ENRON CORP, DEF 14A, 1995-03-27

ENRON CORP
DEF 14A, 1995-03-27
NATURAL GAS TRANSMISISON & DISTRIBUTION

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<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

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

ENRON CORP.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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:

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(2) Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------------------
(5) Total fee paid:

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/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2
[ENRON CORP. LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 2, 1995

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 2, 1995, for the following purposes:

1. To elect thirteen 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 LLP,
independent public accountants, as Enron's auditors for the year ending
December 31, 1995;

3. To approve the Enron Corp. Amended and Restated Performance Unit Plan;
and

4. 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 Cumulative Second Preferred
Convertible Stock at the close of business on March 6, 1995, 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 27, 1994
<PAGE> 3
[ENRON CORP. LOGO]

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 2, 1995. 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 27, 1995. 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 6, 1995, 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 6, 1995, of Enron's 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
6, 1995, the record date, there were outstanding and entitled to vote at the
annual meeting of stockholders 251,397,384 shares of Common Stock and 1,398,979
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 until such shares are
released to fund employee benefits. No such shares were released at December 31,
1994. 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, 1994,
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, thirteen 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 bylaws, abstentions and "broker
non-votes" would not have the same legal effect as a vote withheld with respect
to 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, 59
Director since 1983

Mr. Belfer's principal occupation is oil and gas investments. Prior to his resignation in
April, 1986 from Belco Petroleum Corporation ("Belco"), 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., 53
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, 67
Director since 1985

Mr. Duncan lives in Houston, Texas, and since 1990, his principal occupation has been
investments. Mr. Duncan is also a director of EOTT Energy Corp. (the general partner of
EOTT Energy Partners, L.P.), Texas Commerce Bank National Association and King Ranch, Inc.
------------------------------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE> 5

<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------------

[PHOTO] JOE H. FOY, 68
Director since 1985

Mr. Foy is a former President of Houston Natural Gas Corporation (a predecessor of Enron)
and is a retired partner of Bracewell & Patterson L.L.P., 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, 50
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
Insurance Co. and the Chicago Mercantile Exchange.
------------------------------------------------------------------------------------------------------------------

[PHOTO] ROBERT K. JAEDICKE, 66
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, 50
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 Global Power & Pipelines L.L.C., 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.), Sonat Offshore Drilling Inc. and
Baker Hughes Incorporated.
------------------------------------------------------------------------------------------------------------------

[PHOTO] KENNETH L. LAY, 52
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, 71
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, 66
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 1982 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] JOHN WAKEHAM, 63
Director since 1994

Lord Wakeham is the retired former U.K. Secretary of State for Energy and Leader of the
House of Lords. He served as a member of Parliament from 1974 until his retirement from
the House of Commons in April, 1992. Prior to his government service, Lord Wakeham managed
a large private practice as a chartered accountant.
------------------------------------------------------------------------------------------------------------------

[PHOTO] CHARLS E. WALKER, 71
Director since 1985

For two decades, Dr. Walker has been Chairman of Walker/Potter Associates, previously
Walker/Free Associates, Inc., a governmental relations consulting firm, in Washington,
D.C. Dr. Walker is also a director of Potomac Electric Power Company.
------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 8

<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------------

[PHOTO] HERBERT S. WINOKUR, JR., 51
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>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of January 31, 1995, 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 OWNERSHIP
--------------------------------------------------------------
SOLE VOTING
AND
SOLE VOTING SHARED VOTING LIMITED
AND AND OR NO PERCENT
TITLE OF CLASS NAME AND ADDRESS INVESTMENT INVESTMENT INVESTMENT OF
OF STOCK OF BENEFICIAL OWNER POWER POWER POWER OTHER CLASS
---------------- ---------------------------- ----------- ------------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Common Robert A. Belfer 5,735,174(1)(13) 692,886(2) 12,722(12)(14) -- 2.52
Preferred 767 Fifth Avenue
Convertible New York, NY 10153 325,173(3) 23,052(4) -- -- 24.82
Common Mr. and Mrs. Lawrence Ruben 4,880,702(5) 1,099,658(6) -- -- 2.34
Preferred 600 Madison Avenue
Convertible New York, NY 10022 297,057(7) 16,275(8) -- -- 22.33
Common Jack Saltz 1,466,772(9) 804,103(10) -- -- *
Preferred 767 Fifth Avenue
Convertible New York, NY 10153 76,046 58,900(11) -- -- 9.62
Common Enron Corp. -- -- -- 26,763,314(15) 10.66
Preferred Employee Stock
Convertible Ownership Plan -- -- -- --
1400 Smith Street
Houston, TX 77002
</TABLE>

---------------

* Less than 1 percent.

(1) Includes 13,248 shares held by a trust of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership. Also
includes 4,439,262 shares that would be issued upon the conversion of the
Preferred Convertible Stock shown in the table as being beneficially owned
by Mr. Belfer with sole voting and investment power.

(2) Includes 372,000 shares held by a trust of which Mr. Belfer's wife is
co-trustee and 6,180 shares held by Mr. Belfer's wife. Also includes
314,706 shares that would be issued upon the conversion of the Preferred
Convertible Stock shown in the table as being beneficially owned by Mr.
Belfer with shared voting and investment power.

(3) Includes 63,370 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership.
(Notes continued on following page)

6
<PAGE> 9

(4) Includes 22,000 shares held by a trust of which Mr. Belfer's wife is
co-trustee, 625 shares held by Mr. Belfer's wife and 427 shares held by
trusts of which Mr. Belfer is a trustee, in all of which shares Mr. Belfer
disclaims beneficial ownership.

(5) Includes 9,480 shares held as co-trustees for their children and 61,200
shares held by Mrs. Ruben as trustee for a charitable trust. Also includes
4,055,422 shares that would be issued upon the conversion of the Preferred
Convertible Stock.

(6) Includes 235,696 shares held by Mrs. Ruben as 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
129,800 shares held by the Selma and Lawrence Ruben Foundation in which
shares Mr. and Mrs. Ruben have no pecuniary interest. Also includes 222,186
shares that would be issued upon the conversion of the Preferred
Convertible Stock.

(7) Includes 960 shares held as co-trustees for their children, 60,000 shares
held by Mrs. Ruben as trustee for her children and 3,600 shares held by
Mrs. Ruben as trustee for a charitable trust.

(8) Includes 5,224 shares held by Mrs. Ruben as 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 has no pecuniary interest.

(9) Includes 1,038,180 shares that would be issued upon the conversion of the
Preferred Convertible Stock.

(10) Represents 804,103 shares that would be issued upon the conversion of the
Preferred Convertible Stock.

(11) Held by Mr. Saltz's wife as trustee for their children.

(12) 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.

(13) 14,776 shares of Common Stock are subject to stock options exercisable
within 60 days after January 31, 1995, which number is included in the
number of shares shown as beneficially owned as of such date.

(14) 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.

(15) 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 that 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.

