(3) Restricted stock awards granted to Messrs. Lay, Kinder and Burns on January
3, 1991 vested 33% on January 3, 1992 and 67% on December 14, 1992;
restricted stock awards granted to Messrs. Lay, Kinder, Burns, Segner and
Gray on January 16, 1991 vested 33% on January 16, 1992 and 67% on December
14, 1992; restricted stock awards granted to Messrs. Lay, Kinder and Burns
on January 2, 1992 vested 100% on December 14, 1992. Vesting of all unvested
restricted stock was accelerated to December, 1992. Dividend equivalents
accrued from date of grant and were paid upon vesting. The following is the
aggregate total of shares in unreleased restricted stock holdings and their
value as of December 31, 1993, for each of the Named Officers: Mr. Lay,
47,200 shares valued at $1,368,800; Mr. Kinder, 31,400 shares valued at
$910,600; Mr. Burns, 15,700 shares valued at $455,300; Mr. Segner, 18,800
shares valued at $545,200; and Mr. Gray, 9,800 shares valued at $284,200.
(4) Payments are included in the years in which the applicable payout was
earned. The payout for the 1988 grant was earned in December, 1991, and was
paid in January, 1992. The payout for the 1989 grant was earned and paid in
December, 1992. The payout for the 1990 grant was earned and paid in
December, 1993.
(5) The amounts shown include the value, as of December 31, 1992 and December
31, 1993, of Enron Common Stock allocated during 1992 and 1993 to employee's
savings account under Enron's Employee Stock Ownership Plan. Also included
in 1993 are cash payments to Messrs. Lay and Kinder of $1,095,128 and
$363,006 respectively that were made pursuant to the terms of their advances
which were used to purchase Common Stock in 1989. See "Chief Executive
Officer Compensation" in the Report from the Compensation Committee
Regarding Executive Compensation on pages 12 and 13.
15
<PAGE> 18
STOCK OPTION GRANTS DURING 1993
The following tables sets forth information with respect to grants of stock
options pursuant to Enron's stock option plans to the Named Officers reflected
in the Summary Compensation Table. No stock appreciation rights were granted
during 1993.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS/SARS ASSUMED ANNUAL RATES OF
OPTIONS/ GRANTED TO EXERCISE STOCK PRICE APPRECIATION
SARS EMPLOYEES IN OR BASE FOR OPTION TERM(3)
GRANTED FISCAL PRICE EXPIRATION -------------------------------------------
NAME (#)(1) YEAR ($/SH) DATE 0%(2) 5% 10%
---- ---------- ------- -------- ---------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay............ 600,000 13.81% $27.1875 02/09/03 $0.00 $ 10,258,844 $ 25,997,924
48,000 1.11% $28.2500 12/13/98 $0.00 $ 374,638 $ 827,852
Richard D. Kinder......... 399,998 9.21% $27.1875 02/09/03 $0.00 $ 6,839,195 $ 17,331,863
33,235 0.76% $28.2500 12/13/98 $0.00 $ 259,398 $ 573,201
Ronald J. Burns........... 199,950 4.60% $27.1875 02/09/03 $0.00 $ 3,418,760 $ 8,663,808
Edmund P. Segner, III..... 240,000 5.52% $27.1875 02/09/03 $0.00 $ 4,103,537 $ 10,399,170
Rodney L. Gray............ 124,950 2.88% $27.1875 02/09/03 $0.00 $ 2,136,404 $ 5,414,068
128,000 2.95% $30.1250 06/21/03 $0.00 $ 2,425,018 $ 6,145,471
All Employee and
Director Optionees...... 4,345,233 100% $27.6371(4) N/A $0.00 $ 75,523,626(5) $ 191,391,871(5)
All Stockholders.......... N/A N/A N/A N/A $0.00 $4,329,475,798 $10,971,751,750
Optionee Gain as % of All
Stockholders Gain....... N/A N/A N/A N/A N/A 1.74% 1.74%
</TABLE>
- ---------------
(1) Options granted to the Named Officers granted on February 9, 1993 became 20%
vested on August 9, 1993 and were first exercisable on that date with an
additional 20% becoming exercisable on the anniversary of the date of grant
until February 9, 1997. Options granted to Mr. Lay and Mr. Kinder on
December 13, 1993 are 5 year grants and will become 100% vested June 13,
1994. Options granted to Mr. Gray on June 21, 1993 will vest 8 years from
the date of grant or will vest on an accelerated basis according to the
following percentages if earnings targets are met: 14.29% of total shares on
February 1, 1994; 28.57% of total shares on February 1, 1995; 28.57% of
total shares on February 1, 1996; and 28.57% of total shares on December 31,
1996. If a "change of control" (as defined in the 1991 Stock Plan) were to
occur before the options become exercisable and are exercised, such vesting
shall be accelerated and all such outstanding options shall be surrendered
and the optionee shall receive a cash payment by Enron in an amount equal to
the value of the surrendered options (as defined in the 1991 Stock Plan).
(2) An appreciation in stock price, which will benefit all stockholders, is
required for optionees to receive any gain. A stock price appreciation of
zero percent would render the option without value to the optionees.
(3) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of Enron
Common Stock appreciates in value from the date of grant at the 5% and 10%
annual rates prescribed by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the price of Enron Common
Stock.
(4) Weighted average grant price of all stock options granted to employees in
1993.
(5) Appreciation for all stockholders is calculated using the average exercise
price for All Employee and Director Optionees ($27.6371) and using the
number of shares of Enron Common Stock issued and outstanding on December
31, 1993 (249,095,312).
16
<PAGE> 19
AGGREGATED STOCK OPTION/SAR EXERCISES DURING 1993 AND STOCK OPTION/SAR
VALUES AS OF DECEMBER 31, 1993
The following table sets forth information with respect to the Named
Officers concerning the exercise of SARs and options during the last fiscal year
and unexercised options and SARs held as of the end of the fiscal year:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS/SARS
SHARES AT DECEMBER 31, 1993
ACQUIRED ON VALUE ----------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE
---- ------------ ------------ -----------
<S> <C> <C> <C>
Kenneth L. Lay.................. 147,220 $2,796,819 261,400
Richard D. Kinder............... 60,000 $1,428,750 406,241
Ronald J. Burns................. 0 $ 0 393,090
Edmund P. Segner, III........... 50,480 $ 931,528 52,000
Rodney L. Gray.................. 0 $ 0 51,230
<CAPTION>
VALUE OF UNEXERCISE
IN-THE-MONEY OPTIONS/
SARS AT DECEMBER 31, 1993
-------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- -------------
<S> <C> <C> <C>
Kenneth L. Lay.................. 1,436,500 $2,325,600 $15,480,750
Richard D. Kinder............... 913,992 $5,406,462 $ 9,575,461
Ronald J. Burns................. 342,460 $5,237,644 $ 2,884,928
Edmund P. Segner, III........... 241,140 $ 134,000 $ 1,023,763
Rodney L. Gray.................. 259,960 $ 447,317 $ 636,680
</TABLE>
- ---------------
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1993
The following table provides information concerning awards of performance
units under Enron's long-term incentive plan during 1993. Grants are made at the
beginning of each fiscal year and each unit is assigned a value of $1.00. The
units are subject to a four-year plan performance period, at the end of which
Enron's cumulative quarterly total stockholder return is compared to that of the
11 peer companies included in the Peer Group. At that time, the units are
assigned a value ranging from $0 to $2.00 based on the rank of Enron's
stockholder return within the Peer Group. To be valued at the maximum of $2.00,
Enron must rank first, and to be valued at the target of $1.00, Enron must rank
third. Regardless of Enron's rank, Enron's cumulative quarterly stockholder
return must be above the cumulative return on 90-day U.S. Treasury Bills over
the same performance period in order for any value to be assigned.
<TABLE>
<CAPTION>
NUMBER
OF PERFORMANCE ESTIMATED FUTURE PAYOUTS
SHARES, OR OTHER UNDER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -------------------------------------------
OTHER MATURATION THRESHOLD TARGET MAXIMUM
RIGHTS (#) PAYOUT ($ OR #) ($ OR #) ($ OR #)
---------- ------------ --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Kenneth L. Lay.................. 600,000 4 years $0.00 $600,000 $1,200,000
Richard D. Kinder............... 400,000 4 years $0.00 $400,000 $ 800,000
Ronald J. Burns................. 200,000 4 years $0.00 $200,000 $ 400,000
Edmund P. Segner, III........... 240,000 4 years $0.00 $240,000 $ 480,000
Rodney L. Gray.................. 125,000 4 years $0.00 $125,000 $ 250,000
</TABLE>
RETIREMENT AND SEVERANCE PLANS
For many years, Enron has maintained a Retirement Plan to provide
retirement income for employees of Enron and its subsidiaries. Enron's ongoing
Retirement Plan is designed to provide monthly retirement income for each
employee of Enron and its participating subsidiaries in an amount equal to 1.45%
of an employee's final average pay multiplied by such employee's years of
accrual service not in excess of 25 years, plus .45% of final average pay
multiplied by accrual service in excess of 25 years up to a maximum of 10 years,
plus .45% of final average pay in excess of the integration level multiplied by
accrual service not in excess of 35 years, plus 1% of final average pay
multiplied by accrual service in excess of 35 years. Final average pay is the
average of an employee's monthly
17
<PAGE> 20
compensation either for any period of 60 consecutive months which occurs during
the last 120 months of vesting service and for which such employee's average
monthly compensation is the highest, or for the period of such employee's
vesting service if less than 60 months. The integration level is the lesser of
125% of compensation covered by Social Security for an employee attaining the
Social Security retirement age, or the FICA taxable wage base in effect, in the
Plan year in which the employee terminates employment. Directors who are not
employees are not eligible to participate in the Plan. Benefits accrued after
1986 are offset by the value of Common Stock allocated to an employee's
retirement account in Enron's Employee Stock Ownership Plan. In addition, Enron
has a Supplemental Retirement Plan which is designed to assure payments to
certain employees of that retirement income which would be provided under the
Retirement Plan except for the dollar limitation on accrued benefits imposed by
the Internal Revenue Code of 1986, as amended, and a Pension Program for
Deferral Plan Participants which provides supplemental retirement benefits equal
to any reduction in benefits due to deferral of salary into either of Enron's
Deferral Plans.
Estimated annual retirement benefits based on continued participation in
the Enron Retirement Plan and Supplemental Retirement Plan are as follows:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT
------------------------------------------------------------------------------------
YEARS OF CREDITED SERVICE AT AGE 65
------------------------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 36,722 $ 55,084 $ 73,445 $ 91,806 $100,167 $108,528
$ 400,000 $ 74,722 $112,084 $149,445 $186,806 $204,167 $221,528
$ 600,000 $112,722 $169,084 $225,445 $281,806 $308,167 $334,528
$ 800,000 $150,722 $226,084 $301,445 $376,806 $412,167 $447,528
$1,000,000 $188,722 $283,084 $377,445 $471,806 $516,167 $560,528
$1,200,000 $226,722 $340,084 $453,445 $566,806 $620,167 $673,528
</TABLE>
NOTE: The estimated benefit amounts in the preceding and following
tables are based on the straight life annuity form without
adjustment for any offset applicable to a participant's
retirement account in the ESOP.
The following table sets forth the estimated annual benefits payable under
normal retirement at age 65, assuming current remuneration levels and
participation until normal retirement at age 65, with respect to the Named
Officers under the provisions of the foregoing retirement plans:
<TABLE>
<CAPTION>
ESTIMATED
CURRENT ESTIMATED ANNUAL
CREDITED CREDITED CURRENT BENEFIT
YEARS YEARS OF COMPENSATION PAYABLE
OF SERVICE COVERED UPON
SERVICE AT AGE 65 BY PLANS RETIREMENT
------- --------- -------- ----------
<S> <C> <C> <C> <C>
Mr. Lay....................... 16 30 $990,000 $509,664
Mr. Kinder.................... 13 29 660,044 329,799
Mr. Burns..................... 19 43 445,000 280,178
Mr. Segner.................... 5 30 350,000 176,398
Mr. Gray...................... 5 29 350,000 171,821
</TABLE>
Enron's Severance Pay Plan, as amended, provides for the payment of
benefits to employees who are terminated for failing to meet performance
objectives or standards, or who are terminated due to
18
<PAGE> 21
reorganization or economic factors. The amount of benefits payable for
performance related terminations is based on length of service and may not
exceed six weeks' pay. For those terminated as the result of reorganization or
economic circumstances, the benefit is based on length of service and amount of
pay up to a maximum payment of 26 weeks of base pay. If the employee signs a
Waiver and Release of Claims Agreement, the severance pay benefits are doubled.
