<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
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
Texas Utilities Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Texas Utilities Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
TEXAS UTILITIES COMPANY
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------
April 3, 1995
To the Shareholders of Texas Utilities Company:
The annual meeting of shareholders of Texas Utilities Company will be held in
the Grand Ballroom of the Harvey Hotel/Downtown, Live Oak and Olive Streets,
Dallas, Texas on Friday, May 19, 1995 at 9:30 a.m. for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To approve an Annual Incentive Plan; and
3. To approve the selection of auditors for the year 1995.
The Board of Directors has fixed the close of business on March 20, 1995 as
the time as of which shareholders entitled to notice of, and to vote at, the
meeting and any adjournments shall be determined.
WHETHER OR NOT YOU WILL BE ABLE TO ATTEND THE MEETING, PLEASE SIGN AND RETURN
THE ACCOMPANYING PROXY PROMPTLY. NO POSTAGE NEED BE AFFIXED TO THE REPLY
ENVELOPE WHICH IS ENCLOSED HEREWITH FOR YOUR CONVENIENCE IF IT IS MAILED IN THE
UNITED STATES.
Peter B. Tinkham
Secretary
<PAGE>
TEXAS UTILITIES COMPANY
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
------------------
PROXY STATEMENT
------------------
April 3, 1995
A proxy in the accompanying form is solicited by the Board of Directors of
TEXAS UTILITIES COMPANY for use at the annual meeting of shareholders to be
held in the Grand Ballroom of the Harvey Hotel/Downtown, Live Oak and Olive
Streets, Dallas, Texas, on Friday, May 19, 1995, at 9:30 a.m. and any
adjournments thereof for the purposes set forth in the accompanying notice.
The close of business on March 20, 1995 has been fixed as the time as of
which shareholders entitled to notice of, and to vote with respect to, this
solicitation shall be determined. At such date there were outstanding and
entitled to vote 225,841,037 shares of common stock. Except as indicated below,
each share is entitled to one vote on all questions submitted to shareholders.
Any shareholder may exercise the right of cumulative voting in the election
of directors provided the shareholder gives written notice of such intention to
the Secretary of the Company on or before the date preceding the election. When
exercising this right the shareholder is entitled to one vote for each share
held multiplied by the number of directors to be elected and he may cast all of
his votes for a single nominee or spread his votes among the nominees in any
manner desired.
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited by directors, officers and regular
employees of the Company in person or by telephone. The Company has hired D. F.
King & Co., Inc. to assist in the solicitation of proxies at an estimated cost
of $7,500 plus disbursements. Shareholders may assist the Company in avoiding
expenses in this connection by returning their proxies promptly.
Any proxy delivered pursuant to this solicitation is revocable at the option
of the person executing the same at any time prior to the exercise thereof. The
shares represented by any proxy duly given as a result of this request will be
voted in the discretion of the persons named in the proxy unless the
shareholder specifies a choice by means of the ballot space on the proxy, in
which case the shares will be voted accordingly.
1
<PAGE>
The Company has adopted a confidential voting policy. Accordingly, tabulation
of proxies and votes cast at the meeting will be conducted by an independent
agent and the votes of individual shareholders will be kept private and not
disclosed to the Company, except in limited circumstances.
The presence in person or by proxy of the holders of a majority of the shares
of the common stock entitled to vote shall constitute a quorum entitled to
transact business at the meeting. Directors are elected by plurality vote of
the votes cast at the meeting; abstentions and broker non-votes will have no
effect. The approval of the Annual Incentive Plan requires the affirmative vote
of a majority of the shares represented at the meeting; abstentions and broker
non-votes will be treated as negative votes. The approval of the selection of
auditors also requires the affirmative vote of a majority of the shares
represented at the meeting; abstentions and broker non-votes will be treated as
negative votes.
This Notice, Proxy Statement and form of proxy are being mailed or given to
shareholders on or about April 3, 1995.
1996 ANNUAL MEETING SHAREHOLDERS' PROPOSALS
All proposals from shareholders to be considered at the next annual meeting
scheduled for May 17, 1996 must be received by the Secretary of the Company,
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201-3411, not later than the
close of business on December 4, 1995.
ELECTION OF DIRECTORS
It is the intent of the Board of Directors that the persons named in the
proxy will vote your shares in favor of the nominees for directors listed
hereafter, unless authority is withheld. All of the nominees are at present
members of the Board of Directors and have been nominated by the Nominating
Committee. The persons named in the proxy may cumulate the votes represented
thereby and in case any such nominee shall become unavailable, which the Board
of Directors has no reason to anticipate, may vote for a substitute.
2
<PAGE>
The names of the nominees for the office of director for the ensuing year and
information about them, as furnished by the nominees themselves, are set forth
below:
<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- -------------- ------------------------------------------
<S> <C> <C> <C>
Jack W. Evans
(1)(2)(3)(4)(5)(6)..... 72 1986 Investments. Owner, Jack Evans Investments.
