<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 sec. 240.14a-11(c) or sec. 240.14a-12
Enron Global Power & Pipelines L.L.C.
- --------------------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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 LOGO]
ENRON GLOBAL POWER & PIPELINES L.L.C.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 14, 1997
To The Shareholders:
Notice is hereby given that the annual meeting of shareholders of Enron
Global Power & Pipelines L.L.C. ("EPP") will be held in Room 50M of the Enron
Building, 1400 Smith Street, Houston, Texas, at 3:00 p.m. Houston time on
Wednesday, May 14, 1997, for the following purposes:
1. To elect seven directors of EPP to hold office until the next
annual meeting of shareholders 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 EPP's auditors for the year ending
December 31, 1997; and
3. To transact such other business as may properly be brought before
the meeting or any adjournment(s) thereof.
Holders of record of limited liability company interests in EPP ("Common
Shares") at the close of business on March 17, 1997, will be entitled to notice
of and to vote at the annual meeting or any adjournment(s) thereof.
Please date, sign and return the enclosed proxy, for which a postage-paid,
return envelope is enclosed, so that your Common Shares will be voted in
accordance with your wishes and in order that the presence of a quorum may be
assured. The proxy must be dated, signed and returned in order to be counted.
The giving of such proxy does not preclude you from voting in person if you
attend the annual meeting.
By Order of the Board of Directors,
K. WADE CLINE
Vice President, General Counsel and
Secretary
Houston, Texas
March 28, 1997
<PAGE> 3
[ENRON LOGO]
ENRON GLOBAL POWER & PIPELINES L.L.C.
PROXY STATEMENT
This proxy statement is being furnished in connection with the solicitation
by the Board of Directors of Enron Global Power & Pipelines L.L.C. ("EPP") of
proxies to be used at the annual meeting of shareholders to be held in Room 50M
of the Enron Building, 1400 Smith Street, Houston, Texas, at 3:00 p.m. Houston
time on Wednesday, May 14, 1997 or at any adjournment(s) thereof (the "Annual
Meeting"). The mailing address of the principal executive offices of EPP is 333
Clay Street, Suite 1800, Houston, Texas 77002. The proxy statement and the
related form of proxy included herewith are to be first sent or given to the
shareholders of EPP on approximately March 28, 1997.
Holders of record of limited liability company interests in EPP ("Common
Shares") at the close of business on March 17, 1997, will be entitled to one
vote per Common Share on all matters submitted at the Annual Meeting. On March
17, 1997, the record date, there were outstanding 25,981,934 Common Shares.
Included in the number of outstanding Common Shares are 12,662,593 Common Shares
held by Enron Holding Company L.L.C. ("EHC"), 31,536 Common Shares held by Enron
Development Corp. ("EDC"), 460,857 Common Shares held by Enron Equity Corp.
("EEC") and 380,346 Common Shares held by Enron International Holdings Corp.
("EIHC"), subsidiaries of Enron Corp. There are no other voting securities
outstanding.
If the enclosed form of proxy is properly executed and returned, the Common
Shares represented by the proxy will be voted at the Annual Meeting. If a
shareholder indicates in a proxy a choice with respect to any matter to be acted
upon, the Common Shares will be voted in accordance with such choice. If no
choice is indicated, the Common Shares will be voted "FOR" the proposal to
ratify the appointment of auditors and the election of the director nominees set
forth on the enclosed form of proxy. Any shareholder giving a proxy may revoke
it if written notice of such revocation is received by the Secretary of EPP
before such proxy is voted or by attending the Annual Meeting and voting in
person.
EPP's summary annual report to shareholders for the year ended December 31,
1996, is being mailed herewith to all shareholders entitled to vote at the
Annual Meeting. The summary annual report and the Annual Report on Form 10-K
contained therein do not constitute a part of the proxy soliciting material.
ITEM 1.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to hold office
until the next succeeding annual meeting of shareholders and until their
respective successors have been elected and qualified. All of the
<PAGE> 4
nominees are currently directors of EPP. Pursuant to the Amended and Restated
Limited Liability Company Agreement of EPP (the "Company Agreement"), a majority
of the votes cast in person or by proxy by the holders of Common Shares at the
Annual Meeting will be required to elect each of the nominees as a director.
Abstentions, votes withheld and "broker non-votes" are counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at meetings of the shareholders. Abstentions and votes withheld are counted in
tabulations of the votes cast in the election of directors and on proposals
presented to shareholders, whereas broker non-votes are not counted for purposes
of determining the outcome of a particular vote. Accordingly, an abstention or
vote withheld would have the same legal effect as a vote against a particular
director, but a broker non-vote would not. A "broker non-vote" occurs if a
broker or other nominee with respect to Common Shares does not have
discretionary authority to vote such Common Shares and has not received
instructions as to how to vote such Common Shares with respect to a particular
item. Shareholders may not cumulate their votes in the election of directors.
The following information regarding the nominees, their principal
occupations, employment history and directorships in certain companies is as
reported by the respective nominees.
- --------------------------------------------------------------------------------
JAMES V. DERRICK, JR., 52
Director since 1994
James V. Derrick, Jr. was elected to the Board of Directors in October 1994. Mr.
Derrick has served as Senior Vice President and General Counsel of Enron Corp.
since June 1991. Prior to joining Enron Corp. in 1991, Mr. Derrick was a partner
at the law firm of Vinson & Elkins L.L.P. for more than 13 years.
- --------------------------------------------------------------------------------
RODNEY L. GRAY, 44
Director since 1994
Rodney L. Gray has been a Director and Chief Executive Officer of EPP since
October 1994, and he has served as Chairman of the Board since June 1995. In
addition, Mr. Gray served as President of EPP from October 1994 until June 1995
and from November 1995 until February 1997. Mr. Gray also serves as Executive
Vice President of Enron International Inc. ("EI") and has served as a Managing
Director of both EDC and of Enron Capital & Trade Resources Corp. ("ECT"). EI,
EDC and ECT are all wholly owned subsidiaries of Enron Corp. From October 1992
to June 1993, Mr. Gray served as Senior Vice President, Finance and Treasurer of
Enron Corp. Mr. Gray joined Enron Corp. in 1988 as Vice President and Treasurer.