In the event of an unapproved change of control of Enron, any employee who is
involuntarily terminated within two years following the change of control will
be eligible for severance benefits which will be determined according to a
formula including factors for length of service, amount of base pay and annual
incentive award opportunity under the Annual Incentive Plan.
All of the Named Officers participate in the Executive Supplemental
Survivor Benefit Plan. In the event of death after retirement, the Plan provides
an annual benefit to the participant's beneficiary equal to 50 percent of the
participant's annual base salary at retirement, paid for 10 years. The Plan also
provides that in the event of death before retirement, the participant's
beneficiary receives an annual benefit equal to 30% of the participant's annual
base salary at death, paid for the life of the participant's spouse (but for no
more than 20 years in some cases). Messrs. Lay and Kinder have also entered into
agreements with Enron which supplement benefits under Enron's retirement plans
and provide a participant who retires after reaching age 60 with annual benefit
increases of 5% for up to 13 years or until the participant's total retirement
benefit, as supplemented, equals 60% of the participant's annual base salary at
retirement.
EMPLOYMENT CONTRACTS
Mr. Lay entered into an employment agreement with Enron in September, 1989.
The agreement was renewed for an additional five years in February, 1994 and
provides for (i) a fixed annual salary of $990,000, and (ii) a stock option
grant of 1,200,000 shares of Common Stock pursuant to the Enron Corp. 1991 Stock
Plan. Mr. Lay has the option to terminate the agreement as of February 8, 1997.
Mr. Kinder entered into an employment agreement with Enron in September,
1989. The agreement was renewed for an additional five years in February, 1994
and provides for (i) a minimum annual salary of $660,000, and (ii) a stock
option grant of 1,000,000 shares of Common Stock pursuant to the Enron Corp.
1991 Stock Plan. Mr. Kinder has the option to terminate the agreement as of
February 8, 1997.
The stock option grants to Messrs. Lay and Kinder provided pursuant to the
1991 Stock Plan in the above described employment agreements vest 20% on the
date of grant and 80% after 6 years and 10 months from the date of grant.
However, if 15% annual earnings per share growth targets are achieved, the
options granted under the 1991 Stock Plan vest 20% on the date of grant and the
remaining vest 33 1/3% on each of the first, second and third anniversaries from
the date of grant. If Mr. Lay or Mr. Kinder leaves Enron prior to full vesting
of the options granted under the 1991 Stock Plan, then no further vesting will
occur, but all vested options will be exercisable through February 7, 2001.
Pursuant to the terms of his original 1989 employment agreement, Mr. Lay
received an advance of $5 million to be used to purchase shares of Common Stock
(which shares are pledged as collateral) and a loan commitment of $2.5 million.
Pursuant to the terms of his original 1989 employment agreement, Mr. Kinder
received an advance of $3 million to be used to purchase shares of Common Stock
(which shares are pledged as collateral) and a loan commitment of $1.5 million.
Messrs. Lay and Kinder each
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received the full principal amounts of their respective advances and loans in
1989. During 1993, the balance of Mr. Lay's advance remained at $4,999,975.
During 1993, the highest amount of Mr. Lay's outstanding loan balance was
$2,500,000. As of February 28, 1994, the balance on such loan was $2,150,000.
During 1993, the balance of Mr. Kinder's advance and loan remained at $1,553,086
and $1,500,000 respectively. The advances and loans bear interest (during 1993,
at an average annual rate of 5.36%) and are collateralized with Common Stock and
personal property. Mr. Lay paid Enron $384,950 as interest in 1993 pursuant to
his advance and loan agreements. Mr. Kinder paid Enron $80,548 as interest in
1993 pursuant to his loan agreement. Interest in the amount of $83,129 accrued
in 1993 on Mr. Kinder's advance, of which Mr. Kinder paid Enron $81,832. Unpaid
interest continues to accrue and is payable on or before February 8, 1999. The
loans and advances mature on February 8, 1999, and if the shares of Common Stock
pledged as collateral for the advances are insufficient to cover the amount of
the advance and accrued interest outstanding, then Messrs. Lay and Kinder are
liable for up to one-third of the advance as well as unpaid interest. In the
event of either Mr. Lay's or Mr. Kinder's death or permanent disability, his
obligation to repay the advance is forgiven. Under the terms of the advances,
Messrs. Lay and Kinder are also entitled to receive payments to equalize the
increased value and dividends that would have been realized based on the number
of shares of Common Stock they agreed to buy at a fixed price of $50 per share
and the number of shares they were actually able to buy in the open market at
varying prices above $50. Under the terms of Mr. Lay's renewed agreement, within
30 days of execution of the agreement, Mr. Lay will repay all outstanding
advances and loans, including principal and interest. Mr. Lay will then be
provided with a new non-collateralized, interest bearing line of credit in an
aggregate amount not to exceed $4 million at any time. Mr. Kinder's renewed
agreement also provides that, as of February 8, 1997, if mutually satisfactory
terms pertaining to his future employment with Enron have not been agreed to by
Mr. Kinder and Enron, then the outstanding principal and interest balances of
his loan and advance will be forgiven. Enron has purchased insurance on Messrs.
Lay and Kinder, with Enron as the owner and beneficiary, which policies will
allow Enron to recover any outstanding advances in the event of the death or
permanent disability of Mr. Lay or Mr. Kinder.
If severance remuneration payable under the agreements is held to
constitute "excess parachute payments" and Messrs. Lay or Kinder become liable
for any tax penalties imposed thereon, Enron will make a cash payment to them in
an amount equal to the tax penalties plus an amount equal to any additional tax
for which they will be liable as a result of their receipt of the payment for
such tax penalties and payment for such reimbursement for additional tax.
Messrs. Lay and Kinder have agreed to noncompete provisions until the end of the
term of their employment agreements if they are involuntarily terminated and for
two years from the date of any other termination of their employment.
Mr. Burns entered into an employment agreement with Enron in July, 1989,
which, as amended, provides for a minimum annual salary of $245,000, and
contains a loan commitment provision which allows Mr. Burns to borrow up to an
aggregate of $1,000,000 from Enron. Mr. Burns received the full principal amount
of his loan in August, 1991. The loan bears interest (during 1993, at an average
annual rate of 5.36%) and is collateralized with pledged personal properties.
Mr. Burns paid $75,000 as interest in 1993 pursuant to his loan agreement. In
the event of his involuntary termination, he will receive amounts prescribed in
such agreement through the term of the agreement, which expires on August 31,
1996. The employment agreement contains noncompete provisions in the event of
Mr. Burns' termination of employment.
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<PAGE> 23
Mr. Segner entered into an employment agreement with Enron in October,
1991, which, as amended, provides for a minimum annual salary of $230,000. In
the event of his involuntary termination, he will receive amounts prescribed in
such agreement through the term of the agreement, which expires on September 30,
1996. The employment agreement contains noncompete provisions in the event of
Mr. Segner's termination of employment.
Mr. Gray entered into an employment agreement with Enron in July, 1993,
which provides for a minimum annual salary of $350,000. It also includes the
following provisions: (i) The potential to receive 65,800 shares of restricted
stock, contingent upon Enron International meeting the Board approved earnings
target for the previous calendar year, according to the following grant
schedule: in February 1994, 9,400 shares if 1993 earnings target met; in
February 1995, 18,800 shares if 1994 earnings target met; in February 1996,
18,800 shares if 1995 earnings target met; and in December 1996, 18,800 shares
if 1996 earnings target met. If a grant is not made because the previous year's
earnings target was missed, the grant can be made in a following February if the
earnings target for the year is exceeded by at least the amount of the underage
from a previous year. All shares will vest on December 31, 1996. If the value of
the 65,800 shares, including accrued dividends, is less than $3,000,000 on
December 31, 1996, the difference (prorated for shares not granted) will be made
up by Enron. (ii) A grant of 128,000 stock options with a 10 year term vesting
100% eight years from date of grant. Vesting may be accelerated under the
following schedule: in February 1994, one-seventh if 1993 earnings target met;
in February 1995, two-sevenths if 1994 earnings target met; in February 1996,
two-sevenths if 1995 earnings target met; in December, 1996, two-sevenths if
1996 earnings target met. Vesting of stock options has the same carry back
provision, relative to missed earning targets as the restricted shares. (iii) No
performance unit grants will be made during the term of the agreement. (iv)
Payment of annual bonuses during the term of the agreement are at the sole
discretion of the Compensation Committee. In the event of his involuntary
termination, he will receive amounts prescribed in such agreement through the
term of the agreement, which expires on December 31, 1996. The employment
agreement contains noncompete provisions in the event of Mr. Gray's termination
of employment.
CERTAIN TRANSACTIONS
During 1993, Enron paid Walker/Free Associates, of which Dr. Walker is
Chairman, approximately $31,146 in fees relating to governmental relations and
tax consulting. The services to be performed by Walker/Free Associates pursuant
to its consulting arrangement do not include, and are in addition to, Mr.
Walker's duties as a director of Enron, and the above compensation is in
addition to the remuneration payable to Mr. Walker as a member of the Board of
Directors.
Effective August 1, 1991, Enron, Enron Power Corp. (a wholly owned
subsidiary of Enron) and John A. Urquhart entered into a Consulting Services
Agreement which, as amended, extends through July 31, 1994. Pursuant to the
terms of the agreement, Mr. Urquhart serves as Vice Chairman of the Board of
Enron and consults with Enron and Enron Power Corp. regarding the development
and implementation of an integrated strategic international business plan. The
agreement contains a retainer fee of $37,500 per month for providing up to 120
days consulting services annually. To the extent that consulting services exceed
120 days, Enron and/or Enron Power Corp. will pay Mr. Urquhart a daily rate of
$3,750. Enron and/or Enron Power Corp. also pays for all reasonable out-
of-pocket expenses incurred by Mr. Urquhart under the agreement. In addition,
prior to the amendment described below, Mr. Urquhart was entitled to receive the
following incentive compensa-
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tion: (i) 84,000 Enron Corp. phantom shares valued at $15.25 per share, (ii) a
$300,000 consulting services completion bonus, payable upon the earlier of July
31, 1995, or the date no phantom units remain exercisable, reduced by all
phantom unit payments received, and (iii) a grant of phantom equity of .1% in
Enron Power Corp., pursuant to the provisions of the Enron Power Corp. Executive
Compensation Plan, which shall vest at the end of the term of the Consulting
Services Agreement. The Consulting Services Agreement was amended in February
1993 to replace the .1% phantom equity in Enron Power Corp. with 92,000 phantom
shares in Enron at a grant price of $28.125. Upon exercise of phantom shares,
Mr. Urquhart will receive the difference between the grant price and the fair
market value of a phantom share on the date of exercise, defined as the closing
price for one share of Enron Common Stock, times the number of phantom shares
exercised. The phantom shares will vest 100% one year from date of grant and
will expire on August 1, 1995. In return for waiving his phantom equity, Mr.
Urquhart will receive cash payments totalling $1,160,000, one-third of which was
paid upon execution of the amendment and an additional one-third of which will
be paid on each of the first and second anniversaries of execution. If at the
end of July, 1994, the average number of days which Mr. Urquhart provided
services for each twelve-month period exceeds 135 days, then Enron and/or Enron
Power Corp. in its sole discretion shall review the compensation arrangement and
make a determination whether to pay Mr. Urquhart a cash bonus, taking into
account the average number of days in excess of 135 and the effect they had on
the performance and economic results of Enron and Enron Power Corp. The services
to be performed by Mr. Urquhart pursuant to the Consulting Services Agreement do
not include, and are in addition to, his duties as a director of Enron, and the
above compensation is in addition to the remuneration payable to Mr. Urquhart as
a member of the Board of Directors of Enron. During 1993, Enron paid Mr.
Urquhart approximately $562,500 for services rendered under the Consulting
Services Agreement.
Jeffrey K. Skilling, an executive officer of Enron, is Co-Chairman and
Chief Executive Officer of Enron Gas Services Corp. and a member of Enron's
Management Committee. Mr. Skilling entered into a loan agreement with Enron in
August, 1990, which, as amended, provides for a loan commitment of $1,400,000.
The loan bore interest and was collateralized with pledged personal properties.
In April, 1992, Mr. Skilling received an additional loan of $100,000, which
accrued interest at an annual rate of 7%. Effective as of January 1, 1993, both
of the then-existing loans, as well as accrued interest thereon, were repaid
with the proceeds from a new nonrecourse loan in the amount of $1,606,719, which
was payable on or before January 2, 1995, and was collateralized with Enron
stock options and phantom equity in Enron Gas Services Corp. Interest in the
amount of $34,818 accrued on the new loan during 1993. The new loan, as well as
accrued interest thereon, was repaid in full on July 1, 1993.