Chairman, American Title Inc. Chairman of
the Board, President and Chief Executive
Officer of Cullum Companies, Inc. (food and
drug chain) until October 10, 1990. Mayor,
City of Dallas, 1981-1983. A Director of
Brinker International, Morningstar Group and
Randalls Companies, Inc.
J.S. Farrington
(2)(5)................. 60 1983 Chairman of the Board and Chief Executive of
the Company since February 1987; prior
thereto President of the Company since May
1983. A Director of TU Electric.
Bayard H. Friedman
(1)(3)(4)(6)........... 68 1991 Bayard H. Friedman, Inc., Investment Adviser,
since December 1992. Prior thereto, Senior
Chairman and Director, Team Bank (January
1990-November 1992). A Director of Justin
Industries.
William M. Griffin
(1)(3)(4)(6)........... 68 1966 President, The WMG Company (investments).
Executive Vice President (until August 1985)
and Chairman of the Finance Committees
(until March 1986) of The Hartford Fire
Insurance Company and Subsidiaries. A
Director of The Hartford Fire Insurance
Company (until March 1991) and Shawmut
National Corporation (until April 1992).
Kerney Laday
(1)(3)(4)(6)........... 53 1993 Vice President, field operations, Southern
Region, U. S. Customer Operations, Xerox
Corporation (office equipment manufacturer)
since January 1991; prior thereto Vice
President and region general manager, Xerox,
1986 to 1991. A Director of NationsBank
Texas Corporation.
Margaret N. Maxey
(1)(2)(3)(4)(6)........ 68 1984 Director, Clint W. Murchison, Sr. Chair of
Free Enterprise and Professor, Biomedical
Engineering Program, College of Engineering,
The University of Texas at Austin since
1982; Assistant Director, Energy Research
Institute, Columbia, South Carolina, 1980-
82.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SERVED AS
NAME AGE DIRECTOR SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- -------------- ------------------------------------------
<S> <C> <C> <C>
James A. Middleton
(1)(3)(4)(6)........... 59 1989 Retired. Executive Vice President (October
1987-December 1994) and Senior Vice
President (June 1981-October 1987) of
Atlantic Richfield Company. President, ARCO
Oil and Gas Company, January 1985-October
1990. A Director of ARCO Chemical Company
and Atlantic Richfield Company.
<CAPTION>
Erle Nye
<S> <C> <C> <C>
(2)(5)................. 57 1987 President of the Company since February 1987;
prior thereto Executive Vice President of
the Company since 1980. Chairman of the
Board and Chief Executive, and a Director of
TU Electric.
Charles R. Perry
(1)(2)(3)(4)(5)(6)..... 65 1985 Oil and gas interests, private investments.
Chairman of the Board Perry Management,
Inc., Avion Flight Centre, Inc., Rivercourse
Development, Inc. and Perry Gas Companies,
Inc.
Herbert H. Richardson
(1)(3)(4)(5)(6)........ 64 1992 Associate Vice Chancellor for Engineering and
Director, Texas Transportation Institute,
The Texas A&M University System; Associate
Dean of Engineering, Regents Professor and
Distinguished Professor of Engineering,
Texas A&M University; Chancellor, The Texas
A&M University System, 1991-1993 and Deputy
Chancellor for Engineering, The Texas A&M
University System, 1986-1991.
</TABLE>
- ---------
(1)Member of Audit Committee.
(2)Member of Executive Committee.
(3)Member of Finance Committee.
(4)Member of Nominating Committee.
(5)Member of Nuclear Committee.
(6)Member of Organization and Compensation Committee.
4
<PAGE>
During 1994 the Board of Directors held five meetings. The standing
committees of the Board of Directors and the membership of each committee are
shown on the preceding pages. During 1994 all of the Directors attended 75% or
more of the aggregate of the Board of Directors meetings and the meetings of
the Committees on which they serve.
The Audit Committee nominates to the Board, for approval by the shareholders
at each annual meeting, a firm of independent certified public accountants to
audit the books of account and records of the Company and to perform such other
duties as this Committee may prescribe or approve, receives the reports and
comments from such independent accountants, reviews the adequacy of internal
controls, reviews the accounting principles employed in financial reporting and
takes any action with respect thereto as it may deem appropriate, reports to
the Board of Directors upon its findings and recommendations and performs such
other duties as may be assigned to it from time to time by the Board; the Audit
Committee held two meetings during 1994. The Executive Committee exercises the
authority of the Board in the interval between meetings of the Board; the
Executive Committee did not meet during 1994. The Finance Committee reviews and
recommends to the Board, for its consideration, major financial undertakings
and policies and performs such other duties as may be assigned to it from time
to time by the Board; the Finance Committee held three meetings during 1994.