7
<PAGE> 10

STOCK OWNERSHIP OF MANAGEMENT AND BOARD OF DIRECTORS AS OF JANUARY 31, 1995

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
---------------------------------------------
SOLE SHARED SOLE VOTING
VOTING VOTING AND LIMITED
AND AND OR NO PERCENT
INVESTMENT INVESTMENT INVESTMENT OF
TITLE OF CLASS NAME POWER(2) POWER POWER(1)(3) CLASS
--------------------- ----------------------------------------- ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Enron Corp.
Common Stock Robert A. Belfer......................... 5,735,174(4) 692,886(5) 12,722 2.518
Norman P. Blake, Jr...................... 2,392 -- 490 *
John H. Duncan........................... 103,944 -- 1,902 *
Joe H. Foy............................... 29,448 2,496(12) 1,902 *
Wendy L. Gramm........................... 1,256 -- 874 *
Robert K. Jaedicke....................... 14,224 -- 1,902 *
Richard D. Kinder........................ 1,832,841 -- 57,410 *
Kenneth L. Lay........................... 1,861,920 738,951(10)(13) 84,632 1.062
Charles A. LeMaistre..................... 15,016 800 1,902 *
John A. Urquhart......................... 9,758 -- 1,718 *
Charls E. Walker......................... 6,408 12,848(11) 1,902 *
Herbert S. Winokur, Jr................... 48,544 3,500(14) 1,902 *
John Wakeham............................. -- -- --
Ronald J. Burns.......................... 771,587 -- 38,729 *
Edmund P. Segner, III.................... 266,858 -- 26,340 *
Rodney L. Gray........................... 295,734 -- 48,042 *
All directors and executive officers as a
group (23 in number)................... 12,231,929(4) 1,478,481(5) 383,583 5.395
Enron Corp.
Preferred Con-
vertible Stock Robert A. Belfer......................... 325,173(6) 23,052(7) -- 24.816
All directors and executive officers as a
group (23 in number)................... 325,173(6) 23,052(7) -- 24.816
Enron Global
Power & Pipelines
L.L.C. Common
Shares Robert A. Belfer......................... 6,000(15) 3,000 -- *
Norman P. Blake, Jr...................... 2,000 -- -- *
John H. Duncan........................... 2,000 -- -- *
Richard D. Kinder........................ 10,000 -- -- *
Edmund P. Segner, III.................... 2,000 -- -- *
Rodney L. Gray........................... 4,000 -- -- *
All directors and executive officers as a
group (23 in number)................... 37,000 3,000 -- *
Enron Liquids
Pipeline L.P.
Common Units Joe H. Foy............................... 1,800 -- -- *
Richard D. Kinder........................ 25,000 -- -- *
Ronald J. Burns.......................... 1,900 -- -- *
All directors and executive officers as a
group (23 in number)................... 28,700 -- -- *
</TABLE>

(Table continued on following page)

8
<PAGE> 11

---------------

* Less than 1 percent.

(1) 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.

(2) The number of shares of Enron Common Stock subject to stock options
exercisable within 60 days after January 31, 1995, which number is included
in the number of shares shown as beneficially owned as of such date, is as
follows: Mr. Belfer, 14,776 shares; Mr. Blake, 392 shares; Mr. Duncan,
19,736 shares; Mr. Foy, 19,736 shares; Dr. Gramm, 1,160 shares; Dr.
Jaedicke, 8,816 shares; Mr. Kinder, 1,614,939 shares; Mr. Lay, 1,732,985
shares; Dr. LeMaistre, 10,808 shares; Mr. Urquhart, 6,136 shares; Dr.
Walker, 6,408 shares; Mr. Winokur, 19,736 shares; Mr. Burns, 645,195
shares; Mr. Segner, 254,850 shares; Mr. Gray, 287,526 shares; and all
directors and executive officers as a group, 5,447,637 shares.

(3) Includes shares held under Enron's Savings Plan and/or the 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.

(4) Includes 13,248 shares held by a trust of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership. Also
includes 4,439,262 shares that would be issued upon the conversion of the
Preferred Convertible Stock shown in the table as being beneficially owned
by Mr. Belfer with sole voting and investment power.
(Notes continued on following page)

9
<PAGE> 12

(5) Includes 372,000 shares held by a trust of which Mr. Belfer's wife is
co-trustee and 6,180 shares held by Mr. Belfer's wife. Also includes
314,706 shares that would be issued upon the conversion of the Preferred
Convertible Stock shown in the table as being beneficially owned by Mr.
Belfer with shared voting and investment power.

(6) Includes 63,370 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership.

(7) Includes 22,000 shares held by a trust of which Mr. Belfer's wife is
co-trustee, 625 shares held by Mr. Belfer's wife and 427 shares held by
trusts of which Mr. Belfer is a trustee, in all of which shares Mr. Belfer
disclaims beneficial ownership.

(8) Includes 20,000 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.

(9) Does not include 128,000,000 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 bylaws.

(10) Includes 7,530 shares with respect to Enron Common Stock and 1,600 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.

(11) Includes 6,088 shares owned by Dr. Walker's wife and in which Dr. Walker
disclaims beneficial ownership.

(12) Shares held in a charitable foundation in which Mr. Foy has no pecuniary
interest.

(13) Includes 100,000 shares held in a charitable foundation in which Mr. Lay
has no pecuniary interest.

(14) Shares held in a charitable foundation in which Mr. Winokur has no
pecuniary interest.

(15) Includes 3,000 shares held in a charitable foundation in which Mr. Belfer
has no pecuniary interest.

(16) Shares held in a charitable foundation in which Mr. Kinder has no pecuniary
interest.

10
<PAGE> 13

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held five regularly scheduled meetings during the
year ended December 31, 1994. 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 bylaws or by applicable law. During the year ended
December 31, 1994, the Executive Committee met six 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 serves as the overseer of Enron's financial
reporting process and internal controls. At three meetings during the year ended
December 31, 1994, 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 fees 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 Wakeham and Dr. Gramm.

The Compensation Committee's responsibility is to establish Enron's
compensation strategy and ensure that the senior executives of Enron and its
wholly-owned affiliates are compensated effectively in a manner consistent with
the stated compensation strategy of Enron, internal equity considerations,
competitive practice and the requirements of appropriate regulatory bodies. In
meeting eleven times during the year ended December 31, 1994, 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 monitor of Enron's financial activities.
In meeting three times during the year ended December 31, 1994, 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,
Urquhart and Walker.

The Nominating Committee has oversight for recruiting and recommending
candidates for election to the Board of Directors and evaluation of director
performance. In meeting three times during the year ended December 31, 1994, the
Committee reviewed information regarding proposed nominees to the Board. The
Nominating Committee is currently composed of Messrs. Walker (Chairman),
Urquhart and Wakeham and Dr. Gramm.

During the year ended December 31, 1994, each Director attended at least
75% of the total number of meetings of the Board and the committees on which the
Director served.

11
<PAGE> 14

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

DIRECTOR COMPENSATION

During 1994, 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 1994 were $481,002.

Directors' fees can be deferred to a later specified date under Enron's
1985 Deferral Plan and 1994 Deferral Plan. Under the 1985 Deferral Plan,
interest is credited on amounts deferred based on 150% of Moody's seasoned
corporate bond yield index, which for 1994 was 12%. Interest was credited at 9%
under the 1994 Deferral Plan. One director participated in the 1985 Deferral
Plan during 1994 and four Directors participated in the 1994 Deferral Plan.
Directors also participated in the Enron Corp. 1988 and 1991 Stock Plans. During
1994, each non-employee director received 490 shares of restricted stock (valued
at $29.75 per share on the date of grant) and options to purchase 1,960 shares
(with an exercise price of $29.75 per share) pursuant to the 1991 Stock Plan.

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 proxy performance graph.

Annual Incentive Awards

The annual incentive plan is funded as a percent 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

12
<PAGE> 15

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 a specified percent of after-tax net income as
pre-established annually by the Committee. 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. Based
on the last compensation survey, this objective was met.

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 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", based strictly upon the performance of Enron and return
to the stockholders. Also, two significant elements in the employee benefit
package, the ESOP and Enron Corp. Savings Plan (which together own almost 14% of
Common Stock), are driven by increasing stockholder value. Scheduled allocations
of shares of Common Stock to participants in the ESOP ended with the 1994
allocation. As a means of continuing to link a portion of compensation to the
value of Common Stock, all eligible employees received a stock option grant,
under the new All Employee Stock Option Program, on December 30, 1994. This
grant is intended to replace the allocation of shares of Common Stock to the
ESOP savings subaccount for the next six years and is aimed at continuing to
build upon our existing strong employee/stockholder alignment, which we believe
continues to be a key factor in creating long term 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 executives who are
employees and are listed in Enron's annual report to stockholders are each
expected to hold Enron 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

13
<PAGE> 16

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. In the last review, the Committee confirmed that the
executive compensation program was meeting the targeted objective.