Section 16(a) of the Securities Exchange Act of 1934 requires Enron's
executive officers and directors, and persons who own more than 10% of a
registered class of Enron's equity securities, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Based solely
on its review of the copies of such reports received by it, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Enron believes that during 1993, its executive officers,
directors and greater than ten percent stockholders complied with all applicable
filing requirements, with the exception of the transactions described below.
In 1993, Lawrence Ruben failed to timely file three reports covering one
transaction, each related to a trust for the benefit of his nieces and nephews
for which he is co-trustee, for himself and for the trust. Mrs. Ruben did not
timely file Form 3s for three trusts for the benefit of her children covering
the acquisition in December, 1993, of shares under the will of Arthur B. Belfer.
Robert A. Belfer did
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not timely file Form 3s for three trusts for the benefit of his children
covering the acquisition in December, 1993, of shares under the will of Arthur
B. Belfer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the Compensation Committee consisted of Messrs. LeMaistre,
William A. Anders, Belfer, Duncan and Foy. On March 14, 1994, Mr. Anders
resigned from Enron's Board of Directors and all committees on which he served.
Until April, 1986, Robert Belfer was an officer of Belco Petroleum
Corporation, a wholly owned subsidiary of Enron.
During 1993 and 1994, Belco Oil & Gas Corp. ("BOGC") entered into natural
gas commodity swap agreements and option agreements with Enron Risk Management
Services Corp., a wholly owned subsidiary of Enron ("ERMS"). BOGC is wholly
owned by Mr. Belfer and members of his family. These agreements were entered
into in the ordinary course of business of ERMS, and are on terms that ERMS
believes are no less favorable than the terms of similar arrangements with third
parties. Pursuant to the terms of these agreements, BOGC has paid ERMS $92,100
with respect to 1993. The amount of future payments (as well as whether payments
are made by ERMS to BOGC or vice versa) is affected by fluctuations in energy
commodity prices.
Enron retains the law firm of Bracewell & Patterson for legal services.
During the last fiscal year, Enron and its subsidiaries paid Bracewell &
Patterson, from which Mr. Foy is a retired partner, legal fees which Enron
believes to be reasonable for the services rendered.
ITEM 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed Arthur Andersen & Co., independent public accountants, to
audit the consolidated financial statements of Enron for the year ending
December 31, 1994.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Voting Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same legal effect as a vote against this
proposal, but a broker non-vote would not be counted for purposes of determining
whether a majority had been achieved. THE BOARD OF DIRECTORS RECOMMENDS
RATIFICATION BY THE STOCKHOLDERS OF THIS APPOINTMENT.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
Arthur Andersen & Co. is expected to be present at the Annual Meeting of
Stockholders on May 3, 1994, will be offered the opportunity to make a statement
if such representative desires to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
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ITEM 3.
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE DIVIDEND RATE ON THE $10.50 CUMULATIVE
SECOND PREFERRED CONVERTIBLE STOCK
The Board of Directors of Enron desires to amend the Restated Certificate
of Incorporation to change to a variable rate the dividend characteristics of
the $10.50 Cumulative Second Preferred Convertible Stock (the "Preferred
Stock"). At the 1994 Annual Meeting of Stockholders, there will be submitted for
stockholder approval the resolution described below that would amend Enron's
Restated Certificate of Incorporation by amending Paragraph (A) and Paragraph
(B) of the resolution of the Board of Directors set forth in the Certificate of
Designation of the Preferred Stock (the "Charter Amendment").
Stockholder approval of the following resolutions is necessary in order to
effect the Charter Amendment:
RESOLVED, that the Restated Certificate of Incorporation of the
Company is hereby amended by amending Paragraph (A) and Paragraph (B)
of the resolutions of the Board of Directors set forth in the
Certificate of Designation of the $10.50 Cumulative Preferred
Convertible Stock to read in their entirety as follows:
(A) The distinctive designation of the Second Preferred
Convertible Series shall be "Cumulative Second Preferred
Convertible Stock"; the number of shares which shall constitute the
Second Preferred Convertible Series shall be 2,400,000 shares; and
such number shall not be increased.
(B) The annual rate of dividends payable on shares of the
Cumulative Second Preferred Convertible Series shall be a variable
amount equal to the higher of $10.50 per share or the equivalent
dividend that would be paid if shares of the Cumulative Second
Preferred Convertible Series were converted to Common Stock and the
date from which dividends shall be cumulative and shall accrue on
all shares of the Cumulative Second Preferred Convertible Series
shall be the Effective Time of the Merger, as such terms are
defined in the Agreement and Plan of Merger, dated as of April 12,
1983 among the Corporation, I N Holdings, Inc. and Belco Petroleum
Corporation.
If the Charter Amendment is adopted by the required vote of stockholders,
it will become effective when the appropriate Certificate of Amendment to
Enron's Restated Certificate of Incorporation is filed with the Secretary of
State of Delaware. If the proposal is approved, Enron intends to file the
amendment as soon as possible.
REASONS FOR THE INCREASE IN THE DIVIDEND RATE ON THE PREFERRED STOCK
The new dividend policy would provide that holders of the Preferred Stock
receive the higher of $10.50 per share or the equivalent dividend that would be
paid if the Preferred Stock were converted into Common Stock. The Board of
Directors believes that the amendment will benefit both the holders of the
Preferred Stock and the holders of Common Stock.
Each share of Preferred Stock is currently convertible into 13.652 shares
of Common Stock. The Preferred Stock dividend of $10.50 per share equates to
$0.77 per share of dividends on this amount of Common Stock -- a $0.02 per share
dividend advantage based on the current annualized dividend rate
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<PAGE> 27
on the Common Stock. If Enron were to increase the Common Stock dividend by as
little as 3%, the holders of Preferred Stock would have an economic incentive to
convert in order to receive the higher dividend.
Unless the Charter Amendment is adopted, conversion (which is currently
fully available) would be the only option available to a holder of the Preferred
Stock that desires to realize the benefit of higher dividends. If all of the
approximately 1.5 million shares of Preferred Stock were converted, twenty
million additional shares of Common Stock would be outstanding (an 8% increase).
An increase of this magnitude in the number of shares of Common Stock
outstanding would decrease primary earnings per share by 3 to 4%. The proposed
amendment will permit holders of the Preferred Stock to receive such higher
dividends, without converting their shares, in the event the dividend rate on
the Common Stock is increased above $0.77 per share.
The Board of Directors believes that holders of the Common Stock will
benefit if the Charter Amendment is adopted because there are certain
institutional investors, including insurance companies and fixed income
investment companies, that may be subject to regulatory or contractual
restrictions that prohibit them from owning common stocks or limit the amounts
they may invest in common stocks. The Board of Directors believes that, in the
event the dividend rate on Enron Common Stock is increased above $0.77 per share
on an annualized basis, such investors may convert their Preferred Stock into
Common Stock and sell their Common Stock in the market. This would result in
selling pressure on the Common Stock that is occasioned by regulatory or
contractual requirements and is unrelated to the value of the Common Stock. The
Board of Directors believes that, although such selling pressure may be
temporary, the holders of the Common Stock will benefit from the absence of such
artificial selling pressure in the event the dividend rate is increased. The
Board of Directors believes that the Charter Amendment will permit the market
price of the Common Stock to reflect fully the benefits of any dividend
increase, without artificial selling pressure unrelated to the intrinsic value
of Common Stock.
The Board of Directors believes Enron's stock price would be positively
impacted if the Preferred Stock remained outstanding. Since the existing holders
of Preferred Stock already are entitled to benefit from increases in dividends
paid to the holders of Common Stock through their conversion rights, the Board
of Directors believes the Common Stock will not be disadvantaged by approving
this Charter Amendment. Since holders of both Preferred and Common Stock benefit
from a higher Enron stock price, it is the opinion of the Board of Directors
that it is in the best interests of both to approve the Charter Amendment.
The Board of Directors has made no decision whether to increase the
dividend rate on the Common Stock, although Enron has increased the dividend
rate on the Common Stock for three consecutive years. The Board of Directors has
in recent years addressed the question whether the dividend rate should be
changed in the fourth quarter of each year. The Charter Amendment is being
submitted at this time, however, so that the Board of Directors may consider
future dividend increases without being concerned about selling pressure in the
event the annualized dividend rate is increased above $0.77 per share on the
Common Stock.
REQUIRED VOTE AND RECOMMENDATION
The approval and adoption of the Charter Amendment requires the affirmative
vote of the holders of record at the close of business on March 7, 1994 of at
least a majority of the voting power of the
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outstanding Voting Stock. Accordingly, under Delaware law and Enron's Restated
Certificate of Incorporation and by-laws, abstentions and broker non-votes would
have the same legal effect as a vote against this proposal, even though this may
not be the intent of the person voting or giving the proxy.
The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the proposal.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
ITEM 4.
APPROVAL OF THE ENRON CORP. PERFORMANCE UNIT PLAN
Enron currently maintains the Enron Corp. Performance Unit Plan (the
"Performance Unit Plan"), the purpose of which is to advance the interests of
Enron and its subsidiaries and their stockholders by providing long-term
incentive compensation tied to increases in stockholder value to those key
executive employees who are in a position to make substantial contributions to
the long-term financial success of Enron and its subsidiaries. The following
summary description of the Performance Unit Plan is qualified in its entirety by
reference to the full text of the Plan which is attached to this Proxy Statement
as Exhibit A.
Employees of Enron and its subsidiaries who are participants in the Enron
Executive Compensation Program (currently, approximately 65 people) are eligible
to participate in the Performance Unit Plan, which is administered by the
Compensation Committee of the Board of Directors (the "Committee"). Prior to the
beginning of each calendar year, the Committee designates which eligible
employees will receive an award of Performance Units for that year, and the
number of Performance Units granted to each recipient. In no event may any
individual receive a grant of more than 3,000,000 Performance Units in a
calendar year.
A Performance Unit has a Performance Period which is four consecutive
calendar years (16 quarters) beginning with and including the calendar year in
which the Performance Unit is granted. Bookkeeping accounts are maintained for
Participants who received grants of Performance Units. Each Performance Unit
granted has an initial value of $1.00.
The payment value of a Performance Unit, referred to as the Adjusted Value
or Pro-rated Adjusted Value, as of a Valuation Date will be determined according
to the following schedule and is based on Enron's Total Shareholder Return
Ranking Position during an applicable Performance Period to the Valuation Date
compared to that of the Performance Peer Group:
<TABLE>
<CAPTION>
COMPANY'S TOTAL SHAREHOLDER ADJUSTED
RETURN RANKING POSITION VALUE
- --------------------------- --------
<S> <C>
1...................................................... $2.00
2...................................................... 1.50
3...................................................... 1.00
4...................................................... 0.75
5...................................................... 0.50
6...................................................... 0.25
7 through 12................................................ 0.00
</TABLE>
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If Enron's cumulative Total Shareholder Return percentage for the
applicable Performance Period as of a Valuation Date, does not exceed the
cumulative percentage return for 90-day U.S. Treasury Bills, the Performance
Unit will have no value regardless of Enron's Total Shareholder Return Ranking
Position.
The method to be used to calculate Total Shareholder Return and cumulative
percentage return for 90-day U.S. Treasury Bills and the determination of which
companies are to be included in the Performance Peer Group are established by
the Committee prior to the beginning of an applicable Performance Period or such
later date as permitted by the Internal Revenue Code or applicable regulations.
The Performance Peer Group is comprised of twelve companies, including Enron. If
any company in the applicable Performance Peer Group ceases to be a freestanding
publicly-held company during an applicable Performance Period, the Committee
will substitute another publicly-held company to be used for the remainder of
the Performance Period, and the Total Shareholder Return of both companies will
be combined into one Total Shareholder Return for the purpose of determining
Enron's comparative ranking for the Performance Period.
A Valuation Date occurs whenever payments with respect to Performance Units
become payable. The regular Valuation Date is the last day of the Performance
Period of a Performance Unit. A Valuation Date can occur at other times such as
termination of employment or upon the Committee's determination to make interim
benefit payments prior to the expiration of the Performance Period.
