ENRON CORP, DEF 14A, 1996-03-25

ENRON CORP
DEF 14A, 1996-03-25
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 (AMENDMENT NO. )

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

- --------------------------------------------------------------------------------
(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:

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

/ / 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:

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

- --------------------------------------------------------------------------------
(3) Filing Party:

- --------------------------------------------------------------------------------
(4) Date Filed:

- --------------------------------------------------------------------------------
<PAGE> 2

[ENRON CORP LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 7, 1996

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 7, 1996, 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, 1996; and

3. 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 11, 1996, will be entitled
to notice of and to vote at the meeting or any adjournment(s) thereof.

Stockholders who do not expect to attend the meeting are requested to sign
and return the enclosed proxy, for which a postage-paid, return envelope is
enclosed. The proxy must be signed and returned in order to be counted.

By Order of the Board of Directors,

PEGGY B. MENCHACA
Vice President and Secretary

Houston, Texas
March 25, 1996
<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 7, 1996. The mailing
address of the principal executive office of Enron is 1400 Smith St., Houston,
Texas 77002-7369. This proxy statement and the related proxy are to be first
sent or given to the stockholders of Enron on approximately March 25, 1996. 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 11, 1996, 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 11, 1996, 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
11, 1996, the record date, there were outstanding and entitled to vote at the
annual meeting of stockholders 251,462,963 shares of Common Stock and 1,374,556
shares of Preferred Convertible Stock. Included in the number of shares of
outstanding Common Stock are 4,302,474 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. There are no other voting securities
outstanding. Common Stock and Preferred Convertible Stock are collectively
referred to herein as "Voting Stock".

Enron's annual report to stockholders for the year ended December 31, 1995,
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, 60
Director since 1983

Mr. Belfer's principal occupation is Chairman, President and Chief Executive Officer of
Belco Oil & Gas Corp., a company formed in 1992. Prior to that time, his principal
occupation was diversified investments. Prior to his resignation in April, 1986 from Belco
Petroleum Corporation ("BPC"), a wholly owned subsidiary of Enron, Mr. Belfer was
President and then Chairman of BPC. Mr. Belfer is also a director of EOTT Energy Corp.
(the general partner of EOTT Energy Partners, L.P.) and NAC Re Corporation.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] NORMAN P. BLAKE, JR., 54
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, one of the nation's
largest property and casualty insurers. 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 Fiberglas Corporation.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] JOHN H. DUNCAN, 68
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.) and Texas Commerce Bank National Association.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE> 5

<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] JOE H. FOY, 69
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, 51
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, 67
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, 51
Director since 1988

For over five years, Mr. Kinder has been President and Chief Operating Officer of Enron.
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.), Sonat
Offshore Drilling Inc. and Baker Hughes Incorporated.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] KENNETH L. LAY, 53
Director since 1985

For over five years, Mr. Lay has been Chairman of the Board and Chief Executive Officer 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, 72
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, 67
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, 64
Director since 1994

Lord Wakeham is the retired former U.K. Secretary of State for Energy and Leader of the
Houses of Commons and 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. In the U.K. he is
currently Chairman of the Press Complaints Commission and chairman or director of a number
of publicly traded U.K. companies.
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] CHARLS E. WALKER, 72
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. He is also Adjunct Professor of Finance and Public Affairs at The University of Texas
at Austin.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 8

<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
[PHOTO] HERBERT S. WINOKUR, JR., 52
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.
and Capricorn Investors II, L.P., private investment partnerships 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. and DynCorp.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of January 31, 1996, 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 5,720,428(1)(13) 692,886(2) 12,666(12)(14) -- 2.52
Preferred 767 Fifth Avenue
Convertible New York, NY 10153 323,673(3) 23,052(4) -- -- 25.21

Common Mr. and Mrs. Lawrence Ruben 5,020,772(5) 948,293(6) -- -- 2.34
Preferred 600 Madison Avenue
Convertible New York, NY 10022 290,387(7) 16,275(8) -- -- 22.30

Common Jack Saltz 1,466,872(9) 817,103(10) -- -- *
Preferred 767 Fifth Avenue
Convertible New York, NY 10153 75,731 58,900(11) -- -- 9.79

Common Enron Corp. -- -- -- 19,769,152(15) 7.89
Preferred Employee Stock
Convertible Ownership Plan -- -- -- --
1400 Smith Street
Houston, TX 77002

Common Enron Corp. -- -- -- 8,910,369(16) 3.54
Preferred Savings Plan
Convertible -- -- -- 70,000(16) 5.09
</TABLE>

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

* Less than 1 percent.

(1) Includes 15,726 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership. Also
includes 4,418,784 shares that would be acquired 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.

(Notes continued on following page)

6
<PAGE> 9

(3) Includes 61,870 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership.

(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 9,513 shares held as trustee or co-trustees for their children and
61,200 shares held by Mrs. Ruben as trustee for a charitable trust. Also
includes 3,964,364 shares that would be acquired upon the conversion of the
Preferred Convertible Stock.

(6) Includes 171,696 shares held by Mrs. Ruben as co-trustee for her children;
183,131 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
39,000 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, 53,330 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 1,033,880 shares that would be issued upon the conversion of the
Preferred Convertible Stock.