Mr. Gray also is a director of Harmon Industries, Inc.
- --------------------------------------------------------------------------------
REBECCA P. MARK, 42
Director since 1997
Rebecca P. Mark was elected to the Board of Directors in January 1997. Ms. Mark
has served as Chairman and Chief Executive Officer of EI since January 1997, as
Chairman and Chief Executive Officer of EDC since July 1993, and as Vice
President and Chief Development Officer of Enron Power Corp. from July 1991 to
July 1993. EI, EDC and Enron Power Corp. are all wholly owned subsidiaries of
Enron Corp. Ms. Mark is also a director of Thermatrix Inc.
2
<PAGE> 5
- --------------------------------------------------------------------------------
BRENT SCOWCROFT, 71
Director since 1994
Brent Scowcroft was elected to the Board of Directors in October 1994. Since
1993, General Scowcroft has served as President of The Forum for International
Policy, a nonprofit organization promoting American leadership in foreign
policy. General Scowcroft, a retired Lieutenant General in the Air Force, served
as the National Security Advisor to both Presidents Ford (1975-77) and Bush
(1989-93). From 1982 to 1989, General Scowcroft served as Vice Chairman of
Kissinger Associates, Inc., a strategic and risk assessment consulting firm.
General Scowcroft also is a director of Pennzoil Company, Northrop Grumman
Corporation and Qualcomm Incorporated.
- --------------------------------------------------------------------------------
EDMUND P. SEGNER, III, 43
Director since 1994
Edmund P. Segner, III was elected to the Board of Directors in October 1994.
Since October 1992, Mr. Segner has served as Executive Vice President and Chief
of Staff of Enron Corp. From October 1990 through October 1992, Mr. Segner
served as Senior Vice President of Investor, Public and Government Relations of
Enron Corp. Mr. Segner is also a director of Enron Oil & Gas Company, which is
an affiliate of Enron Corp.
- --------------------------------------------------------------------------------
GEORGE S. SLOCUM, 56
Director since 1994
George S. Slocum was elected to the Board of Directors in October 1994. Since
1992, Mr. Slocum has served as the principal owner and manager of Slocum
Enterprises, a venture capital investment firm. From 1987 to 1991, Mr. Slocum
was President and Chief Executive Officer of Transco Energy Company, a gas
pipeline and services company. Mr. Slocum also is a director of James River Coal
Co.
- --------------------------------------------------------------------------------
THOMAS C. THEOBALD, 59
Director since 1994
Thomas C. Theobald was elected to the Board of Directors in October 1994. From
1987 to August 1994, Mr. Theobald was Chairman of the Board and Chief Executive
Officer of Continental Bank Corporation, Chicago and Vice Chairman of Citicorp,
New York from 1982 to 1987. Mr. Theobald has been a Managing Director of William
Blair Capital Partners, L.L.C., a private equity investment firm, since
September 1994. Mr. Theobald also is a director of Xerox Corporation, Anixter
International Inc. and Peregrine Asia Growth Fund and a Trustee of Mutual Life
Insurance Company of New York.
- --------------------------------------------------------------------------------
3
<PAGE> 6
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
EPP knows of no one who beneficially owns in excess of 5% of the Common
Shares except as set forth in the table below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF OWNERSHIP AS OF PERCENT
BENEFICIAL OWNER TITLE OF CLASS JANUARY 31, 1997 OF CLASS
------------------- -------------- ----------------- --------
<S> <C> <C> <C>
Enron Corp.(1)................................ Common Shares 14,732,168(2) 56.73%
1400 Smith Street
Houston, Texas 77002
</TABLE>
- ---------------
(1) Represents shares owned of record by Enron Corp.'s direct or indirect wholly
owned subsidiaries, EHC, EDC, EEC and EIHC, which subsidiaries share voting
and investment power with Enron Corp.
(2) Includes shares having an aggregate value of $47 million subject to an
option exercisable within 60 days after January 31, 1997. In March 1997,
EIHC exercised this option and acquired 1,577,182 Common Shares.
Subsequently, EIHC sold a portion of these Common Shares, reducing Enron
Corp.'s ownership to 13,535,332 shares as of the date of this Proxy
Statement, representing 52% of the outstanding Common Shares. See
"Compensation Committee Interlocks and Insider Participants -- Share Options
Issued to Enron" below.
SHARE OWNERSHIP OF BOARD OF DIRECTORS AND MANAGEMENT
<TABLE>
<CAPTION>
EPP COMMON SHARES ENRON CORP. COMMON STOCK
-------------------------------- -----------------------------------
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF BENEFICIAL PERCENT
OWNERSHIP AS OF OF OWNERSHIP AS OF OF
JANUARY 31, 1997(1)(2) CLASS JANUARY 31, 1997(1)(2)(3) CLASS
---------------------- ------- ------------------------- -------
<S> <C> <C> <C> <C>
K. Wade Cline...................... 12,000 * 12,892 *
James V. Derrick, Jr............... 500 * 511,433 *
Rodney L. Gray..................... 16,000 * 553,873 *
Kurt S. Huneke(4).................. 8,000 * 163,879 *
Rebecca P. Mark(5)................. -- -- 185,100 *
Paula H. Rieker.................... 12,000 * 31,755 *
Brent Scowcroft.................... 26,750 * -- --
Edmund P. Segner, III.............. 2,000 * 271,076 *
George S. Slocum................... 30,250 * 9,300 *
Thomas C. Theobald................. 31,250 * -- --
All directors and executive
officers as a group (10 in
number).......................... 138,750 * 1,739,308 *
</TABLE>
- ---------------
* Less than 1%.
(1) Except as otherwise explained in the footnotes below, all shares are held
with sole voting power and sole investment power.
(2) Includes (a) EPP Common Shares subject to share options exercisable within
60 days after January 31, 1997, as follows: Mr. Cline, 12,000; Mr. Gray,
12,000; Mr. Huneke, 8,000; Ms. Rieker, 12,000;
(Notes continued on following page)
4
<PAGE> 7
Mr. Scowcroft, 26,250; Mr. Slocum, 26,250; Mr. Theobald, 26,250; and all
directors and executive officers as a group, 122,750; and (b) shares of
Enron Corp. common stock subject to stock options exercisable within 60 days
after January 31, 1997, as follows: Mr. Cline, 11,218; Mr. Derrick, 494,414;
Mr. Gray, 478,603; Mr. Huneke, 138,694; Ms. Mark, 68,946; Ms. Rieker,
25,249; Mr. Segner, 192,844; and all directors and executive officers as a
group, 1,409,968.