The Committee can decide to make interim benefit payments to any
Participant with respect to Performance Units granted for any particular
Performance Period. An interim benefit payment may be provided for during either
the ninth (9th) or thirteenth (13th) quarter of a Performance Period, but not
both. The interim benefit payment will be based upon the Adjusted Value of the
Performance Units credited to the Participant's Account for the applicable
Performance Period, and the amount of any such payment shall not exceed 40
percent (40%) of such Adjusted Value. The Valuation Date for determining such
Adjusted Value is the last day of the Performance Period quarter immediately
preceding the date of the interim benefit payment. Interim benefit payments will
only be made to those Participants who have remained an Employee continuously
from the date of the grant of the applicable Performance Units until the payment
date of the interim benefit payments relating to such Performance Units. The
amount of any final benefit payment to a Participant with respect to Performance
Units granted for any particular Performance Period will be reduced by the
amount of any interim benefit payment. However, if the interim benefit payment
exceeds the amount of the final benefit payment, no reimbursement by the
Participant will be required.
When benefit payments with respect to Performance Units, with the approval
of the Committee, are made at a time earlier than the end of the applicable
Performance Period because of a Participant's termination of employment due to
Retirement, Death, Disability or Involuntary Termination, such payments will be
based on the Pro-Rated Adjusted Value of the Performance Units. The Pro-Rated
Adjusted Value is the product of the Adjusted Value of a Performance Unit
multiplied by a proration factor, which is determined by dividing the number of
completed quarters during the applicable Performance Period for the Performance
Unit by the number 16. The Valuation Date for determining such payment is the
last day of the Plan Year quarter coincident with or immediately preceding the
date of such termination of employment. If a Participant voluntarily terminates
employment or if Enron terminates a Participant's employment in a Termination
for Cause, all Performance Units credited to the Participant's account are
canceled and no benefit payments are made to the Participant.
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Benefit payments for Performance Units will be made in a single sum, and
may be made in cash, Enron Common Stock, or a combination thereof as the
Committee in its sole discretion may determine. Cash payments may be deferred by
a Participant under the Enron Corp. Deferral Plan. Benefit payments under the
Performance Unit Plan will be paid from the general assets of Enron. No fund or
trust is established or maintained under the Performance Unit Plan for the
payment of benefits.
The Enron Board of Directors, or the Committee acting on behalf of the
Board, may amend or modify the Performance Unit Plan at any time as long as it
does not impair the rights of the recipient of a grant previously made without
the consent of such recipient. Also, no such amendment or modification may be
made without the approval of the stockholders of Enron that would: (i) change
the class of Eligible Employees who may be designated to receive an award of
Performance Units under the Plan; (ii) change the criteria used to determine the
Adjusted Value to a performance measure other than Total Shareholder Return;
(iii) change the schedule used to determine the Adjusted Value; (iv) increase
the maximum grant of Performance Units that any individual may receive in a Plan
Year; or (v) otherwise modify the material terms of the Plan.
Stockholder approval of the Performance Unit Plan is required if payments
from the Performance Unit Plan are to be tax deductible as performance-based
compensation under Section 162(m) of the Internal Revenue Code, enacted in 1993.
Section 162(m) generally disallows a tax deduction for compensation over $1
million paid to a Named Officer, unless it qualifies as performance-based.
Approval of the Performance Unit Plan by the stockholders of Enron is also
advisable in order for the Performance Unit Plan to comply with Rule 16b-3 under
the Exchange Act. Rule 16b-3 provides an exemption from the operation of the
"short-swing profit" recovery provisions of Section 16(b) of the Exchange Act,
with respect to qualifying employee benefit plans. In the event stockholders do
not approve the Performance Unit Plan, the plan will continue to be maintained,
but payments made on or after January 1, 1994 will not be tax deductible by
Enron for executives whose compensation exceeds $1 million.
UNITS GRANTED UNDER THE PLAN
The following units were granted under the Performance Unit Plan in 1994:
<TABLE>
<CAPTION>
NUMBER
NAME OF UNITS(1)
---- -----------
<S> <C>
Kenneth L. Lay................................................ 756,000
Richard D. Kinder............................................. 501,000
Ronald J. Burns............................................... 225,000
Edmund P. Segner, III......................................... 225,000
Rodney L. Gray................................................ 0
All Executive Officers........................................ 2,587,000
All Non-Employee Directors.................................... 0
All Non-Executive Officer Employees........................... 2,312,500
</TABLE>
- ---------------
(1) Performance units shown were granted at $1. The payout value is not
determinable until the end of a 4-year performance period, but ranges from
$0 to $2 per unit.
28
<PAGE> 31
REQUIRED VOTE AND RECOMMENDATION
The approval of the Performance Unit Plan shall be effective upon receiving
the affirmative vote of the holders of a majority of the Voting Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same legal effect as a vote against this
proposal, but a broker non-vote would not be counted for purposes of determining
whether a majority had been achieved.
The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the approval of the Enron Corp. Performance Unit Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
ITEM 5.
APPROVAL OF THE ENRON CORP. ANNUAL INCENTIVE PLAN
Enron currently maintains the Enron Corp. Annual Incentive Plan (the
"Annual Incentive Plan") which is designed to recognize, motivate and reward
exceptional accomplishment toward annual corporation objectives; to attract and
retain quality employees; and to be market competitive. The following summary
description of the Annual Incentive Plan is qualified in its entirety by
reference to the full text of the Plan which is attached to this Proxy Statement
as Exhibit B.
Employees of Enron and its subsidiaries are eligible to receive awards
under the Annual Incentive Plan, which will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Annually, before January
1 of each calendar year for which awards will be paid, or such later date as
permitted under the Internal Revenue Code or applicable regulations, the
Committee will establish an award fund, expressed as a percent of after-tax net
income of Enron, for each calendar year. For 1994, the award fund must be
established by the Committee prior to April 1, 1994. Depending on facts and
circumstances, the Committee has the discretion to reduce the amount of an award
fund previously established. The Committee may not increase the amount of the
award fund.
The maximum amount of compensation that can be paid to any individual for a
calendar year is one-half of one percent (.5%) of the after-tax net income of
Enron for such calendar year.
Awards payable under the Annual Incentive Plan will be paid from the
general assets of Enron. No fund or trust is established or maintained under the
Annual Incentive Plan for the payment of such awards. Enron may elect to pay
awards in cash or other property having equivalent value, including shares of
Enron Common Stock.
The Committee may modify or terminate the Plan at any time without prior
notice to or consent of employees; provided that, without the approval of the
stockholders of Enron, no such amendment shall be made that would change the
class of employees eligible to receive awards under the Plan, base the award
fund on a performance measure other than after-tax net income, increase the
maximum individual target award level under the Plan, or modify any other
material terms of the Plan.
Stockholder approval is required if payments from the Annual Incentive Plan
are to be tax deductible as performance-based compensation under Section 162(m)
of the Internal Revenue Code, enacted in 1993. Section 162(m) generally
disallows a tax deduction for compensation over $1 million
29
<PAGE> 32
paid to a Named Officer, unless it qualifies as performance-based. Approval of
the Annual Incentive Plan by the stockholders of Enron is also advisable in
order for the Annual Incentive Plan to comply with Rule 16b-3 under the Exchange
Act. Rule 16b-3 provides an exemption from the operation of the "short-swing
profit" recovery provisions of Section 16(b) of the Exchange Act, with respect
to qualifying employee benefit plans. In the event stockholders do not approve
the Annual Incentive Plan, the plan will continue to be maintained, but payments
made on or after January 1, 1994 will not be tax deductible by Enron for
executives whose compensation exceeds $1 million and payments made in Common
Stock, if any, would not be exempt under Rule 16-b3.
AMOUNTS GRANTED UNDER THE PLAN FOR 1993
The benefits to be received for 1994 performance under the Annual Incentive
Plan are not determinable, since funding will be based on 1994 after-tax net
income. However, actual payments under the Annual Incentive Plan made in 1994
for 1993 performance are shown below. The maximum payout that could have been
paid to any individual, based on .5% of 1993 after-tax net income was
$1,932,500.
<TABLE>
<CAPTION>
ANNUAL
INCENTIVE
PLAN
NAME PAYMENTS
---- -----------
<S> <C>
Kenneth L. Lay....................................................... $ 1,040,000
Richard D. Kinder.................................................... $ 720,000
Ronald J. Burns...................................................... $ 320,000
Edmund P. Segner, III................................................ $ 260,000
Rodney L. Gray....................................................... $ 260,000
All Executive Officers............................................... $ 3,565,600
All Non-Employee Directors........................................... $ 0
All Non-Executive Officer Employees.................................. $20,934,400
</TABLE>
REQUIRED VOTE AND RECOMMENDATION
The approval of the Annual Incentive Plan shall be effective upon receiving
the affirmative vote of the holders of a majority of the Voting Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same legal effect as a vote against this
proposal, but a broker non-vote would not be counted for purposes of determining
whether a majority had been achieved.
The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the approval of the Enron Corp. Annual Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
30
<PAGE> 33
ITEM 6.
APPROVAL OF AN AMENDMENT TO THE ENRON CORP. 1991 STOCK PLAN
The stockholders approved the Enron Corp. 1991 Stock Plan at the 1991
Annual Meeting. The 1991 Stock Plan is intended to provide individual
participants with an opportunity to acquire a proprietary interest in Enron and
give them an additional incentive to use their best efforts for Enron's
long-term success. The 1991 Stock Plan permits the granting of (i) stock
options, including incentive stock options meeting the requirements of Section
422 of the Internal Revenue Code and stock options with a grant price that is
discounted from the fair market value to be used only in lieu of cash bonus
payments, (ii) stock appreciation rights ("SAR's") and (iii) restricted stock,
any of which may be granted separately or together. Grants may be made to any
employee, officer or employee-director of Enron or its affiliates as well as to
individuals who are non-employee directors of Enron or an affiliate. The 1991
Stock Plan is administered by the Compensation Committee of the Board of
Directors, which has the authority to establish administrative rules, to
designate individuals to receive awards and the size of such awards, and to set
the terms and conditions of awards.
Stock options permit the recipient to purchase shares of Enron Common
Stock, commonly referred to as exercising their option, at a fixed price,
determined on the date of grant, regardless of the fair market value on the date
of exercise. The holder of an SAR is entitled to receive the excess of the fair
market value on the date of exercise over the grant price of the SAR. Restricted
stock may provide the recipient all of the rights of an Enron stockholder,
including the right to vote the shares and receive any dividends, however the
stock may not be transferred by the recipient until certain restrictions, such
as time, lapse.
The Board of Directors of Enron desires to amend the 1991 Stock Plan to
increase the number of shares authorized for granting awards under the plan,
which requires stockholder approval. Amendment of several provisions is also
required so that certain awards under the plan will qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code. The following
summary description of the proposed amendment to the 1991 Stock Plan is
qualified in its entirety by reference to the full text of the Amendment which
is attached to this Proxy Statement as Exhibit C.
CHANGES TO THE 1991 STOCK PLAN
Among the changes effected by the proposed amendment to the 1991 Stock
Plan, is an increase, effective May 3, 1994, in the number of shares of Enron
Common Stock available for granting Awards. The number of shares authorized for
granting Awards when the Plan was first approved in 1991 was 11,000,000 shares
(2,750,000 shares adjusted for stock splits in December, 1991 and August, 1993),
with no more than 25% being granted as restricted stock. Less than 1,500,000
remain available for grant. The proposed amendment will increase the total
shares available for grant to 10,000,000 shares of Enron Common Stock effective
May 3, 1994, with no more than 25% being granted as restricted stock.
The proposed amendment places a limit of 1,000,000 shares on the number of
options or stock appreciation rights that can be granted to any individual in a
calendar year. The purchase price of an Option will not be less than the fair
market value of a share on the date of grant. The proposed amendment would also
permit grants of performance-based restricted stock which is either issued or
becomes vested based on the attainment of pre-established net income and/or cash
flow criteria or is issued in lieu of cash payments under the Enron Corp. Annual
Incentive Plan or Enron Corp. Performance Unit Plan, based on attainment of the
performance criteria established under those plans.
31
<PAGE> 34
A maximum of 100,000 shares of performance-based restricted stock can be granted
to any individual in a calendar year. The proposed amendment would permit grants
of Awards to non-employee contractors performing services for Enron or its
affiliates. Discounted options in lieu of cash bonus payments will no longer be
permitted, and provisions of the 1991 Stock Plan pertaining to discounted
options are being revised or deleted as appropriate.