(10) Includes 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) 17,304 shares of Common Stock are subject to stock options exercisable
within 60 days after January 31, 1996, 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.

(16) Pursuant to the terms of Enron's Savings Plan, shares allocated to employee
accounts are voted by the respective employees. If the trustee receives no
voting directions from the respective employees, then all such shares are
to be voted by the trustee in the same proportion as the allocated shares
that are voted by employees. Includes 955,640 shares that would be acquired
upon the conversion of the Preferred Convertible Stock.

7
<PAGE> 10

STOCK OWNERSHIP OF MANAGEMENT AND BOARD OF DIRECTORS AS OF JANUARY 31, 1996

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
--------------------------------------------
SOLE SHARED SOLE VOTING
VOTING VOTING AND LIMITED
AND AND OR NO
INVESTMENT INVESTMENT INVESTMENT PERCENT
TITLE OF CLASS NAME POWER(2) POWER POWER(1)(3) OF CLASS
- --------------------- --------------------------------------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Enron Corp.
Common Stock Robert A. Belfer....................... 5,720,428 (4) 692,886(5) 12,666 2.52
Norman P. Blake, Jr.................... 5,802 -- 1,482 *
John H. Duncan......................... 107,198 -- 1,626 *
Joe H. Foy............................. 17,304 12,934(12) 1,626 *
Wendy L. Gramm......................... 2,586 -- 1,130 *
Robert K. Jaedicke..................... 17,478 -- 1,626 *
Richard D. Kinder...................... 2,199,197 -- 51,098 *
Kenneth L. Lay......................... 2,996,638 (13) 7,552(10) 75,070 1.22
Charles A. LeMaistre................... 18,270 800 1,626 *
John A. Urquhart....................... 12,852 -- 1,626 *
John Wakeham........................... 460 -- 450 *
Charls E. Walker....................... 16,422 6,088(11) 1,626 *
Herbert S. Winokur, Jr................. 51,798 3,500(14) 1,626 *
Edmund P. Segner, III.................. 313,855 -- 22,560 *
Rodney L. Gray......................... 417,423 -- 55,424 *
James V. Derrick, Jr. ................. 384,637 -- 12,806 *
All directors and executive officers as
a group (23 in number)............... 13,444,627 (4) 723,760(5) 496,535 5.61
Enron Corp.
Preferred Con-
vertible Stock Robert A. Belfer....................... 323,673 (6) 23,052(7) -- 25.21
All directors and executive officers as
a group (23 in number)............... 323,673 23,052 -- 25.21
Enron Global
Power & Pipelines
L.L.C. Common
Shares Robert A. Belfer....................... 3,000 -- -- *
Norman P. Blake, Jr.................... 2,000 -- -- *
Richard D. Kinder...................... 10,000 -- -- *
Kenneth L. Lay......................... 5,000 -- -- *
Edmund P. Segner, III.................. 2,000 -- -- *
James V. Derrick, Jr. ................. 500 -- -- *
Rodney L. Gray......................... 4,000 -- -- *
All directors and executive officers as
a group (23 in number)............... 27,500 -- -- *
Enron Liquids
Pipeline L.P.
Common Units Joe H. Foy............................. 1,800 1,000 -- *
Richard D. Kinder...................... 25,000 -- -- *
All directors and executive officers as
a group (23 in number)............... 26,800 1,000 -- *
</TABLE>

(Table continued on following page)

8
<PAGE> 11

<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) CLASS
- --------------------- ------------------------------------------------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Enron Oil &
Gas Company
Common Stock Robert A. Belfer................................. -- 20,600(8) -- *
Norman P. Blake, Jr.............................. 2,000 -- -- *
John H. Duncan................................... 35,000 5,000 -- *
Joe H. Foy....................................... -- 2,000 -- *
Rodney L. Gray................................... 11,220 -- -- *
Richard D. Kinder................................ 13,738(9) 20,500(15) -- *
Kenneth L. Lay................................... 50,000(9) 1,200(10) -- *
John A. Urquhart................................. --(9) -- -- *
Charls E. Walker................................. 4,000 2,000 -- *
All directors and executive officers as a group
(23 in number)................................. 122,221(9) 51,300 -- *
EOTT Energy
Partners, L.P.
Common Units Robert A. Belfer................................. 11,500 23,000(16) -- *
Norman P. Blake, Jr.............................. 1,000 -- -- *
John H. Duncan................................... 8,500 -- -- *
Joe H. Foy....................................... -- 2,000 -- *
Richard D. Kinder................................ 15,000 -- -- *
Kenneth L. Lay................................... 5,000 -- -- *
All directors and executive officers as a group
(23 in number)................................. 41,400 25,000 -- *
Northern Border
Partners, L.P
Common Units Robert A. Belfer................................. 30,000 17,500(17) -- *
Norman P. Blake.................................. 1,500 -- -- *
Joe H. Foy....................................... -- 4,650 -- *
Richard D. Kinder................................ 15,000 -- -- *
All directors and executive officers as a group
(23 in number)................................. 48,600 22,150 -- *
</TABLE>

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

* 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, 1996, which number is included
in the number of shares shown as beneficially owned as of such date, is as
follows: Mr. Belfer, 17,304 shares; Mr. Blake, 3,704 shares; Mr. Duncan,
22,264 shares; Mr. Foy, 17,304 shares; Dr. Gramm, 2,296 shares; Dr.
Jaedicke, 11,344 shares; Mr. Kinder, 1,974,385 shares; Mr. Lay, 2,058,264
shares; Dr. LeMaistre, 13,336 shares; Mr. Urquhart, 8,664 shares; Lord
Wakeham, 360 shares; Dr. Walker, 8,936 shares; Mr. Winokur, 22,264 shares;
Mr. Segner, 284,077 shares; Mr. Gray, 397,705 shares; Mr. Derrick, 380,457
shares; and all directors and executive officers as a group, 5,964,770
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 ESOP.