(3) Includes shares held under Enron Corp.'s Savings Plan (the "Enron Savings
Plan") and/or Employee Stock Ownership Plan (the "Enron ESOP") or unvested
restricted shares under Enron Corp.'s 1991 Stock Plan (the "Enron 1991 Stock
Plan") as follows: Mr. Cline, 1,674; Mr. Derrick, 10,959; Mr. Gray, 5,850;
Mr. Huneke, 15,185; Ms. Mark, 114,781; Ms. Rieker, 6,294; and Mr. Segner,
18,997; and all directors and executive officers as a group, 173,740.
Participants in the Enron Savings Plan have sole voting power and limited
investment power with respect to shares in the Enron Savings Plan.
Participants in the Enron ESOP have sole voting power and no investment
power prior to distribution of shares from the Enron ESOP. Participants in
the Enron 1991 Stock Plan have sole voting power and no investment power for
restricted shares awarded thereunder until such shares vest in accordance
with the provisions of such Plan. After vesting, the participant has sole
investment and voting powers.
(4) Mr. Huneke became an executive officer of EPP on November 6, 1996. In
addition to the EPP Common Shares and the Enron Corp. Common Stock set forth
in the table, Mr. Huneke owns 5,000 American Depositary Shares of
Transportadora de Gas del Sur S.A., an indirect partially owned subsidiary
of EPP.
(5) Ms. Mark became a director of EPP on January 27, 1997.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors had four regularly scheduled meetings and one
special meeting during the year ended December 31, 1996. The Board of Directors
uses working committees with functional responsibility in the more complex
recurring areas where more active board involvement or disinterested oversight
is required. The Board of Directors has a standing Oversight Committee, Audit
Committee, Compensation Committee and 1994 Share Option Plan Committee. It does
not have a standing Nominating Committee.
The Oversight Committee has the sole authority and responsibility to make
all decisions regarding whether EPP should accept or reject offers by Enron
Corp. or its affiliates (collectively, but excluding EPP and its subsidiaries,
"Enron") of interests in projects made pursuant to the Purchase Right Agreement
between EPP and Enron and all other decisions with regard to such agreement,
including the review and approval of any amendments thereto or the termination
thereof. The Oversight Committee also may, and on the request of Enron or the
Board of Directors will, review the terms of acquisitions from Enron outside the
Purchase Right Agreement or new or amended contracts or transactions between EPP
and Enron. The Oversight Committee also may consider and resolve other matters
involving conflicts of interests between EPP and Enron. The Oversight Committee,
which met ten times during the year ended December 31, 1996, is currently
composed of Messrs. Scowcroft, Slocum and Theobald (Chairman), all of whom are
outside directors not affiliated with Enron.
The Audit Committee recommends to the Board of Directors the appointment of
the independent auditors to conduct an annual audit of EPP's consolidated
financial statements and reviews with such firm the plan, scope and results of
such audit and the fees for the services to be performed. The Audit Committee
also reviews with the independent auditors the adequacy of internal control
systems and reports its findings to the Board of Directors. The Audit Committee,
which met four times during the year ended December 31, 1996, is currently
composed of Messrs. Slocum (Chairman) and Theobald.
5
<PAGE> 8
The Compensation Committee is responsible for approving the compensation
arrangements of senior management and recommending approval by the Board of
Directors of the creation of and amendments to EPP benefit plans, other than
stock option plans. In addition, the Compensation Committee administers the
Enron Global Power & Pipelines L.L.C. 1994 Annual Incentive Plan (the "EPP
Incentive Plan"), and in this capacity makes all decisions regarding incentive
awards to EPP employees, including executive officers, under such plan. The
Compensation Committee, which met four times during the year ended December 31,
1996, is currently composed of Messrs. Segner, Slocum (Chairman) and Scowcroft.
The 1994 Share Option Plan Committee administers the Enron Global Power &
Pipelines L.L.C. 1994 Share Option Plan (the "EPP Share Plan"), the All-Employee
Share Option Program ("AESOP") and the Bonus Stock Option Plan (the "Bonus
Option Plan"), and in this capacity makes all decisions regarding share option
awards to individuals, including EPP executive officers, under such plans. In
addition, the 1994 Share Option Plan Committee is responsible for recommending
approval by the Board of Directors of the creation of and amendments to EPP
share option plans. The 1994 Share Option Plan Committee, which was formed in
November 1996 and met one time during the year ended December 31, 1996, is
currently composed of Messrs. Slocum (Chairman) and Scowcroft.
During the year ended December 31, 1996, each director attended at least
75% of the total number of meetings of the Board of Directors and the committees
on which the director served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Each director who is not an employee of EPP or Enron (a "nonemployee
director") receives an annual retainer fee of $50,000 and reimbursement of
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors or committees thereof. In addition, members of the Oversight
Committee may receive additional fees or compensation, as determined by the
Board of Directors and/or the Compensation Committee and/or the 1994 Share
Option Plan Committee, to the extent such persons are required to spend a
significant amount of time serving on the Oversight Committee. In May 1996, the
Compensation Committee granted to Mr. Theobald 10,000 phantom options with share
appreciation rights as additional compensation for the unanticipated heavy
workload during 1996 of Mr. Theobald as Chairman of the Oversight Committee.
This heavy workload was primarily due to the Oversight Committee's evaluation of
several Enron Corp. projects for purchase by EPP during 1996. These phantom
share options have an exercise price of $24.625 per share, became 100% vested on
May 14, 1996, and could be exercised at any time after November 14, 1996, but
before May 14, 2006.
Under the terms of the EPP Share Plan, each nonemployee director will also
receive an annual grant of an option to purchase 10,000 Common Shares upon his
or her election to the Board of Directors at the annual meeting of shareholders
at an exercise price equal to the fair market value of the Common Shares on the
date of grant. Accordingly, during 1996, each nonemployee director received a
grant of options to purchase 10,000 Common Shares at $25.50 per share. Options
granted to nonemployee directors under the EPP Share Plan vest as to 25% of the
Common Shares covered thereby after six months and an additional 25% on each
anniversary of the date of grant. All options expire ten years from the date of
grant.