The proposed amendment authorizes the Board of Directors of Enron to amend
the 1991 Stock Plan, without stockholder approval, to authorize additional
shares of Enron Common Stock for granting Awards in lieu of other compensation
or benefits, such as cash bonus payments or Enron contributions to the Enron
Corp. Savings Plan, to persons who are not subject to the short swing profit
prohibitions of Section 16(b) of the Exchange Act. The Board of Directors cannot
authorize additional shares for granting Awards to persons who are subject to
Section 16 of the Exchange Act, increase the maximum number of options or
restricted stock that may be granted to any individual in any calendar year or
modify the material terms of the 1991 Stock Plan, without obtaining stockholder
approval.
Approval of the amendment to the 1991 Stock Plan by the stockholders of
Enron is required in order for the 1991 Stock Plan to continue to comply with
Rule 16b-3 under the Exchange Act. Rule 16b-3 provides an exemption from the
operation of the "short-swing profit" recovery provisions of Section 16(b) of
the Exchange Act, with respect to acquisition of stock options, transactions
relating to certain stock appreciation rights, restricted stock grants, and the
use of already owned shares as payment for the exercise price of stock options.
Stockholder approval of the amendment is also required so that certain awards
under the Plan will qualify as performance-based compensation under Section
162(m) of the Internal Revenue Code.
AWARDS UNDER THE PROPOSED AMENDMENT
Benefits payable or amounts that will be granted after the effective date
of the proposed amendment to the 1991 Stock Plan are not determinable at this
time.
REQUIRED VOTE AND RECOMMENDATION
The approval of the amendment to the 1991 Enron Corp. Stock Plan shall be
effective upon receiving the affirmative vote of the holders of a majority of
the Voting Stock present or represented by proxy and entitled to vote at the
Annual Meeting. Under Delaware law, an abstention would have the same legal
effect as a vote against this proposal, but a broker non-vote would not be
counted for purposes of determining whether a majority had been achieved.
The shares represented by the proxies solicited by the Board of Directors
will be voted as directed on the form of proxy or, if no direction is indicated,
will be voted "FOR" the approval of the amendment to the 1991 Enron Corp. Stock
Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
32
<PAGE> 35
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders may propose matters to be presented at stockholders' meetings
and may also nominate persons to be Directors. Formal procedures have been
established for those proposals and nominations.
PROPOSALS FOR 1995 ANNUAL MEETING
Pursuant to various rules promulgated by the SEC, any proposals of holders
of Voting Stock of Enron intended to be presented to the Annual Meeting of
Stockholders of Enron to be held in 1995 must be received by Enron, addressed to
Peggy B. Menchaca, Vice President and Secretary, 1400 Smith Street, Houston,
Texas 77002, no later than November 25, 1994, to be included in the Enron proxy
statement and form of proxy relating to that meeting.
In addition to the SEC rules described in the preceding paragraph, Enron's
by-laws provide that for business to be properly brought before the Annual
Meeting of Stockholders, it must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise brought before the meeting by or at the direction of
the Board of Directors or (c) otherwise properly brought before the meeting by a
stockholder of Enron who is a stockholder of record at the time of giving of
notice hereinafter provided for, who shall be entitled to vote at such meeting
and who complies with the following notice procedures. In addition to any other
applicable requirements, for business to be brought before an annual meeting by
a stockholder of Enron, the stockholder must have given timely notice in writing
of the business to be brought before an Annual Meeting of Stockholders of Enron
to the Secretary of Enron. TO BE TIMELY, A STOCKHOLDER'S NOTICE MUST BE
DELIVERED TO OR MAILED AND RECEIVED AT ENRON'S PRINCIPAL EXECUTIVE OFFICES, 1400
SMITH STREET, HOUSTON, TEXAS 77002, ON OR BEFORE FEBRUARY 2, 1995. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on Enron's books, of the stockholder proposing such business,
(iii) the acquisition date, the class and the number of shares of Voting Stock
of Enron which are owned beneficially by the stockholder, (iv) any material
interest of the stockholder in such business and (v) a representation that the
stockholder intends to appear in person or by proxy at the meeting to bring the
proposed business before the meeting. Notwithstanding the foregoing by-law
provisions, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in the foregoing by-law provisions. Notwithstanding anything
in Enron's by-laws to the contrary, no business shall be conducted at the annual
meeting except in accordance with the procedures outlined above.
PROPOSALS FOR 1994 ANNUAL MEETING
The date for delivery to, or receipt by, Enron of any notice from a
stockholder of Enron regarding business to be brought before the 1994 Annual
Meeting of Stockholders of Enron was February 3, 1994. With respect to business
to be brought before the 1994 Annual Meeting of Stockholders, Enron has not
received any notices from its stockholders that Enron is required to include in
this proxy statement.
33
<PAGE> 36
NOMINATIONS FOR 1995 ANNUAL MEETING AND FOR ANY SPECIAL MEETINGS
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors. Nominations of persons for election
to Enron's Board of Directors may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of Enron
who is a stockholder of record at the time of giving of notice hereinafter
provided for, who shall be entitled to vote for the election of directors at the
meeting and who complies with the following notice procedures. Such nominations,
other than those made by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the Secretary of Enron. TO BE
TIMELY, A STOCKHOLDER'S NOTICE SHALL BE DELIVERED TO OR MAILED AND RECEIVED AT
ENRON'S PRINCIPAL EXECUTIVE OFFICES, 1400 SMITH STREET, HOUSTON, TEXAS 77002,
(I) WITH RESPECT TO AN ELECTION TO BE HELD AT THE ANNUAL MEETING OF STOCKHOLDERS
OF ENRON, OR BEFORE FEBRUARY 2, 1995, AND (II) WITH RESPECT TO AN ELECTION TO BE
HELD AT A SPECIAL MEETING OF STOCKHOLDERS OF ENRON FOR THE ELECTION OF
DIRECTORS, NOT LATER THAN THE CLOSE OF BUSINESS ON THE 10TH DAY FOLLOWING THE
DATE ON WHICH NOTICE OF THE DATE OF THE MEETING WAS MAILED OR PUBLIC DISCLOSURE
OF THE DATE OF THE MEETING WAS MADE, WHICHEVER FIRST OCCURS. Such stockholder's
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, all
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors, or is otherwise required,
pursuant to Regulation 14A under the Exchange Act (including the written consent
of such person to be named in the proxy statement as a nominee and to serve as a
director if elected); and (b) as to the stockholder giving the notice, (i) the
name and address, as they appear on Enron's books, of such stockholder, and (ii)
the class and number of shares of capital stock of Enron which are beneficially
owned by the stockholder. In the event a person is validly designated as nominee
to the Board and shall thereafter become unable or unwilling to stand for
election to the Board of Directors, the Board of Directors or the stockholder
who proposed such nominee, as the case may be, may designate a substitute
nominee. Notwithstanding the foregoing by-law provisions, a stockholder shall
also comply with all applicable requirements of the Exchange Act and the rules
and regulations thereunder with respect to the matters set forth in the
foregoing by-law provisions.
NOMINATIONS FOR 1994 ANNUAL MEETING
The date for delivery to, or receipt by, Enron of any notice from a
stockholder of Enron regarding nominations for directors to be elected at the
1994 Annual Meeting of Stockholders of Enron was February 3, 1994. Enron has not
received any notices from its stockholders regarding nominations for directors
to be elected at the 1994 Annual Meeting of Stockholders.
GENERAL
As of the date of this proxy statement, the management of Enron has no
knowledge of any business to be presented for consideration at the meeting other
than that described above. If any other business should properly come before the
meeting, it is intended that the shares represented by proxies will be voted
with respect thereto in accordance with the judgment of the persons named in
such proxies.
The cost of any solicitation of proxies will be borne by Enron. In addition
to solicitation by use of the mails, certain officers and regular employees of
Enron may solicit the return of proxies by telephone, telegraph or personal
interview. Arrangements may also be made with brokerage firms and
34
<PAGE> 37
other custodians, nominees and fiduciaries for the forwarding of material to and
solicitation of proxies from the beneficial owners of Voting Stock held of
record by such persons, and Enron will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out of pocket expenses
incurred by them in connection therewith. In addition, Enron has retained a
proxy soliciting firm, Corporate Investor Communications, Inc., to assist in the
solicitation of proxies other than with respect to Item 3 and will pay a fee of
approximately $6,000.00 plus reimbursement of expenses.
By Order of the Board of Directors
PEGGY B. MENCHACA
Vice President and Secretary
Houston, Texas
March 25, 1994
35
<PAGE> 38
EXHIBIT A
ENRON CORP. PERFORMANCE UNIT PLAN
I. PURPOSE
Enron Corp. ("Company") hereby establishes a performance unit plan for key
executive employees of the Company and its participating Subsidiaries, which
plan as amended from time to time shall be known as the "Enron Corp. Performance
Unit Plan" ("Plan"). The purpose of the Plan is to advance the interests of the
Company, its subsidiaries and their stockholders by providing long-term
incentive compensation tied to increases in shareholder value to those key
executive employees of the Company who are in a position to make substantial
contributions to the long-term financial success of the Company and its
Subsidiaries.
II. DEFINITIONS
Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise expressly provided:
A:. "Account" means the separate account maintained with respect to
each Participant.
B. "Adjusted Value" means the dollar amount value of Performance Units
determined as of a Valuation Date.
C. "Beneficiary" means the person, persons, trust or other entity
designated by a Participant.
D. "Board" means the Board of Directors of the Company.
E. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
F. "Committee" means the Compensation Committee of the Board, which
Committee is responsible for the administration of the Plan.
G. "Eligible Employee" means an Employee of the Company or its
Subsidiaries who is a participant in the Enron Executive Compensation
Program.
H. "Employee" means any individual who is employed by the Company or a
Subsidiary.
I. "Employer" means the Company or Subsidiary adopting the Plan.
J. "Participant" means an Eligible Employee who has received a grant
of Performance Units under the Plan.
K. "Performance Peer Group" means those publicly-held companies (as
hereinafter defined) against which the Company's common stock performace
during the Performance Period is ranked to determine the Adjusted Value of
Performance Units under the Plan.
L. "Performance Period" means a period of four consecutive Plan Years
with respect to which Performance Units are granted to Eligible Employees.
A separate Performance Period shall begin as of the first day of each Plan
Year. Each Performance Period shall consist of sixteen (16) quarterly
periods of three calendar months each.
<PAGE> 39
M. "Performance Unit" means a unit of long-term incentive compensation
granted to an Eligible Employee with respect to a particular Performance
Period.
N. "Plan Year" means a consecutive twelve (12) month period beginning
January 1 and ending December 31.
O. "Pro-Rated Adjusted Value" means the dollar amount value of
Performance Units determined as of a Valuation Date which is earlier than
the end of a Performance Period.
P. "Subsidiary" means a corporation or non-corporate entity affiliated
with the Company which the Committee determines to be eligible to adopt the
Plan.
Q. "Total Shareholder Return" means the sum of the appreciation or
depreciation in the price of a share of a company's common stock and the
dividends paid, expressed on a percentage basis, as calculated in a manner
determined by the Committee.
R. "Total Shareholder Return Ranking Position" means the relative
placement of the Company's common stock performance compared to the other
companies in the Performance Peer Group, with a ranking of first (1st)
corresponding to the company with the highest Total Shareholder Return.
S. "Valuation Date" means the date as of which the Adjusted Value or
Pro-Rated Adjusted Value of Performance Units are determined.
III. PARTICIPANTS
A. Designation. The designation of which "Eligible Employees" are to
receive an award of Performance Units under the Plan shall be made with respect
to each separate Plan Year, and shall be determined as follows:
1. In December prior to the beginning of each Plan Year, the Office of
the Chairman of the Company shall present a nomination list to the
Committee of those Eligible Employees (if any) recommended to the Committee
for consideration as recipients of Performance Unit awards for the Plan
Year.
2. After giving due consideration to the nomination list described
above, the Committee, in its sole discretion, shall designate, prior to the
beginning of each Plan Year, which of the Eligible Employees will receive
an award of Performance Units for the subject Plan Year. The Eligible
Employees so designated by the Committee for the subject Plan Year may
include any, all or none of the Eligible Employees included on such
nomination list, and may also include such other Eligible Employees as the
Committee shall deem appropriate.
All such determinations and designations by the Committee shall be final
and binding on all Employees. The Committee shall provide each designated
Eligible Employee for a Plan Year with a written notice of any Performance Units
granted to such Eligible Employee during such Plan Year. Such notice may be
given at such time and in such manner as the Committee may determine from time
to time. Such a designation shall be limited to the Plan Year for which it is
made, and shall not create any right in the Eligible Employee to be designated
as a recipient of a Performance Unit award for any subsequent Plan Year.
