<PAGE>
================================================================================
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
Enova Corporation
- --------------------------------------------------------------------------------
(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)(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:
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Notes:
<PAGE>
Proxy Statement
and Notice of
Annual Meeting
1997
ENOVA
Corporation
<PAGE>
ENOVA CORPORATION
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
You are invited to attend the 1997 Annual Meeting of Enova Corporation
shareholders at 10:00 a.m. on Tuesday, April 22, 1997, at the Del Mar
Fairgrounds, 2260 Jimmy Durante Boulevard, Mission Tower Building, Del Mar,
California.
At a Special Meeting of Shareholders held on March 11, 1997, the Enova
Corporation shareholders approved the merger of Enova Corporation with Pacific
Enterprises. Regulatory approvals necessary to complete the merger are expected
to be obtained by the end of 1997.
During this meeting, the business of Enova Corporation will be reviewed. A
summary of the meeting will be included in the Spring Investors Report, which
will be mailed to you in May.
Whether or not you plan to attend the meeting, please fill out, sign and
return your proxy card right away. Your vote is very important.
Sincerely yours,
/s/ THOMAS A. PAGE
-----------------------
Thomas A. Page
Chairman
/s/ STEPHEN L. BAUM
-----------------------
Stephen L. Baum
President and Chief
Executive Officer
<PAGE>
[MAP INSERTED HERE]
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF ENOVA CORPORATION
- -------------------------------------------------------------------------------
ENOVA CORPORATION
- -------------------------------------------------------------------------------
P.O. Box 129400, 101 Ash Street
- -------------------------------------------------------------------------------
San Diego, California 92112-9400
- -------------------------------------------------------------------------------
Tuesday, April 22, 1997
- -------------------------------------------------------------------------------
The Annual Meeting of Shareholders of Enova Corporation will be held on
Tuesday, April 22, 1997, at 10:00 a.m. at the Del Mar Fairgrounds, 2260 Jimmy
Durante Boulevard, Mission Tower Building, Del Mar, California, to:
1. Elect the two directors constituting Class II of Enova Corporation's board
of directors to serve a three-year term--the names of the two nominees
intended to be presented for election are Daniel W. Derbes and Robert H.
Goldsmith; and
2. Consider and act upon one shareholder proposal relating to criteria for
grants of officer options and bonuses, if properly presented at the
meeting; and
3. Act upon such other business as may properly come before the meeting.
The Enova Corporation board of directors has fixed the close of business on
March 3, 1997 as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof. It is anticipated that the proxy material will be mailed
to shareholders on or about the date of this notice.
San Diego, California By order of the Board of Directors
March 20, 1997 Thomas A. Page
Chairman
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT! Please sign and return your enclosed proxy promptly,
even if you expect to attend the meeting. A business reply envelope is
enclosed for your convenience in returning the proxy. It requires no postage
if mailed within the United States. Ample free parking will be available at
the Del Mar Fairgrounds.
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
TUESDAY, APRIL 22, 1997
<TABLE>
<CAPTION>
CONTENTS PAGE
-------- ----
<S> <C>
Chairman and President's Letter............................................
Notice of Annual Meeting...................................................
Proxy Statement............................................................ 1
Introduction.............................................................. 1
Meeting Date, Voting, Proxies............................................. 1
Item No. 1--Election of Directors......................................... 2
Nominees................................................................. 3
Board Meetings/Committees................................................ 5
Security Ownership of Management and Certain Beneficial Holders.......... 6
Executive Compensation and Transactions with Management and Others....... 8
Item No. 2--Shareholder Proposal.......................................... 24
Relationship with Independent Public Accountants.......................... 25
Annual Report and Availability of Form 10-K............................... 25
Shareholder Proposals for 1998 Annual Meeting............................. 25
Proxy Solicitations....................................................... 25
Other Business to Be Brought Before the Annual Meeting.................... 26
</TABLE>
<PAGE>
ENOVA CORPORATION
----------------
PROXY STATEMENT
----------------
INTRODUCTION
This Proxy Statement is provided to the shareholders of Enova Corporation
(Enova) in connection with its 1997 annual meeting of shareholders, together
with any adjournments or postponements thereof (the Annual Meeting). The
Annual Meeting is scheduled to be held on Tuesday, April 22, 1997 at 10:00
a.m. at the Del Mar Fairgrounds, 2260 Jimmy Durante Boulevard, Mission Tower
Building, Del Mar, California.
This Proxy Statement and the enclosed proxy were first mailed on or about
March 20, 1997 to shareholders entitled to vote at the Annual Meeting.
Mail to Enova should be addressed to Shareholder Services, P.O. Box 129400,
San Diego, California 92112-9400.
MEETING DATE, VOTING, PROXIES
The board of directors of Enova is soliciting proxies for use at the Annual
Meeting, and a form of proxy is being provided with this Proxy Statement. Any
proxy may be revoked at any time before it is exercised by filing a written
notice of revocation with Enova or by presenting an executed proxy bearing a
later date at or before the Annual Meeting. A shareholder also may revoke a
proxy by attending the Annual Meeting and voting in person. However,
attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy. All shares represented by valid proxies will be voted
as specified in this Proxy Statement.
The Enova board of directors has fixed the close of business on March 3,
1997 as the record date (the Record Date) for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At the
close of business on the Record Date there were 116,614,314 shares of Enova
Common Stock, without par value, outstanding and entitled to vote.
Each share of Enova Common Stock is entitled to one vote on each matter
considered by Enova shareholders.
Shares represented by properly executed proxies received by Enova prior to
or at the Annual Meeting will be voted at the Annual Meeting in accordance
with the instructions specified in such proxies. If no instructions are
specified in a proxy, shares represented thereby will be voted (i) "FOR" the
election of the nominees for directors of Enova, unless authority to vote is
withheld as provided in the proxy, and (ii) "AGAINST" the shareholder
proposal. In the event that any other matters properly come before the Annual
Meeting, the holders of proxies solicited by the Enova board of directors will
vote on those matters in accordance with their judgment, and discretionary
authority to do so is included in the enclosed proxy.
Shares represented by proxies in which authority to vote is "WITHHELD" with
respect to any proposal or nominee will be counted in the number of votes
cast, but will not be counted as votes for or against the proposal or nominee.
If a broker or other nominee holding shares for a beneficial owner does not
vote on a proposal or nominee, the shares will not be counted in the number of
votes cast.
THE ENOVA BOARD RECOMMENDS THE ELECTION OF ITS NOMINEES FOR DIRECTORS.
THE ENOVA BOARD RECOMMENDS THAT THE ENOVA SHAREHOLDERS VOTE AGAINST ADOPTION
OF THE SHAREHOLDER PROPOSAL REGARDING INSTITUTING CRITERIA FOR GRANTING
OFFICER OPTIONS AND BONUSES.
1
<PAGE>
ITEM NO. 1 -- ELECTION OF DIRECTORS OF ENOVA
There are presently ten members on the Enova board. Enova's Restated
Articles of Incorporation divide the board into three approximately equal
classes of directors serving staggered three-year terms, with one class of
directors to be elected at each annual meeting of the shareholders of Enova.
Two directors are to be elected at the Enova Annual Meeting (representing the
Class II Directors). The Enova board has nominated the two current members of
Class II of the Enova board to be reelected. Directors elected to Class II of
the Enova board will serve a three-year term expiring in 2000.
Should any of the nominees for the Enova board become unavailable (an event
which is not anticipated), and the size of the board is not reduced
accordingly, proxies will be voted for the remainder of the listed nominees
and for such other nominees as may be designated by the Enova board as
replacements for those who become unavailable. The nominees for the Enova
board receiving the highest number of affirmative votes of the shares entitled
to vote for such nominees shall be elected as directors. Votes withheld from
any nominee are counted for purposes of determining the presence or absence of
a quorum, but have no other legal effect under California law.
The Enova board's nominees for reelection at the Enova Annual Meeting as
Class II Directors (with terms expiring in 2000) are D. W. Derbes and R. H.
Goldsmith. The Enova board Class I Directors (with terms expiring in 1999) are
R. C. Atkinson, S. L. Baum, A. Burr and R. A. Collato. The Enova board Class
III Directors (with terms expiring in 1998) are W. D. Jones, R. R. Ocampo, T.
A. Page and T. C. Stickel.
A brief biography of each nominee for election as a director, and each
continuing director, of Enova is presented below.
CONTINUING MEMBERS OF ENOVA BOARD (CLASS I)
- -------------------------------------------------------------------------------
- ----------- RICHARD C. ATKINSON,
PH.D.
[PICTURE] Dr. Atkinson is president of the University of California. He
served as the chancellor of the University of California at San
- ----------- Diego from 1980 to 1995. He is a director of Qualcomm, Inc.
Before joining UCSD, he served as director of the National
Science Foundation. He is a former long-term member of the
faculty at Stanford University.
Age 67
Director of Enova (Class I) since 1994; Director of SDG&E since
1992; Member of the Audit Committees of Enova and SDG&E.
- ----------- STEPHEN L. BAUM
Mr. Baum has been the president and chief executive officer of
[PICTURE] Enova and a member of the Enova and SDG&E boards since January
1, 1996. Mr. Baum joined SDG&E as vice president and general
- ----------- counsel in 1985, and became senior vice president and general
counsel in 1987. He was appointed as an executive vice president
in January 1993. Mr. Baum is a director of Wright Strategies,
Inc. and Pacific Diversified Capital Company (PDC).
Age 56
Director of Enova (Class I) and SDG&E since January 1996. Member
of the Executive Committees of Enova and SDG&E and of the
Nominating Committee of Enova.
2
<PAGE>
- ----------- ANN BURR
Ms. Burr is president of Time Warner Communications in
[PICTURE] Rochester, New York. She was formerly president of the San Diego
Division of Time Warner Cable, which includes Southwestern Cable
- ----------- TV and American Cablevision of Coronado. She is a director of
the RIT Research Corporation and a member of the George Eastman
House board of trustees.
Age 50
Director of Enova (Class I) since 1994; Director of SDG&E since
1993; Member of the Audit and Nominating Committees of Enova and
SDG&E.
- ----------- RICHARD A. COLLATO
Mr. Collato has been president and chief executive officer of
[PICTURE] the YMCA of San Diego County since January 1981. He is a former
director of Y-Mutual Ltd., a reinsurance company, and is a
- ----------- trustee of Springfield College and a director of the Armed
Services YMCA of the USA.