6
<PAGE> 9
JOINT REPORT FROM THE COMPENSATION COMMITTEE AND THE
1994 SHARE OPTION PLAN COMMITTEE REGARDING EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing the executive compensation philosophy of EPP. Under the new Section
16 regulations of the Securities and Exchange Commission (the "SEC"), Edmund P.
Segner, III, cannot be a member of the committee that administers
the 1994 Share Option Plan, because he is employed by EPP's parent, Enron Corp.
Therefore, the 1994 Share Option Plan Committee was established during 1996 and
has responsibility for administering the 1994 Share Option Plan. It is the duty
of both Committees to administer the executive compensation 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 EPP is to reward the
executive's performance that creates long-term shareholder value. This
pay-for-performance tenet is embedded in most aspects of an executive's total
compensation package. Salary increases and annual incentive awards will be
reviewed annually by the Compensation Committee, and long-term grants will be
reviewed annually by the 1994 Share Option Plan Committee to ensure consistency
with EPP's total compensation philosophy.
Base Salary
All decisions regarding base salary are made based upon individual
performance as measured against preestablished individual objectives and
competitive practice as measured by compensation surveys. Base salaries are
targeted at the median of a U.S. energy industry comparator group.
Annual Incentive Awards
The EPP Incentive Plan is funded as a percentage of after-tax net income as
approved by the Compensation Committee each year. Downward adjustment of the
fund is at the sole discretion of the Compensation Committee based on
performance against other goals, such as earnings per share growth. However,
upward adjustment of the fund, over the formula-driven amount, is not allowed.
All decisions regarding individual objectives are made based upon individual
performance as measured against pre-established individual objectives, but in no
event will an individual incentive award exceed a specified percentage of
after-tax net income as pre-established annually by the Compensation Committee.
In 1996, the Bonus Share Option Program was implemented such that 20% of
the annual incentive bonus is required to be paid in share options. Eligible
employees may voluntarily elect to take up to an additional 30% of the annual
incentive bonus in share options.
Long-Term Incentives
Long-term incentives at EPP are provided under the 1994 Share Option Plan.
The 1994 Share Option Plan is administered by the 1994 Share Option Plan
Committee. Share options are issued at initial employment to those employees who
are in a position to impact share value. Long-term incentives are reviewed
annually to determine if additional grants are warranted based on the executive
compensation philosophy. EPP's long-term incentive philosophy is focused on
increasing shareholder value. Aggregate stock holdings of the executives have no
bearing on the size of long-term incentive grants.
7
<PAGE> 10
Total Compensation
Over 50% of the total compensation of EPP's senior executives is "at risk,"
based strictly upon the performance of EPP and return to the shareholders.
Chief Executive Officer Compensation
In addition to being Chairman and Chief Executive Officer of EPP, Mr. Gray
is also Executive Vice President of EI. In 1994, Mr. Gray entered into a
compensation agreement with ECT and EPP. In 1995, Mr. Gray's compensation
agreement with ECT was assigned to EDC. In 1997, Mr. Gray's compensation
agreement was further assigned to EI. The agreement specifies that EPP will pay
up to two-thirds of Mr. Gray's total base salary, dependent upon the amount of
time he dedicates to activities of EPP. In 1996, Mr. Gray dedicated 50% of his
time to Company activities and EPP paid half of his total base salary according
to the agreement. In 1996, the EPP Compensation Committee reviewed Mr. Gray's
total base salary, including a proposed annual base salary increase of $30,000.
Both the 50/50 base salary allocation between Enron Corp. and EPP and the
proposed base salary increase were approved by the Compensation Committees of
both Enron Corp. and EPP. During 1996, EPP produced net income of $46 million,
achieved a 13% growth in earnings per share, and provided a total return to
shareholder of 12%. Based on these results, the Compensation Committee approved
a payment of $232,500 to Mr. Gray under EPP's 1996 Annual Incentive Plan (which
payment represented 50% of Mr. Gray's bonus consistent with the percentage of
base pay paid by EPP), and the 1994 Share Option Plan Committee approved a grant
of share options, at market value on the date of grant, to acquire 12,000 Common
Shares.
Summary
Executive compensation programs at EPP are taken seriously by both
Committees, the Board of Directors and senior management, and have been
structured to create a strong link between the success of the shareholder and
the rewards of the executives.
<TABLE>
<S> <C>
Compensation Committee 1994 Share Option Plan Committee
George S. Slocum (Chairman) George S. Slocum (Chairman)
General Brent Scowcroft General Brent Scowcroft
Edmund P. Segner, III
</TABLE>
COMPARATIVE SHARE PERFORMANCE
The performance graph shown below was prepared by Frank Russell Company for
use in this proxy statement. As required by applicable rules of the SEC, the
graph was prepared based upon the following assumptions:
1. $100 was invested in Common Shares of EPP, the S&P 500 and a peer
group of six companies (the "Peer Group") on November 21, 1994, the date
immediately prior to EPP's initial public offering (the "IPO") date. The
investment in the Common Shares was at the IPO price of $24.00 per Common
Share.
2. The Peer Group investment is weighted based on the market
capitalization of each individual company within the Peer Group at the
beginning of the year.
3. Dividends are reinvested on the ex-dividend dates.
8
<PAGE> 11
The companies that comprise the Peer Group are as follows: Shandong Huaneng
Power Development Ltd., Huaneng Power International, Inc., Empresa Nacional de
Electricidad, Destec Energy Inc., YPF Sociedad Anonima and AES Corp.