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. Mr. Lay did not receive an increase to his
base salary during 1994, as a result of a decision by management that no merit
increases would be given in 1994 due to a special Enron stock allocation, using
previously existing ESOP shares, to the ESOP savings subaccount for all
employees. In recognition of Enron's superior performance relative to its peer
group, Mr. Lay received a cash annual incentive award of $1,200,000 and a stock
option grant, at market value, of 55,385 shares. The Committee determined the
amount of the annual incentive award taking into consideration the annual
performance report presented by management, which reflected Enron's 17.2%
increase in net income and, omitting special one-time items, an increase in
earnings from operations of 14.8%. In addition, Enron's total stockholder return
for 1994 was 7.8% as compared to the S&P 500 annual return of 1.2% and a
negative 4.3% annual return for industry peers.

Mr. Lay also received a cash payment of $930,000 under the Performance Unit
Plan for the 1991-1994 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 1991-1994 reflected Enron's
return to its stockholders of 103.55% compared with 13.92% for industry peers,
46.70% for the S&P 500, and 16.07% for 90-day U.S. Treasury Bills. This
performance earned Enron a ranking of Number 1 and valued the units at $2.00.

During 1994, grants of stock options and performance units were made to Mr.
Lay, consistent with the design of the long-term incentive program. In addition,
Mr. Lay received a grant of stock options on December 30, 1994, under the All
Employee Stock Option Program mentioned above. On February 8, 1994, Mr. Lay
received a grant of 1,200,000 stock options, at market value, coincident with
renewing his employment contract through February 8, 1999. The special stock
option award has performance-based vesting features, provided Enron achieves its
aggressive target of 15% annual compounded growth in earnings per share. The
special performance-based vesting feature for 1994 was triggered due to Enron
achieving a 16.1% increase in earnings per share. The Committee believes this
significant stock option grant provides the necessary linkage between
stockholder return and management rewards.

Also during 1994, Mr. Lay waived certain post-retirement executive
supplemental benefits in exchange for split dollar life insurance. An
independent firm certified that the exchange is cost neutral to Enron on a
present value basis.

Compliance with Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code ("Section 162(m)"), enacted in
1993, generally disallows a tax deduction to public companies for compensation
over $1 million paid to a company's Chief Executive Officer and four other most
highly compensated executive officers, as reported in its

14
<PAGE> 17

Proxy Statement. Qualifying performance-based compensation is not subject to the
deduction limit if certain requirements are met. Enron has structured the
performance-based portion of the compensation of its executive officers (which
currently consists of stock option grants, certain restricted stock grants,
performance unit grants and annual incentive awards) in a manner that complies
with the statute. The Amended and Restated 1991 Stock Plan, the Annual Incentive
Plan and the Performance Unit Plan were presented to and approved by
stockholders at the 1994 annual meeting. Due to the need to make a technical
clarification, the Performance Unit Plan is being re-submitted to stockholders
for approval in the 1995 Proxy Statement. The amended and restated Performance
Unit Plan is substantially the same plan for which stockholder approval was
obtained by more than 80% of the vote at the 1994 annual meeting, except that it
is now made clear that failure of the stockholders to approve the plan precludes
Enron from making any payment to employees eligible under such plan with respect
to grants made on or after January 1, 1994. 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. This success is evidenced by the increase in stockholder value from
1989 to 1994, during which time a stockholder who invested $100 in Enron Common
Stock would have received $249.59, or a 150% increase in value, compared to 52%
for the S&P 500 and a negative 16% for industry peers. The Committee believes
that with the present plan designs, management will continue to strive to
increase stockholder value.

Compensation Committee

Charles A. LeMaistre (Chairman)
Robert A. Belfer
John H. Duncan
Joe H. Foy

15
<PAGE> 18

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 December 31, 1989.

2. The 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: Burlington
Resources Inc.; Coastal Corp.; Columbia Gas Systems, Inc.; Consolidated Natural
Gas Co.; NorAm Energy Corp.; Occidental Petroleum Corp.; Panhandle Eastern
Corp.; Sonat Inc.; Tenneco, Inc.; Transco Energy Company; and The Williams
Companies, Inc.

Although this method of calculating stockholder return differs from the
method that Enron uses for purposes of its Performance Unit Plan, it does
display a similar trend.

[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Enron Corp. S&P 500 Peer Group
<S> <C> <C> <C>
1989 100 100 100
1990 99.40 96.83 79.37
1991 132.21 126.41 68.08
1992 180.71 136.25 77.64
1993 231.28 150.00 90.89
1994 249.59 151.73 84.11
</TABLE>

16
<PAGE> 19

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 SECURITIES ALL OTHER
ANNUAL RESTRICTED UNDERLYING LTIP COMPENSATION
NAME & PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/ PAYOUTS ------------
POSITION YEAR $ $ ($)(1) AWARDS($)(2) SARS (#) ($) ($)(4)
------------------- ---- -------- ---------- ------------ ------------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay........ 1994 $990,000 $1,200,000 $296,630 $ 69,680 1,416,615 $930,000 $ 311,837
Chairman of the Board 1993 $960,000 $1,040,000 $375,232 $1,283,250 648,000 $900,000 $1,137,035
and Chief Executive 1992 $875,000 $1,100,000 $326,709 $ 60,270 187,500 $739,200 $ 35,624
Officer

Richard D. Kinder..... 1994 $660,044 $ 840,000 $124,366 $ 42,210 1,161,125 $680,000 $ 87,872
President and Chief 1993 $640,044 $ 720,000 $218,410 $ 853,688 433,233 $550,044 $ 404,913
Operating Officer 1992 $583,377 $ 750,000 $100,344 $ 32,646 125,000 $475,200 $ 35,624

Ronald J. Burns....... 1994 $445,000 $ 376,000 $ 80,735 $ 24,455 282,885 $375,000 $ 31,572
Managing Director, 1993 $433,333 $ 320,000 $129,212 $ 426,844 199,950 $216,810 $ 41,907
North American 1992 $368,021 $ 325,000 $ 46,089 $ 11,839 62,500 $208,440 $ 35,624
Operations, Enron
Capital & Trade
Resources

Edmund P. Segner, III. 1994 $350,000 $ 300,000 $ 10,500 $ 16,583 225,895 $200,000 $ 31,572
Executive Vice 1993 $297,500 $ 260,000 $ 8,450 $ 511,125 240,000 $ 70,070 $ 41,907
President and Chief 1992 $195,631 $ 250,000 $ 8,400 $ -- 41,700 $ 67,376 $ 30,679
of Staff

Rodney L. Gray........ 1994 $350,000 $ 288,000 $ 10,500 $ 331,483 375,895(3) $175,000 $ 31,572
Managing Director, 1993 $287,292 $ 260,000 $ 6,250 $ 266,438 252,950 $ 84,150 $ 41,907
International 1992 $187,545 $ 165,000 $ 5,100 $ -- 29,200 $ 80,904 $ 29,303
Operations, Enron
Capital & Trade
Resources
</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 $147,919 has been reported for Mr. Lay. Also, Enron maintains three
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 with a minimum
rate of 12%, which for 1992 was 13.845%, for 1993 was 12.825% and for 1994
was the minimum of 12.0%. Interest in excess of 120% of the December, 1993
long-term Applicable Federal Rate ("AFR") (7.29%) has been reported as Other
Annual Compensation for 1994, interest in excess of 120% of the December,
1992 long-term AFR (8.5%) has been reported as Other Annual Compensation for
1993, and interest in excess of 120% of the December, 1991 long-term AFR
(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, 1993 and 1994 of 7.5%, 7.06%, and 6.0%
respectively, did not exceed 120% of the AFR. No interest has been reported
as Other Annual Compensation under the 1994 Deferral Plan, because none of
the Named Officers participates in this plan. Other Annual Compensation also
includes miscellaneous cash payments for items such as cash perquisite
allowances and lost benefits due to statutory earnings limits.