(4) Includes 15,726 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership. Also
includes 4,418,784 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 61,870 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 is co-trustee or
his wife is trustee for their children and 600 shares held by his daughter,
in all of which shares Mr. Belfer disclaims beneficial ownership.

(9) Does not include 96,950,000 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 7,552 shares with respect to Enron Common Stock and 1,200 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) Includes 2,496 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) Shares held in a charitable foundation in which Mr. Kinder has no pecuniary
interest.

(16) Includes 17,000 shares held in a charitable foundation in which Mr. Belfer
has no pecuniary interest and 6,000 shares held in trusts in which Mr.
Belfer or his son is trustee.

(17) Includes 17,000 shares held in trusts in which Mr. Belfer's son or wife is
trustee or in which Mr. Belfer is trustee or a co-trustee and 500 shares
held in a charitable foundation in which Mr. Belfer has no pecuniary
interest.

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held five regularly scheduled meetings and one
special meeting during the year ended December 31, 1995. 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, 1995, the Executive Committee met seven
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, 1995, 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 six times during the year ended December 31, 1995, 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.

10
<PAGE> 13

The Finance Committee serves as a monitor of Enron's financial activities.
In meeting four times during the year ended December 31, 1995, 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 one time during the year ended December 31, 1995, 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, 1995, each Director attended at least
75% of the total number of meetings of the Board and the committees on which the
Director served.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

DIRECTOR COMPENSATION

Each non-employee director of Enron receives an annual service fee of
$40,000 (increased from $22,000 effective May 2, 1995) for serving as a
director. The annual fee for serving on a committee, which was $4,000 per
committee, was eliminated effective May 2, 1995. Each non-employee director
currently serves on two committees. Chairs of the committees receive an
additional $5,000 annually (increased from $3,000 effective May 2, 1995).
Meeting fees are $1,250 for each Board meeting attended and $1,000 for each
committee meeting attended. Total director's fees paid or deferred in 1995 were
$600,750.

Directors can elect to receive fees in cash, defer receipt of their fees to
a later specified date under Enron's 1994 Deferral Plan, or receive their fees
in a combination of restricted stock and stock options in lieu of cash under the
1991 Stock Plan. Under Enron's 1994 Deferral Plan, interest was credited, during
1995, at 9%. Five directors elected to defer fees into Enron's 1994 Deferral
Plan. Prior to 1994, Directors were able to defer their fees under Enron's 1985
Deferral Plan, which continues to credit interest on account balances based on
150% of Moody's seasoned corporate bond yield index, which for 1995 was 12.39%.
One Director elected to receive his fees in a combination of restricted stock
and stock options in lieu of cash according to the terms of the 1991 Stock Plan.
During 1995, each non-employee director received 450 shares of restricted stock
(valued at $34.75 per share on the date of grant) and options to purchase 1,800
shares (with an exercise price of $34.75 per share) according to the terms of
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.

11
<PAGE> 14

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 periodic 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 measured against pre-established individual objectives and competitive
practice as measured by 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. Under the annual incentive plan,
awards can be made in any combination of cash, stock and stock options. 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, three significant elements in the employee benefit
package, the All-Employee Stock Option Program and the Employee Stock Ownership
Plan and the Enron Corp. Savings Plan (which together own almost 12% of Common
Stock as of January 31, 1996), are driven by increasing stockholder value.

Inherent in this "at-risk" component is a heavy weighting toward long-term
performance. At Enron, long-term incentives for the most senior executives are
approximately double the size of annual incentives. We

12
<PAGE> 15

believe this feature provides Enron management with a long-term strategic
incentive that will encourage the continued creation of stockholder value. In
addition, the Committee has approved stock ownership guidelines which provide
that each member of the Office of the Chairman is required to own Enron stock
having a value at least equal to five times his or her annual base salary, each
Management Committee member is required to own Enron stock having a value at
least equal to two times his or her annual base salary, and other corporate and
subsidiary officers named in the annual report are required to own Enron stock
having a value at least equal to his or her annual base salary.