The Nominating Committee selects and recommends to the Board, for its
consideration, persons as nominees for election as directors of the Company and
performs such other duties as may be assigned to it from time to time by the
Board; the Nominating Committee held one meeting in 1994. Shareholders may
recommend nominees for directors to the Nominating Committee by writing to the
Secretary of the Company, Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201-
3411. The Nuclear Committee reviews, generally oversees, and makes reports and
recommendations to the Board in connection with, the construction and operation
of the Company's nuclear generating units; the Nuclear Committee held four
meetings during 1994. The Organization and Compensation Committee reviews and
establishes the duties, titles and remuneration of officers of the Company;
this Committee held three meetings in 1994.
Non-officer directors were compensated in 1994 by a retainer fee at the
annual rate of $25,000 plus $1,500 for each Board meeting attended and $1,000
for each committee meeting attended. Additionally, non-officer directors who
are members of the Nuclear Committee receive an annual retainer fee of $10,000
for their services on that Committee. Directors who are officers of the Company
do not receive fees. All directors are reimbursed for expenses.
Nancy F. King and Sheree Anne Meyer, as custodian for Adam Joseph Davenport,
allegedly as shareholders of the Company, filed suits in May 1990 and November
1991, respectively, which have now been consolidated in the United States
District Court for the
5
<PAGE>
Northern District of Texas, derivatively on behalf of the Company and the
Company's subsidiary, Texas Utilities Electric Company (TU Electric), against
the Company and TU Electric as nominal defendants and, as amended, against Jack
W. Evans, J. S. Farrington, William M. Griffin, Margaret N. Maxey, James A.
Middleton, Erle Nye and Charles R. Perry, Directors of the Company, James K.
Dobey, William H. Seay, James H. Zumberge, Burl B. Hulsey, Jr., Perry G.
Brittain and Charles N. Prothro, former directors of the Company, S. S. Swiger,
a former officer of the Company, and T. L. Baker, an officer of TU Electric.
The plaintiffs allege mismanagement involving gross negligence, willful
misconduct, breaches of fiduciary duty and waste of corporate assets on the
part of the defendants, primarily relating to the Comanche Peak nuclear
generating station owned by TU Electric, which is claimed to have resulted in
damages in an amount not less than $1.381 billion. In January 1993, the Court
entered an order which stays the consolidated suit until thirty days after the
disposition of all appeals from the final order of the Public Utility
Commission of Texas in the TU Electric rate case in which an order was entered
in September 1991.
The Company has received a letter from another person, allegedly as a
shareholder of the Company, demanding that the Company bring suit against
certain present and former directors based on claims similar to those alleged
in the law suit described in the preceding paragraph and a committee of the
Board has been established to make a determination in this regard. The
Plaintiffs, this claimant, the Company and the individual defendants have
entered into a settlement agreement with respect to the consolidated suit and
the demand. The settlement is conditioned upon approval by the Court. The
committee, following an extensive evaluation, has approved the settlement. In
February, 1995, the Court approved the settlement on a preliminary basis and
ordered the Company to notify its shareholders of the settlement and their
opportunity to object to it. A final hearing on the settlement has been
scheduled for May 8, 1995.
6
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK OF THE COMPANY
Each nominee for director and certain executive officers reported beneficial
ownership of common stock of the Company as of the date hereof, as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
NAME COMMON STOCK
---- ------------
<S> <C>
Jack W. Evans............................................... 3,000
J. S. Farrington............................................ 17,347
Bayard H. Friedman.......................................... 2,416(1)
William M. Griffin.......................................... 10,000
Kerney Laday................................................ 500
Margaret N. Maxey........................................... 4,049
James A. Middleton.......................................... 3,000
Erle Nye.................................................... 17,376
Charles R. Perry............................................ 1,000
Herbert H. Richardson....................................... 1,000
Michael D. Spence........................................... 6,668
W. M. Taylor................................................ 7,067
H. Jarrell Gibbs............................................ 5,249
All Directors and Executive Officers
as a group (13)............................................ 78,672
</TABLE>
- ---------
(1) In addition to the shares reported above, clients of Mr. Friedman's
investment advisory firm own 4,200 shares of the common stock of the
Company. Mr. Friedman disclaims any beneficial interest in such shares.
The named individuals have voting and investment power for the shares of
common stock reported. Ownership of such common stock constituted less than 1%
of the outstanding shares for each individual director and executive officer
and for all directors and executive officers as a group. As the result of an
inadvertent oversight, H. Dan Farell, an officer of the Company, did not timely
file an annual report with the SEC regarding automatic purchases of Common
Stock of the Company made for him with Company matching contributions under the
Thrift Plan.
As of December 31, 1994, based on information contained in filings made by
the following person with the Securities and Exchange Commission, the following
person was known to be the beneficial owner of more than 5% of the Company's
common stock:
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 13,038,658 5.8%
</TABLE>
7
<PAGE>
Mellon Bank, N.A. (Mellon), a wholly-owned subsidiary of Mellon Bank
Corporation, as trustee under the Employees' Thrift Plan of the Texas Utilities
Company System (Thrift Plan) was the record owner of 11,757,658 shares of the
Company's common stock. Each employee participating in the Thrift Plan is
entitled to instruct the Trustee how to vote all shares of common stock
allocated to the employee's account. To the extent that this right is not
exercised or shares are held by the Trustee which are not allocated to
participant accounts, the Trustee may vote these shares in its discretion.