(2) 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 granted before December, 1992 was accelerated to December,
1992. Restricted stock awards to the Named Officers on February 7, 1994,
were provided to compensate for lost benefits due to statutory earnings
limits and became 50% vested on August 7, 1994, and 50% vested on February
7, 1995. 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, 1994, for each
of the Named Officers: Mr. Lay, 38,800 shares valued at $1,183,400; Mr.
Kinder, 25,750 shares valued at $785,375; Mr. Burns, 12,925 shares valued at
$394,213; Mr. Segner, 15,287 shares valued at $466,254; and Mr. Gray, 17,487
shares valued at $533,354.

(3) Options granted to Mr. Gray in 1994 include options for 150,000 common
shares of Enron Global Power & Pipelines L.L.C. ("EPP") granted on November
15, 1994, at EPP's initial public offering price of $24 per share.
(Notes continued on following page)

17
<PAGE> 20

(4) The amounts shown include the value, as of year-end 1992, 1993 and 1994 of
Enron Common Stock allocated during those years to employees' savings
subaccounts under Enron's Employee Stock Ownership Plan. Included in 1994 is
a special allocation made in February, 1994 to employees' savings
subaccounts under Enron's Employee Stock Ownership Plan in lieu of a merit
increase in 1994 and a special allocation made in December, 1994 to a
special allocation subaccount. Also included in 1994 for Mr. Lay is $1,944
that is attributable to term life insurance coverage pursuant to a
split-dollar life insurance arrangement, and $278,321, representing the
remainder of the annual premium that was provided in exchange for forfeiture
by Mr. Lay of post-retirement executive supplemental survivor benefits and
executive supplemental retirement benefits. Also included in 1994 for Mr.
Kinder is a cash payment of $56,300 provided for payment of life insurance
premiums on policies already held by Mr. Kinder in exchange for forfeiture
by Mr. Kinder of post-retirement executive supplemental survivor benefits.
An independent firm has certified that both of the benefit exchanges are
cost neutral to Enron. (See "Employment Contracts" on page 22 for
explanation of the benefit exchanges.) 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 "Employment Contracts" on page 22.)

STOCK OPTION GRANTS DURING 1994

The following table sets forth information with respect to grants of stock
options pursuant to Enron's stock plans to the Named Officers reflected in the
Summary Compensation Table. No stock appreciation rights were granted during
1994.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------
% OF
TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED POTENTIAL REALIZABLE VALUE AT
UNDERLYING TO ASSUMED ANNUAL RATES OF
OPTIONS/ EMPLOYEES EXERCISE STOCK PRICE APPRECIATION
SARS IN OR BASE FOR OPTION TERM(10)
GRANTED FISCAL PRICE EXPIRATION --------------------------------------------
NAME (#)(1) YEAR ($/SH) DATE 0%(9) 5% 10%
------------------------ --------- ------ -------- -------- ----- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay.......... 84,000(2) 0.53% $33.5000 02/07/04 $ -- $ 1,769,709 $ 4,484,791
1,200,000(3) 7.59% $34.0000 02/08/01 $ -- $ 16,609,697 $ 38,707,658
90,280(4) 0.57% $30.5000 12/30/04 $ -- $ 1,731,688 $ 4,388,439
42,335(5) 0.27% $30.5000 12/30/04 $ -- 812,040 $ 2,057,870
Richard D. Kinder....... 55,670(2) 0.35% $33.5000 02/07/04 $ -- $ 1,172,854 $ 2,972,242
1,000,000(3) 6.33% $34.0000 02/08/01 $ -- $ 13,841,414 $ 32,256,381
77,780(4) 0.49% $30.5000 12/30/04 $ -- $ 1,491,922 $ 3,780,824
27,675(5) 0.18% $30.5000 12/30/04 $ -- 530,842 $ 1,345,260
Ronald J. Burns......... 14,770(6) 0.09% $33.5000 02/07/99 $ -- $ 136,703 $ 302,077
25,000(2) 0.16% $34.0000 02/08/04 $ -- $ 534,560 $ 1,354,681
200,000(7) 1.27% $29.3750 05/02/04 $ -- $ 3,694,756 $ 9,363,237
25,000(4) 0.16% $30.5000 12/30/04 $ -- $ 479,533 $ 1,215,230
18,115(5) 0.11% $30.5000 12/30/04 $ -- 347,469 $ 880,556
Edmund P. Segner, III... 12,000(6) 0.08% $33.5000 02/07/99 $ -- $ 111,065 $ 245,425
25,000(2) 0.16% $34.0000 02/08/04 $ -- $ 534,560 $ 1,354,681
150,000(7) 0.95% $29.3750 05/02/04 $ -- $ 2,771,067 $ 7,022,428
25,000(4) 0.16% $30.5000 12/30/04 $ -- $ 479,533 $ 1,215,230
13,895(5) 0.09% $30.5000 12/30/04 $ -- 266,524 $ 675,424
Rodney L. Gray.......... 12,000(6) 0.08% $33.5000 02/07/99 $ -- $ 111,065 $ 245,425
200,000(7) 1.27% $29.3750 05/02/04 $ -- $ 3,694,756 $ 9,363,237
13,895(5) 0.09% $30.5000 12/30/04 $ -- $ 266,524 $ 675,424
150,000(8) 23.66%(8) $24.0000 11/15/04 $ -- $ 2,264,025 $ 5,737,470
All Employee and
Director Optionees.... 15,805,680(11) 100% $31.1896(12) N/A $ -- $ 310,028,413(13) $ 785,671,903(13)
All Stockholders........ N/A N/A N/A N/A $ -- $4,936,601,889(13) $12,510,303,030(13)
Optionee Gain as % of
All Stockholders
Gain.................. N/A N/A N/A N/A N/A 6.28% 6.28%
</TABLE>

(Footnotes begin on following page)

18
<PAGE> 21

---------------

(1) If a "change of control" (as defined in the 1991 Stock Plan) were to occur
before the options become exercisable and are exercised, the vesting
described below will 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) Options granted to Messrs. Lay and Kinder on February 7, 1994 and Messrs.
Burns and Segner on February 8, 1994 represent the 1994 stock option grant
under the Long-Term Incentive Program. The options became 20% vested on
August 7 and 8, 1994, respectively, and were first exercisable on those
dates, with an additional 20% becoming exercisable on the anniversary of
the date of grant until February 7 and 8, 1998, respectively.

(3) Represents options granted pursuant to renewal of employment contracts.
These options became 20% vested on August 8, 1994 and were first
exercisable on that date, with the remaining 80% becoming vested on
December 8, 2000. Based on attainment of 15% annual growth in earnings per
share, the vesting may be accelerated such that one-third of remaining
shares would vest at year-end 1994, 1995 and 1996. One-third of the shares
became vested at year-end 1994 due to Enron achieving a 16.1% increase in
earnings per share.

(4) Represents the 1995 stock option grant under the Long-Term Incentive
Program. Beginning with 1995 grants, the grant date has been changed from
early February to the last trading day of the prior year, due to
regulations under Section 162(m). Therefore, 1994 was the transition year,
resulting in two long-term incentive grants being awarded. Options will
become 20% vested on June 30, 1995 and will first be exercisable on that
date with an additional 20% becoming exercisable on the anniversary of the
date of grant until December 30, 1998.

(5) Represents options granted under the All Employee Stock Option Program.
Options will become 20% vested on June 30, 1995 and will first be
exercisable on that date with an additional 20% becoming exercisable on the
anniversary of the first vesting until June 30, 1999.

(6) Represents bonus stock options that are five year grants and became 100%
vested on August 7, 1994.

(7) Represents options granted pursuant to extensions of employment contracts.
These options became 20% vested on November 2, 1994 and were first
exercisable on that date with the remaining 80% becoming vested on May 2,
2002. Vesting for these grants can be accelerated based on attainment of
individual company earnings targets so that 20% would vest at the end of
1994, 1995, 1996, and 1997 as follows: Mr. Burns for Enron Capital & Trade
Resources ("ECT") performance; Mr. Segner for Enron Corp. performance; and
Mr. Gray for ECT International Operations performance. The first 20% did
vest at year-end 1994 based on attainment of company earnings targets.