Age 53
Director of Enova (Class I) since 1994; Director of SDG&E since
1993; Member of the Audit (Chairman), Executive and Nominating
Committees of Enova and SDG&E.
NOMINEES FOR ELECTION TO ENOVA BOARD (CLASS II)
- --------------------------------------------------------------------------------
- ----------- DANIEL W. DERBES
Mr. Derbes is president of Signal Ventures. From November 1985
[PICTURE] until December 31, 1988, he was president of Allied-Signal
International Inc. and executive vice president of Allied-Signal
- ----------- Inc., a multi-national advanced technologies company. Mr. Derbes
is a director of Oak Industries, Inc., WD-40 Co. and PDC. He
also is a member of the board of trustees of the University of
San Diego.
Age 66
Director of Enova (Class II) since 1994; Director of SDG&E since
1983; Member of the Executive and Executive Compensation
Committees of Enova and SDG&E and of the Technology (Chairman)
Committee of Enova.
- ----------- ROBERT H. GOLDSMITH
Mr. Goldsmith is a management consultant. He is a former
[PICTURE] chairman, president and chief executive officer of Exten
Industries, Inc. and a former chairman and chief executive
- ----------- officer of Rohr, Inc. Mr. Goldsmith also is a former vice
chairman and chief operating officer of Precision Forge Co.,
senior vice president of Pneumo Corporation's Aerospace and
Industrial Group and vice president and general manager,
commercial (aircraft) engine projects division and the gas
turbine division of General Electric Company.
Age 66
Director of Enova (Class II) since
1994; Director of SDG&E since 1992;
Member of the Executive and Executive
Compensation (Chairman) Committees of
Enova and SDG&E and of the Technology
Committee of Enova.
3
<PAGE>
CONTINUING MEMBERS OF ENOVA BOARD (CLASS III)
- --------------------------------------------------------------------------------
- ----------- WILLIAM D. JONES
Mr. Jones is president, chief executive officer and a director
[PICTURE] of CityLink Investment Corporation. From 1989 to 1993, he served
as general manager/senior asset manager and investment manager
- ----------- with certain real estate subsidiaries of The Prudential. Prior
to joining The Prudential, Mr. Jones served as a San Diego City
Council member from 1982 to 1987. Mr. Jones is a director of The
Price Real Estate Investment Trust and a member of the board of
trustees of the University of San Diego.
Age 41
Director of Enova (Class III) and SDG&E since 1994; Member of
the Finance (Chairman) and Nominating Committees of Enova and
SDG&E.
- ----------- RALPH R. OCAMPO, M.D.
Dr. Ocampo is a San Diego physician and surgeon.
[PICTURE]
Age 65
- -----------
Director of Enova (Class III) since 1994; Director of SDG&E
since 1983; Member of the Finance Committees of Enova and SDG&E
and of the Technology Committee of Enova.
- ----------- THOMAS A. PAGE
Mr. Page has been chairman of Enova since December 1994 and
[PICTURE] chairman of SDG&E since February 1983. Mr. Page was the
president and chief executive officer of Enova from December
- ----------- 1994 until January 1, 1996. Mr. Page was also the chief
executive officer of SDG&E from February 1983 to January 1,
1996, and the president of SDG&E from February 1983 to December
1991 and from January 1994 to January 1, 1996. He is a director
of Burnham Pacific Properties and is the chairman and a director
of PDC.
Age 63
Director of Enova (Class III) since 1994; Director of SDG&E
since 1979; Chairman of the Executive and Nominating Committees
of Enova and SDG&E.
- ----------- THOMAS C. STICKEL
Mr. Stickel is the chairman and founder of American Partners
[PICTURE] Capital Group, Inc. He previously was the chairman, chief
executive officer and president of TCS Enterprises, Inc. and the
- ----------- Bank of Southern California, both of which he founded. Mr.
Stickel is a director of Onyx Corporation, O'Connor R.P.T.,
Scripps International, Inc., Clair Burgener Foundation and the
Del Mar Thoroughbred Club.
Age 47
Director of Enova (Class III) and SDG&E since 1994; Member of
the Executive Compensation and Finance Committees of Enova and
SDG&E and of the Technology Committee of Enova.
4
<PAGE>
BOARD MEETINGS/COMMITTEES
During 1996, the SDG&E and Enova Audit Committees met twice and the
Executive Compensation Committees met six times while the Nominating
Committees did not meet. The Enova board met thirteen times, while the SDG&E
board met twelve times.
During 1996, all directors attended 75% or more of the aggregate total
meetings of the Enova and SDG&E boards and committees on which they served
with the exception of Dr. Atkinson, who attended 59% of such meetings.
In addition to Executive, Finance and Technology Committees, the committees
of each of the Enova and SDG&E boards are the Audit, Executive Compensation
and Nominating Committees. The major functions of each of the Audit, Executive
Compensation and Nominating Committees are described briefly below.
Audit Committees. In addition to recommending an independent auditor for
each ensuing year, these committees review (1) the overall plan of the annual
independent audits, (2) financial statements, (3) audit results, (4) the scope
of internal audit procedures and (5) the auditors' evaluation of internal
controls. These committees are composed exclusively of directors who are not
salaried employees of Enova or SDG&E.
Executive Compensation Committees. These committees review the salaries and
other forms of compensation of executives of Enova and SDG&E and make
compensation recommendations to the full boards of directors. These committees
are composed exclusively of directors who are not salaried employees of Enova
or SDG&E.
Nominating Committees. In addition to considering and recommending nominees
to the Enova and SDG&E boards, these Committees recommend (1) criteria for
board and committee composition and membership and (2) directors'
compensation. These committees consider any nominees recommended by
shareholders by letter to the respective board. These committees are composed
of the chairman of each entity and at least three directors who are not
salaried employees of Enova or SDG&E. In addition, Mr. Baum serves on the
Nominating Committee of Enova.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL HOLDERS
The following table presents certain information as of January 31, 1997,
except as otherwise noted, regarding the equity securities of Enova
beneficially owned by (i) the directors, (ii) the executive officers named in
the "Summary Compensation Table" below under "Executive Compensation and
Transactions with Management and Others," (iii) the directors and executive
officers of Enova as a group, and (iv) the only beneficial owners known to
Enova to hold more than 5% of any class of the voting securities of Enova.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP PERCENT OF
BENEFICIAL OWNER (SHARES)(A) CLASS
---------------- ----------------- ----------
<S> <C> <C>
Directors and Named Executive Officers:
R. C. Atkinson.................................... 1,643 *
A. Burr........................................... 1,600 *
R. A. Collato..................................... 2,885 *
D. W. Derbes...................................... 4,201 *
R. H. Goldsmith................................... 1,903 *
W. D. Jones....................................... 1,145** *
R. R. Ocampo...................................... 13,779 *
T. C. Stickel..................................... 1,354 *
T. A. Page........................................ 201,931 *
S. L. Baum........................................ 58,720 *
D. E. Felsinger................................... 45,551 *
D. R. Kuzma....................................... 13,580 *
E. A. Guiles...................................... 17,758 *
All Directors and Executive Officers of Enova and
SDG&E as a group
(19 persons)..................................... 465,681(B) *
Others:
Franklin Resources, Inc. ......................... 7,945,660(C) 6.81%
777 Mariners Island Boulevard
San Mateo, CA 94404
Union Bank of California Trust Department......... 9,387,522(D) 8.05%
530 B Street
San Diego, CA 92101
</TABLE>
- --------
* Less than 1% of the shares outstanding.
** Information as of February 12, 1997.
6
<PAGE>
(A) All shares are beneficially owned by the directors and named officers,
with sole voting and investment power, except for the following:
. Dr. Atkinson: 1,000 shares held jointly with spouse/children of same
household.
. Mr. Collato: 2,885 shares held jointly with spouse/children of same
household.
. Dr. Ocampo: 13,779 shares held jointly with spouse/children of same
household.
. Mr. Page: 90,727 shares held jointly with or separately by spouse/children
of same household; 40,415 shares of restricted stock purchased under the
1986 Long-Term Incentive Plan (LTIP) as to which vesting has not occurred;
53,838 shares credited to an account with the San Diego Gas and Electric
Savings Plan (the Savings Plan) with the trustee.
. Mr. Baum: 56,021 shares held jointly with or separately by spouse/children
of same household (of which 28,095 are shares of restricted stock purchased
under the LTIP as to which vesting has not occurred); 2,699 shares credited
to a Savings Plan account with the trustee.
. Mr. Felsinger: 6,254 shares credited to a Savings Plan account with the
trustee; 20,765 shares of restricted stock purchased under the LTIP as to
which vesting has not occurred.
. Mr. Kuzma: 660 shares credited to a Savings Plan account with the trustee;
10,000 shares of restricted stock purchased under the LTIP as to which
vesting has not occurred.
. Mr. Guiles: 2,531 shares credited to a Savings Plan account with the
trustee; 7,865 shares of restricted stock purchased under the LTIP as to
which vesting has not occurred.
(B) Excludes 11,628 shares delivered to Enova in January 1997, to satisfy
certain withholding tax obligations relating to the vesting of shares
pursuant to the LTIP as described below under "1986 Long-Term Incentive
Plan." All shares are beneficially owned by the directors and officers,
with sole voting and investment power, except for the following:
. 148,276 shares held jointly with or separately by spouses or children
living in the same household.
. 92,271 shares credited to the officers' Savings Plan accounts with the
trustee.
. 142,560 shares of restricted stock purchased by officers in 1993, 1994,
1995 and 1996 under the LTIP, as to which restrictions for vesting of
shares have not yet been satisfied.
(C) According to a Schedule 13G filed February 12, 1997, the indicated shares
are owned by Franklin Resources, Inc., its subsidiaries and investment
companies advised by such subsidiaries.
(D) 9,333,822 shares are held by the bank in its capacity as trustee under the
Savings Plan. The trustee has discretion under the Savings Plan to vote
the shares in the absence of voting directions by the Savings Plan
participants. The bank also holds 53,700 shares of Enova Common Stock as
trustee for various other trusts.
7
<PAGE>
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Enova's directors and officers, and persons who own more than 10% of a
registered class of Enova's respective equity securities, to file reports of
ownership and changes in ownership of such equity securities with the
Securities and Exchange Commission (the SEC) and the exchange (i.e., the New
York or American Stock Exchanges) upon which such securities are traded.