2
<PAGE> 40
B. Participation. Each Eligible Employee who has received a grant of
Performance Units under the Plan and has Performance Units credited to his
Account under the Plan shall be a Participant under the Plan, and shall continue
as a Participant so long as there are Performance Units credited to his Account
under the Plan.
IV. GRANT OF PERFORMANCE UNITS
The number of Performance Units to be granted to an Eligible Employee shall
be determined by the Committee in accordance with the provisions of the Plan.
Each such grant of Performance Units shall be made with respect to the
Performance Period commencing with the Plan Year during which such grant is
made, and such Performance Units shall thereafter be identified by reference to
the Plan Year in which such Performance Units are granted. For example,
Performance Units granted to a Participant for the 1994 Plan Year for the
Performance Period beginning January 1, 1994 and ending December 31, 1997, shall
be identified as 1994 Performance Units. In no case shall any Eligible Employee
receive more than 3,000,000 Performance Units in a Plan Year. All determinations
with respect to the grant of Performance Units under the Plan shall be in the
sole discretion of the Committee and shall be final and binding on all
Employees.
V. VALUATION OF PERFORMANCE UNITS
A. Participant Accounts. The Committee shall maintain, or cause to be
maintained, an Account for each Participant for the purpose of accounting for
the Participant's Performance Unit interest under the Plan. Such Account shall
reflect the Performance Units granted to the Participant under the Plan and all
adjustments to reflect charges against such Account. Since Performance Units are
granted to Participants with respect to separate Performance Periods, the
Committee shall also maintain within each Participant's Account such subaccounts
as may be necessary to identify Performance Units granted with respect to each
particular Performance Period (such as the 1994 Performance Units, the 1995
Performance Units, the 1996 Performance Units, etc. subaccounts with respect to
the applicable Performance Periods for which such Performance Units were
granted). In addition to the foregoing bookkeeping subaccounts maintained for
such Participant, the Committee may maintain, or cause to be maintained, such
other accounts, subaccounts, records or books as it deems necessary to properly
provide for the maintenance of Accounts under the Plan, and to carry out the
intent and purposes of the Plan.
B. Adjustment of Accounts. Each Participant's Account shall be adjusted to
reflect all Performance Units credited to the Participant's Account and all
payments charged to the Participant's Account. Performance Units granted to a
Participant shall be credited to the Participant's Account as of the date of the
grant of such Performance Units and shall be credited to the applicable
Performance Period subaccount within such Account to which they relate. Charges
to a Participant's Account to reflect payments with respect to Performance Units
shall be made as of the date of such payments.
C. Valuation of Performance Units. All Performance Units granted to
Participants under the Plan shall be valued as follows:
1. Initial and Continuing Value. Each Performance Unit shall have an
initial value of one dollar ($1.00) as of the date of the grant of the
Performance Unit. Except where the Adjusted Value of Performance Units is
determined as provided under Section V.C.2., each Performance
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<PAGE> 41
Unit shall continue to have a dollar value of one dollar ($1.00) on each
date subsequent to the date of the grant of the Performance Unit.
2. Adjusted Value. Sections VI.A.1. and VI.A.3. provide for benefit
payments to be made with respect to Performance Units under the
circumstances described in such Sections. Such payments are based on the
Adjusted Value of the Performance Units as of the Valuation Date applicable
to the subject payment. The determination of the Adjusted Value of
Performance Units for benefit payments under said Sections as of any
relevant Valuation Date shall be made based on the Company's Total
Shareholder Return Ranking Position for the applicable Performance Period
compared to the Performance Peer Group, based on the following schedule:
<TABLE>
<CAPTION>
COMPANY'S TOTAL SHAREHOLDER ADJUSTED
RETURN RANKING POSITION VALUE
--------------------------- --------
<S> <C>
1...................................................... $2.00
2...................................................... 1.50
3...................................................... 1.00
4...................................................... 0.75
5...................................................... 0.50
6...................................................... 0.25
7 through 12................................................ 0.00
</TABLE>
Notwithstanding any other provision of the Plan, in the event the
Company's cumulative Total Shareholder Return percentage does not exceed
the cumulative percentage return for 90-day U.S. Treasury Bills, a
Performance Unit will have no value regardless of the Company's Performance
Peer Group ranking.
The method to be used to calculate Total Shareholder Return and
cumulative percentage return for 90-day U.S. Treasury Bills and
determination of the companies to be included in the Performance Peer Group
shall be established by the Committee prior to the beginning of the
applicable Performance Period, or such later date as permitted under the
Code or applicable regulations. The Performance Peer Group to which the
foregoing schedule relates shall be comprised of twelve companies,
including the Company.
If any company in the applicable Performance Peer Group ceases to be a
publicly-held company, defined as having an outstanding class of common
equity securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended, during the applicable Performance Period the
Committee shall substitute another publicly-held company to be used for the
remainder of the Performance Period and shall combine the Total Shareholder
Return of both companies into one Total Shareholder Return to determine
Company's ranking for the Performance Period.
3. Pro-Rated Adjusted Value. Section VI.A.2. provides for benefit
payments to be made with respect to Performance Units under the
circumstances described in such Section. Such payments are based on the
Pro-Rated Adjusted Value of the Performance Units as of the Valuation Date
applicable to the subject payment. The Pro-Rated Adjusted Value of
Performance Units as of any relevant Valuation Date for benefit payments
under said Section shall be determined as follows:
a. The Adjusted Value of the Performance Units with respect to each
Performance Period, as provided for in Section V.C.2. above, shall be
separately determined.
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b. The "proration fraction" applicable to the Performance Units for
each such Performance Period shall be determined.
c. The Pro-Rated Adjusted Value is the product of the Adjusted
Value of the Performance Units with respect to each separate Performance
Period multiplied by the proration fraction applicable to such
Performance Units.
The "proration fraction" applicable to the Performance Units for a
particular Performance Period shall be determined by dividing the number of
"completed quarters" during such Performance Period by the number 16. For
this purpose, "completed quarters" shall be the number of elapsed quarters
from the first day of the Performance Period to the Valuation Date for
valuing such Performance Units. For example, a Participant who received a
grant of 1995 Performance Units in December, 1994 and who retires on July
31, 1997, shall have 10 "completed quarters" for the relevant Performance
Period (measured from January 1, 1995 to the Valuation Date on June 30,
1997) and a "proration fraction" of 10/16ths to be multiplied by the
Adjusted Value of the 1995 Performance Units determined as of the Valuation
Date.
D. Account Statements. The Committee shall provide each Participant with a
statement of the status of his Account under the Plan. The Committee shall
provide such statement annually or at such other times as the Committee may
determine from time to time, and such statement shall be in the format as
prescribed by the Committee.
VI. PAYMENT OF BENEFITS
Participants shall be eligible to receive benefit payments with respect to
Performance Units under the circumstances described in Section VI.A. Such
benefit payments, at the sole discretion of the Committee, may be made in cash,
Enron Corp. Common Stock or a combination of the two, and shall be made in the
form of a single payment. Benefit payments to a Participant or Beneficiary shall
be payable with respect to the Performance Units granted for each separate
Performance Period, and the benefit payment with respect to the Performance
Units for each such Performance Period shall be paid by the Employer who is the
Employer of the Participant on the date of the payment of the subject
Performance Units.
A. Eligibility for Benefit Payments. Benefit payments with respect to
Performance Units shall be paid under the following circumstances:
1. Expiration of Performance Period. Upon the expiration of each
Performance Period, all uncancelled Performance Units granted with respect
to such Performance Period shall mature and benefit payments with respect
to such Performance Units shall become payable. A Participant who has
remained an Employee continuously from the date of the grant of the
Performance Units for a Performance Period through the last day of such
Performance Period shall be eligible to receive a benefit payment equal to
the Adjusted Value, as provided for in Section V.C.2., of the Performance
Units (the "Primary Benefit") credited to his Account with respect to and
as of the close of such Performance Period. The Valuation Date for
determining such Adjusted Value shall be the last day of the applicable
Performance Period. The amount of any benefit payment payable with respect
to Performance Units shall be reduced by the amount of any interim benefit
payments made pursuant to Section VI.A.3. with respect to such Performance
Units. If the interim benefit payments exceed the Primary Benefit payment,
no payment shall be made.
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2. Certain Terminations of Employment. A Participant who has remained
an Employee continuously from the date of the grant of the Performance
Units credited to his Account until a termination of employment due to one
of the following events shall be eligible for a benefit payment with
respect to such Performance Units according to the provisions of this
subsection (2), provided the Committee approves such payment.
a. Retirement: The Participant terminates employment as an Employee
at a time when he is eligible to receive an early or normal retirement
benefit under the "Enron Corp. Retirement Plan".
b. Death: The Participant's employment terminates by reason of
death. Any benefit payable under this Plan by reason of such death shall
be paid to the Participant's Beneficiary.
c. Disability: The Participant's employment terminates by reason of
a disability which qualifies him for a disability benefit under the
"Enron Corp. Long-Term Disability Plan".
d. Involuntary Termination: The Participant's employment as an
Employee is terminated by the Company, provided that such termination is
not Termination for Cause, death or disability.
The benefit payment payable to or with respect to a Participant who
incurs a termination of employment under this Section VI.A.2. shall be
equal to the Pro-Rated Adjusted Value of the Performance Units, as provided
for in Section V.C.3., credited to the Participant's Account as of such
termination of employment. The Valuation Date for determining such
Pro-Rated Adjusted Value shall be the last day of the Plan Year quarter
coincident with or immediately preceding the date of the subject
termination of employment. The amount of any benefit payment payable with
respect to Performance Units shall be reduced by the amount of any interim
benefit payments made pursuant to Section VI.A.3. with respect to such
Performance Units.
3. Interim Benefit Payments. The Committee may in its sole discretion
provide for an interim benefit payment to be made to a Participant with
respect to Performance Units granted for any particular Performance Period.
An interim benefit payment may be provided for during either the ninth
(9th) or thirteenth (13th) quarter of a Performance Period, but not both.
The interim benefit payment shall be based upon the Adjusted Value of the
Performance Units, as provided for in Section V.C.2., credited to the
Participant's Account for the applicable Performance Period, and the amount
of any such payment shall not exceed 40 percent (40%) of such Adjusted
Value. The Valuation Date for determining such Adjusted Value shall be the
last day of the Performance Period quarter immediately preceding the date
of the interim benefit payment. Interim benefit payments shall only be made
to those Participants who have remained Employees continuously from the
date of the grant of the applicable Performance Units until the payment
date of the interim benefit payments relating to such Performance Units.
The amount of any benefit payment payable with respect to Performance Units
pursuant to Section VI.A.1. and VI.A.2. shall be reduced by the amount of
any interim benefit payment made pursuant to this Section VI.A.3.
4. Payment in the Event of Termination of the Plan. In the event of
Termination of the Plan under Section IX.C., all uncancelled Performance
Units granted to Participants shall become immediately payable as if the
Performance Period (16 quarters) had been completed, and benefit payments
will be made to Participants equal to the Adjusted Value as provided for in
Section V.C.2. In the event of Termination of the Plan by the Board, or the
Committee, under
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Section IX.B., uncancelled Performance Units will become immediately
payable, and the Board has the discretion to (a) make a benefit payment
equal to the Adjusted Value as provided for in Section V.C.2. as if the
Performance Period (16 quarters) had been completed, or (b) make a benefit
payment equal to the Pro-Rated Adjusted Value as provided for in Section
V.C.3. based on the actual Performance Period quarters completed. The
Valuation Date for determining the Adjusted Value or Pro-Rated Adjusted
Value shall be the last day of the Performance Period quarter immediately
preceding the date of the Termination of the Plan. The amount of any
benefit payment payable with respect to Performance Units shall be reduced
by the amount of any interim benefit payments made pursuant to Section
VI.A.3. with respect to such Performance Units.
B. Time of Payment. A benefit payment made to or with respect to a
Participant pursuant to the provisions of Sections VI.A.1., VI.A.2. or VI.A.4.
shall be made as soon as practicable following the date of the event giving rise
to such benefit payment. Interim benefit payments authorized by the Committee
pursuant to the provisions of Section VI.A.3. shall be made on the earliest
practicable payment date within the ninth (9th) or thirteenth (13th) quarter of
the applicable Performance Period, as the case may be.
C. Deferral of Payment. Benefit payments made in cash pursuant to the
provisions of Section VI.A. may be deferred by a Participant according to the
terms of the Enron Corp. Deferral Plan.
D. Cancellation of Performance Units. Performance Units credited to
Participants' accounts under the Plan shall be cancelled whenever they are paid.