(8) Represents options to purchase EPP shares and shows the grant as a
percentage of all EPP options granted (633,980).

(9) 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.

(10) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of 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 Common Stock.

(11) Includes shares issued on December 30, 1994 under the All Employee Stock
Option Program, which replaced allocations to the Employee Stock Ownership
Plan savings subaccount for eligible employees for the years 1995 through
2000. Eligible employees are defined as regular full-time employees and
regular part-time employees who have worked 1,000 hours, who are on the
U.S. or Canadian payroll, excluding employees of Enron Oil & Gas and EOTT
Energy.

(12) Weighted average exercise price of all Enron stock options granted to
employees in 1994.

(13) Appreciation for All Employee and Director Optionees is calculated using
the maximum allowable option term of 10 years, even though in some cases
the actual option term is less than 10 years. Appreciation for all
stockholders is calculated using an assumed ten-year option term, the
weighted average exercise price for All Employee and Director Optionees
($31.1896) and the number of shares of Common Stock issued and outstanding
on December 31, 1994 (251,674,835).

19
<PAGE> 22

AGGREGATED STOCK OPTION/SAR EXERCISES DURING 1994 AND STOCK OPTION/SAR
VALUES AS OF DECEMBER 31, 1994

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>
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($)
--------------------------------- ------------ ------------
<S> <C> <C>
Kenneth L. Lay................... 336,400 $6,653,025
Richard D. Kinder................ 48,000 $1,050,000
Ronald J. Burns.................. 80,000 $1,496,800
Edmund P. Segner, III............ 25,800 $ 426,413
Rodney L. Gray -- Enron Corp. ... -- $ --
EPP............ -- $ --

</TABLE>

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS/SARS AT
DECEMBER 31, 1994
-----------------------------
NAME EXERCISABLE UNEXERCISABLE
--------------------------------- ----------- -------------
<S> <C> <C>
Kenneth L. Lay................... 1,152,100 1,626,015
Richard D. Kinder................ 1,170,570 1,262,788
Ronald J. Burns.................. 517,850 420,585
Edmund P. Segner, III............ 143,000 350,235
Rodney L. Gray -- Enron Corp. ... 160,991 376,094
EPP............. -- 150,000
</TABLE>

VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS/
SARS AT DECEMBER 31, 1994
-----------------------------
NAME EXERCISABLE UNEXERCISABLE
--------------------------------- ----------- -------------
<S> <C> <C>
Kenneth L. Lay................... $11,457,900 $2,840,100
Richard D. Kinder................ $14,057,382 $1,926,890
Ronald J. Burns.................. $ 6,336,621 $1,769,276
Edmund P. Segner, III............ $ 351,750 $1,026,755
Rodney L. Gray -- Enron Corp. ... $ 889,282 $ 742,499
EPP............. $ -- $ --

</TABLE>

LONG-TERM INCENTIVE PLAN -- AWARDS IN 1994

The following table provides information concerning awards of performance
units under Enron's Performance Unit Plan during 1994. 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 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 ESTIMATED FUTURE PAYOUTS
OF PERFORMANCE UNDER NON-STOCK PRICE-BASED
SHARES, OR OTHER PLANS
UNITS OR PERIOD UNTIL ---------------------------
OTHER MATURATION THRESHOLD TARGET
NAME RIGHTS (#) PAYOUT ($ OR #) ($ OR #)
---------------------------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Kenneth L. Lay.................... 756,000 4 years $ -- $ 756,000
Richard D. Kinder................. 501,000 4 years $ -- $ 501,000
Ronald J. Burns................... 225,000 4 years $ -- $ 225,000
Edmund P. Segner, III............. 225,000 4 years $ -- $ 225,000
Rodney L. Gray(1)................. -- -- $ -- $ --
</TABLE>

MAXIMUM
NAME ($ OR #)
---------------------------------- ----------
<S> <C>
Kenneth L. Lay.................... $1,512,000
Richard D. Kinder................. $1,002,000
Ronald J. Burns................... $ 450,000
Edmund P. Segner, III............. $ 450,000
Rodney L. Gray(1)................. $ --
</TABLE>

---------------
(1) Pursuant to Mr. Gray's employment agreement, he does not receive performance
units, (See "Employment Contracts" on page 24.)

RETIREMENT AND SEVERANCE PLANS

For many years, Enron has maintained a Retirement Plan to provide
retirement income for employees of Enron and its subsidiaries. Accrual of
benefits under the Retirement Plan was temporarily suspended effective December
31, 1994 in connection with Enron's intent to convert the plan's benefit formula
from a final average pay formula (the "Pre-1995 Formula") to a career average
pay, cash balance formula (the "Post-1994 Formula").

20
<PAGE> 23

The Pre-1995 Formula is designed to provide monthly retirement income for
each covered employee 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 compensation
either for any period of sixty consecutive months that 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.

Subject to adoption of an amendment to the Retirement Plan by Enron's Board
of Directors, Enron intends to change the Plan's benefit accrual formula to the
Post-1994 Formula, under which covered employees will accrue an annual benefit
equal to an account balance of 5% of base pay. Each employee's accrued benefit
will be credited with interest based on 10-year Treasury Bond yields. Benefit
accrual under the Post-1994 Formula will commence in Plan year 1996.

Directors who are not employees are not eligible to participate in the
Retirement Plan.

Benefits accrued under the Retirement Plan after 1986 and before 1995 are
offset by the value of Common Stock allocated to an employee's retirement
subaccount in Enron's Employee Stock Ownership Plan. In addition, Enron has a
Supplemental Retirement Plan that is designed to assure payments to certain
employees of that retirement income that 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 that provides supplemental retirement benefits equal to any
reduction in benefits due to deferral of salary into Enron's Deferral Plans.

The following table sets forth the estimated annual benefits payable under
normal retirement at age 65, assuming current remuneration levels without any
salary projection, 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 CREDITED CURRENT ESTIMATED
CREDITED YEARS OF COMPENSATION ANNUAL BENEFIT
YEARS OF SERVICE COVERED PAYABLE UPON
SERVICE AT AGE 65 BY PLANS RETIREMENT
-------- --------- ------------ --------------
<S> <C> <C> <C> <C>
Mr. Lay.................................. 17.9 30.2 $990,000 $437,813
Mr. Kinder............................... 14.1 28.9 $660,044 $264,317
Mr. Burns................................ 20.6 43.4 $445,000 $299,774
Mr. Segner............................... 6.9 30.7 $350,000 $154,755
Mr. Gray................................. 6.8 29.1 $350,000 $144,396
</TABLE>

NOTE: The estimated annual benefits payable are based on the straight life
annuity form without adjustment for any offset applicable to a
participant's retirement subaccount in Enron's Employee Stock Ownership
Plan.

21
<PAGE> 24

ENRON'S SEVERANCE PAY PLAN

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 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 equal to two weeks of base pay multiplied by the number of full or
partial years of service, plus one month of base pay for each $10,000 (or
portion of $10,000) included in the employee's annual base pay, plus one month
of base pay for each five percent of annual incentive award opportunity under
any approved plan. The maximum an employee can receive is 2.99 times the
employee's average annual base pay over the past five years.

Messrs. Burns, Segner and Gray participate in the Executive Supplemental
Survivor Benefit Plan. Both Messrs. Lay and Kinder have waived their
participation in lieu of life insurance premiums. 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). Mr. Lay has
an agreement which was entered into with Houston Natural Gas Corporation for an
annual benefit equal to 30% of his annual base salary at death, paid for the
life of his spouse. Mr. Kinder has an agreement which was entered into with
Houston Natural Gas Corporation for an annual benefit equal to 30% of his annual
base salary at death, paid for the life of his spouse and an agreement with
Houston Natural Gas Corporation which will provide Mr. Kinder with an annual
retirement benefit increase of 5% for up to 13 years or until his total
retirement benefit, as supplemented, equals 60% of his annual base salary at
retirement after reaching age 60.