Directors, officers and greater than 10% shareholders are required by SEC
regulations to furnish Enova with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
respective companies Enova believes that from January 1, 1996 through December
31, 1996 its directors, officers and greater than 10% beneficial owners
complied with all Section 16(a) filing requirements.
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
The following table sets forth information as to all compensation awarded,
paid, earned or distributed by Enova and/or SDG&E during the last three fiscal
years for services in all capacities to or for the benefit of the chief
executive officer and the other four highest compensated executive officers
whose earned compensation exceeded $100,000. Since Enova paid no amounts to
any executives for services as such in 1994 and 1995, the following table for
1994 and 1995 presents information solely for SDG&E. Moreover, as of December
31, 1996 Enova had no salaried executives; rather, certain Policies and
Guidelines for Affiliated Company Transactions, which are mandated by the
California Public Utilities Commission and have been adopted by SDG&E and
Enova, provide that SDG&E will be compensated by Enova for personnel and
resources which are used by Enova, including executive resources.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ---------------------
AWARDS PAYOUTS
------------ --------
OTHER ANNUAL SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR (A) (B) (C) OPTIONS (#) (D)(E) (F)
- ------------------ ---- -------- -------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. A. Page ............. 1996 $550,010 $429,000 $14,076 107,660 $315,605 $169,874
Chairman of Enova and 1995 560,577 404,000 12,571 (-) 549,205 104,908
SDG&E 1994 528,615 253,000 11,228 (-) 76,147 60,078
S. L. Baum.............. 1996 455,489 322,000 1,592 58,140 146,940 101,511
President and Chief 1995 264,423 291,000 1,426 (-) 173,661 32,874
Executive Officer of 1994 244,999 90,000 1,278 (-) 23,969 18,606
Enova and Vice Chairman
of SDG&E
D. E. Felsinger......... 1996 356,546 228,000 2,667 37,380 129,758 60,534
Executive Vice 1995 242,885 269,000 2,387 (-) 126,580 18,203
President of Enova and 1994 228,076 81,000 2,137 (-) 13,644 14,103
President and Chief
Executive Officer of
SDG&E
D. R. Kuzma............. 1996 214,673 112,000 (-) 17,220 38,414 58,120(G)
Senior Vice President, 1995 124,362 118,000 (-) (-) 20,963 37,047(G)
Chief Financial Officer 1994 (-) (-) (-) (-) (-) (-)
and Treasurer of Enova
and SDG&E
E. A. Guiles............ 1996 201,558 101,000 (-) 9,380 57,670 20,910
Senior Vice President 1995 190,773 149,000 (-) (-) 91,127 14,124
of Enova 1994 172,692 64,000 (-) (-) 10,325 7,922
</TABLE>
8
<PAGE>
(A) Amounts shown reflect compensation paid and amounts deferred. All officers
may elect to defer bonuses and base salary for periods of time they
select. Restricted stock awarded in 1996 pursuant to the LTIP is reported
below in the Long-Term Incentive Plan Restricted Stock Awards table.
Nonqualified Stock Options awarded in 1996 pursuant to the LTIP also are
reported below in the Long-Term Incentive Plan Nonqualified Stock Options
table.
(B) Bonuses are paid pursuant to the Executive Incentive Compensation Plan
(EICP) as described under "Report of the Executive Compensation Committee"
below.
(C) Other annual compensation includes any deferred compensation interest
above 120% of the applicable federal rate.
(D) LTIP payouts relate to restrictions lifted on restricted stock awarded
pursuant to the LTIP. Payouts are based on Enova's performance, as
described below under "1986 Long-Term Incentive Plan."
(E) The aggregate holdings/value of restricted stock held on December 31,
1996, by the individuals listed in this table, are: T. A. Page, 56,395
shares/$1,176,399; S. L. Baum, 35,535 shares/$762,934; D. E. Felsinger,
27,335 shares/$581,384; D. R. Kuzma, 11,945 shares/$254,736; and E. A.
Guiles, 10,785 shares/$225,396. The value of the aggregate restricted
stock holdings at December 31, 1996 is determined by multiplying $22.75,
the fair market value of Enova's Common Stock on December 31, 1996, less
the purchase price of $2.50 per share for restricted stock purchased in
1992, 1993, 1994 and 1995, by the number of shares held. These December
31, 1996 share amounts include the share amounts shown in "Security
Ownership of Management and Certain Beneficial Holders" above. In certain
instances, the January 31, 1997 amounts are less due to the vesting of
certain shares in January 1997. Regular quarterly dividends have been paid
on restricted stock held by these individuals, when declared by Enova.
(F) All other compensation includes a cash amount paid to each officer
designated solely for the purpose of paying (i) the premium for an
insurance policy providing death benefits equal to two times the sum of
annual base pay plus the average of such officer's three highest bonuses;
such cash amount includes a gross-up payment such that the net amount
retained by each officer, after deduction for any income tax imposed on
such payment, will be equal to the gross amount which would have been paid
to such officer had the income tax not been imposed; (ii) a match under
deferred compensation agreements which allows officers who have exceeded
the maximum pretax amount under the Savings Plan to continue to make
pretax deferrals of base compensation to an account in their name up to a
maximum of 15%; up to 6% of base compensation will be matched by a
contribution of 50 cents per dollar deferred; no amount can be deferred by
an officer or matched under such agreement until the officer contributes
to the Savings Plan the maximum amount allowed by the tax law; (iii) SDG&E
matching contributions to the Savings Plan; and (iv) an amount to provide
financial and estate planning services up to a maximum of $15,000 for T.
A. Page, S. L. Baum and D. E. Felsinger, and $10,000 for D. R. Kuzma and
E. A. Guiles in 1996. The respective amounts paid in 1996 for each of the
above officers were: T. A. Page, $126,250, $26,720, $1,904 and $15,000; S.
L. Baum, $66,680, $20,495, $1,963 and $12,373; D. E. Felsinger, $31,097,
$13,584, $1,685 and $14,168; D. R. Kuzma, $34,527, $1,319, $1,979 and $0;
and E. A. Guiles, $12,132, $4,845, $3,933 and $0.
(G) Includes the one-time reimbursement of moving expenses in the amounts of
$8,405 in 1995 and $20,295 in 1996.
COMPENSATION OF DIRECTORS
During 1996, Enova directors not holding salaried positions in Enova or
SDG&E were paid an annual retainer of $30,000, payable at the rate of $2,500
per month. No additional fees were paid for attendance at any meeting of the
Enova or SDG&E boards or of any committee of such boards. Non-employee
directors are reimbursed for their out-of-pocket expenses incurred to attend
meetings. All Enova directors except Messrs. Page and Baum are non-salaried
directors.
During 1996, SDG&E directors were not paid for their service as such (all
SDG&E directors not holding salaried positions in Enova or SDG&E during 1996
were also Enova directors). All SDG&E board meetings
9
<PAGE>
during 1996 were held in conjunction with Enova board meetings. Accordingly,
the directors incurred no incremental out-of-pocket expenses in connection
with SDG&E board meetings in 1996. A non-salaried director serving on the
board of both Enova and SDG&E receives a single annual retainer in the amount
of $30,000, payable at the rate of $2,500 per month.
In addition to the annual retainer for service as a director, the LTIP
provides for the grant of up to 300 shares of Enova Common Stock per year to
non-employee directors. This grant was made promptly following both the 1995
and 1996 Annual Meetings to each incumbent non-employee director based upon
service during the prior year, and this grant will continue to be made on the
same terms for future annual meetings, including the Annual Meeting. Although
non-employee directors of Enova and SDG&E are eligible for the annual grant of
300 shares of Enova Common Stock under the LTIP, a director serving on both
boards will receive only one grant of 300 shares annually.
Messrs. Baum, Derbes and Page are directors of Enova and SDG&E who also
served during 1996 as directors of PDC. As a non-employee director, Mr. Derbes
received a $500 fee for attending each meeting of PDC.
Messrs. Baum and Page received no fees or other compensation for serving as
directors of Enova, SDG&E or any of their subsidiaries.
Directors may elect to defer their retainers and/or fees for periods of time
they select.
On December 17, 1990, the board of SDG&E adopted a Retirement Plan for
Directors applicable to directors serving on the board of SDG&E on or after
such date. This Retirement Plan also applies to directors of Enova. If a
director has at least five years of total board service, then, beginning in
the calendar quarter following the later of the director's retirement from the
board or attaining age 65, the director (or a surviving spouse) will receive
during each subsequent 12-month period, a benefit amount equal to the
director's annual retainer (currently $30,000) plus meeting fees, committee
chair fees, and the cash value of any stock grant paid to the director during
the prior calendar year for a benefit period equal to the number of years of
the director's total service on the board. Directors currently do not receive
meeting or committee chair fees. The benefit will end upon the completion of
the benefit period or the death of the later to die of the director and a
surviving spouse, whichever occurs first. In computing the benefit period,
periods of service as an employee director shall be disregarded, and
concurrent service on the board of SDG&E and Enova will not result in double-
counting of years of service.
EMPLOYMENT CONTRACT OF MR. PAGE
On September 12, 1988, Mr. Page and SDG&E entered into an employment
agreement dated as of June 15, 1988. Mr. Page's employment agreement provides
that he will serve as chief executive officer and chairman of the board of
directors of SDG&E for a period of two years beginning June 15, 1988, subject
to automatic extensions for successive two-year periods (unless the contract
is terminated as described below) and that he will receive a salary at a rate
of not less than $31,916.66 per month or such greater amount as may, from time
to time, be determined by the board. Mr. Page resigned from his position as
chief executive officer effective January 1, 1996. Mr. Page continues to serve
as chairman of the board of directors of SDG&E and Enova. Mr. Page's
resignation did not trigger a termination under the employment agreement as
described below.
The employment agreement also provides that Mr. Page will be entitled to
participation in the EICP, any other annual bonus plan, the Savings Plan, the
LTIP and any other long-term incentive plan. In addition, Mr. Page is entitled
to participate in the Supplemental Executive Retirement Plan (SERP) and the
Pension Plan. Pursuant to an earlier agreement between Mr. Page and SDG&E, Mr.
Page was credited with years of service under the Pension Plan and the SERP
equal to his years of service with SDG&E plus five extra years.