The Committee consults from time to time with Hewitt Associates, a national
consulting firm experienced in executive compensation, and has access to
national compensation surveys and Enron's financial records. The Committee
reviews each element of compensation to ensure that the total compensation
delivered is reflective of company performance with input on market
competitiveness. The executive compensation program is designed to provide top
quartile compensation for top quartile performance. 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 1995, as specified in his employment agreement. In
recognition of Enron's performance during 1995, Mr. Lay received an annual
incentive award consisting of $1,440,000 in cash and a grant of stock options,
at market value, to acquire 73,850 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 14.5% increase in net
income, an increase in earnings per share of 15%, a stockholder return of 27.66%
and an increase in credit rating by Standard & Poor's to BBB+ from BBB. In
addition, 1995 was the eighth consecutive year Enron Corp. increased earnings
per share by 15% or more (excluding the 1989 gain on the initial public offering
of Enron Oil & Gas Company common stock and the effect on deferred taxes of the
1993 federal statutory tax rate increase from 34% to 35%) and the fifth
consecutive year common stock dividends were increased.

In addition to the annual incentive award, during 1995 Mr. Lay received
long-term incentive grants consisting of a grant of stock options, at market
value, to acquire 101,570 shares, and a grant of 812,500 performance units,
consistent with the design of the long-term incentive program.

Mr. Lay received a cash payment of $421,875 under the Performance Unit Plan
for the 1992-1995 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 1992-1995 reflected Enron's return to
its stockholders of 99.40% compared with 61.61% for industry peers, 51.92% for
the S&P 500, and 14.54% for 90-day U.S. Treasury Bills. This performance earned
Enron a ranking of Number 4 and valued the units at $0.75.

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 Proxy Statement.
Qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are

13
<PAGE> 16

met. Enron has structured the performance-based portion of the compensation of
its executive officers (which currently consists of stock options grants,
performance unit grants and annual incentive awards) in a manner that complies
with the statute. The Amended and Restated 1991 Stock Plan and the Annual
Incentive Plan were presented to and approved by stockholders at the 1994 annual
meeting and the Performance Unit Plan was presented to and approved by
stockholders at the 1995 annual meeting. Occasionally, Enron may grant
restricted stock for specific reasons which would not qualify as
performance-based compensation. Also, during 1996, Enron will change the
composition of the Compensation Committee in compliance with Section 162(m).

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 1995, during which time a stockholder who invested $100 in Enron Common
Stock would have received $469, or a 369% increase in value, compared to 153%
for the S&P 500 and 65% 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

14
<PAGE> 17

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, the Current
Peer Group (as defined below) and the Original Peer Group (as defined
below) on December 31, 1990.

2. The Original and Current Peer Groups investments are weighted based
on the market capitalization of each individual company within the
Peer Groups at the beginning of each year.

3. Dividends are reinvested on the ex-dividend dates.

The companies that comprise Enron's Current Peer Group are as follows:
British Gas PLC (which replaced Transco Energy Company effective April 28,
1995); Burlington Resources Inc.; Coastal Corp.; Columbia Gas Systems, Inc.;
Consolidated Natural Gas Co.; NorAm Energy Corp.; Occidental Petroleum Corp.;
PanEnergy Corp; Sonat Inc.; Tenneco, Inc. and The Williams Companies, Inc. The
companies that comprise Enron's Original Peer Group are as follows: Burlington
Resources Inc.; Coastal Corp.; Columbia Gas Systems, Inc.; Consolidated Natural
Gas Co.; NorAm Energy Corp.; Occidental Petroleum Corp.; PanEnergy Corp; Sonat
Inc.; Tenneco, Inc.; Transco Energy Company (until April 28, 1995, when it
ceased to be publicly traded); 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.

<TABLE>
<CAPTION>
Measurement Period Current Peer Original Peer
(Fiscal Year Covered) Enron Corp. S&P 500 Group Group
<S> <C> <C> <C> <C>
1990 100.00 100.00 100.00 100.00
1991 133.01 130.55 96.65 85.78
1992 181.81 140.72 103.71 97.82
1993 232.69 154.91 124.09 114.52
1994 251.10 157.39 117.94 105.98
1995 321.21 216.42 134.72 140.41
</TABLE>

15
<PAGE> 18

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..... 1995 $990,000 $1,440,000 $220,316 $ 0 156,955 $421,875 $ 281,058
Chairman of the
Board and......... 1994 $990,000 $1,200,000 $296,630 $ 69,680 1,416,615 $930,000 $ 311,837
Chief Executive
Officer........... 1993 $960,000 $1,040,000 $375,232 $1,283,250 648,000 $900,000 $1,137,035
Richard D.
Kinder............ 1995 $720,015 $1,040,000 $ 81,465 $ 0 126,270 $281,250 $ 121,886
President and
Chief............. 1994 $660,044 $ 840,000 $124,366 $ 42,210 1,161,125 $680,000 $ 87,872
Operating
Officer........... 1993 $640,044 $ 720,000 $218,410 $ 853,688 433,233 $550,044 $ 404,913
Edmund P. Segner,
III............... 1995 $373,333 $ 372,000 $ 10,500 $ 0 41,980 $ 93,750 $ 793
Executive Vice
President......... 1994 $350,000 $ 300,000 $ 10,500 $ 16,583 225,895 $200,000 $ 31,572
and Chief of
Staff............. 1993 $297,500 $ 260,000 $ 8,450 $ 511,125 240,000 $ 70,070 $ 41,907
Rodney L. Gray..... 1995 $366,667 $ 382,500 $ 10,500 $ 554,600 13,295 $ 65,625 $ 793
Managing Director,
Enron............. 1994 $350,000 $ 288,000 $ 10,500 $ 331,483 375,895(3) $175,000 $ 31,572
Development
Corp.............. 1993 $287,292 $ 260,000 $ 6,250 $ 266,438 252,950 $ 84,150 $ 41,907
and Chairman,
President and
Chief Executive
Officer, Enron
Global Power &
Pipelines L.L.C.
James V. Derrick,
Jr................ 1995 $340,001 $ 300,000 $ 13,439 $ 0 40,710 $129,375 $ 793
Senior Vice
President......... 1994 $320,004 $ 232,000 $ 16,110 $ 14,070 181,795 $345,000 $ 31,572
and General
Counsel........... 1993 $311,671 $ 200,000 $ 14,198 $ 255,563 160,000 $ 0(5) $ 41,907
</TABLE>