If a Participant incurs a termination of employment for any reason other than
the events described in Section VI.A.2., including if the Company terminates a
Participant's employment in a Termination for Cause, all Performance Units
credited to the Participant's account under the Plan shall be cancelled and the
Participant shall not be entitled to receive any payment with respect thereto.
"Termination for Cause" shall mean the Company's termination of Employee's
employment because of Employee's (i) conviction of a felony relating to or in
connection with the Company or the Company's business (which, through lapse of
time or otherwise, is not subject to appeal); (ii) willful refusal without
proper legal cause to perform Employee's duties and responsibilities; (iii)
willfully engaging in conduct which Employee has reason to know is materially
injurious to the Company, its affiliates or subsidiaries; or (iv) failure to
meet the performance objectives or standards established for Employee's
position. Such termination shall be effected by notice thereof delivered by
Employee's Employer to Employee and shall be effective as of the date of such
notice; provided, however, that Employee's Employer shall consult in good faith
with Employee and provide an opportunity for Employee to be heard prior to
effecting such termination, and that failure to do so shall constitute
Involuntary Termination and not Termination for Cause.
Following the cancellation of Performance Units pursuant to this Section
VI.D., no benefit payments shall be payable with respect to such cancelled
Performance Units.
VII. ADMINISTRATION
A. Plan Administration. The Committee shall be the "plan administrator" for
the Plan and, as such, shall administer the Plan and shall have the authority to
exercise the powers and discretion conferred on it by the Plan. The Committee
shall also have such other powers and authority necessary or proper for the
administration of the Plan, as shall be determined from time to time by the
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Committee. Notwithstanding the foregoing, the day-to-day administration of the
Plan shall be handled by the Company's Vice President of Human Resources, who in
carrying out such day-to-day administrative activities shall be acting as the
Committee's delegate. The Committee may also delegate to any agent, attorney,
accountant, or other person selected by it, any power or duty vested in, imposed
upon, or granted to it under the Plan. The Committee may adopt such rules and
regulations for the administration of the Plan as it shall consider necessary
and appropriate and shall have full power and authority to enforce, construe,
interpret, and administer the Plan. All interpretations under the Plan and all
determinations of fact made in good faith by the Committee shall be final and
binding on all Employees, Participants, Beneficiaries and all other interested
persons. Only the Committee shall determine who shall be a Participant in the
Plan and make decisions concerning the timing, pricing and amount of Performance
Units granted under the Plan.
B. Notification of Eligible Employees. The Committee shall provide the
Eligible Employees with such communications or descriptions of the terms and
conditions of the Plan as it deems appropriate, or as may be required by law.
C. Finality of Determinations. All determinations of the Committee as to
any matter arising under the Plan, including questions or construction and
interpretation, shall be final, binding and conclusive upon all interested
parties.
D. Indemnification. To the extent permitted by law, Employees, the members
of the Committee, and all agents, delegates and representatives of the Committee
and Employers, shall be indemnified by the Employers, and saved harmless against
any claims, and the expenses of defending against such claims, resulting from
any of their individual action or conduct relating to the administration of the
Plan, except claims arising from gross negligence, willful neglect, or willful
misconduct.
E. Expenses of Administration. The expenses relating to the administration
of the Plan shall be paid by the Employers, and such expenses shall be allocated
among such Employers as determined by the Committee.
F. Rights of the Company to Inspect the Records of the Plan. The Company
may at its own expense at any time cause an examination of the books and records
of the Plan to be made by such attorneys, accountants, auditors, or other agents
as it shall select for that purpose, and may cause a report of such examination
to be made.
VIII. FUNDING
It is intended that the Employers are under an obligation to make the
benefit payments provided for under the Plan, if and when such payments become
due and payable to their respective Employees under the terms of the Plan. All
amounts paid under the Plan shall be paid either in cash, in stock or a
combination of the two from the general assets of the Employers. Performance
Units shall be reflected on the accounting records of the Company, as provided
for under the Plan, but such records shall not be construed to create, or
require the creation of, a trust, custodial or escrow account with respect to
any Participant. No Participant shall have any right, title or interest
whatsoever in or to any assets, investment reserves, accounts or funds that the
Employers may purchase, establish or accumulate to aid in providing the benefit
payments described in the Plan. Nothing contained in the Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
or a fiduciary relationship of any kind between the Employers and a Participant
or any other person. Participants
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and Beneficiaries shall not acquire any interest under the Plan greater than
that of an unsecured general creditor of the Employers.
IX. AMENDMENT; TERMINATION; MERGER
A. Amendment of the Plan. The Board, or the Committee acting on behalf of
the Board, may amend or modify the Plan at any time and in any manner; provided
that no change in any grant theretofore made may be made which would impair the
rights of the recipient of a grant without the consent of such recipient; and
provided further, that notwithstanding any other provision of the Plan, without
the approval of the stockholders of the Company no such amendment or alteration
shall be made that would:
1. change the class of Eligible Employees who may be designated to
receive an award of Performance Units under the Plan;
2. change the criteria used to determine the Adjusted Value to a
performance measure other than Total Shareholder Return;
3. change the schedule used to determine the Adjusted Value;
4. increase the maximum grant of Performance Units that any Eligible
Employee may receive in a Plan Year; or
5. otherwise modify the material terms of the Plan.
Amendments to the Plan shall be evidenced by a written instrument
describing such amendments and the effective date of such amendments.
B. Termination of the Plan. The Board, or the Committee acting on behalf of
the Board, may terminate the Plan at any time. Any such termination may be as to
the Plan as a whole, or as to any Employer's participation in the Plan. A Plan
termination shall be evidenced by a written instrument describing any special
provisions relating to the Plan termination and the effective date of the
termination.
C. Merger, Consolidation or Acquisition. In the event of a merger,
consolidation or acquisition where the Company is not the surviving corporation,
the Plan shall terminate at the time of such event. The Plan termination shall
be evidenced by a written instrument describing any special provisions relating
to the Plan termination and the effective date of the termination.
X. GENERAL PROVISIONS
A. Beneficiary Designation. A Participant shall be deemed to have
designated as his Beneficiary to receive any benefit payable under Section
VI.A.2.b. upon the death of the Participant, such person, persons, trust or
other entity as he has designated as a beneficiary(ies) to receive any lump sum
death benefit payment under the "Enron Corp. Employee Life Insurance Plan ("Life
Plan"). If more than one beneficiary has been designated under the Life Plan,
the benefit payments under this Plan under Section VI.A.2.b. shall be paid in
the same distributive shares among such beneficiaries as is designated under the
Life Plan. If the Participant is not covered under the Life Plan, or if he does
not have a beneficiary designation in effect under such Plan, the Participant's
Beneficiary under this Plan shall be
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his estate. If the Participant wishes to designate a different Beneficiary than
that under the Life Plan, then written notification to the Committee by the
Participant is required.
B. Nontransferability. Participants and Beneficiaries shall have no rights
by way of anticipation or otherwise to assign, transfer, pledge or otherwise
dispose of an interest under the Plan, nor shall rights be assigned or
transferred by operation of law.
C. Plan Not an Employment Contract. The Plan does not give to any person
the right to be continued in employment, and all Employees remain subject to
change of salary, transfer, change of job, discipline, layoff, discharge or any
other change of employment status.
D. Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, such provision shall not affect the remaining
parts of the Plan, but the Plan shall be construed and enforced as if the
illegal or invalid provision had never been inserted, and the Company shall have
the privilege and opportunity to correct and remedy such questions of illegality
or invalidity by amendment as provided in the Plan.
E. Withholding of Taxes. The Employers shall have the right to deduct from
all payments made under the Plan any Federal, state or local taxes required by
law to be withheld with respect to such payments.
F. Applicable Law. The Plan shall be governed and construed in accordance
with the laws of the State of Texas, except to the extent such laws are
preempted by any applicable Federal Law.
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EXHIBIT B
ENRON CORP. ANNUAL INCENTIVE PLAN
I. PURPOSE
The Annual Incentive Plan (the "Plan") is designed to recognize, motivate
and reward exceptional accomplishment toward annual corporation objectives; to
attract and retain quality employees; and to be market competitive.
II. ELIGIBILITY
All regular full-time and part-time employees ("Employees") of Enron Corp.
(the "Company") and participating subsidiaries are eligible to receive awards
under this Plan.
III. ADMINISTRATION
The plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"), which shall have the sole
discretion to interpret the plan; approve a pre-established objective
performance measure annually, certify the level to which the performance measure
was attained prior to any payment under the Plan, approve the amount of awards
made under the Plan, and determine who shall receive any payment under the Plan.
The Committee may delegate authority to officers of the Company to approve the
amount of awards made under the Plan to Employees who are not individuals whose
compensation is disclosed in the Company's proxy statement. All decisions and
determinations of the Committee on all matters relating to the Plan shall be
conclusive. Members of the Committee shall not be liable for any action taken or
decision made in good faith relating to the Plan or any award thereunder. Only
the Committee shall determine who shall receive an award under the Plan and make
decisions concerning the timing, pricing and amount of any award granted under
the Plan.
IV. AWARD FUND
An award fund, expressed as a percent of after-tax net income of the
Company, will be established annually by the Committee prior to the beginning of
the Plan year (defined as the calendar year during which the net income is
reported), or such later date as permitted under the Internal Revenue Code of
1986, as amended from time to time, or applicable regulations. For the 1994 Plan
year, the award fund must be established by the Committee prior to April 1.
Downward adjustment of the award fund shall be at the sole discretion of the
Committee. Discretionary upward adjustment of the award fund shall not be
allowed.
V. INDIVIDUAL TARGET AWARD LEVELS
For Employees whose compensation is disclosed in the Company's proxy
statement, prior to the beginning of the Plan year, or such later date as
permitted under the Internal Revenue Code of 1986, as amended from time to time,
or applicable regulations, an individual target award level, expressed as a
percent of after-tax net income, will be established by the Committee. The
maximum individual target award level that may be established under the Plan is
one-half of one percent (.5%) of the after-tax net income of the Company in any
given Plan year.
<PAGE> 49
The establishment of an individual target award level for any Employee
shall not give any Employee the right to receive any payment under this Plan.
VI. PAYMENT OF AWARDS
At the end of each Plan year, the Committee will verify the actual
after-tax net income of the Company, if any, and the resulting award fund, if
any, taking into consideration any downward adjustments that the Committee may
make at its sole discretion, prior to authorizing any payments under the Plan.
The Committee will then determine which Employees will receive payments
under the Plan, and the amount of such payments, if any.
For Employees whose compensation is required to be disclosed in the Summary
Compensation Table of the Company's proxy statement, downward adjustment of the
actual award level from the target award level may be made at the sole
discretion of the Committee. Discretionary upward adjustment of actual award
level above the target award level shall not be allowed.
For Employees whose compensation is not required to be disclosed in the
Summary Compensation Table of the Company's proxy statement, actual individual
award levels shall be determined based on an Employee's attainment of
subsidiary/individual objectives.
Payments made under this Plan may be made in cash or other property having
equivalent value, including shares of Enron Common Stock, at the sole discretion
of the Committee. Cash payments made under this Plan may be deferred according
to the terms of the Enron Corp. Deferral Plan.
VII. UNFUNDED NATURE OF PLAN
This Plan shall constitute an unfunded mechanism for the Company to pay
incentive compensation to Employees from its general assets. No fund or trust is
created with respect to the Plan, and no Employee shall have any security or
other interest in the assets of the Company.
VIII. COMPENSATION FOR BENEFIT PLAN PURPOSES
Awards made under this Plan shall not be used to determine benefit amounts
under the Company's benefit programs.
IX. PROHIBITION AGAINST ASSIGNMENT OR ENCUMBRANCE
No right, title, interest or benefit hereunder shall ever be liable for or
charged with any of the torts or obligations of an Employee, or be subject to
seizure by any creditor or an Employee or any person claiming under an Employee.
No Employee nor any person claiming under an Employee shall have the power to
sell, transfer, pledge, anticipate or dispose of any right, title, interest or
benefit hereunder in any manner until the same shall have been actually
distributed free and clear of the terms of the Plan.
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X. PLAN NOT AN EMPLOYMENT CONTRACT
The Plan does not give any Employee the right to be continued in
employment, and all Employees remain subject to change of salary, transfer,
change of job, discipline, layoff, discharge or any other change of employment
status.
XI. SEVERABILITY.
In the event any provision of the Plan shall be held invalid or illegal for
any reason, any illegality or invalidity shall not affect the remaining parts of
the Plan, but the Plan shall be construed and enforced as if the illegal or
invalid provision had never been inserted, and the Company shall have the
privilege and opportunity to correct and remedy such questions of illegality or
invalidity by amendment as provided in the Plan.