Mellon Bank Corporation (including shares held by its subsidiaries) reported
(excluding Thrift Plan shares) an aggregate of 1,281,000 other shares of common
stock of the Company, including 18,000 shares with respect to which it shared
voting power, 43,000 shares with respect to which it shared dispositive power,
1,249,000 shares with respect to which it has sole voting power and 1,238,000
shares with respect to which it has sole dispositive power.
EXECUTIVE COMPENSATION
The Company and its subsidiaries have paid or awarded compensation during the
last three calendar years to the following executive officers for services in
all capacities:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION(1)
----------------------- -----------------------------
AWARDS PAYOUTS
--------------------- -------
OTHER ALL
ANNUAL SECURITIES OTHER
COMPEN- RESTRICTED UNDERLYING LTIP COMPEN-
NAME AND SALARY BONUS SATION STOCK OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) AWARDS ($) SARS (#) ($) ($) (2)
------------------ ---- ------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. S. Farrington........ 1994 804,167 0 -- 273,500 -- 15,810 85,817
Chairman of the Board 1993 743,750 125,000 -- 264,500 -- 82,584 82,865
and Chief Executive of 1992 700,000 0 -- 251,000 -- 67,021 78,239
the Company
Erle Nye ............... 1994 618,750 0 -- 217,000 -- 11,858 67,275
President of the 1993 554,167 100,000 -- 203,500 -- 61,938 63,907
Company 1992 525,000 0 -- 194,500 -- 50,266 60,739
Michael D. Spence....... 1994 292,000 10,000 -- 77,560 -- 4,743 34,600
Executive Vice 1993 289,083 31,000 -- 67,560 -- 44,034 34,246
President -- 1992 285,000 0 -- 66,300 -- 33,223 22,800
TU Services
W. M. Taylor............ 1994 249,333 40,000 -- 97,880 -- 2,371 30,333
Executive Vice 1993 217,250 65,000 -- 60,800 -- 28,815 21,296
President--TU Electric 1992 205,000 0 -- 66,900 -- 22,543 12,795
H. Jarrell Gibbs,....... 1994 245,167 40,000 -- 97,880 -- 2,371 29,017
Vice President of the 1993 203,083 45,000 -- 58,880 -- 15,989 25,070
Company 1992 185,000 0 -- 78,300 -- 9,012 22,811
</TABLE>
8
<PAGE>
(1) Amounts reported as Long-Term Compensation are attributable to the named
officers' participation in the Deferred and Incentive Compensation Plan of
the Texas Utilities Company System (DICP). Under the DICP, officers of the
Company and its subsidiaries with a title of Vice President or above may
defer a percentage of their compensation not to exceed a maximum percentage
determined by the Organization and Compensation Committee (Committee) for
each Plan year and in any event not to exceed 15% of the participant's
compensation. The Company makes a matching award equal to 150% of the
deferred compensation. In addition, the Committee has provided incentive
awards under the DICP. The DICP has provided that the sum of all incentive
awards in any Plan year could not exceed 25% of the aggregate compensation
of eligible employees. These matching and incentive awards are subject to
forfeiture in certain circumstances. Under the DICP, a trustee purchases
Company common stock with an amount of cash equal to the deferred
compensation, matching award and incentive award and the Company
establishes accounts for each participant containing performance units
equal to such number of common shares. DICP investments, including
reinvested dividends, are restricted to Company common stock. On the
expiration of the applicable maturity period (three years for incentive
awards, and five years for deferrals and matching awards) the value of the
participants' accounts are paid in cash based upon the then current value
of the units; provided, however, that in no event will a participant's
account be deemed to have a cash value which is less than the sum of such
participant's deferred amount together with a 6% per annum (compounded
annually) interest equivalent thereon. The maturity requirement is waived
if the participant dies or becomes totally and permanently disabled.
Contingent upon approval by the shareholders of the Annual Incentive Plan
(AIP) adopted by the Board of Directors (see "Approval of Annual Incentive
Plan"), the DICP has been amended to substitute the deferred portion of
awards made under the AIP for the incentive award feature, and will
otherwise continue as presently in effect.
Compensation deferred under the DICP is included in amounts reported as
Salary in the Summary Compensation Table. Amounts shown in the table below
represent the number of shares purchased under the DICP with such deferred
salaries for 1994:
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER
PERIOD
NUMBER OF UNTIL
SHARES, UNITS OR MATURATION
NAME OTHER RIGHTS (#) OR PAYOUT
---- ---------------- -----------
<S> <C> <C>
J. S. Farrington................................ 3,094 5 Years
Erle Nye........................................ 2,438 5 Years
Michael D. Spence............................... 1,095 5 Years
W. M. Taylor.................................... 997 5 Years
H. Jarrell Gibbs................................ 997 5 Years
</TABLE>
9
<PAGE>
Incentive and matching awards that have been made under the DICP are
included under Restricted Stock Awards in the Summary Compensation Table.