(1) Includes "Perquisites and Other Personal Benefits" if value is greater than
the lesser of $50,000 or 10% of reported salary and bonus. Personal plane
usage of $132,829, $147,919 and $130,154 has been reported for Mr. Lay in
1993, 1994 and 1995, respectively. 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 1993 was 12.825%, for 1994 was the minimum of 12.0%, and for
1995 was 12.39%. Interest in excess of 120% of the December, 1994 long-term
Applicable Federal Rate ("AFR") (9.91%) has been reported as Other Annual
Compensation for 1995, interest in excess of 120% of December, 1993 long-
term 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. 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 1993, 1994 and 1995 of 7.06%, 6.0%, and 8.5% respectively, did not
exceed 120% of the AFR. No interest has been reported as Other Annual
Compensation under the 1994 Deferral Plan during 1994, because none of the
Named Officers participated in this plan during 1994. No interest has been
reported as Other Annual Compensation under the 1994 Deferral Plan during
1995 for the participating Named Officers because the crediting rate during
1995 was 9% and did not exceed 120% of the AFR. Other Annual Compensation
also includes cash perquisite allowances.

(2) Restricted stock awards to the Named Officers on February 9, 1993 vest 20%
per year beginning February 9, 1994 and ending February 9, 1998. 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 100% vested on February 7, 1995. Grants made
to Mr. Gray in 1994 and 1995 under the terms of his employment agreement
will vest 100% on December 31, 1996. Dividend equivalents for all restricted
stock awards accrue from date of grant and are paid upon vesting. The
following is the aggregate total of shares in unreleased restricted stock
holdings and their value as of December 31, 1995, for each of the Named
Officers: Mr. Lay, 28,320 shares valued at $1,079,700; Mr. Kinder, 18,840
shares valued at $718,275; Mr. Segner, 11,280 shares valued at $430,050; Mr.
Gray, 34,080 shares valued at $1,299,300; and Mr. Derrick, 5,640 shares
valued at $215,025.

(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.

(4) The amounts shown include the value, as of year-end 1993, 1994, and 1995 of
Enron Common Stock allocated during those years to employees' savings and
special subaccounts under Enron's Employee Stock Ownership Plan. Included in
1994 is a special allocation
(Notes continued on following page)

16
<PAGE> 19

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. Included in 1995 is a special allocation made in December, 1995
to a special allocation subaccount. Included in 1994 and 1995 for Mr. Lay is
$1,944 and $3,252, respectively, that is attributable to term life insurance
coverage pursuant to a split-dollar life insurance arrangement. Also
included in 1994 and 1995 for Mr. Lay is $278,321 and $277,013,
respectively, which represents 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. Included in 1994 for Mr. Kinder is a cash payment of $56,300 and
in 1995 a cash payment of $121,245 which were 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 certified that both of the benefit exchanges
were cost neutral to Enron. 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.

(5) Mr. Derrick was employed in June, 1991 and did not receive a grant of
performance units until the 1991 grant which was paid in 1994.

STOCK OPTION GRANTS DURING 1995

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
1995.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------
NUMBER
OF
SECURITIES POTENTIAL REALIZABLE VALUE AT
UNDERLYING % OF TOTAL ASSUMED ANNUAL RATES OF
OPTIONS/ OPTIONS/SARS EXERCISE STOCK PRICE APPRECIATION
SARS GRANTED TO OR BASE FOR OPTION TERM(5)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 0%(4) 5% 10%
- --------------------- -------- ------------ -------- ---------- ----- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay....... 55,385(2) 1.88% $29.5000 01/25/00 $0 $ 451,405 $ 997,486
101,570(3) 3.45% $38.1250 12/29/05 $0 $ 2,435,304 $ 6,171,539
Richard D. Kinder.... 38,770(2) 1.32% $29.5000 01/25/00 $0 $ 315,987 $ 698,249
87,500(3) 2.97% $38.1250 12/29/05 $0 $ 2,097,953 $ 5,316,625
Edmund P. Segner,
III................ 13,850(2) 0.47% $29.5000 01/25/00 $0 $ 112,882 $ 249,439
28,130(3) 0.95% $38.1250 12/29/05 $0 $ 674,462 $ 1,709,219
Rodney L. Gray....... 13,295(2) 0.45% $29.5000 01/25/00 $0 $ 108,358 $ 239,444
James V. Derrick,
Jr................. 10,710(2) 0.36% $29.5000 01/25/00 $0 $ 87,290 $ 192,888
30,000(3) 1.02% $38.1250 12/29/05 $0 $ 719,298 $ 1,822,843
All Employee and
Director
Optionees.......... 2,971,210(6) 100% $34.2800(7) N/A $0 64,054,831(8) 162,327,602(8)
All Stockholders..... N/A N/A N/A N/A $0 5,277,342,489(8) 13,373,828,926(8)
Optionee Gain as % of
All Stockholders
Gain............... N/A N/A N/A N/A N/A 1.21% 1.21%
</TABLE>

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

(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) Represents bonus stock options that are five year grants and became 100%
vested on July 25, 1995.