Under the employment agreement, if Mr. Page's employment is terminated (i)
by the board upon two years' written notice, (ii) upon his death or permanent
disability, (iii) by SDG&E for cause or (iv) by Mr. Page upon
10
<PAGE>
30 days written notice to SDG&E, which termination is other than a
"Constructive Termination" (as defined below), he will receive benefits
through the last day of his term of employment and no additional benefits. If
Mr. Page's employment is terminated (i) because of the dissolution,
liquidation or winding-up of SDG&E, (ii) by a majority vote of the SDG&E board
of directors without cause upon 30 days written notice or (iii) by Mr. Page as
a result of (A) any violation of the compensation provisions of the employment
agreement, (B) any adverse and significant change in Mr. Page's position,
duties, responsibilities or status, including the failure to be elected to the
board and as chief executive officer of SDG&E or (C) a change in Mr. Page's
normal business location to a point away from SDG&E's main headquarters (each,
a Constructive Termination), he will be entitled to two years' salary paid in
a lump sum plus a bonus equal to 200% of the average of the three highest
bonuses paid to him during the previous five years, continued health and life
insurance benefits under various plans, his SERP benefit (without regard to
the limit described therein relating to Section 280G of the Internal Revenue
Code of 1986, as amended (the Code)) and his LTIP benefit. If any of the
payments set forth in the previous sentence become subject to the excise tax
imposed by Section 4999 of the Code, SDG&E will pay Mr. Page an additional
amount such that the net amount retained by Mr. Page after deduction for such
excise tax and any income and excise tax imposed on such additional amount
will be equal to the gross amount which would have been paid to Mr. Page under
the agreement had the excise tax not been imposed. The benefits payable to Mr.
Page under the agreement on account of a change in control are in lieu of any
benefits which would have otherwise been payable to Mr. Page under the
Executive Severance Allowance Plan. The term "change in control" includes such
significant events as those described under "Pension Plan and Supplemental
Executive Retirement Plan" below.
EMPLOYMENT CONTRACTS OF MESSRS. BAUM AND FELSINGER
On September 18, 1996, Enova entered into an employment agreement with Mr.
Baum to serve as its President and Chief Executive Officer and SDG&E entered
into an employment agreement with Mr. Donald E. Felsinger to serve as its
President and Chief Executive Officer and as Executive Vice President of
Enova.
The agreements have an initial two-year term, which automatically will be
extended for a two-year period on September 18, 1998 and on each even-numbered
anniversary thereof, unless terminated in accordance with their terms. During
the term of the agreements, Mr. Baum will receive an annual base salary of not
less than $495,000 and Mr. Felsinger will receive an annual base salary of not
less than $350,000, subject to increases from time to time. In addition,
Messrs. Baum and Felsinger will be entitled to participate in the EICP, the
LTIP, the SERP, and other bonus, incentive or deferred compensation and
retirement plans and fringe benefit programs of Enova and SDG&E, as
applicable.
In the event that Mr. Baum's or Mr. Felsinger's employment is involuntarily
terminated on account of the dissolution, liquidation or winding-up of Enova
or SDG&E, as the case may be, or without "cause," or if Messrs. Baum and
Felsinger terminate their employment for "good cause" (as such terms are
defined in the agreements), they will receive: (i) a lump sum payment of two
years' base salary, determined by annualizing their highest monthly base
salary paid at any time during the term, (ii) a bonus equal to 200% of the
average of their three highest annual bonus awards, not necessarily
consecutive, paid in the previous five years, (iii) accelerated vesting and
exercisability and/or immediate removal of all restrictions on any outstanding
LTIP award or other long- or short-term incentive awards, and notwithstanding
any conflicting provision in the applicable incentive plan, each such option
or award will remain outstanding for three years from the date of termination
of employment, (iv) continued health and life insurance benefits and other
existing benefit plans for two years, and (v) two years of additional age and
service credit (and for Mr. Felsinger, if he is not yet age 53, he will be
credited with the additional amount of age credit as if he had attained age
55) under the SERP, without giving effect to certain early retirement factors
therein. Additionally, such termination will be considered a "qualifying
termination" under Mr. Baum's or Mr. Felsinger's split-dollar life insurance
agreement in order to fund their benefits under the SERP.
The pending business combination of Enova and Pacific Enterprises will not
constitute a "change in control" for purposes of the agreements. However, in
the event that Mr. Baum's or Mr. Felsinger's employment terminates under any
of the foregoing circumstances following the occurrence of another transaction
that would
11
<PAGE>
constitute a "change of control" as defined in the LTIP, then, in addition to
the foregoing payments and benefits: (i) each outstanding option or award will
remain outstanding until the expiration of its original term, (ii) health,
life insurance and other benefits will continue until he reaches normal
retirement age and, thereafter, he will be treated as if he had retired at
normal retirement age under the Pension Plan, and (iii) he will receive a lump
sum payment of his benefits under the SERP, less the value of his entitlement
under the Pension Plan, to be paid without regard to the SERP's limitation of
payments on account of the application of Section 280G of the Internal Revenue
Code. The agreements also provide for a gross up payment to be made to offset
the effects of any excise tax imposed under Section 4999 of the Internal
Revenue Code.
CERTAIN ARRANGEMENTS REGARDING DIRECTORS AND MANAGEMENT RELATING TO THE
PENDING BUSINESS COMBINATION WITH PACIFIC ENTERPRISES
Board of Directors
Upon completion of the pending business combination of Enova and Pacific
Enterprises, the New Holding Company Board of Directors will consist of an
equal number of directors designated by each of Pacific Enterprises and Enova.
Mr. Baum, President and Chief Executive Officer of Enova, will serve on the
New Holding Company Board, assuming he is elected by the New Holding Company's
shareholders. To date, Enova and Pacific Enterprises have not decided who, in
addition to Mr. Baum and the President and Chief Operating Officer of Pacific
Enterprises, will serve on the New Holding Company Board after completion of
the business combination.
Employment Agreements
The New Holding Company has entered into employment agreements with Mr. Baum
and Mr. Felsinger that will become effective upon the completion of the
business combination. Each agreement provides for an initial employment term
of five years (subject to earlier mandatory retirement at age 65) with
automatic one year extensions on the fourth anniversary of the completion of
the business combination (and each anniversary thereafter) unless either party
elects not to extend the term.
Mr. Baum's employment agreement provides that, commencing upon the
completion of the business combination and ending on the earlier of September
1, 2000, or the second anniversary of the completion of the business
combination, he will serve as Vice-Chairman of the Board of Directors,
President and Chief Operating Officer of the New Holding Company and as a
member of its Office of the Chairman. During the period, if any, commencing on
the second anniversary of the completion of the business combination and
ending on September 1, 2000, Mr. Baum will be nominated to the position of,
and if elected will serve as, Vice-Chairman of the Board, Chief Executive
Officer and President of the New Holding Company. During the period, if any
commencing September 1, 2000, and ending on expiration of his employment
agreement, Mr. Baum will be nominated to the position of, and if elected will
serve as, Chairman, Chief Executive Officer and President of the New Holding
Company.
Under the terms of his agreement, Mr. Baum will receive an annual base
salary of not less than $645,000 during the period in which he serves as
President and Chief Operating Officer of the New Holding Company and
thereafter (during which he will serve as Chief Executive Officer and
President of the New Holding Company) an annual base salary of no less than
that of his predecessor as Chief Executive Officer of the New Holding Company
and will be entitled to participate in (i) annual incentive compensation plans
and long-term compensation plans and awards providing him with the opportunity
to earn, on a year-by-year basis, short-term and long-term compensation at
least equal (in terms of target, maximum and minimum awards expressed as a
percentage of annual base salary) to the greater of his opportunities in
effect prior to the completion of the business combination and awards granted
to the Chief Executive Officer under incentive compensation plans during the
period in which he serves as President and Chief Operating Officer of the New
Holding Company and (ii) all retirement and welfare benefit plans applicable
generally to employees and/or senior executive officer of the New Holding
Company.
12
<PAGE>
Mr. Felsinger's employment agreement provides that, commencing on the
completion of the business combination, he will serve as President and the
principal executive officer of the business of the New Holding Company and its
subsidiaries that are not regulated by the California Public Utilities
Commission. In such capacities, Mr. Felsinger will report to the Office of the
Chairman or, if such office no longer exists, the Chief Executive Officer of
the New Holding Company.
As compensation for services, Mr. Felsinger will receive an annual base
salary of not less than $440,000, and will be entitled to participate in (i)
annual incentive compensation plans and long-term compensation plans and
awards providing him with an annual bonus opportunity at least equal (in terms
of target, maximum and minimum awards expressed as a percentage of annual base
salary) to his opportunities in effect prior to the completion of the business
combination and (ii) in all retirement and welfare benefit plans applicable
generally to employees and/or senior executive officers of the New Holding
Company.
The employment agreements with Messrs. Baum and Felsinger provide that if
the New Holding Company terminates the executive's employment (other than for
cause, death or disability) or the executive terminates his employment for
good reason, the executive will be entitled to receive an amount equal to (i)
the sum of his annual base salary and annual incentive compensation (equal to
the greater of his target bonus for the year of termination or the average of
the three years' highest gross bonus awards in the five years preceding
termination), multiplied by the number of years remaining in the term of his
agreement, but in no event less than two, provided that in the event of
termination following a change in control such multiplier will be three; (ii)
a pro rata portion of the target amount payable under any annual incentive
compensation awards for the year or, if greater, the average of the three
years' highest gross bonus awards paid to the executive in the five years
preceding the year of termination; and (iii) the present value of the benefits
attributable to additional years of age and service credit for purposes of the
calculation of retirement benefits under the SERP as if he had remained
employed for the remainder of the term of the agreement, but in no event less
than two years.
In addition, the employment agreements with Messrs. Baum and Felsinger
provide that (i) all equity-based long-term incentive compensation awards will
immediately vest and become exercisable, provided that any awards granted on
or after the completion of the business combination will remain outstanding
and exercisable until the earlier of the 18 months following termination or
the expiration of the original term of the award, (ii) with respect to all
cash-based long-term incentive compensation awards that are outstanding under
any plan, the New Holding Company will pay the executive a pro rata portion of
all outstanding cash-based, long-term incentive compensation awards at target,
(iii) the executive will be allowed to continue to participate in the New
Holding Company's welfare benefit plans for a period of two years or until he
is eligible for retiree medical benefits, whichever is longer, provided that
in the event of termination following a change in control such period will not
be less than three years; and (iv) the executive will be entitled to payment
of any compensation previously deferred. Each employment agreement also
provides that the executive will not be entitled to receive any benefits that
would be subject to the excise taxes under Section 4999 of the Internal
Revenue Code provided, however, that the executive may enter into and receive
additional compensation under a post-termination consulting and non-
competition agreement with the New Holding Company and provided, that in the
event the executive receives a notice from the Internal Revenue Service to the
effect that the amounts payable under the consulting and non-competition
agreement would be subject to the excise tax imposed under Section 4999 of the
Internal Revenue Code, the New Holding Company will provide the executive with
an additional payment to offset the effects of such excise tax.