As a result of these awards and undistributed awards made under the Plan in
prior years, at December 31, 1994 the number and market value of
performance units (each of which is equal to one share of common stock)
held in the DICP accounts for Messrs. Farrington, Nye, Spence, Taylor and
Gibbs were 26,930 ($861,762), 20,887 ($668,389), 8,139 ($260,479), 7,956
($254,618) and 8,035 ($257,152), respectively.
Amounts reported as LTIP Payouts in the Summary Compensation Table
represent payouts maturing during such years of earnings on salary deferred
under the DICP in prior years.
(2) Amounts reported as All Other Compensation are attributable to the named
officers' participation in certain plans described hereinafter in this
footnote.
Under the Employees' Thrift Plan of the Texas Utilities Company System all
employees with at least six months of full time service with the Company or
any of its subsidiaries may invest up to 16% of their regular salary or
wages in common stock of the Company, or in a variety of selected mutual
funds. The amounts reported under All Other Compensation in the Summary
Compensation Table include contributions by employer-corporations to each
participant's account of 40%, 50% or 60% of the employee's savings, up to
6% of the employee's regular salary or wages, depending upon length of
service, which amount is invested in the common stock of the Company.
During 1994, these employer contributions for Messrs. Farrington, Nye,
Spence, Taylor and Gibbs amounted to $5,400, $5,400, $5,400, $5,400 and
$4,500, respectively.
The Company has a Salary Deferral Program (Program) under which each
employee of the Company and its subsidiaries whose annual salary is $80,000
($87,160 for the Program Year beginning April 1994) or more may elect to
defer a percentage of annual salary for a period of seven years, a period
ending with the retirement of such employee, or for a combination thereof.
Such deferrals may not exceed in the aggregate 10% of such annual salary.
Deferred salary is included in amounts reported under Salary in the Summary
Compensation Table. The Company makes a matching award, subject to
forfeiture under certain circumstances, equal to 100% of the deferred
salary. A trustee will distribute at the end of the applicable maturity
period cash equal to the greater of the actual earnings of Program assets,
or the average interest rate during the applicable maturity period of U.S.
Treasury Notes with a maturity of ten years. The distribution of the
amounts due under the Program will be in a lump sum if the maturity period
is seven years or, if the retirement option is elected, in twenty annual
installments. The Company is financing the retirement portion of the
Program through the purchase of corporate owned life insurance on the lives
of the participants and the proceeds from such insurance are expected to
allow the Company to fully recover the cost of the
10
<PAGE>
retirement option. During 1994, matching awards, which are included under
All Other Compensation in the Summary Compensation Table, were made for
Messrs. Farrington, Nye, Spence, Taylor and Gibbs in the amounts of
$80,417, $61,875, $29,200, $24,933 and $24,517, respectively.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
- -------------------------------------------------------------------------------------
REMUNERATION 20 25 30 35 40
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 14,688 $ 18,360 $ 22,032 $ 25,704 $ 29,376
100,000 29,688 37,110 44,532 51,954 59,376
200,000 59,688 74,610 89,532 104,454 119,376
400,000 119,688 149,610 179,532 209,454 239,376
600,000 179,688 224,610 269,532 314,454 359,376
800,000 239,688 299,610 359,532 419,454 479,376
1,000,000 299,688 374,610 449,532 524,454 599,376
</TABLE>
The Company and its subsidiaries maintain retirement plans qualified under
applicable provisions of the Internal Revenue Code of 1986 (Code). Annual
retirement benefits are computed as follows: for each year of accredited
service up to a total of 40 years of service, 1.3% of the first $7,800, plus
1.5% of the excess over $7,800 of average annual salary received by the
participant during their three years of highest earnings. Retirement benefits
are computed with respect to base salaries only and amounts reported under
Salary for the named officers in the Summary Compensation Table herein
approximate earnings as defined by the retirement plans. Such benefits are not
subject to any reduction for Social Security payments. Benefits payable from a
qualified retirement plan are limited by provisions of the Code and the Company
maintains a Supplemental Retirement Plan which provides for the payment of
retirement benefits calculated in accordance with the retirement plan formula
which would otherwise be limited by the definition of compensation in the
retirement plans. Subject to shareholder approval of the AIP the Supplemental
Retirement Plan has been amended to include awards made under the AIP in
earnings for purposes of such Plan and will otherwise continue as presently in
effect. As of February 28, 1995, years of accredited service under the plans
for Messrs. Farrington, Nye, Spence, Taylor and Gibbs were 35, 32, 28, 27 and
32, respectively. The table illustrates the total annual benefit payable at
retirement under these retirement plans.