(3) Represents the stock option grant under the Long-Term Incentive Program for
1996. Grants under this program are granted on the last trading day of the
prior year, due to regulations under Section 162(m). Options will become 20%
vested on June 29, 1996 and will first be exercisable on that date with an
additional 20% becoming exercisable on the anniversary of the date of grant
until December 29, 1999.
(Notes continued on following page)

17
<PAGE> 20

(4) 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.

(5) 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.

(6) Includes shares issued to employees on December 29, 1995 under the All
Employee Stock Option Program to employees hired during 1995.

(7) Weighted average exercise price of all Enron stock options granted in 1995.

(8) 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 ($34.28) and the
number of shares of Common Stock outstanding on December 31, 1995, excluding
6,450,597 shares held by the Enron Corp. Flexible Equity Trust.

AGGREGATED STOCK OPTION/SAR EXERCISES DURING 1995 AND STOCK OPTION/SAR
VALUES AS OF DECEMBER 31, 1995

The following table sets forth information with respect to the Named
Officers concerning the exercise of SARs and options during the last fiscal year
and unexercised options and SARs held as of the end of the fiscal year:
<TABLE>
<CAPTION>

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
SHARES DECEMBER 31, 1995 SARS AT DECEMBER 31, 1995
ACQUIRED ON VALUE ------------------------------ --------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth L. Lay................... 213,600 $4,936,600 1,563,964 1,157,506 $19,015,511 $7,017,812
Richard D. Kinder................ 60,000 $1,387,500 1,591,586 908,042 $24,473,757 $5,194,751
Edmund P. Segner, III............ 78,892 $ 828,343 192,737 263,586 $ 1,798,327 $2,287,202
Rodney L. Gray -- Enron Corp. ... 0 $ 0 290,305 260,075 $ 3,407,067 $2,398,658
EPP.............. 0 $ 0 0 150,000 $ 0 $ 131,250
James V. Derrick, Jr. ........... 0 $ 0 326,457 216,048 $ 4,983,240 $1,875,116
</TABLE>

LONG-TERM INCENTIVE PLAN -- AWARDS IN 1995

The following table provides information concerning awards of performance
units under Enron's Performance Unit Plan during 1995. 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
total stockholder return is compared to that of the 11 peer companies included
in the Current 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
Current 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 stockholder return

18
<PAGE> 21

must be above the return on 90-day U.S. Treasury Bills over the same performance
period in order for any value to be assigned.

<TABLE>
<CAPTION>
NUMBER PERFORMANCE
OF OR OTHER ESTIMATED FUTURE PAYOUTS
SHARES, PERIOD UNDER NON-STOCK PRICE-BASED PLANS
UNITS OR UNTIL --------------------------------------------
OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) PAYOUT ($) ($) ($)
---- ---------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Kenneth L. Lay......................... 812,500 4 years $ 0 $812,500 $1,625,000
Richard D. Kinder...................... 700,000 4 years $ 0 $700,000 $1,400,000
Edmund P. Segner, III.................. 225,000 4 years $ 0 $225,000 $ 450,000
Rodney L. Gray(1)...................... 0 0 $ 0 $ 0 $ 0
James V. Derrick, Jr. ................. 172,500 4 years $ 0 $172,500 $ 345,000
</TABLE>

- ---------------
(1) Pursuant to Mr. Gray's employment agreement, he does not receive performance
units (See "Employment Contracts" on page 22.)

RETIREMENT AND SUPPLEMENTAL BENEFIT PLANS

For many years, Enron has maintained the Enron Corp. Retirement Plan (the
"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 conversion of 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").

The Pre-1995 Formula was 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. 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 1995, Enron's Board of Directors adopted an amendment to and restatement
of the Retirement Plan changing the Plan's name to the Enron Corp. Cash Balance
Plan (the "Cash Balance Plan") and changing the 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 commenced in Plan year 1996.

Directors who are not employees are not eligible to participate in the Cash
Balance 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 Cash Balance Plan except for the dollar limitation on accrued
benefits imposed by the Internal Revenue Code of 1986, as amended, and a

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<PAGE> 22

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.................................... 18.9 30.2 $990,000 $437,813
Mr. Kinder................................. 15.1 28.9 $750,000 $276,521
Mr. Segner................................. 7.9 30.7 $385,000 $165,743
Mr. Gray................................... 7.8 29.1 $375,000 $151,551
Mr. Derrick................................ 4.5 18.6 $350,000 $ 71,851
</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.