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 provided to Messrs. Lay and Kinder pursuant to the
1991 Stock Plan in the above described employment agreements vest 20% on the
date of grant and 100% 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

22
<PAGE> 25

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.
Under the terms of the advances, Messrs. Lay and Kinder were 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 $12.50 per share and the number of shares they were actually
able to buy in the open market at varying prices above $12.50. Such payments
were made in 1993. Messrs. Lay and Kinder each received the full principal
amounts of their respective advances and loans in 1989. The advances and loans
bear interest (during 1994, at an average annual rate of 6.54%) and are
collateralized with Common Stock and personal property.

During 1994, the balance of Mr. Lay's advance was $4,999,975. Under the
terms of Mr. Lay's renewed agreement, on March 25, 1994, Mr. Lay repaid all
outstanding advances and loans, including principal and interest. Mr. Lay was
then provided with a new non-collateralized, interest bearing line of credit
(during 1994, at an average annual rate of interest of 6.54%) in an aggregate
amount not to exceed $4 million at any time. During 1994, the highest amount of
Mr. Lay's outstanding loan balance was $4,000,000. As of February 28, 1995, the
balance on such loan was $1,893,000. Mr. Lay paid Enron $297,402 as interest in
1994 pursuant to his advance and loan agreements.

During 1994, the balance of Mr. Kinder's advance and loan remained at
$1,553,086 and $1,500,000 respectively. Interest in the amount of $106,679 and
$98,188 accrued in 1994 on Mr. Kinder's advance and loan, respectively. 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 Mr. Kinder is liable for up
to one-third of the advance as well as unpaid interest. In the event of Mr.
Kinder's death or permanent disability, his obligation to repay the advance is
forgiven. Enron has purchased insurance on Mr. Kinder, with Enron as the owner
and beneficiary, which will allow Enron to recover any outstanding advances in
the event of the death or permanent disability of Mr. Kinder. Mr. Kinder's
renewed agreement 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.

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

23
<PAGE> 26

involuntarily terminated and for two years from the date of any other
termination of their employment.

In 1994, Messrs. Lay and Kinder entered into agreements with Enron under
which they forfeited certain executive supplemental benefits in exchange for
payment of life insurance premiums. Mr. Lay forfeited post-retirement survivor
benefits and supplemental retirement benefits in exchange for payment by Enron
of nine annual premiums on a split-dollar life insurance policy. Mr. Kinder
forfeited post-retirement survivor benefits in exchange for payment by Enron for
nine years to be applied to premiums on life insurance policies already held by
Mr. Kinder. An independent firm has certified that the exchanges are cost
neutral to Enron on a present value basis.

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 this loan in August, 1991. The loan bears interest (during 1994, at an
average annual rate of 6.54%) and is collateralized with pledged personal
properties. Mr. Burns paid $70,000 as interest in 1994 pursuant to this loan
agreement. In May, 1994 Mr. Burns' agreement was extended two years, and he was
granted 200,000 stock options with vesting tied to ECT earnings performance.
These options will vest 20% immediately and 100% eight years from the date of
grant. Vesting can be accelerated so that 20% would vest at the end of 1994,
1995, 1996 and 1997 if earnings targets are met. 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, 1998. The employment
agreement contains noncompete provisions in the event of Mr. Burns' termination
of employment.

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
May, 1994, Mr. Segner's agreement was extended two years and he was granted
150,000 stock options with vesting tied to Enron earnings performance. These
options will vest 20% immediately and 100% eight years from the date of grant.
Vesting can be accelerated so that 20% would vest at the end of 1994, 1995, 1996
and 1997 if earnings targets are met. 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, 1998. 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, a predecessor of ECT, meeting the
Board approved earnings target for the previous calendar year, according to the
following grant schedule: in February, 1994, 9,400 shares if the 1993 earnings
target was met; in February, 1995, 18,800 shares if the 1994 earnings target was
met; in February, 1996, 18,800 shares if the 1995 earnings target was met; and
in December, 1996, 18,800 shares if the 1996 earnings target was 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 the 1993 earnings target was met; in February, 1995,
two-sevenths if the 1994 earnings target was met; in February, 1996,
two-sevenths if the 1995 earnings target was met;

24
<PAGE> 27

in December, 1996, two-sevenths if the 1996 earnings target was 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
May, 1994, Mr. Gray's agreement was extended one year, and he was granted
200,000 stock options with vesting tied to Enron International earnings
performance. These options will vest 20% immediately and 100% eight years from
the date of grant. Vesting can be accelerated so that 20% would vest at the end
of 1994, 1995, 1996 and 1997 if earnings targets are met. Mr. Gray received a
personal executive loan from Enron in the amount of $250,000 on August 1, 1994.
The loan bears interest at the short-term Applicable Federal Rate compounded
semi-annually, which during 1994 was 6.04% and is collateralized with 7,960
shares of Common Stock. Interest in the amount of $6,330 accrued in 1994 on the
loan. 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, 1997. The employment agreement contains noncompete provisions in
the event of Mr. Gray's termination of employment.

Subsequent to the formation of ECT through the combination of Enron
International and Enron Gas Services, Mr. Gray's employment agreement was
assigned to ECT, with contingent grants and acceleration of vesting based on the
earnings targets of ECT's international operations. In addition, subsequent to
the formation of EPP, of which Mr. Gray is President and Chief Executive
Officer, Mr. Gray entered into a separate employment agreement with EPP, which
provides that EPP will pay up to two-thirds ( 2/3) of his total base salary,
dependent upon the amount of time he dedicates to activities of EPP, and allows
for Mr. Gray to receive payments from the EPP Annual Incentive Plan and grants
from the EPP 1994 Share Option Plan.

CERTAIN TRANSACTIONS

During 1994, Enron paid Walker/Potter Associates (formerly Walker/Free
Associates), of which Dr. Walker is Chairman, approximately $39,750 in fees
relating to governmental relations and tax consulting. The services to be
performed by Walker/Potter 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 December 31, 1995. Pursuant to the
terms of the agreement, Mr. Urquhart serves as Vice Chairman of the Board of
Enron and consults with Enron regarding the development and implementation of an
integrated strategic international business plan and other matters concerning
international business and operations. The Consulting Services Agreement, as
amended, contains a retainer fee of $40,000 per month for providing up to 120
days consulting services annually. To the extent that consulting services exceed
120 days, Mr. Urquhart will be paid a daily rate of $4,000. Mr. Urquhart will
also be paid for all reasonable out-of-pocket expenses incurred under the
agreement. In addition, prior to the amendments described below, Mr. Urquhart
was entitled to receive the following incentive compensation: (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

25
<PAGE> 28

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 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 totaling $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. The Consulting Services
Agreement was further amended in May 1994 to extend the term of both grants of
phantom shares to December 31, 1995 and to rescind the $300,000 completion
bonus. 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
1994, Enron paid Mr. Urquhart $596,354 for services rendered (including
reimbursement of expenses) under the Consulting Services Agreement. In addition,
Mr. Urquhart exercised 56,000 of the 84,000 Enron Corp. phantom shares granted
at $15.25 per share. Based on the fair market value on the date of exercise of
$31.875, Mr. Urquhart received a cash payment of $931,000.

Houston Pipe Line Company ("HPL"), a subsidiary of Enron, in the ordinary
course of its business, entered into a master gas storage agreement on April 1,
1994, with Bruin Interests, L.L.C. ("Bruin"), of which Mark K. Lay owns a
33 1/3% equity interest. Mark K. Lay is a son of Kenneth L. Lay, Chairman of the
Board and Chief Executive Officer of Enron. Bruin (or an assignee of its
interest under the agreement) had the right to inject a predetermined quantity
of natural gas into an underground storage facility owned by HPL, and thereafter
has the right to withdraw such stored natural gas. At the time of execution of
the master agreement, Bruin gained the right, through a contemporaneously
executed confirmation, to inject up to 8 billion cubic feet of natural gas into
the storage facility from April to August of 1994, and to withdraw such gas
during the months of December, 1994 and January, 1995. The consideration for
such storage service was an $800,000 prepayment to HPL and an obligation to make
certain payments to HPL upon withdrawal of the natural gas from the storage
facility. The amount of the withdrawal payments depended in part on then
prevailing market prices for natural gas. HPL had the option to purchase the
natural gas held in storage at an index price for natural gas at the beginning
of a given month. Shortly after execution Bruin advised HPL that it desired to
assign its interest in the master storage agreement (together with the 8 billion
cubic feet transaction confirmation) to a party unaffiliated with Bruin or Enron
and that in consideration for such assignment Bruin would receive a portion of
the assignee's profits, if any, from its activities associated with the gas
storage agreement. HPL consented to such transaction and the assignment was
finalized in late April, 1994. Bruin's assignee and HPL have confirmed or are
confirming a series of transactions since the assignment in April, 1994
involving the storage of an aggregate of approximately 8.35 billion cubic feet
of gas for aggregate fees of approximately $1.16 million.