Incentive/Retention Bonus Agreements
The boards of directors of Enova and SDG&E have authorized
incentive/retention bonus agreements with 10 selected executives and officers.
The purpose of the agreements is to (i) compensate covered individuals for the
performance of services related to the business combination, in addition to
their ongoing duties, and (ii) to provide an incentive for these individuals
to continue their employment with the New Holding Company. The amount payable
under each agreement is equal to a specified multiple of the participant's
base salary plus annual
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<PAGE>
incentive bonus at target. The multiple is 1.0 or less except for one
individual for whom the multiple is 2.0. Payment of the bonuses is conditioned
upon the completion of the business combination or another business
combination transaction during the term of the agreements. If the business
combination is completed, payment generally will be made if (i) the covered
individual continues employment with New Holding Company and its subsidiaries
for a specified period of six to twelve months following the completion of the
business combination or (ii) the covered individual's employment is actually
or constructively terminated prior to or following the completion of the
business combination other than for cause. The incentive/retention bonus
agreements provide for the deferral of payment of amounts that would otherwise
fail to be deductible by reason of Section 162(m) of the Internal Revenue
Code. If the amount of the foregoing benefits, when taken together with any
other payments to a covered individual, would otherwise fail to be deductible
by reason of the "golden parachute" provisions of Section 280G of the Internal
Revenue Code, the amount of such benefits will be reduced to the extent
necessary to provide that the net payments will be so deductible. To the
extent any provisions of the agreements would disqualify the business
combination or another business combination transaction for treatment as a
pooling of interests for accounting purposes, such provisions will be deemed
null and void.
The incentive/retention bonus agreements also provide for the deferral,
under a deferred compensation plan, of amounts otherwise payable under the
agreements. The entire amount of the bonuses will be deferred for a period of
at least two years from the completion of the business combination. The entire
bonus amount will be deemed to be invested in the New Holding Company common
stock, with any deemed dividends deemed to be reinvested in additional shares.
One-half of the bonus will be payable two years from the completion of the
business combination. The remaining half will be payable at the later of (i)
two years from the completion of the business combination and (ii) the first
date on which a share of the New Holding Company common stock attains a value
that is 10% higher than the value of a share of Enova common stock on October
11, 1996, the last trading day before the announcement of the business
combination, as adjusted for the business combination. The bonus payments will
be made in cash, based on the value of the New Holding Company common stock on
each payment date. The same terms generally apply to non-officers of Enova,
except that the mandatory deferral period is one year. In addition,
participants may select a deferral period of greater than two years, during
which time the amounts deferred will continue to be deemed invested in the New
Holding Company common stock with dividends reinvested.
The incentive/retention bonus agreements provide for maximum aggregate
incentive/retention bonus payments to all officers of approximately $4.7
million assuming the business combination is completed on January 1, 1998. The
approximate amounts payable to the five most highly compensated executive
officers of Enova (excluding any increase or decrease attributable to the
deferral of such amounts) are as follows: Mr. Page, $880,000; Mr. Baum,
$1,032,000; Mr. Felsinger, $704,000; Mr. Kuzma, $692,000; and Mr. Guiles,
$316,000.
In addition, the Chief Executive Officer of Enova has been granted the
authority to provide incentive/retention bonus agreements to other non-officer
employees. The maximum aggregate bonus amounts payable under such agreements
are $5 million.
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<PAGE>
1986 LONG-TERM INCENTIVE PLAN
The LTIP provides that the Enova Executive Compensation Committee may grant
to certain executives any combination of nonqualified stock options, incentive
stock options, restricted stock, stock appreciation rights, performance
awards, stock payments or dividend equivalents. Prior to 1996, all grants made
to executives under the LTIP were in the form of restricted stock. In 1996,
the Executive Compensation Committee initiated a program of nonqualified stock
option grants in conjunction with restricted stock awards. This nonqualifed
stock option grant program is described in detail below.
RESTRICTED STOCK GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS
NUMBER UNDER
OF NON-STOCK
RESTRICTED PERFORMANCE PERIOD PRICE-BASED
NAME SHARES UNTIL PAYOUT PLANS (A)(B)
---- ---------- ------------------- ----------------
<S> <C> <C> <C>
T. A. Page...................... 13,760 Four Annual Periods $307,880
S. L. Baum...................... 17,340 Four Annual Periods $387,983
D. E. Felsinger................. 11,140 Four Annual Periods $249,258
D. R. Kuzma..................... 5,140 Four Annual Periods $115,008
E. A. Guiles.................... 2,800 Four Annual Periods $ 62,650
</TABLE>
(A) The value (target) of the restricted stock awards is determined by
multiplying $22.375, the fair market value of Enova Common Stock on
November 29, 1996, the date of grant by the number of shares granted.
(B) The payout amounts set forth in this column represent both the maximum and
the target amounts payable upon achievement of all performance-vesting
goals. The minimum payout upon failure to achieve any of the performance
vesting goals would be $0. The actual payout will depend upon the
achievement of performance-vesting goals and upon the fair market value of
Enova Common Stock at the date of vesting.
With respect to LTIP shares acquired in 1986 through 1991, all restrictions
have been lifted in prior years.
The earnings target was met for the year ended December 31, 1996 and one-
quarter of the LTIP shares acquired in 1992, 1993, 1994 and 1995 were released
from restrictions and delivered to the executives. All restrictions have now
been lifted on LTIP shares acquired in 1992.
With respect to LTIP shares acquired in 1993, 1994, 1995 and 1996,
restrictions on one-quarter of the number of shares originally placed in
escrow are to be released and the shares are to be delivered to the executives
for each of the four succeeding calendar years if Enova's earnings per share
meets or exceeds the earnings per share target set by the Executive
Compensation Committee or if, at the end of the first, second and third
quarters of the following year, earnings for the 12 months then ending equals
or exceeds the weighted average of the targets for the prior year and the
current year. Shares acquired in 1993 have no end-of-term goal. As to shares
acquired in 1994, 1995 and 1996, the restrictions on all remaining shares may
be released by the Enova board of directors after considering the impact on
earnings of industry and corporate restructuring during the periods in
question.
In addition to the above-described restricted shares, special grants of
2,500 shares were made to each of S. L. Baum and D. E. Felsinger in 1994 and
1995. The earnings target was met for the year ended December 31, 1996 and the
restrictions on the shares granted in 1994 were lifted. The shares granted in
1995 are to be lifted at the end of 1997 if Enova meets or exceeds the target
earnings per share as set by the Executive Compensation Committee at the time
of grant. Such target earnings may be adjusted to reflect industry and
corporate restructuring.
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<PAGE>
In general, restricted shares may not be sold, transferred or pledged until
restrictions are removed or expire. The LTIP was amended by the Enova board of
directors in July 1996 to authorize holders of restricted shares to transfer
such shares to revocable inter vivos trusts for estate-planning purposes and
to eliminate the $2.50 per share purchase price. Holders of restricted stock
have voting rights and will receive dividends prior to the time the
restrictions lapse if, and to the extent, paid on Enova Common Stock
generally.
All shares of restricted stock acquired are placed in escrow. It is
anticipated that restricted stock would be forfeited and would be resold to
Enova at original cost, if any, in the event that vesting is not achieved by
virtue of performance or other criteria. Shares acquired prior to 1996, were
purchased by executives at $2.50 per share.
NONQUALIFIED STOCK OPTION GRANTS IN LAST FISCAL YEAR (A)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE PRICE GRANT DATE
UNDERLYING TO EMPLOYEES IN PER SHARE EXPIRATION PRESENT
NAME OPTIONS GRANTED FISCAL YEAR ($/SHARE) DATE VALUE ($)(B)
- ---- --------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
T. A. Page.............. 107,660 39.5% $22.375 October 2006 $253,001
S. L. Baum.............. 58,140 21.3% 22.375 October 2006 136,629
D. E. Felsinger......... 37,380 13.7% 22.375 October 2006 87,843
D. R. Kuzma............. 17,220 6.3% 22.375 October 2006 40,467
E. A. Guiles............ 9,380 3.4% 22.375 October 2006 22,043
</TABLE>
(A) The options shown on this table were granted under the 1986 Long-Term
Incentive Plan and vest in four equal annual installments beginning
January 1, 1998.
(B) Calculated using the Black-Scholes option pricing model assuming an option
value of $2.35 per share, stock price volatility of 18.86%, a risk-free
rate of return of 6.21%, and an annual dividend yield of 7.0%. Options
will have no actual value unless the stock price appreciates from the date
of grant to the exercise date.
The LTIP's primary purpose is to enhance the value of Enova to its
shareholders by encouraging executives to remain with Enova and/or SDG&E and
to act and perform to increase the price of Enova shares as well as Enova
earnings per share. To accomplish these objectives, the Executive Compensation
Committee initiated a program of nonqualified stock option grants in 1996.
Instead of placing all long-term incentive compensation in restricted stock,
the Executive Compensation Committee allocated a portion of each executive's
long-term incentive compensation to non-qualified stock options. These stock
options will provide long-term benefits to executives only if share price
increases and continued service requirements are met. These conditions help to
align executives' interests with those of shareholders.
AGGREGATED NONQUALIFIED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
NUMBER OF END FISCAL YEAR END
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
T. A. Page.............. None $ 0 None / 107,660 $ 0 /$40,373
S. L. Baum.............. None $ 0 None / 58,140 $ 0 /$21,803
D. E. Felsinger......... None $ 0 None / 37,380 $ 0 /$14,018
D. R. Kuzma............. None $ 0 None / 17,220 $ 0 / $6,458
E. A. Guiles............ None $ 0 None / 9,380 $ 0 / $3,518
</TABLE>
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<PAGE>
Under the LTIP, all outstanding incentive awards become fully vested and
exercisable without restrictions upon the occurrence of one of two events
after a change in control. The first triggering event is the failure of a
successor corporation or its parent or subsidiary to make adequate provision
for continuation of the LTIP by substituting new awards. In the second
triggering event, even if adequate provision for continuation of the LTIP and
substitution of new awards has been made, an executive's incentive awards will
become vested and exercisable if the executive is terminated within three
years after a change of control for reasons other than cause, retirement,
death or disability, or if the executive voluntarily terminates employment due
to adverse circumstances.