Messrs. 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 upon death before
retirement, 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 upon death before retirement, 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.

SEVERANCE PLANS

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 employee may receive an additional severance benefit equal to the
severance benefit described above. Under no circumstances will the total
severance benefit paid under Enron's Severance Pay Plan exceed 52 weeks of pay.
Under Enron's Change of Control Severance Plan, 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

20
<PAGE> 23

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.

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
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 were 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 were 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 1995, at an average annual rate of 6.8%) and are
collateralized with Common Stock and personal property.

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 1995, at an average annual rate of interest of 6.8%) in an
aggregate amount not to exceed $4 million at any time. During 1995, the highest
amount of Mr. Lay's outstanding loan balance was $2,605,000. During 1995, Mr.
Lay made certain principal payments on the loan, and as of February 29, 1996,
the balance on such loan was $250,000. Mr. Lay paid Enron $155,472 as interest
in 1995 pursuant to his advance and loan agreements.

During 1995, the balance of Mr. Kinder's advance and loan remained at
$1,553,086 and $1,500,000 respectively. Interest in the amount of $118,451 and
$109,023 accrued in 1995 on Mr. Kinder's advance and loan, respectively. Unpaid
interest continues to accrue and is payable on or before February 8, 1999. The
loans

21
<PAGE> 24

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 involuntarily terminated and for
two years from the date of any other termination of their 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 vested 20% immediately and will vest 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 Enron Capital &
Trade Resources Corp. ("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; 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 vested

22
<PAGE> 25

20% immediately and will vest 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,
Mr. Gray will receive amounts prescribed in the employment 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.

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 1995 was 6.8% and is
collateralized with 7,960 shares of Common Stock. Interest in the amount of
$16,082 accrued in 1995 on the loan.

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 Chairman, 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 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. In 1995, Mr. Gray's employment and
compensation agreement were assigned to Enron Development Corp. ("EDC"), with
contingent grants and acceleration of vesting based 50% on Enron Corp. earnings
per share targets and 50% based on EPP earnings per share targets.

Mr. Derrick entered into an employment agreement with Enron in June, 1991,
which provides for a minimum annual salary of $275,000, a minimum annual grant
of 20,000 stock options, a minimum annual grant of 172,500 performance units,
and annual cash compensation of not less than $400,000. In May, 1994, Mr.
Derrick's agreement was extended three years, and he was granted 100,000 stock
options with a four (4) year vesting schedule. 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, 1997. The employment
agreement contains noncompete provisions in the event of Mr. Derrick's
termination of employment.

CERTAIN TRANSACTIONS

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, 1997. 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. Effective January 1,
1996, the retainer will be increased to $42,000 per month, and the daily rate
will be increased to $4,200. Effective January 1, 1997, the retainer will be
increased to $44,100 per month and the daily rate will be increased to $4,410.
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 Plan, which would vest at the end of the term of

23
<PAGE> 26

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 would 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 vested 100% one year from date of
grant and were to expire on August 1, 1995. In return for waiving his phantom
equity, Mr. Urquhart received cash payments totaling $1,160,000, one-third of
which was paid upon execution of the amendment and an additional one-third of
which was 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 Consulting Services Agreement was further amended
in August, 1995, to provide for a grant of 50,000 Enron Corp. phantom shares at
a grant price equal to the December 29, 1995 Enron Corp. closing stock price, or
$38.125. The phantom shares will vest 50% on June 29, 1996, and 50% on December
29, 1996, and will expire on December 31, 1998. 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 1995, Enron paid Mr. Urquhart
$592,989 for services rendered (including reimbursement of expenses) under the
Consulting Services Agreement. In addition, in 1995 Mr. Urquhart exercised
92,000 Enron Corp. phantom shares granted at $28.125 per share. Based on the
fair market value on the date of exercise of $34.375, Mr. Urquhart received a
cash payment of $575,000.

Houston Pipe Line Company ("HPL"), a subsidiary of Enron, in the ordinary
course of its business, entered into a master gas storage agreement (the "Master
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 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 eight 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 Master Agreement and the initial confirmation were
subsequently assigned by Bruin to a third party; HPL consented to such
assignment. The assignment expired on April 1, 1995, whereupon rights and
obligations under the Master Agreement reverted to Bruin. Subsequent to
expiration of the initial confirmation, a new confirmation was entered into
between Bruin and HPL relating to the storage of up to approximately six billion
cubic feet of natural gas during the period from June 1, 1995 to February 28,
1996. The consideration for such storage service was the payment to HPL of an
injection fee equal to $0.159 per million British Thermal Units ("MMBtu") of gas
injected, with a minimum payment of $954,000 due by the payment date for the
October 1995 invoice if the requisite minimum quantity of natural gas had not
been injected by Bruin into the storage facility prior to October 31, 1995. All
of the gas stored during the period of the second confirmation has been
withdrawn as of this date, except for certain minor imbalance amounts that do
not total more than 100,000 MMBtu.

As a complement to the storage transaction, during the period from June 1,
1995 to September 30, 1995, HPL provided transportation services for Bruin and
charged Bruin transportation fees ranging from $.01 per MMBtu to $.03 per MMBtu.
The transportation contract is now complete.