11
<PAGE>
The following information contained under the headings Organization and
Compensation Committee Report on Executive Compensation and Performance Graph
is not to be deemed to be (i) incorporated by reference into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934 or (ii)
soliciting material or filed with the Securities and Exchange Commission (SEC)
within the meaning of Item 402(a)(9) of SEC Regulation S-K.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors is
responsible for reviewing and establishing the compensation of the executive
officers of the Company. The Committee consists of all of the nonemployee
directors of the Company and is chaired by James A. Middleton. The Committee
has directed the preparation of this report and has approved its contents and
submission to the shareholders.
As a matter of policy, the Committee believes that levels of executive
compensation should be based upon an evaluation of the performance of the
Company and its officers generally as well as in comparison to persons with
comparable responsibilities in similar business enterprises. Compensation plans
should align executive compensation with returns to shareholders with due
consideration accorded to balancing both long-term and short-term objectives.
Such compensation principles and practices have allowed, and should continue to
allow, the Company to attract, retain and motivate its key executives.
In furtherance of this policy, during the past year a nationally recognized
compensation consultant was retained to conduct a comprehensive review of the
compensation and benefits provided by the Company to its officers. The
consultant's report included recommended revisions to the Company's
compensation and benefits program principally so as to place a greater emphasis
on performance-based incentive compensation and to provide, thereby, for an
appropriate and competitive balance between base salaries, annual incentives
and long-term incentives. As a result of this review, the Committee and the
Board adopted, subject to shareholder approval, an Annual Incentive Plan (AIP).
The AIP will provide an objective framework within which individual and Company
performance will be evaluated by the Committee and, depending on the results of
such performance evaluations, the Committee may provide annual incentive
compensation awards to eligible officers. Such awards will replace the cash
bonuses and the incentive award portion of the Deferred and Incentive
Compensation Plan (DICP) which have been utilized in prior years. The Committee
also determined that, as a matter of policy to be implemented over time, the
base salaries of the officers will be established at the median, or 50th
percentile, of the top 10 electric utilities
12
<PAGE>
and that opportunities for total direct compensation to reach the 75th
percentile of such utilities will be provided through performance-based
compensation plans. In exceptional circumstances, based upon individual and
Company performance, total direct compensation may exceed such level.
The compensation of the officers of the Company has previously consisted
primarily of base salaries, the opportunity to participate in the DICP, which
is described on page 9 of this proxy statement, and cash bonuses. Benefits
provided under the DICP have represented a substantial portion of the officers'
compensation. This pattern will change to some extent with the implementation
of the AIP, if it is approved. The value of the future payment of benefits
under the DICP, as well as the deferred portion of any award under the AIP, is
directly related to the future performance of the Company's common stock. The
named executive officers participate to the fullest extent permissible in the
elective salary deferral feature of the DICP. The officers are also eligible to
participate in the Salary Deferral Program and the Employees' Thrift Plan, both
of which are described on pages 10 and 11 of this proxy statement. In addition,
the officers participate in the retirement plans, the benefits payable under
which are described on page 11 of this proxy statement. Except for benefits
under these plans, the officers have not received any other form of direct or
indirect compensation from the Company.
In discharging its responsibilities with respect to establishing executive
compensation, the Committee normally considers such matters at its May meeting
held in conjunction with the Annual Meeting of Shareholders. Although Company
management may be present during Committee discussions of officers'
compensation, Committee decisions with respect to the compensation of the
Chairman of the Board and Chief Executive and the President are reached in
private session without the presence of any member of Company management. If
the AIP is approved, the Committee expects to establish target levels of
earnings per share that are prerequisites to awards under such Plan at its
February meeting.
In establishing levels of executive compensation at its May 1994 meeting, the
Committee reviewed Company performance data and its officers' compensation
compared to the performance of companies in similar businesses and the
compensation levels of the management of such companies, including companies
generally comparable in size represented in the Moody's 24 Utilities whose
comparative investment return is depicted in the graph on page 15. Information
was gathered from industry sources and other published and private materials
which provided a basis for comparing the largest electric and gas utilities and
other survey groups representing a large variety of business organizations.
Included in the data considered was that, in 1993, TU Electric, the Company's
principal subsidiary, was the second largest electric utility in the United
States as measured by megawatt hour sales; and compared to other electric
utilities in the United States, was third
13
<PAGE>
in electric revenues, fourth in total assets, first in net generating
capability, sixth in number of customers and eleventh in number of employees.
The Committee also reviewed a variety of industry financial and operating
performance comparisons (including productivity indicators, service reliability
indexes and measures of efficiency and service quality) throughout the year.
These industry comparisons constituted an important component of the
Committee's review of executive compensation. The Committee's decisions,
however, were subjective because it had not at such time adopted or approved a
specific formula or other criteria linking any target level or performance
measure, or the aggregate of all measures, to the levels of executive
compensation.