COMPARATIVE TOTAL RETURNS
ENRON GLOBAL POWER & PIPELINES L.L.C., S&P 500, PEER GROUP
(Performance results through 12/31/96)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) EPP S&P 500 PEER GROUP
<S> <C> <C> <C>
1991 1992 1993 11/21/94
1994 88.89 100.54 96.20
1995 104.07 138.25 98.11
1996 116.86 170.39 111.76
</TABLE>
9
<PAGE> 12
EXECUTIVE COMPENSATION
EPP was formed in September 1994 and paid no compensation to its directors
and officers prior to November 22, 1994, the closing date of the IPO, nor did
any obligations accrue with respect to management incentive or retirement
benefits prior to such time, except for certain options granted on November 15,
1994, under the EPP Share Plan. The following table summarizes certain
information regarding compensation paid or accrued after November 22, 1994, for
the periods indicated, as well as certain options granted on November 15, 1994,
in anticipation of the IPO, to the following persons (the "Named Officers"): (i)
EPP's Chief Executive Officer and (ii) three other persons who were executive
officers of EPP at December 31, 1996, and received Annual Compensation from EPP
during 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPENSATION
SALARY BONUS COMPENSATION OPTIONS/ ------------
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARS(#) ($)(3)
--------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Gray................... 1996 $197,500 $232,500 $5,650 0 $ 551
Chairman and 1995 $183,333 $212,500 $5,250 -- $ 397
Chief Executive Officer 1994 $ 26,924 $ 0 $6,930 159,265(2) $5,395
K. Wade Cline(4)................. 1996 $141,671 $100,000 $2,982 35,000 $ 566
Vice President, General 1995 $ 33,750 $ 70,000 $ 0 -- $ 102
Counsel and Secretary
Kurt S. Huneke(5)................ 1996 $ 0 $ 20,000 $ 0 40,000 $ 0
President
Paula H. Rieker(6)............... 1996 $136,052 $ 85,000 $1,200 10,000 $ 785
Vice President and 1995 $ 16,846 $ 60,000 $ 150 25,000 $ 65
Chief Financial Officer
</TABLE>
- ---------------
(1) Other Annual Compensation includes cash perquisite allowances. The amount
shown for Mr. Cline also includes pay for unused vacation.
(2) Includes options to acquire 9,265 shares of Enron Corp. Common Stock issued
on December 30, 1994, under the Enron Corp. All Employee Stock Option
Program, of which EPP is a participating subsidiary, prorated for the amount
of salary paid by EPP.
(3) The amounts shown include the value as of year-end 1994, 1995 and 1996 of
Enron Corp. Common Stock allocated during 1994, 1995 and 1996 to the Named
Officers' savings and special subaccounts under the Enron ESOP.
(4) Mr. Cline became an executive officer of EPP on November 1, 1995.
(5) Mr. Huneke became an executive officer of EPP on November 6, 1996. His base
salary is not paid by EPP; however, a percentage of his bonus is paid by EPP
and in 1996, he was granted EPP share options. Even though Mr. Huneke's
Annual Compensation did not exceed $100,000 because of the short period of
time that he served as an executive officer of EPP in 1996, his disclosure
is included because he is now President of EPP.
(6) Ms. Rieker became an executive officer of EPP on November 1, 1995.
10
<PAGE> 13
SHARE OPTION GRANTS DURING 1996
The following table sets forth information with respect to grants of share
options during 1996 pursuant to the EPP Share Plan to the Named Officers. No
share appreciation rights ("SARs") were granted during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------
NUMBER OF
SECURITIES POTENTIAL REALIZABLE VALUE AT
UNDERLYING % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OPTIONS/ OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR OPTION
SARS GRANTED TO OR BASE TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION -------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- -------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Gray................. 0 0.00% N/A N/A $ -- $ --
K. Wade Cline.................. 25,000(3) 13.97% $25.6250 02/12/06 $ 402,885 $ 1,020,992
10,000(4) 5.59% $28.5000 11/06/06 $ 179,235 $ 454,217
Kurt S. Huneke................. 40,000(4) 22.36% $28.5000 11/06/06 $ 716,940 $ 1,816,867
Paula H. Rieker................ 10,000(4) 5.59% $28.5000 11/06/06 $ 179,235 $ 454,217
All EPP Employee and
Director Optionees........... 178,920 100% $26.6521(5) N/A $ 2,998,950 $ 7,599,913
All EPP Shareholders........... N/A N/A N/A N/A $408,849,970(6) $1,036,104,180(6)
Optionee Gain as % of All EPP
Shareholders' Gain........... N/A N/A N/A N/A 0.73% 0.73%
</TABLE>
- ---------------
(1) If a "change of control" (as defined in the EPP Share 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 EPP in an
amount equal to the value of the surrendered options (as defined in the EPP
Share Plan).
(2) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of shares
appreciates in value from the date of grant at the 5% and 10% annual rates
under formulas prescribed by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the price of shares.
(3) Options became 20% vested on August 12, 1996, with an additional 20% vesting
on each February 12 thereafter until February 12, 2000.
(4) Options became 20% vested on November 6, 1996, with an additional 20%
vesting on each November 6 thereafter until November 6, 2000.
(5) Weighted average exercise price of all EPP share options granted to
employees and directors in 1996 which was $26.6521.
(6) Appreciation of all EPP shareholders is calculated using the number of
Common Shares issued and outstanding on December 31, 1996 (24,392,352).
11
<PAGE> 14
AGGREGATED SHARE OPTION/SAR EXERCISES DURING 1996 AND SHARE OPTION/SAR
VALUES AS OF DECEMBER 31, 1996
The following table sets forth information with respect to the Named
Officers concerning the exercise of options and SARs during the last fiscal year
and unexercised options and SARs held as of the end of the fiscal year. The
options and SARs shown in the table reflect options and SARs granted to the
Named Officers by EPP or by Enron under the Enron Corp. All Employee Stock
Option Program, with respect to which EPP is a participating subsidiary,
prorated for the amount of salary paid by EPP.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT SARS AT
SHARES DECEMBER 31, 1996(#) DECEMBER 31, 1996($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Gray
EPP(1)..................... -- $ -- -- 150,000 $ -- $450,000
Enron Corp................. -- $ -- 2,779 4,169 $35,085 $ 52,627
K. Wade Cline(1)............. -- $ -- 7,000 28,000 $ 6,875 $ 27,500
Kurt S. Huneke(1)............ -- $ -- 8,000 32,000 $ -- $ --
Paula H. Rieker(1)........... -- $ -- 12,000 23,000 $20,000 $ 30,000
</TABLE>
- ---------------
(1) Options issued under the EPP Share Plan.