There are no currently effective confirmations under the Master Agreement,
nor are there any discussions relating to the conduct of further storage or
transportation business between HPL and Bruin under the Master

24
<PAGE> 27

Agreement; however, such agreement has not been terminated and could be used in
the future as the contractual vehicle to document future storage transactions
between Bruin and HPL. HPL believes that the terms of the existing Master
Agreement are comparable to those available to unaffiliated third parties, and
HPL does not intend to engage in or permit any affiliate to engage in any
transactions with Bruin except on terms that HPL believes are comparable to
those available to unaffiliated third parties.

In January, 1996, ECT, United Media Corporation ("UMC") and certain other
individuals, including Mark K. Lay, entered into a feasibility agreement (the
"Feasibility Agreement") providing for the performance by UMC and ECT of a
feasibility study relating to the fixed price purchase and sale of certain paper
products. Under the terms of the Feasibility Agreement, ECT has agreed to
advance to the project up to $300,000 (including certain internal costs and out
of pocket expenses of ECT and UMC). ECT also has an option to increase its
commitment by an additional $300,000. In connection with the feasibility
analysis being performed, ECT and UMC have held preliminary discussions with
third parties for the supply of paper and related arrangements, but it has not
been determined whether any such arrangements would ultimately be entered into.
The Feasibility Agreement provides that if the project proceeds, UMC would
receive an equity interest not to exceed 49%. ECT has been informed that, if the
project proceeds, Mark K. Lay would own 20% of UMC's interest in the project.

Section 16(a) of the Securities Exchange Act of 1934 requires Enron's
executive officers and directors, and persons who own more than 10% of a
registered class of Enron's equity securities, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Based solely
on its review of the copies of such reports received by it, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Enron believes that during 1995, its executive officers,
directors and greater than ten percent stockholders complied with all applicable
filing requirements, except Lawrence Ruben, who failed to file timely one report
covering four transactions and Ronald J. Burns, who failed to file timely two
reports covering four transactions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

At December 31, 1995, the Compensation Committee consisted of Messrs.
LeMaistre, Belfer, Duncan and Foy.

Until April 1986, Mr. Belfer was an officer of Belco Petroleum Corporation,
a wholly owned subsidiary of Enron. During 1995 and 1996, Belco Oil & Gas Corp.
("BOGC") entered into natural gas and crude oil commodity swap agreements and
option agreements with ECT. BOGC is wholly owned by Mr. Belfer and members of
his family. These agreements were entered into in the ordinary course of
business of ECT and are on terms that ECT believes are no less favorable than
the terms of similar arrangements with third parties. Pursuant to the terms of
these agreements, ECT paid BOGC a net amount of approximately $5,446,597 with
respect to 1995. The amount of future payments (as well as whether payments are
made by ECT to BOGC or vice versa) is affected by fluctuations in energy
commodity prices. Enron believes that BOGC and ECT will continue to enter into
similar arrangements throughout 1996.

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.

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<PAGE> 28

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, 1996.

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 7, 1996, 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.

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 1997 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 1997 must be received by Enron, addressed to
Peggy B. Menchaca, Vice President and Secretary, 1400 Smith Street, Houston,
Texas 77002, no later than November 25, 1996, 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 NOVEMBER 25, 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

26
<PAGE> 29

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 1996 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 1996 Annual
Meeting of Stockholders of Enron was February 2, 1996. With respect to business
to be brought before the 1996 Annual Meeting of Stockholders, Enron has not
received any notices from its stockholders that Enron is required to include in
this proxy statement.

NOMINATIONS FOR 1997 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 November 25, 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 1996 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
1996 Annual Meeting of Stockholders of Enron was February 2,

27
<PAGE> 30

1996. Enron has not received any notices from its stockholders regarding
nominations for directors to be elected at the 1996 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 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 25, 1996

28
<PAGE> 31
|
/X/ PLEASE MARK YOUR |7405
VOTES AS IN THIS ----
EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
1. Election of FOR WITHHELD 2. Ratification of FOR AGAINST ABSTAIN
Directors. / / / / appointment of / / / / / /
(see reverse) independent
accountants.

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

3. In the discretion of the proxies named Change of Address/ / /
herein, the proxies are authorized Comments on
to vote upon other matters as are Reverse Side
properly brought before the meeting.

All as more particularly described in the
Proxy Statement relating to such meeting,
receipt of which is hereby acknowledged.

Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.

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

------------------------------------------
Signature(s) Date

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

FOLD AND DETACH HERE

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

FOR EARNINGS INFORMATION, CALL (800) 808-0363

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 $15 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) 519-3111 OR (201) 324-1225
OR WRITE TO:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P.O. BOX 2500
JERSEY CITY, NJ 07303-2500

<PAGE> 32

[ENRON CORP LOGO]

P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENRON CORP.
FOR ANNUAL MEETING ON MAY 7, 1996
R
The Undersigned hereby appoints Kenneth L. Lay, James V. Derrick, Jr., and
O 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
X Stockholders of Enron Corp. ("Enron") to be held at 10:00 a.m. Houston time
on Tuesday, May 7, 1996, in the LaSalle Ballroom of the Doubletree Hotel at
Y 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 SEE REVERSE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. SIDE
--------------