At its meeting held in May 1994, the Committee established the Chief
Executive's base salary at an annual rate of $825,000 representing a $50,000,
or 6.5 percent, increase over the annual rate established in May 1993. Also,
the Committee provided an incentive award under the DICP of $125,000, the same
amount as provided in 1993. A cash bonus of $100,000 was provided to the Chief
Executive in 1993; no cash bonus was awarded in 1994. This amount of
compensation was based upon the Committee's subjective evaluation of the
information described herein.
Section 162(m) of the Code limits the deductibility of compensation which a
publicly traded corporation provides to its most highly compensated officers.
As a general policy, the Company does not intend to provide compensation which
is not deductible for federal income tax purposes. Assuming shareholder
approval is obtained, awards under the AIP in 1996 and subsequent years are
expected to be fully deductible. Additionally, the DICP and the Salary Deferral
Program have been amended to require the deferral of distributions of amounts
earned in 1995 and subsequent years until the time when such amounts would be
deductible. Awards provided under the AIP in 1995, if any, and distributions
under the DICP and the Salary Deferral Program which were earned in plan years
prior to 1995, may not be fully deductible but such amounts are not expected to
be material.
Shareholder comments to the Committee are welcomed and should be addressed to
the Corporate Secretary of the Company at the Company's offices.
ORGANIZATION AND COMPENSATION COMMITTEE
James A. Middleton, Chair Kerney Laday
Jack W. Evans Margaret N. Maxey
Bayard H. Friedman Charles R. Perry
William M. Griffin Herbert H.
Richardson
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the performance of the Company's common stock to
the S&P 500 Index and to the Moody's 24 Utilities for the last five years. The
graph assumes the investment of $100 at December 31, 1989 and that all
dividends were reinvested. The amount of the investment at the end of each year
is shown in the graph and in the table which follows.
CUMULATIVE TOTAL RETURNS
FOR THE FIVE YEARS ENDED 12/31/94
<TABLE>
---------------------------------
<CAPTION>
1989 1990 1991 1992 1993 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Texas Utilities................................... 100 113 140 153 167 135
- --------------------------------------------------------------------------------
S&P 500 Index..................................... 100 97 126 136 150 152
- --------------------------------------------------------------------------------
Moody's 24 Utilities.............................. 100 105 135 141 155 132
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
APPROVAL OF ANNUAL INCENTIVE PLAN
The Board of Directors of the Company has adopted an Annual Incentive Plan
(AIP) as described herein, subject to approval by the shareholders of the
Company. The purpose of the Plan is to provide performance-based annual
incentive compensation opportunities to officers who contribute significantly
to the growth and success of the Company. The Board believes that the Plan is
necessary in order to maintain a compensation program which will appropriately
and competitively balance base salaries, annual incentives and long-term
incentives. Approval of the AIP by the shareholders is required in order to
allow the Company to fully deduct for federal income tax purposes compensation
provided under the AIP to its most highly compensated officers.
The individuals eligible to participate in the AIP will be the officers of
the Company and its subsidiaries with a title of Vice President or above
(currently 34 persons), including those persons named in the Summary
Compensation Table. The Plan will be administered by the Organization and
Compensation Committee of the Board of Directors, which is responsible for the
establishment of levels of executive compensation and which consists entirely
of non-employee directors of the Company.
Under the terms of the AIP, target incentive awards ranging from 35% to 50%
of base pay, and a maximum award of 100% of base pay, are established for each
calendar year. The percentage of the target or the maximum actually awarded, if
any, is dependent upon the attainment of per share net income goals established
in advance by the Committee as well as the Committee's evaluation of the
participants' and the Company's performance.
The evaluation of each individual participant's performance is based upon
individual and business unit objectives. The Company's performance is evaluated
compared to the ten largest electric utility companies and/or the electric
utility industry. Specific Company performance measures to be considered by the
Committee in its evaluation include total return to shareholders and return on
invested capital, as well as other measures relating to competitiveness,
service quality and employee safety. Based upon the Committee's evaluation of
individual and Company performance, grades, which generally correlate to
exceeding, meeting or failing to meet expectations, are assigned by the
Committee. The combination of such individual and Company grades, together with
the Committee's evaluation of the competitive level of total direct
compensation which is appropriate for such grades, determines the amount
actually awarded. This evaluation process will be used by the Committee to
establish the actual awards which, depending upon the achievement of per share
net income goals, may be equal to or less than the maximum or target award
levels.
16
<PAGE>
One-half of any amount awarded is paid in cash and will take the place of
previously provided discretionary cash bonuses. The remaining one-half of any
amount awarded is invested by a trustee in the common stock of the Company.
Such shares of common stock, including those acquired with reinvested
dividends, will be sold by the trustee at the end of the third year following
the date of award and the proceeds of such sales will be distributed to the
participant. Amounts awarded under the AIP which are invested in common stock
will take the place of incentive awards previously provided under the Deferred
and Incentive Compensation Plan.