It is anticipated that HPL and either Bruin or one of its affiliates will
pursue similar transactions during 1995. HPL and Bruin are currently finalizing
a transportation agreement, which Enron understands will facilitate possible gas
storage transactions between Bruin and Enron. The transportation agreement will
provide for interruptible transportation of up to 80,000 million British Thermal
Units ("MMBtu") of gas per day. The rates for any gas transportation service
under such agreement

26
<PAGE> 29

will be the standard and discounted rates that are available to HPL's customers
generally, and it is estimated that the aggregate transportation fees for the
four months beginning June 1, 1995 will range from $30,000 to $90,000, depending
on the receipt points utilized. Enron believes that the terms of the existing
and proposed agreements involving HPL and Bruin are comparable to those
available to unaffiliated third parties, and Enron does not intend to engage in
any transaction with Bruin except on terms that Enron believes are comparable to
those available to unaffiliated third parties.

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
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 1994, its executive
officers, directors and greater than ten percent stockholders complied with all
applicable filing requirements, except that Thomas E. White failed to timely
file one report for one transaction.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

At December 31, 1994, the Compensation Committee consisted of Messrs.
LeMaistre, Belfer, Duncan and Foy. Mr. William A. Anders served on the
Compensation Committee until March 14, 1994, at which time Mr. Anders resigned
from Enron's Board of Directors and all committees on which he served.

Until April 1986, Mr. Belfer was an officer of Belco Petroleum Corporation,
a wholly owned subsidiary of Enron.

During 1994 and 1995, 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 a net
amount of approximately $154,000 with respect to 1994. 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 believes that BOGC
and ERMS will continue to enter into similar arrangements throughout 1995.

Enron retains the law firm of Bracewell & Patterson L.L.P. for legal
services. During the last fiscal year, Enron and its subsidiaries paid Bracewell
& Patterson L.L.P., from which Mr. Foy is a retired partner, legal fees which
Enron believes to be reasonable for the services rendered. Until 1979, Mr. Foy
was President of Houston Natural Gas Corporation, a predecessor of Enron.

ITEM 2.

RATIFICATION OF APPOINTMENT OF AUDITORS

Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed Arthur Andersen LLP, independent public accountants, to
audit the consolidated financial statements of Enron for the year ending
December 31, 1995.

27
<PAGE> 30

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 LLP is expected to be present at the Annual Meeting of
Stockholders on May 2, 1995, 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.

ITEM 3.

APPROVAL OF AMENDED AND RESTATED
PERFORMANCE UNIT PLAN

GENERAL

Stockholder approval of the amended and restated 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), enacted in 1993 and
effective for the 1994 and subsequent tax years. Section 162(m) generally
disallows a tax deduction for compensation over $1 million paid to a Named
Officer, unless it qualifies as performance-based. Upon approval by Enron's
stockholders, the Performance Unit Plan will be considered effective for grants
made on or after January 1, 1994. In the event stockholders do not approve the
Performance Unit Plan, the plan will not be continued and grants made in 1994
and 1995 will be cancelled. The Compensation Committee believes long-term
incentive compensation is an important element of compensation in order to
attract and retain highly qualified executive talent and to motivate these
executives to achieve long-term financial objectives that create value for
stockholders.

The amended and restated Performance Unit Plan that is subject to
stockholder approval is substantially the same plan for which stockholder
approval was obtained by more than 80% of the votes at Enron's 1994 Annual
Meeting of Stockholders, except that it is now made clear that failure of the
stockholders to approve the plan precludes Enron from making any payment to
employees eligible under such plan with respect to grants made on or after
January 1, 1994. Because the Internal Revenue Service had not yet finalized its
regulations and was still soliciting comments at the time of the 1994 Annual
Meeting of Stockholders, there was some ambiguity as to the scope of the $1
million deduction limitation and what was required from stockholders with
respect to their approval of Enron's compensation plans. Therefore, in the proxy
statement for the 1994 annual meeting, Enron did not explain that stockholder
approval is required not only for Enron to claim a tax deduction, but also to
allow it to make payments to eligible employees under the Performance Unit Plan.
Upon further guidance from legal counsel after consultation with the Internal
Revenue Service, the clarification contained herein now complies with the
Internal Revenue Service's interpretation of this provision.

28
<PAGE> 31

The purpose of the Performance Unit Plan 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 amended and restated 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.

Key executive employees of Enron and its subsidiaries who are selected by
the Compensation Committee of the Board of Directors (the "Committee") for
participation in the Enron Executive Compensation Program (currently,
approximately 65 people) are eligible to participate in the Performance Unit
Plan, which is administered by 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 Prorated 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>

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

29
<PAGE> 32

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 termination of the Plan.

When benefit payments with respect to Performance Units 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 Prorated Adjusted
Value of the Performance Units. The Prorated 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 Performance Period 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.

The Plan will automatically terminate upon the occurrence of a merger,
consolidation or acquisition where Enron is not the surviving corporation. In
such event, all uncancelled Performance Units will become immediately payable as
if the full Performance Period (16 quarters) had been completed, and payments
will be based on the Adjusted Value of the Performance Unit for the applicable
Performance Period. The Board of Directors, or the Committee acting on behalf of
the Board of Directors, may terminate the Performance Unit Plan at any time. If
the Performance Unit Plan is terminated by the Board of Directors or the
Committee, all uncanceled Performance Units will become immediately payable as
if the full Performance Period (16 quarters) had been completed, and payments
will be based on the Adjusted Value of the Performance Unit for the applicable
Performance Period; provided, however, that the Committee may, in its sole
discretion, determine that the benefit payment with respect to uncanceled
Performance Units will be based on the Prorated Adjusted Value (determined as
described in the preceding paragraph using the number of completed quarters
during the applicable Performance Period as of the date of the Performance Unit
Plan termination). The Valuation Date for determining any payment upon the
Performance Unit Plan termination is the last day of the Performance Period
quarter immediately preceding the date of such Performance Unit Plan
termination.

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 Enron's deferral plans. 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 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

30
<PAGE> 33

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 Performance Unit Plan.

In addition to satisfying applicable requirements of Section 162(m),
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 not be continued.

UNITS GRANTED UNDER THE PLAN

The following units were granted under the Performance Unit Plan in 1994
and 1995:

<TABLE>
<CAPTION>
NUMBER OF UNITS(1)
-----------------------
NAME 1994 1995
------------------------------------------------------ --------- ---------
<S> <C> <C>
Kenneth L. Lay........................................ 756,000 812,500
Richard D. Kinder..................................... 501,000 700,000
Ronald J. Burns....................................... 225,000 225,000
Edmund P. Segner, III................................. 225,000 225,000
Rodney L. Gray........................................ -0- -0-
All Executive Officers................................ 2,587,000 2,717,500
All Non-Employee Directors............................ -0- -0-
All Non-Executive Officer Employees................... 2,312,500 2,412,500
</TABLE>

---------------

(1) Performance units shown were granted at $1. The payout value is not
determinable until the end of a four-year performance period, but ranges
from $0 to $2 per unit.

REQUIRED VOTE AND RECOMMENDATION

The approval of the amended and restated 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 amended and restated Performance Unit
Plan.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.