XII. WITHHOLDING OF TAXES
The Company shall have the right to deduct from any payment made under the
Plan any federal, state or local taxes required by law to be withheld with
respect to such awards.
XIII. APPLICABLE LAW
The Plan shall be governed and construed in accordance with the laws of the
State of Texas, except to the extent such laws are preempted by an applicable
federal law.
XIV. EFFECTIVE DATE OF PLAN
Upon approval by the stockholders of the Company at the 1994 Annual
Meeting, the Plan shall be considered effective as of January 1, 1994.
XV. AMENDMENT AND TERMINATION OF THE PLAN
The Committee may modify or terminate the Plan at any time without prior
notice to or consent of Employees; provided that, without the approval of the
stockholders of the Company, no such amendment shall be made that would change
the class of Employees eligible to receive awards under the Plan, base the award
fund on a performance measure other than after-tax net income, increase the
maximum individual target award level under the Plan, or modify any other
material terms of the Plan.
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EXHIBIT C
AMENDMENT TO ENRON CORP. 1991 STOCK PLAN
WHEREAS, ENRON CORP. (the "Company") and the stockholders of the Company
have heretofore approved and adopted the Enron Corp. 1991 Stock Plan (the
"Plan"); and
WHEREAS, the Company desires to amend the Plan to provide for the issuance
of additional shares of Common Stock of the Company;
NOW, THEREFORE, the Plan is amended as follows:
1. The Plan name will be changed to "ENRON CORP. 1991 STOCK PLAN (AS
AMENDED AND RESTATED EFFECTIVE MAY 3, 1994)," and the Plan shall be restated to
incorporate this and all prior amendments.
2. Under Section 3.1, "SHARES AVAILABLE," the first paragraph of Section
3.1(i) shall now read:
"Calculation of Number of Shares Available. Effective May 3, 1994, the
number of Shares available for granting Awards under the Plan shall be ten
million (10,000,000) Shares, subject to adjustment as provided in Section
3.2."
3. Under Section 4, "ELIGIBILITY," the first sentence of Section 4.1 shall
be changed to include non-employee contractors and shall now read:
"Any Employee, including any officer or employee-director of the
Company or of any Affiliate, who is not a member of the Committee, any
individual who is a Director of the Company duly elected by stockholders of
the Company or who is a member of the board of directors of an Affiliate,
who is not an Employee at the time the grant is made, and any individual
performing services for the Company as a non-employee contractor, shall be
eligible to be designated a Participant."
4. Under Section 5.1, "OPTIONS," Subsection (i) shall now read:
"(i) Exercise Price. The per Share purchase price of an Option shall
not be less than the Fair Market Value of a Share on the date of grant of
such Option and in no event less than the par value of a Share.
5. Also under Section 5.1, "OPTIONS," Subsection (v), Discounted Options,
shall be deleted and the following new Subsection (v) shall be substituted
therefor:
"(v) Limit on Size of Option Grants. No individual shall be granted
Options totalling more than 1,000,000 Shares in any single calendar year."
6. Section 5.2, "STOCK APPRECIATION RIGHTS" shall be changed to delete
references to Discounted Options and to place a limit on the size of grants, and
shall now read:
"STOCK APPRECIATION RIGHTS. Except as provided by Section 6, the
Committee is hereby authorized to grant Stock Appreciation Rights to
Participants. Each Stock Appreciation Right shall be evidenced by an Award
Agreement which shall specify the term of the Stock Appreciation Right as
well as vesting and termination provisions. Subject to the terms of the
Plan,
<PAGE> 52
a Stock Appreciation Right granted under the Plan shall confer on the
holder thereof a right to receive, upon exercise thereof, the excess of (i)
the Fair Market Value of one Share on the date of exercise over (ii) the
grant price of the right, which shall not be less than the Fair Market
Value of one Share on the date of grant of the Stock Appreciation Right and
in no event less than the par value of one Share. The Committee may impose
such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate; provided that the Committee shall retain
final authority to determine whether (a) a Participant shall be permitted,
or (b) to approve an election by a Participant, to receive cash in full or
partial settlement of Stock Appreciation Rights. No individual shall be
granted Stock Appreciation Rights totalling more than 1,000,000 Shares in
any single calendar year."
7. Under Section 5.3, "RESTRICTED STOCK," the following new Subsection (vi)
shall be added, which authorizes grants of performance-based Restricted Stock:
"(vi) Performance-Based Restricted Stock. The Committee is hereby
authorized to grant Awards of Restricted Stock which qualify as
performance-based compensation under Code Section 162(m), such that a) the
issuance is contingent upon attainment of pre-established performance
criteria; b) restrictions lapse contingent upon attainment of
pre-established performance criteria; or c) the issuance is in lieu of cash
payments under the Enron Corp. Annual Incentive Plan or the Enron Corp.
Performance Unit Plan, based upon attainment of the performance criteria
established under the terms of those stockholder approved plans. The
performance criteria to be used with such Awards shall be after-tax net
income and/or cash flow, at the Company and/or subsidiary level, as
determined at the sole discretion of the Committee. Performance criteria
will be established by the Committee prior to the beginning of each
performance period, defined as January 1 of each year, or such later date
as permitted under the Code, or applicable regulations. Notwithstanding any
other provision of the Plan, no individual shall be granted Awards of
Restricted Stock under this Section 5.3(vi) totalling more than 100,000
Shares in any single calendar year.
8. Under Section 6, "GRANTS TO NON-EMPLOYEE DIRECTORS," Section 6.2 shall
be changed to delete Election B, which permits a Non-employee Director to
receive discounted Options, and shall now read:
"6.2 A. Subject to the limitation of the total number of Shares and
Restricted Stock set forth in Section 3 and Section 5.3(ii), on July 1 of
each year, each non-employee Director, who on or prior to December 31 of
the previous year files with the Committee or its designate an irrevocable
election to receive a grant under this Section 6.2 in lieu of a portion or
all of the cash amount of the projected Retainer Fees plus meeting fees for
six (6) regular meetings of the Board of Directors, such Director will be
entitled to receive in the following year beginning January 1 and ending
December 31, as determined at the time of such election (the "Aggregate
Fee"), is hereby granted on such July 1, shares of Restricted Stock and an
Option to purchase a number of Shares, as determined by the provisions of
the following paragraph. In making such election, the non-employee Director
may elect a vesting date applicable to the grant of shares of Restricted
Stock to be a date not earlier than six (6) months and not later than five
(5) years from the date of grant. The Options shall not be Incentive Stock
Options.
B. The number of Shares of Restricted Stock which is hereby granted on
each July 1 to a non-employee Director making such an election is equal to
fifty percent (50%) of "A", where "A"
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is equal to (i) the cash amount of the portion of such projected Aggregate
Fee selected by the non-employee Director, divided by (ii) the per share
Fair Market Value of a Share on the date of grant, rounded to the next
higher increment of ten. The number of Shares for which an Option is hereby
granted on each July 1 to such non-employee Director is equal to the number
of shares of Restricted Stock granted hereby multiplied by the number four
(4)."
9. Under Section 6.3, all references to discounted Options granted under
Election B or Section 6.2C shall be deleted.
10. Section 7.1, "AMENDMENTS TO THE PLAN," shall now read:
"7.1 AMENDMENTS TO THE PLAN. The Board of Directors in its discretion
may terminate the Plan at any time with respect to any Shares for which a
grant has not theretofore been made. The Board of Directors shall have the
right to alter or amend the Plan or any part thereof from time to time,
including amending the Plan for the purpose of making additional shares
available under the Plan for granting Awards in lieu of other compensation
or benefits, such as cash bonus payments or Company contributions to the
Enron Corp. Savings Plan, to persons who are not subject to Section 16 of
the Securities Exchange Act of 1934; provided, that the provisions of
Section 6 shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee retirement income
Security Act, or the rules and regulations thereunder; provided further,
that no change in any grant theretofore made may be made which would impair
the rights of the recipient of a grant without the consent of such
recipient; and provided further, that nonwithstanding any other provision
of the Plan or any Award Agreement, without the approval of the
stockholders of the Company no such amendment or alteration shall be made
that would:
(i) increase the total number of Shares available for Awards under
the Plan to persons who are subject to Section 16 of the Securities
Exchange Act of 1934, except as provided in Section 3 hereof;
(ii) change the minimum Option price;
(iii) change the class of Participants eligible to receive Awards;
(iv) extend the maximum period during which Awards may be granted
under the Plan;
(v) increase the maximum number of Options that may be granted
under Section 5.1, Stock Appreciation Rights that may be granted under
Section 5.2 or Shares of performance-based Restricted Stock that may be
granted under Section 5.3(vi) to any individual in any calendar year; or
(vi) otherwise modify the material terms of the Plan."
3
<PAGE> 54
ENRON CORP
<PAGE> 55
[LOGO]
Proxy Solicited on Behalf of the Board of Directors of
Enron Corp. for Annual Meeting on May 3, 1994
THE UNDERSIGNED hereby appoints Kenneth L. Lay, James V. Derrick, Jr.
P and Peggy B. Menchaca, or any of them, and any substitute or substitutes,
to be the attorneys and proxies of the undersigned at the Annual Meeting of
R Stockholders of Enron Corp. ("Enron") to be held at 10:00 a.m. Houston time
on Tuesday, May 3, 1994, in the LaSalle Ballroom of the Doubletree Hotel at
O Allen Center, 400 Dallas St., Houston, Texas or at any adjournment thereof,
and to vote at such meeting the shares of stock of Enron the undersigned
X held of record on the books of Enron on the record date for the meeting.
Y
ELECTION OF DIRECTORS, NOMINEES: (change of address/comments)
Robert A. Belfer, Norman P. Blake, _________________________________
Jr., John H. Duncan, Joe H. Foy, _________________________________
Wendy L. Gramm, Robert K. Jaedicke, _________________________________
Richard D. Kinder, Kenneth L. Lay, _________________________________
Charles A LeMaistre, John A. Urquhart, (If you have written in the above
Charls E. Walker, Herbert S. Winokur, Jr. space, please mark the
corresponding box on the reverse
side of this card)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this card.
SEE REVERSE SIDE
<PAGE> 56
/X/ Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposals 1, 2, 3, 4,
5, and 6.
The Board of Directors recommends a vote FOR proposals 1, 2, 3, 4, 5, and 6.
FOR WITHHELD
1. Election of Directors. / / / /
(see reverse)
For, except vote withheld from the following nominee(s):
2. Ratification of appointment of independent accountants.
FOR AGAINST ABSTAIN
/ / / / / /
3. Amendment of Restated Certificate of Incorporation.
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the Performance Unit Plan.
FOR AGAINST ABSTAIN
/ / / / / /
5. Approval of the Annual Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
6. Amendment of the 1991 Stock Plan.
FOR AGAINST ABSTAIN
/ / / / / /
7. In the discretion of the proxies named herein, the proxies are
authorized to vote upon other matters as are properly brought before the
meeting.
Change of Address/Comments on Reverse Side / /
All as more particularly described in the Proxy Statement relating to such
meeting, receipt of which is hereby acknowledged.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
________________________________
________________________________
SIGNATURE(S) DATE
FOLD AND DETACH HERE
[Logo]
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
NEED STOCKHOLDER ASSISTANCE?
# DIRECT DEPOSIT - HAVE YOUR ENRON CORP. QUARTERLY DIVIDENDS
ELECTRONICALLY DEPOSITED INTO YOUR CHECKING OR SAVINGS ACCOUNT ON DIVIDEND
PAYMENT DATE. (No more worries about late or lost dividend checks.)
# DIVIDEND REINVESTMENT - HAVE YOUR ENRON CORP. QUARTERLY DIVIDENDS
REINVESTED IN THE PURCHASE OF ADDITIONAL SHARES OF ENRON CORP. COMMON STOCK
WITH NO COMMISSION OR SERVICE CHARGE FOR THE PURCHASE OF SHARES.
# CONSOLIDATION OF ACCOUNTS - ELIMINATE MULTIPLE ACCOUNTS FOR ONE HOLDER AND
CERTAIN DUPLICATE STOCKHOLDER MAILINGS GOING TO ONE ADDRESS. (Dividend checks,
annual reports and proxy materials would continue to be mailed to each
stockholder.)
JUST CONTACT ENRON'S TRANSFER AGENT:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P.O. BOX 2500
JERSEY CITY, NJ 07303-2500
(201) 324-0498 or (800) 446-2617