RETIREMENT AND SUPPLEMENTAL BENEFIT PLANS
Enron Corp. maintains the Enron Corp. Retirement Plan (the "Retirement
Plan"), which is a noncontributory defined benefit plan, to provide retirement
income for employees of Enron Corp. and its subsidiaries, including EPP. Through
December 31, 1994, participants in the Retirement Plan with five years or more
of service were entitled to retirement benefits in the form of an annuity based
on a formula that uses a percentage of final average pay and years of service.
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"). In connection with a change to the retirement
benefit formula, all employees became fully vested in retirement benefits earned
through December 31, 1994. The formula in place prior to January 1, 1995, was
suspended and replaced with a benefit accrual in the form of a cash balance of
5% of annual base pay beginning January 1, 1996. Under the Cash Balance Plan,
each employee's accrued benefit will be credited with interest based on 10-year
Treasury Bond yields.
Enron Corp. also maintains a noncontributory employee stock ownership plan
("ESOP") which covers all eligible employees, including employees of EPP.
Allocations to individual employees' retirement accounts within the ESOP offset
a portion of benefits earned under the Cash Balance Plan.
In addition, Enron Corp. has a Supplemental Retirement Plan which is
designed to assure payments to certain employees of that retirement income which
would be provided under the Enron Cash Balance Plan except for the dollar
limitation on accrued benefits imposed by the Internal Revenue Code of 1986, as
amended, and a Pension Program for Deferral Plan Participants which provides
supplemental retirement benefits equal to any reduction in benefits due to
deferral of salary into an Enron Corp. Deferral Plan.
12
<PAGE> 15
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
NAME(1) SERVICE AT AGE 65 BY PLANS RETIREMENT(2)
------- -------- --------- ------------ --------------
<S> <C> <C> <C> <C>
Rodney L. Gray............................... 8.8 29.1 $202,500 $ 80,069
K. Wade Cline................................ 4.8 35.8 $168,012 $109,394
Paula H. Rieker.............................. 6.6 29.0 $150,000 $ 59,386
</TABLE>
- ---------------
(1) 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 the Enron ESOP.
(2) Kurt S. Huneke is not listed in this table as any retirement payment made to
Mr. Huneke would be paid by Enron Corp. or another subsidiary of Enron Corp.
not owned by EPP.
Mr. Gray participates in the Enron Corp. Executive Supplemental Survivor
Benefit Plan ("Survivor Benefit Plan"). In the event of death after retirement,
the Survivor Benefit Plan provides an annual benefit to the participant's
beneficiary equal to 50% of the participant's annual base salary at retirement,
paid for ten years. The Survivor Benefit 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).
SEVERANCE PLANS
EPP is a participating subsidiary in the Enron Corp. Severance Pay Plan and
the Enron Corp. Change of Control Severance Plan. The Enron Corp. 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 the
Enron Corp. Severance Pay Plan exceed 52 weeks of pay. Under the Enron Corp.
Change of Control Severance Plan, in the event of an unapproved change of
control of Enron Corp., any employee who is involuntarily terminated within two
years following the change of control will be eligible for severance benefits
equal to two weeks of base pay multiplied by the number of full or partial years
of service, plus one month of base pay for each $10,000 (or portion of $10,000)
included in the employee's annual base pay, plus one month of base pay for each
5% of annual incentive award opportunity under any approved plan. The maximum an
employee can receive is 2.99 times the employee's average W-2 earnings over the
past five years.
COMPENSATION AND EMPLOYMENT AGREEMENTS
EPP has entered into a compensation agreement (as amended, the
"Compensation Agreement") with Mr. Gray which provides that EPP will pay up to
two-thirds of his total Enron Corp. base salary, dependent
13
<PAGE> 16
upon the amount of time he dedicates to activities of EPP, and that any
increases in such salary are subject to the approval of EPP's Compensation
Committee. The Compensation Agreement also allows for Mr. Gray to receive
payments from the EPP Incentive Plan and grants from the EPP Share Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From February 1995 until May 1996, the Compensation Committee consisted of
Messrs Segner, Slocum and Theobald. Since May 1996, the Compensation Committee
has consisted of Messrs. Scowcroft, Segner and Slocum.
Each of Messrs. Derrick, Gray and Segner was, during the fiscal year ended
December 31, 1996, and along with Ms. Mark currently is, an executive officer of
Enron Corp. In addition, each of Messrs. Derrick, Gray and Segner and Ms. Mark
served during such period, and continues to serve, on the Board of Directors and
as executive officers of various subsidiaries of Enron Corp.
Ownership of Common Shares
Enron owns approximately 52% of the outstanding Common Shares. As a result,
Enron controls a majority of the Common Shares and, through its ability to elect
a majority of the directors of EPP, has the ability to exercise significant
influence regarding management of EPP. There is no agreement between Enron and
any other party, including EPP, that would prevent Enron from acquiring
additional Common Shares.
Purchase Right Agreement
Enron and EPP have entered into a Purchase Right Agreement (the "Purchase
Right Agreement"), pursuant to which Enron has agreed to offer to sell to EPP,
at prices lower than those available to third parties, all of Enron's ownership
interests in all power plant and natural gas pipeline projects developed or
acquired by Enron outside the United States, Canada and Western Europe, but only
those that commence commercial operation prior to 2005, subject to certain
exceptions.
Administrative Services Agreement
EPP has entered into an Administrative Services Agreement with Enron
pursuant to which Enron provides various services, such as, among other things,
provision of telecommunications and computer systems, lease of office space and
certain other staff and support services. EPP has agreed to reimburse Enron for
all of its direct and certain indirect costs incurred in rendering services to
EPP under the contract up to an annual cap during the initial term of the
contract. The Administrative Services Agreement is for an initial term of three
years (through November 1997) and will continue thereafter until terminated by
either party upon written notice to the other party. Pursuant to this agreement,
EPP paid Enron approximately $0.6 million during 1996 and expects to pay Enron
approximately $0.6 million in 1997.