Assuming that shareholder approval is obtained, the Company expects that
awards under the AIP will be fully deductible for federal income tax purposes.
In order to comply with the requirements of Section 162(m) of the Code, which
limits such deductions, $1,000,000 has been established as the maximum amount
which may be awarded under the AIP in any year to any participant. Because
elements of the awards under the AIP are within the discretion of the
Committee and depend upon individual and Company performance, payments that
would have been received by participants in the last fiscal year if the AIP
had been in effect, and payments that will be received by participants in the
future, are not presently determinable.
The Board may amend, suspend or terminate the AIP at any time; however, any
amendment which changes the material terms of the performance goals or
increases the maximum amount payable under the Plan will be subject to the
shareholder approval requirements of Section 162(m) of the Code in order for
the Company to be able to deduct awards under the Plan for federal income tax
purposes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ANNUAL INCENTIVE
PLAN.
SELECTION OF AUDITORS
The Audit Committee has nominated to the Board of Directors for its
consideration the firm of Deloitte & Touche LLP to act as independent auditors
for the Company for the year 1995 and, subject to the approval of shareholders
at the annual meeting, the Board has selected that firm to audit the books of
account and records of the Company and to make a report thereon to the
shareholders. The persons named in the proxy will, unless otherwise instructed
thereon, vote your shares in favor of the following resolution which will be
submitted for consideration:
RESOLVED that the selection of the firm of Deloitte & Touche LLP,
independent auditors, to audit the books of account and records of the
Company for the year 1995, to make a report thereon "To the Shareholders
of Texas Utilities Company," and to perform other services, be, and it
hereby is, approved.
17
<PAGE>
The firm of Deloitte & Touche LLP, independent auditors, has been the outside
auditors for the Company since its organization in 1945 and for certain of the
subsidiaries since 1932, including the last fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the annual meeting and will
have the opportunity to make a statement, if they desire to do so, and to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AUDITORS.
OTHER BUSINESS
Other than as stated herein, the Board of Directors does not intend to bring
any business before the meeting and it has not been informed of any matters
that may be presented to the meeting by others. However, if any other matters
properly come before the meeting, it is the intent of the Board of Directors
that the persons named in the proxy will vote pursuant to the proxy in
accordance with their judgment in such matters.
Dated: April 3, 1995.
WHETHER OR NOT YOU WILL BE ABLE TO ATTEND THE MEETING,
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY PROMPTLY.
18
<PAGE>
LOGO
- --------------------------------------------------------------------------------
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
- --------------------------------------------------------------------------------
TIME:
FRIDAY, MAY 19, 1995, AT 9:30 A.M.
PLACE:
GRAND BALLROOM
HARVEY HOTEL/DOWNTOWN
LIVE OAK AND OLIVE STREETS
DALLAS, TEXAS 75201
Whether or not you will be able
to attend the meeting, please
sign and return the enclosed
proxy promptly so that you may
be represented at the meeting.
<PAGE>
P
R [TEXAS UTILITIES COMPANY LOGO APPEARS HERE]
O ENERGY PLAZA
1601 Bryan Street
X Dallas, TX 75201-3411
Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.S. Farrington and Erle Nye, and each of
them, Proxies with power to appoint a substitute, and hereby authorizes them to
represent and to vote all shares of common stock of Texas Utilities Company held
of record by the undersigned on March 20, 1995 at the annual meeting of
shareholders of the Company to be held in the Grand Ballroom of the Harvey
Hotel/Downtown, Live Oak and Olive Streets, Dallas, Texas, on Friday, May 19,
1995, and at any adjournments thereof, and to vote, as directed on the reverse
side of this card, on all specified matters coming before said meeting, and in
their discretion, upon such other matters not specified as may come before said
meeting.
Election of Directors
NOMINEES: JACK W. EVANS, J.S. FARRINGTON, BAYARD H. FRIEDMAN, WILLIAM M.
GRIFFIN, KERNEY LADAY, MARGARET N. MAXEY, JAMES A. MIDDLETON,
ERLE NYE, CHARLES R. PERRY, HERBERT H. RICHARDSON
- -------------------------------------------------------------------------------
[X] Please mark your This proxy when properly executed will be voted in
votes as in this the manner directed herein. If no direction is made,
example. this proxy will be voted FOR Items 1, 2 and 3.
- -------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES AND FOR ITEMS 2 and 3.
- -------------------------------------------------------------------------------
1. Election of Directors: 2. Approval of Annual 3. Approval of Auditors-
(see reverse) Incentive Plan Deloitte & Touche LLP
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[_] [_] [_] [_] [_] [_] [_] [_]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
- -------------------------------------------------------------------------------
NOTE: Please sign names exactly as printed
hereon. Joint owners should each sign. In
signing as attorney, administrator, executor,
guardian or trustee, please give full title as
such. Receipt is acknowledged of the Annual
Report of the Company for 1994, notice of
meeting and proxy statement.
DATE
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SIGNATURE
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SIGNATURE