The term "change in control" includes such significant events as those
described under "Pension Plan and Supplemental Executive Retirement Plan"
below. The adverse circumstances allowing such voluntary termination of
employment consist of significant and adverse changes in the executive's
position, duties, responsibilities or status, or the reduction or elimination
of the executive's compensation or incentive compensation opportunities.
The LTIP will expire in 2005. Outstanding incentive awards will not be
affected by such expiration or termination and will vest or be forfeited in
accordance with their terms.
PENSION PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)
<TABLE>
<CAPTION>
PENSION PLAN AND SERP TABLE
-------------------------------------------------------------------------------------
AGGREGATE ANNUAL BENEFIT FOR
CREDITED
YEARS OF SERVICE(A)
-----------------------------------------------------
ASSUMED 10 YEARS
ANNUAL AND
COMPENSATION 5 YEARS THEREAFTER
------------ ------- ----------
<S> <C> <C>
$100,000 $ 30,000 $ 60,000
200,000 60,000 120,000
300,000 90,000 180,000
400,000 120,000 240,000
500,000 150,000 300,000
600,000 180,000 360,000
700,000 210,000 420,000
800,000 240,000 480,000
</TABLE>
- --------
(A) Credited years of service under the Pension Plan for the five highest paid
executive officers are: T. A. Page, 19 years; S. L. Baum, 12 years; D. E.
Felsinger, 24 years; D. R. Kuzma, 2 years; and E. A. Guiles, 24 years.
In addition to the Pension Plan, the SERP provides a supplemental retirement
benefit for certain executives. The Pension Plan and the SERP are available
for executives of Enova as well as executives of SDG&E; however, concurrent
service for both Enova and SDG&E will not result in double-counting of years
of service.
The aggregate monthly benefit payable under the combined Pension Plan and
SERP to an executive who retires at age 62 or thereafter and has completed at
least five years of service will be a percentage of the executive's final pay
equal to 5% times years of service (up to a maximum of 10 years); however,
officers appointed prior to July 1, 1994 shall receive 6% times years of
service (up to a maximum of 10 years). Final pay is defined in the SERP as the
monthly base pay rate in effect during the month immediately preceding
retirement, plus 1/12 of the average of the highest three years' gross bonus
awards. Alternatively, the executive may elect to receive a lump sum cash
payment equal to the actuarially determined present value of the monthly
benefits. The SERP also provides reduced benefits to executives who retire
between the ages of 55 and 61, if the executive has completed at least five
years of employee service.
The above table shows the aggregate annual retirement benefits payable to
executives under the Pension Plan and the SERP, assuming a straight life
annuity form of pension at the normal retirement age of 62 for
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<PAGE>
specified compensation and years of service. The benefit amounts listed in the
table are not subject to a deduction for Social Security benefits. SERP
payments will be reduced by benefits payable under the Pension Plan.
The SERP, as amended, provides monthly surviving spouse benefits equal to
50% of the defined benefits and disability benefits equal to 100% of the
defined benefits. The SERP also provides enhanced benefits to an executive who
is adversely affected within three years after the occurrence of an event
constituting a change in control of Enova or SDG&E, as the case may be (a
Change of Control). If, during that period, an executive is terminated for
reasons other than cause, retirement, death or disability, or voluntarily
leaves employment for reasons specified in the SERP, the executive may elect
either to take early retirement, if otherwise qualified to do so, or to
receive a lump sum cash payment equal to the actuarially determined present
value of normal retirement benefits based on 10 years of service.
The lump sum payment under the SERP is limited. If that payment alone, or
when added together with other payments that the executive has the right to
receive from Enova or SDG&E, as the case may be, in connection with a Change
in Control, becomes subject to the excise tax imposed by Section 4999 of the
Code, the payment must be reduced until no such payment is subject to the
excise tax. The effect of this limitation is that total severance payments
made to an executive in connection with a Change in Control may not exceed
approximately 2.99 times the executive's average W-2 income for the five years
preceding the Change of Control.
Certain significant events described in the SERP constitute a Change in
Control, such as the dissolution of Enova or SDG&E, the sale of substantially
all the assets of Enova or SDG&E, a merger or the acquisition by one person or
group of the beneficial ownership of more than 25% of the voting power of
Enova or SDG&E, coupled with the election of a new majority of the board of
Enova or SDG&E, as the case may be. A merger initiated by Enova or SDG&E, in
which Enova or SDG&E, as the case may be, is the surviving entity, is not a
change in control; accordingly, the formation of Enova and the proposed
combination with Pacific Enterprises, including the formation of the New
Holding Company, do not constitute a Change in Control. The adverse actions
that allow an executive to leave employment voluntarily are described in the
SERP and consist of events such as a significant and adverse change in the
executive's position, duties, responsibilities or status, or the reduction or
elimination of the executive's compensation or incentive compensation
opportunities.
Some or all of the amounts to be paid which are discussed in the above
paragraphs will be funded out of the cash value of life insurance policies
paid for by the employer on behalf of the executive.
EXECUTIVE SEVERANCE ALLOWANCE PLAN
The Executive Severance Allowance Plan, as amended (the Executive Severance
Plan), covers officers with one or more years of employee service in lieu of
coverage under the severance plan for non-officer employees. The Executive
Severance Plan is available for executives of Enova as well as executives of
SDG&E; however, concurrent service for both Enova and SDG&E will not result in
double-counting of years of service.
The Executive Severance Plan provides two different severance allowances
depending upon whether the officer's termination is related to a Change in
Control. Termination unrelated to a Change in Control essentially means a
termination due to a reduction in staff or a termination resulting from the
sale of a work unit. The term Change in Control includes such significant
events as those described under "Pension Plan and Supplemental Executive
Retirement Plan" above. If, within three years after a Change in Control, the
officer is terminated for reasons other than cause, retirement, death or
disability, or leaves employment voluntarily due to adverse actions, the
officer is entitled to a severance allowance. The adverse actions that allow
an officer to leave employment voluntarily are described in the Executive
Severance Plan and consist of events such as a significant and adverse change
in the officer's position, duties, responsibilities or status, or the
reduction or elimination of the officer's compensation or incentive
compensation opportunities.
In the event of a termination unrelated to a Change in Control, officers
with one or more years of employee service, but less than five years of
employee service, will receive a severance allowance consisting of a
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<PAGE>
continuation of base salary and health and basic life insurance benefits for
nine months. Officers with five or more years of employee service receive a
continuation of base salary and such benefits for 12 months.
The Executive Severance Plan provides that if the length of an officer's
severance allowance is greater under the employees' severance plan than under
the Executive Severance Plan, the officer's severance allowance under the
Executive Severance Plan will be for that longer period.
In the event of a termination related to a Change in Control, the officer
will receive a severance allowance consisting of one year's final pay in a
lump sum payable within five days after termination and, at the officer's
option, either the continuation of health and basic life insurance coverage
for 12 months or a lump sum payment equal to the present value of that
coverage. Payments pursuant to the Executive Severance Plan alone, or when
combined with compensation from other Enova or SDG&E sources made in
connection with a Change in Control, may not exceed approximately 2.99 times
the officer's average W-2 income for the five years preceding the Change in
Control.
The Executive Severance Plan provides a procedure and a formula to reduce
the total payments to be received by an officer by reason of a Change in
Control if such total payments would exceed the 2.99 limitation (causing an
excise tax to be due) and if the officer waives receipt of all or a portion of
the excess. Under the formula, an officer's lump sum benefit under the SERP
would be first reduced, if necessary, to zero. It is not anticipated that any
reduction under any other benefit plan would be necessary in the case of any
officer.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee, which is composed entirely of
independent outside directors, acts on behalf of the board of directors in the
interests of the shareholders in formulating policy and administering approved
programs for compensating Enova and SDG&E officers and other senior
executives.
The compensation policy, with respect to executives, is to provide a total
compensation package comprised of base salary, annual incentive and long-term
incentive, and benefit programs. The terms and administration of the plans by
which such forms of compensation are determined (1) are structured and
administered in the best interests of the shareholders, (2) are reasonable in
comparison to competitive practice, (3) are aligned and vary with corporate
performance, and (4) will continue to motivate and reward on the basis of
Enova, subsidiary and individual performance. The Executive Compensation
Committee believes that a significant portion of the total compensation of all
executives, and most specifically, the chairman and president and chief
executive officers of Enova and SDG&E, should be "at risk" and based upon the
achievement of measurable, superior financial and operational performance.
In discharging its responsibility, the Executive Compensation Committee,
subject to the final approval of the board of directors, determines the
factors and criteria to be used in compensating the chief executive officers,
as well as other executives of Enova and SDG&E, and applies these factors and
criteria in administering the various plans and programs in which these
executives participate to ensure they are (1) consistent with compensation
policy, (2) compatible with other compensation programs and (3) administered
in accordance with their terms and the objectives for which they are intended.
To assist in the performance of the above and to ensure that it is provided
with unbiased, objective input, the Executive Compensation Committee has
elected to retain the services of an outside independent compensation
consulting firm. The Executive Compensation Committee considers the
compensation practices and levels paid by major nation-wide companies. To
ensure compensation components and levels are aligned with Enova's diverse
activities, a comprehensive study was conducted in 1996 by the outside
consultant. The study analyzed and compared Enova compensation practices and
levels to those of the nation-wide, multi-industry comparison group including
other utility holding companies. The Executive Compensation Committee believes
that by taking into account the compensation practices of other comparative
utility holding companies as well as major nation-wide non-utility companies,
it can best determine the level of compensation necessary to attract, retain
and motivate its executives. In addition, the Executive Compensation Committee
reviews economic and comparative compensation surveys compiled and provided by
the Human Resources Division of SDG&E.
19
<PAGE>
While it may rely on such information, the Executive Compensation Committee
is ultimately and solely responsible for any decisions made or recommended to
the board of directors with regard to the compensation of Enova and SDG&E
executives.
The Executive Compensation Committee has reviewed the compensation of Enova
and SDG&E executives and has determined that their compensation is consistent
with Enova's policies.
Chief Executive Officer Compensation
The compensation of Messrs. Page, Baum and Felsinger, as well as that of the
other executives, is directly tied to the achievement of the corporate goals
described below. Mr. Page serves as chairman of the board of Enova and SDG&E.