Benefit and Compensation Agreement
EPP has entered into a Benefit and Compensation Agreement with Enron
pursuant to which EPP and certain of its subsidiaries will adopt and become a
participating employer in certain pension, welfare benefit and compensation
plans sponsored by Enron. EPP is obligated to make contributions to the plans in
connection with its employees and, if not paid for by the plans, to pay EPP's
allotment of the administrative expenses of the plans. Pursuant to this
agreement, EPP paid Enron approximately $0.1 million during 1996 and expects to
pay Enron approximately $0.1 million in 1997.
14
<PAGE> 17
Cost Sharing Agreement
EPP entered into a Cost Sharing Agreement with ECT pursuant to which ECT
provided certain accounting, commercial, administrative and other services
related to the management of the projects to EPP. This agreement was entered
into effective as of July 1, 1995, and extended through December 31, 1996.
Pursuant to the agreement, EPP paid ECT approximately $1.0 million during 1996.
EPP anticipates entering into a Cost Sharing Agreement with EI pursuant to which
EI will provide certain accounting, commercial, administrative and other
services related to the management of the projects to EPP. The terms of the
agreement have not been finalized.
Contribution Agreement
In connection with EPP's formation, EPP, Enron Corp. and certain of their
subsidiaries entered into a Master Contribution Agreement (the "Contribution
Agreement"). The Contribution Agreement provides that Enron will maintain
certain guarantees, letters of credit, support obligations and other covenants
and shareholder commitments on behalf of EPP for the benefit of certain
operating subsidiaries of EPP ("Project Companies") as required by their lenders
and certain other third parties. In most instances, EPP has agreed to indemnify
Enron against liabilities incurred under such guarantees, letters of credit,
support obligations and other covenants and shareholder commitments to the
extent Enron does not otherwise have a contractual right to be reimbursed for
such liabilities. Substantially all of such indemnity obligations of EPP to
Enron reflect EPP's pro rata share of preexisting obligations of the Project
Companies. In addition, pursuant to the Contribution Agreement, EPP and Enron
have agreed, subject to certain limitations, to cooperate with one another in
eliminating guarantees, support obligations and other covenants of Enron that
Enron is required to maintain.
Pursuant to the Contribution Agreement, Enron had agreed to support a
minimum level of aggregate earnings before interest, taxes, depreciation,
amortization and other noncash charges ("EBITDA") generated by EPP's initial
Project Companies, calculated on a quarterly basis. In September 1995, the
Contribution Agreement was amended to remove Enron's minimum EBITDA obligation.
In exchange for agreeing to remove such obligation, EPP and Enron amended the
Purchase Right Agreement to add the Marmara, Turkey project and a project to be
named later as additional Designated Development Projects, as defined in the
Purchase Right Agreement. Under the Purchase Right Agreement, Enron is required
to offer to sell to EPP the Designated Development Projects at prices that meet
certain projected minimum earnings, cash flow and internal rate of return
criteria.
Share Options Issued to Enron
Pursuant to the Company Agreement, EPP has issued to Enron options for an
aggregate of 1.5 million Common Shares (subject to adjustment in the event of
share dividends, share splits and other contingencies). The options permit Enron
to purchase Common Shares (by exercising its options) at a fixed price equal to
$24.00 regardless of the market value of the Common Shares on the exercise date.
Provided the other vesting condition described below is met, 50% of its share
options will vest on January 1, 1998, and the balance will vest on January 1,
2000. Enron's share options will vest only if the earnings per share of EPP have
increased at an average rate of at least 15% per annum (compounded annually) for
the period commencing January 1, 1995, through the last fiscal quarter preceding
the applicable vesting date. Enron is not permitted to transfer its share
options prior to the time they vest. Under the Company Agreement, Enron has the
right to purchase Common Shares from EPP whenever, and on the same terms that,
EPP issues Common Shares to others, to the extent necessary to permit Enron to
retain ownership of at least 52% of the Common Shares.
15
<PAGE> 18
In order to manage the capital structure of EPP resulting from the
acquisition of additional interests in Compania de Inversiones de Energia S.A.
("CIESA"), EPP granted to EHC on July 31, 1996, and EHC subsequently assigned
100% thereof to EIHC, an option (the "Option")to acquire all or any portion of
such number of Common Shares having an aggregate value of $47 million on the
date of exercise of the Option. The Option was ratified and the issuance of
Common Shares to EHC upon the exercise of the Option was approved by the
shareholders of EPP. EIHC exercised the Option on March 5, 1997, and, in
connection therewith, 1.6 million Common Shares were issued to EIHC. Proceeds
from the issuance of Common Shares were used to repay outstanding debt and for
general corporate purposes.
Contractual Relationships with Enron in Respect of the Project Companies
Enron provides various services to the Project Companies through
contractual arrangements, which include (i) administrative and commercial
support services, (ii) operations and maintenance services, (iii) technical
support and (iv) fuel supply and management services. The Project Companies have
historically paid Enron amounts for similar services provided under various
contractual arrangements. For the year ended December 31, 1996, operating
expenses of the Project Companies included approximately $66.7 million paid by
the Project Companies to Enron pursuant to such arrangements, and EPP expects
the Project Companies to make approximately the same amount of payments to Enron
in the current fiscal year.
At February 28, 1997, the Project Companies were indebted to Enron in a
aggregate amount of approximately $16.2 million. Such indebtedness was incurred
pursuant to the contractual arrangements discussed above.
At February 28, 1997, the Project Companies were indebted to Enron in an
aggregate amount of approximately $6.3 million. Such indebtedness, incurred in
connection with the construction of the projects owned by the Project Companies,
is payable over ten to 15-year periods and bears interest between 9% and 12% per
annum.
At February 28, 1997, Enron was indebted to one of the Project Companies in
the amount of $7.25 million. Such indebtedness represents an interest-free
advance to Enron (the sole shareholder of the Project Company at the time of the
advance) of a $7.25 million interest-free advance received by the Project
Company from its customer. The advance to Enron is to be repaid in ten
semiannual payments of $725,000 between 1999 and 2004, which corresponds to the
scheduled repayment of the Project Company's advance.
At February 28, 1997, Enron Pipeline Company -- Argentina, S.A., a wholly
owned subsidiary of EPP, was indebted to Enron in an aggregate amount of
approximately $36.6 million. Such indebtedness was incurred in connection with
the acquisition of additional interests in CIESA.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the officers and directors of EPP and beneficial owners
of more than 10% of a registered class of the equity securities of EPP to file
reports of ownership with the SEC and the New York Stock Exchange. Based solely
upon 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
such persons, EPP believes that during 1996 its officers, directors and greater
than 10% shareholders complied with all applicable filing requirements.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE NOMINEES FOR THE BOARD
OF DIRECTORS AS DESCRIBED ABOVE.