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<PAGE> 34

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 1996 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 1996 must be received by Enron, addressed to
Peggy B. Menchaca, Vice President and Secretary, 1400 Smith Street, Houston,
Texas 77002, no later than November 28, 1995, 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
bylaws 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, 1996. 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 bylaw
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 bylaw provisions. Notwithstanding anything in
Enron's bylaws to the contrary, no business shall be conducted at the annual
meeting except in accordance with the procedures outlined above.

PROPOSALS FOR 1995 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 1995 Annual
Meeting of Stockholders of Enron was February 2, 1995. With respect to business
to be brought before the 1995 Annual Meeting of Stockholders, Enron has not
received any notices from its stockholders that Enron is required to include in
this proxy statement.

32
<PAGE> 35

NOMINATIONS FOR 1996 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, 1996, 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 bylaw 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 bylaw provisions.

NOMINATIONS FOR 1995 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
1995 Annual Meeting of Stockholders of Enron was February 2, 1995. Enron has not
received any notices from its stockholders regarding nominations for directors
to be elected at the 1995 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

33
<PAGE> 36

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 and will pay a fee of approximately $6,000 plus
reimbursement of expenses.

By Order of the Board of Directors

PEGGY B. MENCHACA
Vice President and Secretary

Houston, Texas
March 27, 1995

34
<PAGE> 37

EXHIBIT A

ENRON CORP. PERFORMANCE UNIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 2, 1995)

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 performance
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.

A-1
<PAGE> 38

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. "Prorated 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
Prorated 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.

A-2
<PAGE> 39

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

A-3
<PAGE> 40

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. Section VI.A.1. 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 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 Section 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. Prorated 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

A-4
<PAGE> 41

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.

b. The "proration fraction" applicable to the Performance Units for
each such Performance Period shall be determined.

c. The Prorated 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 credited to his Account with respect to and as of the close of such
Performance Period.

A-5
<PAGE> 42

The Valuation Date for determining such Adjusted Value shall be the last
day of the applicable Performance Period.

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).

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 Prorated 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 Prorated
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.

3. 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 Section IX.B., uncancelled Performance Units granted to
Participants will 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.;
provided, however, that (a) the Committee may, in its sole discretion,
determine that the benefit payment with respect to uncancelled Performance
Units shall be equal to the Prorated Adjusted Value as provided for in
Section V.C.3. based on the actual Performance Period quarters completed
and (b) no payment shall be made with respect to Performance Units granted
for Performance Periods beginning on or after January 1, 1994 if such
Termination of the Plan is a result of the failure of the stockholders of
the Company to approve the Plan. The Valuation Date for determining the
Adjusted Value or Prorated Adjusted Value shall be the last day of the
Performance Period quarter immediately preceding the date of the
Termination of the Plan.

A-6
<PAGE> 43

B. Time of Payment. A benefit payment made to or with respect to a
Participant pursuant to the provisions of Section VI.A. shall be made as soon as
practicable following the date of the event giving rise to such benefit payment.

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
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. The Committee shall certify in writing prior to
the payment of any benefit hereunder that the performance goal associated with
the grant of Performance Units giving rise to such payment was in fact
satisfied. For purposes of the

A-7
<PAGE> 44

preceding sentence, approved minutes of the Committee meeting in which the
certification is made shall be treated as a written certification.

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 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,

A-8
<PAGE> 45

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 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.

A-9
<PAGE> 46

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.

G. Effective Date of Plan. Upon approval by the stockholders of the Company
at the 1995 annual meeting, the Plan shall be considered effective for
Performance Periods beginning on or after January 1, 1994. In the event that the
Plan is not approved by the stockholders of the Company at the 1995 annual
meeting, all Performance Units granted prior to such meeting with respect to
Performance Periods beginning on or after January 1, 1994, shall be cancelled
without the payment of any amount to the holders thereof and no Performance
Units shall thereafter be granted under the Plan.

A-10
<PAGE> 47

[ENRON CORP. LOGO]

<PAGE> 48

/X/ PLEASE MARK YOUR VOTES AS IN THIS 7398
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 AND 3.

--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
--------------------------------------------------------------------------------

1. Election of Directors. (see reverse) FOR / / WITHHELD / /

For, except vote withheld from the following
nominee(s):

--------------------------------------------------------------------------------

2. Ratification of appointment of FOR / / AGAINST / / ABSTAIN / /
independent accountants.

3. Approval of the Amended and FOR / / AGAINST / / ABSTAIN / /
Restated Performance Unit Plan.

4. In the discretion of the proxies named FOR / / AGAINST / / ABSTAIN / /
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

--------------------------------------------------------------------------------

O FOLD AND DETACH HERE O

[ENRON CORP. LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.

NEED ASSISTANCE IN ANY OF THE FOLLOWING AREAS:

o DIVIDEND CHECKS - ADDRESS CHANGES - LEGAL TRANSFERS

o 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.)

o 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 THE SHARES AND A
FEE OF $10 PLUS 12 CENTS PER SHARE TO SELL SHARES. (There is no charge to
have shares delivered to you in certificate form.)

o 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 CALL OUR TRANSFER AGENT'S TELEPHONE RESPONSE CENTER:
(800) 446-2617 OR (201) 324-0498
OR WRITE TO:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P. O. BOX 2500
JERSEY CITY, NJ 07303-2500
<PAGE> 49

PROXY

[ENRON CORP. LOGO]

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENRON CORP.
FOR ANNUAL MEETING ON MAY 2, 1995

The Undersigned hereby appoints Kenneth L. Lay, James V. Derrick, Jr.
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
Stockholders of Enron corp. ("Enron") to be held at 10:00 a.m. Houston time on
Tuesday, May 2, 1995, in the LaSalle Ballroom of the Doubletree Hotel at 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 held of
record on the books of Enron on the record date for the meeting.

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, John
Wakeham, Charls E. Walker, Herbert S. ----------------------------------------
Winokur, Jr.
----------------------------------------

(If you have written in the above 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> 50

/X/ PLEASE MARK YOUR VOTES AS IN THIS 7405
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 AND 3.

-------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
-------------------------------------------------------------------------------

1. Election of Directors. (see reverse) FOR / / WITHHELD / /
For, except vote withheld from the following
nominee(s):

-------------------------------------------------------------------------------

2. Ratification of appointment of
independent accountants. FOR / / AGAINST / / ABSTAIN / /

3. Approval of the Amended and
Restated Performance Unit Plan. FOR / / AGAINST / / ABSTAIN / /

4. In the discretion of the proxies named
herein, the proxies are authorized to
vote upon other matters as are
properly brought before the meeting. FOR / / AGAINST / / ABSTAIN / /

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

-------------------------------------------------------------------------------

o FOLD AND DETACH HERE o

[ENRON CORP LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.

NEED ASSISTANCE IN ANY OF THE FOLLOWING AREAS:

o DIVIDEND CHECKS - ADDRESS CHANGES - LEGAL TRANSFERS

o 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 THE SHARES AND A FEE
OF $10 PLUS 12 CENTS PER SHARE TO SELL SHARES. (There is no charge to have
shares delivered to you in certificate form.)

JUST CALL OUR TRANSFER AGENT'S TELEPHONE RESPONSE CENTER:
(800) 446-2617 OR (201) 324-0498
OR WRITE TO:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P. O. BOX 2500
JERSEY CITY, NJ 07303-2500
<PAGE> 51

PROXY

[ENRON CORP. LOGO]

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENRON CORP.
FOR ANNUAL MEETING ON MAY 2, 1995

The Undersigned hereby appoints Kenneth L. Lay, James V. Derrick, Jr.
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
Stockholders of Enron Corp. ("Enron") to be held at 10:00 a.m. Houston time on
Tuesday, May 2, 1995, in the LaSalle Ballroom of the Doubletree Hotel at 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 held of
record on the books of Enron on the record date for the meeting.

(If you have written in the above space,
please mark the corresponding box on
the reverse side of this card)

___________

SEE REVERSE
SIDE
___________