Mr. Baum serves as president and chief executive officer of Enova and vice
chairman of SDG&E and Mr. Felsinger serves as president and chief executive
officer of SDG&E and executive vice president of Enova.
The base salary of the chief executive officers, and the other executives,
is targeted at the competitive median (50th percentile) for the above-
mentioned comparison group. Pursuant to Mr. Page's employment agreement
described above, he will receive a salary of not less than $31,916.66 per
month through his remaining term as chairman of the board. For 1996, the
targeted participation levels for the chairman were 60% under the EICP and
110% under the LTIP, of base salary. For 1996, the targeted participation
levels for S. L. Baum and D. E. Felsinger are 50% under the EICP and 110% and
100%, respectively, under the LTIP, of base salary. Actual incentive
compensation earned under these two plans is contingent upon Enova and SDG&E's
attaining stated performance goals. At targeted compensation levels, 63% of
the chairman's and 61% and 60% of the chief executive officer's total
compensation is contingent on the achievement of these quantifiable corporate
performance goals. As discussed further below in the EICP and LTIP sections,
these goals address Enova earnings per share, return on equity, market-to-book
ratio, and SDG&E operating and maintenance expenses, capital expenditures,
rates, electric reliability, safety and customer satisfaction.
Base Salary Compensation
The base salary component for the chief executive officers and the other
executives is reviewed annually and is based upon the responsibilities of the
position and the experience of the individual. The Executive Compensation
Committee also takes into account the base salaries of executives with similar
responsibilities at the above-mentioned comparison group. Other factors taken
into consideration by the Executive Compensation Committee are the condition
of the local and national economies and the financial and operational health
of Enova and SDG&E. The individual performance of the specific executive is
also considered. The base salary information is gathered and analyzed in order
to determine the appropriate compensation level. While these statistical
factors may warrant one level of pay, more subjective elements such as the
condition of the economy may dictate another.
Executive Incentive Compensation Plan (EICP)
Under the EICP, cash payments may be made annually to the chief executive
officers and other executives based on a combination of financial and
operating performance goals. There are three elements that determine the
individual awards: (1) the executive's base salary, (2) the participation
level, and (3) corporate performance. The participation level is expressed as
a percentage and is set by the Executive Compensation Committee based on the
executive's duties and level of responsibility. The amount of the individual
award is determined by multiplying the executive's base salary by the
participation level and then modifying it by total corporate performance.
The EICP is highly leveraged on the basis of performance. Accordingly, no
payments may be made unless and until the minimum performance levels are
exceeded. Under the terms of the EICP, corporate performance is measured
against preset quantifiable goals approved by the Executive Compensation
Committee at the beginning
20
<PAGE>
of the year. A target and a minimum and maximum performance range are
established for each goal. In 1996, financial goals addressed (1) the percent
return on Enova shareholders' equity and (2) the ratio of Enova's stock market
price to its book value, which is then compared to other utilities. Operating
goals addressed (1) adherence to SDG&E's operating and capital budgets, (2)
customer service satisfaction as measured by customer surveys, (3) customer
electric reliability as measured in duration and frequency of outages and
customer satisfaction, and (4) employee lost-time accidents. An electric-rate
goal was set as a hurdle goal. If the rate goal had not been attained it would
have reduced the overall operating results by 50%. Total corporate performance
is determined from the degree of achievement of each of these goals. These
goals directly support the performance-based rates goals approved by the
California Public Utilities Commission. The Executive Compensation Committee
gives equal weight to the financial goals and the operating goals in order to
balance shareholder and customer interests. This serves to assist SDG&E in
reaching its goals of lowering rates and increasing earnings at the same time.
All 1996 operating performance goals were met and performance on four of the
five goals far exceeded the targets. The 1996 financial goal of return on
shareholder's equity was exceeded; however, the market-to-book ratio at 74%
fell slightly short of the target of 75%. For 1996, the individual awards
could not exceed 90% of base salary for the chairman, 75% for the president
and chief executive officers, and 60% for other executives. The EICP
compensation component represents 22% of the chairman's, 19% of the Enova
president and chief executive officer's, and 20% of the SDG&E president and
chief executive officer's total mix of compensation based upon the targets set
under the EICP and LTIP. The actual amounts earned by each of the five highest
compensated executives under the EICP are listed in the Summary Compensation
Table.
1986 Long-Term Incentive Plan (LTIP)
The LTIP was approved by the shareholders of SDG&E in 1986, and amended and
reapproved by the shareholders of SDG&E in 1995, to promote the interests of
SDG&E and its shareholders. Enova has assumed the LTIP and the obligation to
issue Enova common stock thereunder. The LTIP delegates the responsibility of
administration and goal determination to the Executive Compensation Committee.
The LTIP's primary purpose is to enhance the value of Enova to its
shareholders by encouraging executives to remain with Enova and/or SDG&E and
to act and perform to increase the price of Enova shares as well as Enova
earnings per share. To accomplish these objectives, the LTIP now includes the
use of Nonqualified Stock Options in addition to Restricted Stock for the
executives. The shares represented by the Nonqualified Stock Options and
Restricted Stock are subject to substantial restrictions on the rights of
executives to benefit fully from such shares unless and until certain earnings
improvement, and/or share value, and continued service requirements are met.
If these requirements or other criteria are not met, it is anticipated that
the executives' rights to such shares would be forfeited and would be returned
to the Plan.
All Enova and SDG&E executives are eligible to participate in the LTIP at
various levels. The number of shares granted is determined by a formula
adopted by the Executive Compensation Committee, and is calculated as a
percentage of base salary. The higher the responsibility level, the higher the
participation level (or percentage of risk). For example, in 1996 the chairman
participated at 110% of base salary, making the LTIP equal to 41% of his mix
of total target compensation. The president and chief executive officers'
participated at 110% and 100% of base salary, making the LTIP equal to 42% and
40%, respectively, for S. L. Baum and D. E. Felsinger. As a component of the
executives' total compensation package, the LTIP formula is reviewed annually.
The review takes into consideration that the value of such shares, at the time
of grant, has been determined to be consistent with the size of grants made to
executives in similar positions in the above-mentioned companies. Other
factors accounted for are LTIP goals, current share ownership and current
participation levels. In 1996, the Executive Compensation Committee
established minimum share ownership levels. The executives are provided five
(5) years to attain and maintain these levels. The minimum levels are four
times base salary for the chairman and president and chief executive officers,
two times base salary for senior vice presidents and one times base salary for
vice presidents.
With respect to LTIP restricted shares granted in 1993, 1994, 1995 and 1996
restrictions on one-quarter of the number of shares originally placed in
escrow are to be released and the shares are to be delivered to the
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<PAGE>
executives for each of the four succeeding calendar years if SDG&E's earnings
per share (to be measured in terms of Enova's earnings per share from and
after January 1, 1996) meet or exceed the earnings per share target set by the
Executive Compensation Committee or if, at the end of the first, second and
third quarters of the following year, earnings for the twelve months then
ending equal or exceed the weighted average of the targets for the prior year
and the current year. In previous years' grants an end-of-term, four-year
performance goal has been provided. Shares granted in 1993 have no end-of-term
goal. As to restricted shares granted in 1994, 1995 and 1996, the restrictions
on all remaining shares may be released by the Enova board of directors after
considering the impact on earnings of industry and corporate restructuring. In
addition to the above-described restricted shares, special grants of 2,500
shares were made to each of S. L. Baum and D. E. Felsinger in 1994 and 1995.
The restrictions on these shares are to be lifted at the end of 1996 and 1997,
respectively, if Enova meets or exceeds the target earnings per share for 1996
and 1997 as set by the Executive Compensation Committee at the time of grant.
Such target earnings may be adjusted to reflect industry and corporate
restructuring. The 1996 earnings per share target was met and restrictions
have been lifted on the 1994 special grants.
With respect to the Nonqualified Stock Options (NQSOs) granted in 1996, a
ten-year term and a four-year vesting schedule applies. The NQSO vesting
criteria is predicated on continued service requirements.
The number of restricted shares and NQSOs granted to Enova and SDG&E's five
highest-compensated executives in 1996, pursuant to the LTIP, is shown in the
Long-Term Incentive Plan Restricted Stock Grants and Nonqualified Stock Option
Grants tables.
Revenue Reconciliation Act of 1993
In 1993, Section 162(m) of the Internal Revenue Code was amended to limit
the deductibility of most forms of compensation over $1,000,000 paid to top
executives of publicly held corporations. The Executive Compensation Committee
believes that awards of stock options and stock appreciation rights under the
LTIP will not be subject to the limitations on compensation deductibility as a
result of the amendments approved by the shareholders of SDG&E at their 1995
Annual Meeting. The Executive Compensation Committee intends to maintain
flexibility in the manner and conditions under which grants of restricted
stock are made under the LTIP, however, and, in the future, such grants may be
subject to the limitations on compensation deductibility under certain
circumstances.
The report is submitted by the Executive Compensation Committee:
Robert H. Goldsmith, Chairman
Daniel W. Derbes
Thomas C. Stickel
January 27, 1997
22
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COMPARATIVE COMMON STOCK PERFORMANCE
The following graph compares the percentage change in Enova's cumulative
total shareholder return on Enova Common Stock over the last five fiscal years
with the performances of the Standard & Poor's 500 Index and the Dow Jones
Utilities Index over the same period. The returns were calculated assuming the
investment in Enova Common Stock, the S&P 500, and the Dow Jones Utilities
Index on December 31, 1991, and reinvestment of all dividends. Note that
periods prior to the formation of Enova (January 1, 1996) are measured in terms
of SDG&E Common Stock.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
AMONG ENOVA, S&P 500 INDEX AND DOW JONES UTILITIES INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
DOW JONES
Measurement Period S&P 500 UTILITIES
(Fiscal Year Covered) ENOVA INDEX(A) INDEX(B)
- --------------------- ---------- -------- ---------
<S> <C> <C> <C>
Measurement Pt- 12/31/91 $100 $100 $100
FYE 12/31/92 $113 $108 $110
FYE 12/31/93 $123 $114 $118
FYE 12/31/94 $ 96 $120 $107
FYE 12/31/95 $128 $165 $137
FYE 12/31/96 $141 $203 $136
</TABLE>
(A) Calculations for the S&P 500 Index were performed by Standard & Poor's
Compustat Services, Inc.
(B) The Dow Jones Utilities Index (consisting of 11 electric utilities and four
gas utilities) is maintained by Dow Jones & Company, Inc. and reported
daily in The Wall Street Journal.