16
<PAGE> 19
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 EPP for the year ending December
31, 1997.
Ratification of this appointment will be effective upon receiving the
affirmative vote of the holders of a majority of the Common Shares present or
represented by proxy and entitled to vote at the Annual Meeting. Under the
Company Agreement, 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.
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, 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.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Shareholders may propose matters to be presented at shareholders' meetings
and may also nominate persons to be directors. Formal procedures have been
established for those proposals and nominations.
PROPOSALS FOR 1998 ANNUAL MEETING
Pursuant to various rules promulgated by the SEC, any proposals of holders
of Common Shares intended to be presented to the Annual Meeting of Shareholders
of EPP to be held in 1998 must be received by EPP, addressed to K. Wade Cline,
Vice President, General Counsel and Secretary, 333 Clay Street, Suite 1800,
Houston, Texas 77002, no later than November 28, 1997, to be included in the EPP
proxy statement and form of proxy relating to that meeting.
A shareholder's notice to the Secretary shall set forth as to each matter
the shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting,
(ii) the name and address of the shareholder proposing such business and (iii)
the acquisition date, the class and number of Common Shares that are owned
beneficially by the shareholder. A shareholder must also comply with all other
applicable requirements of the Exchange Act and the rules and regulations
thereunder. No business will be conducted at the annual meeting of shareholders
except in accordance with the procedures outlined above.
NOMINATIONS FOR 1998 ANNUAL MEETING AND FOR ANY SPECIAL MEETINGS
Only persons who are nominated in accordance with the following procedures
will be eligible for election as directors. Nominations of persons for election
to the EPP Board of Directors may be made (a) by or at the direction of the
Board of Directors or (b) by any shareholder of EPP who complies with the
following notice procedures. 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 EPP. To be timely, a shareholder's notice shall be
delivered to or mailed and received by EPP's Vice President, General Counsel and
Secretary at 333 Clay
17
<PAGE> 20
Street, Suite 1800, Houston, Texas 77002, no less than 90 nor more than 120 days
prior to the meeting at which an election of directors is to be held. Such
shareholder's notice to the Secretary must set forth as to each person whom the
shareholder 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 of 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). Any slate of shareholder nominees shall include at least
two persons who are qualified to serve on the Oversight Committee. For a
description of such qualifications, see the Company Agreement, which is filed as
an exhibit to EPP's Annual Report on Form 10-K for the year ended December 31,
1994. Notwithstanding the foregoing provisions, a shareholder must also comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder.
GENERAL
As of the date of this proxy statement, the management of EPP 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 Common Shares represented by proxies will be
voted with respect thereto in accordance with the judgment of the persons named
in such proxies. In addition to solicitation by use of the mails, certain
officers and regular employees of EPP may solicit the return of proxies by
telephone, telegraph or personal interview. The cost of any solicitation of
proxies will be borne by EPP.
By Order of the Board of Directors
K. WADE CLINE
Vice President, General Counsel and
Secretary
Houston, Texas
March 28, 1997
18
<PAGE> 21
[ENRON LOGO]
ENRON GLOBAL POWER & PIPELINES L.L.C.
<PAGE> 22
P R O X Y
[ENRON LOGO] ENRON GLOBAL POWER & PIPELINES L.L.C.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENRON GLOBAL POWER & PIPELINES L.L.C. FOR ANNUAL MEETING ON MAY 14, 1997
THE UNDERSIGNED hereby appoints Rodney L. Gray, K. Wade Cline, and Paula H.
Rieker, or any of them, and any substitute or substitutes, to be the attorneys
and proxies of the undersigned at the Annual Meeting of Shareholders of Enron
Global Power & Pipelines L.L.C. ("EPP") to be held at 3:00 p.m. Houston time on
Wednesday, May 14, 1997, in Room 50M of the Enron Building, 1400 Smith Street,
Houston, Texas, or at any adjournment thereof, and to vote at such meeting the
shares of EPP the undersigned held of record on the books of EPP on the record
date for the meeting.
ELECTION OF DIRECTORS, NOMINEES: (change of address/comments)
James V. Derrick, Jr., Rodney L. Gray,
Rebecca P. Mark, Brent Scowcroft, ----------------------------------------
Edmund P. Segner, III, George S.
Slocum, Thomas C. Theobald ----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(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 REVERSESIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 23
[X] PLEASE MARK YOUR 4835
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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Directors. [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of appointment of independent [ ] [ ] [ ]
accountants.
3. In the discretion of the proxies named
herein, the proxies are authorized to vote
upon other matters as are properly brought
before the meeting.
Change of Address/ [ ]
Comments on
Reverse Side
All as more particularly described in the Proxy Statement relating to such
meeting, receipt of which is hereby acknowledged.
SIGNATURE(S)____________________________________________________ DATE___________
NOTE: 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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[ENRON LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
ENRON GLOBAL POWER & PIPELINES L.L.C.
IF YOU NEED ASSISTANCE IN ANY OF THE FOLLOWING AREAS:
o DIVIDEND CHECKS - ADDRESS CHANGES - LEGAL TRANSFERS
o DIRECT DEPOSIT - HAVE YOUR ENRON GLOBAL POWER & PIPELINES L.L.C. QUARTERLY
DIVIDENDS ELECTRONICALLY DEPOSITED INTO YOUR CHECKING OR SAVINGS ACCOUNT ON
DIVIDEND PAYMENT DATE. (No more worries about late or lost dividend checks.)
Call (800) 870-2340 to enroll.
o CONSOLIDATION OF ACCOUNTS - ELIMINATE MULTIPLE ACCOUNTS FOR ONE HOLDER AND
CERTAIN DUPLICATE SHAREHOLDER MAILINGS GOING TO ONE ADDRESS. (Dividend
checks, annual reports and proxy materials would continue to be mailed to
each shareholder.)
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
FOR EARNINGS INFORMATION, CALL (800) 808-0363.