23
<PAGE>
ITEM NO. 2--SHAREHOLDER PROPOSAL
Enova has received the following shareholder proposal submitted in
accordance with the rules of the SEC. This proposal will be voted upon at the
Enova Annual Meeting only if properly presented by the proposing shareholder
or his qualified representative. To be approved, a proposal must receive the
affirmative vote of a majority of the outstanding shares of Enova Common Stock
represented and voting at the Enova Annual Meeting.
The proposal and supporting statement are presented as received by Enova,
and the Enova board of directors disclaims any responsibility for their
content. The Enova board of directors recommends a vote "AGAINST" the proposal
for the reasons stated in the opposition statement following the proposal. The
name and address of, and number of shares represented to be held by, the
proposing shareholder will be furnished by Enova to any shareholder promptly
upon receipt of any oral or written request to Enova Shareholder Services.
SHAREHOLDER PROPOSAL (ITEM NO. 2 ON PROXY CARD)
"RESOLVED: That the shareholders recommend that the Board of Directors
institute the additional criteria that before any officer options and bonus
are granted, the Company's financial performance will be in the top 30% of the
Edison Electric Institute 100 Index of Investor-Owned Electrics (EEI 100)."
SHAREHOLDER SUPPORTING STATEMENT
"Reasons: Employees are typically rewarded with a bonus after superior
performance, but not after average or mediocre performance. In 1994 the
Company's return was -17% and bonuses were paid. In 1995 the performance was
32.4% and bonuses were paid. As of October 11th of 1996, when this proposal
was written, the total return for the year will be 1.3% if the share price
does not improve. This is not the type of performance that should be
rewarded."
"When bonuses are paid for poor performance, the Directors of the Company
represent the Management and not the Shareholders. As long as the Chairman of
the Company sits on the nominating committee the directors can not be
independent of officer influence. Since once nominated they are automatically
elected to the board."
"In the 1995 Annual Report the President of the Corporation stated that the
"shares should be perceived as moving from a yield-oriented investment to
being more of a total-return investment.' This was a reason why the dividend
was not raised in 1996. The officers have failed to deliver."
"This resolution will put the officers interests in line with the
shareholders."
"A proposal tying officer bonus to total return was submitted at the 1996
Annual Meeting and received 19.89% of the vote cast which represented
16,344,270 shares. This year the target is set to compare the total return to
the Edison 100 as more representative of the industry than the Dow Jones 15
Utilities which the company uses to justify its performance. You should note
that the 15 Utilities showed a total return of $147 for an investment of $100
in a five year period ending in 1995 compared to a return of $179 for the EEI
100. The EEI 100 is more representative of the choices an investor has in the
industry."
ENOVA OPPOSITION STATEMENT
The board agrees that the compensation of officers should be tied to the
financial performance of Enova. Indeed, current long- and short-term incentive
compensation programs are based upon achievement of financial and operational
goals which are targeted to enhance shareholder value.
24
<PAGE>
The board does not believe that executive compensation should be tied to a
single performance measure, such as comparing performance to the Edison
Electric Institute 100 Index of Investor-Owned Electric Utilities (EEI 100).
This is particularly true as Enova increases its focus in the non-utility,
non-regulated arena. Comparison to pure utility indices becomes decreasingly
relevant.
The board believes that its existing compensation programs, which are tied
to a number of specific financial and operating performance goals, provide the
right type of incentive for officers. In addition to financial goals, such as
earnings growth, these plans directly reward or penalize management for
operating functions within their control. The operating goals include system
reliability, customer satisfaction, and budget goals that reflect the targets
mandated by the California Public Utilities Commission under SDG&E's
performance-based ratemaking structure. Performance consistent with these
targets contributes directly to shareholder value through regulatory incentive
mechanisms.
The Enova board urges each shareholder to review the more complete
discussion of Enova and SDG&E's executive compensation programs and their "pay
for performance" approach included above in this Proxy Statement (see "Item
No.1--Election of Directors--Executive Compensation and Transactions with
Management and Others" and "Report of the Executive Compensation Committee").
FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "AGAINST" THIS PROPOSAL. Proxies received will be voted against this
proposal unless a contrary choice is specified.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has been employed by Enova since it's formation and
has been employed by SDG&E for many years to audit financial statements and
for other purposes. Representatives of Deloitte & Touche LLP are expected to
be present at the Annual Meeting. They will have the opportunity to make a
statement, if they so desire, and will respond to appropriate questions from
shareholders.
ANNUAL REPORT AND AVAILABILITY OF FORM 10-K
THE ENOVA 1996 ANNUAL REPORT TO SHAREHOLDERS ACCOMPANIES THIS PROXY
STATEMENT. THE COMBINED ANNUAL REPORT OF ENOVA AND SDG&E TO THE SEC ON FORM
10-K FOR 1996 WILL BE PROVIDED TO SHAREHOLDERS, WITHOUT CHARGE, UPON WRITTEN
REQUEST, TO SHAREHOLDER SERVICES, P.O. BOX 129400, SAN DIEGO, CALIFORNIA
92112-9400.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals that Shareholders may wish to have included in the proxy materials
relating to the next Annual Meeting (1998) must be received by Enova by
November 18, 1997.
PROXY SOLICITATIONS
In addition to the original solicitation by mail, some of the officers and
regular employees of Enova and SDG&E may solicit proxies by personal visits,
telephone or mail without receiving compensation in addition to their regular
salaries. Enova anticipates that the expense associated with these
solicitation efforts will be nominal. Enova will reimburse brokerage firms and
other securities' custodians for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of stock.
Enova and SDG&E have retained Georgeson & Co., Inc., a proxy solicitation
firm, to assist in the dissemination of proxy materials and the solicitation
of proxies at an estimated cost of $12,000 plus disbursements. All costs
associated with these solicitations will be allocated between Enova and SDG&E.
25
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OTHER BUSINESS TO BE BROUGHT BEFORE THE ANNUAL MEETING
The board of directors of Enova does not know of any matters that will be
presented for action at the Annual Meeting other than the matters described
above. However, if any other matters properly come before the Annual Meeting,
the holders of proxies solicited by the Enova board of directors, will vote on
those matters in accordance with their judgment, and discretionary authority
to do so is included in the enclosed proxy.
By order of the Board of Directors
Thomas A. Page
Chairman
San Diego, California
March 20, 1997
26
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENOVA CORPORATION
POST OFFICE BOX 129400, SAN DIEGO, CALIFORNIA 92112-9400
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 22, 1997
DANIEL W. DERBES, RALPH R. OCAMPO and THOMAS A. PAGE, jointly or
individually, are hereby appointed as proxies with full power of substitution to
represent and vote all shares of stock of the undersigned shareholder(s) of
record on March 3, 1997, at the Annual Meeting of Shareholders of Enova
Corporation, to be held at Del Mar Fairgrounds, 2260 Jimmy Durante Blvd., Del
Mar, CA, on April 22, 1997, and at any adjournment or postponement thereof,
as indicated on reverse side.
For Participants in the San Diego Gas & Electric Company Savings PLan (the
"Plan"), the proxy also serves as voting instructions to the Trustee to vote
the shares of Enova Corporation Common Stock benefically owned by the
Participant in the Plan.
THIS CARD IS ONLY FOR SHARES OF COMMON STOCK
(Continued and to be signed on other side)
[SEE REVERSE SIDE]
FOLD AND DETACH HERE
DIRECTIONS TO THE DEL MAR FAIRGROUNDS
(SOLANA GATE ENTRANCE, MISSION TOWER BUILDING)
FROM THE NORTH -- DRIVING SOUTH
ON INTERSTATE 5
Take I-5 South to Via de la Valle
exit. Turn West (right) onto Via
de la Valle. Pass the electronic
sign and Jimmy Durante Blvd. Take
the next left into the Solana Gate
entrance. Once inside, follow the
"Enova" signs to the Mission Tower
Building. Parking is adjacent to
the building.
FROM THE EAST (ESCONDIDO) --
DRIVING WEST ON HWY. 78
Take Hwy. 78 West to I-5 South.
Take I-5 South to Via de la Valle
exit. Turn West (right) onto
Via de la Valle. Pass the electronic
sign and Jimmy Durante Blvd. Take
the next left into the Solana Gate
entrance. Once inside, follow the "Enova"
signs to the Mission Tower Building.
Parking is adjacent to the building.
[MAP INSERTED HERE]
FROM THE EAST -- DRIVING WEST ON
INTERSTATE 8
Take I-8 West to I-5 North. Take I-5
North to Via de la Valle exit. Turn
West (left) onto Via de la Valle.
Pass the electronic sign and Jimmy
Durante Blvd. Take the next left into
the Solana Gate entrance. Once inside,
follow the "Enova" signs to the Mission
Tower Building. Parking is adjacent to
the building.
FROM THE SOUTH -- DRIVING NORTH ON
INTERSTATE 5
Take I-5 North to Via de la Valle exit.
Turn West (left) onto Via de la Valle.
Pass the electronic sign and Jimmy
Durante Blvd. Take the next left
into the Solana Gate entrance. Once
inside, follow the "Enova" signs to
the Mission Tower Building. Parking
is adjacent to the building.
<PAGE>
[X] Please mark your votes as in this example.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this Proxy will be
voted FOR Item 1 and AGAINST Item 2.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
- -------------------------------------------------------------------------------
FOR WITHHELD NOMINEES:
1. ELECTION Daniel W. Derbes
OF CLASS II Robert H. Goldsmith
DIRECTORS
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. SHAREHOLDER PROPOSAL
Relating to criteria for
grants of officer options
and bonus.
In their discretion, act upon such
other business as may properly
come before the meeting.
- -------------------------------------------------------------------------------
Check box if you are planning to attend the Annual Meeting of Enova
shareholders. [_]
Please check here if you receive more than one Annual Report and do not wish
to receive the extra copy(ies). This will not affect the distribution of
dividends or proxy statements. [_]
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.
- -------------------------------------------------
- -------------------------------------------------
SIGNATURES(S) DATE
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
OF ENOVA CORPORATION
TUESDAY, APRIL 22, 1997
10:00 A.M.
DEL MAR FAIRGROUNDS
SOLANA GATE ENTRANCE
MISSION TOWER BUILDING
DEL MAR, CA
(See map on reverse side for directions)
YOUR VOTE IS IMPORTANT:
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND PROMPTLY RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
[LOGO OF ENOVA CORPORATION]
