4 Y See Distribution froO From: Kriste Sullivan Clement Abrams March 6, 1998 Subject: ENE Proxy Statement - Third Draft Memorandum Enclosed for your review is the third draft of the ENE proxy statement. Comments to this draft should be sent to Kriste Sullivan (EB4861) no later than Wednesday, March 11, 1998. Please call Kriste Sullivan (X3755 7), Clement Abrams (X35986) or Norma Tidrow (X67933) if you have any questions. If we have omitted someone from the distribution list, please let us know. Thanks for your assistance on this project. Enclosure Distribution: Cliff Baxter Dianne Bazelides Phil Bazelides Pam Butler Bob Butts Rick Causey Jim Derrick Robert Eickenroht Pat Edwards Denise Ernest Rod Gray Ken Harrison Stan Horton Jan Johnson Mary Joyce Mark Koenig V~en Lay Pat Mackin Rebecca Mark Peggy Menchaca Rex Rogers Jeff Skilling Tom White Mark Metts - Vinson & Elkins cc: Norma Tidrow GOVERNMENT EXHIBIT 24170 Crnn No. H 04-0023 I EC 002666325 To: Date: enedist.doc ..pa*ad Typeseang System 26-FEB.93 05:43 3.DST.39 B0D0002699 Fmr VS.19B/5 C: 100 lead lO2ODMpolnts. Nest lead OD. Viust R .~CORP. BOWNEOFHOUSTON.IN (713)369-918! 4OH~PS7 DLJSM CUMULATIVE 6-MAJ-1991 0O~07 N~ PCN: 010.00.00.00 - Page Is valid, no graphics .JB: H55700 PN: 00 .00.00.00 N: liX JOHN A. URQUHART, 69 Director since 1990 Since August, 1991, Mr. Urquhart has been Vice Chairman of the Board of Enron. Sincc January, 1991. Mr. Urquhazt has also been President of John A. Urquhazt Associates, a management consulting firm in Fairfield, Connecticut. He also serves as a director of Aquarion Company. TECO Energy. Inc., Hubbell, Inc. The We , LC. and Catalvdca Inc. and its subsidiary. Catalytic Combustion Systems Inc. JOHN WAKEHAM, 65 Director since 1994 Lord Wakeham Is the retired former U.L Secretary of State for Energy and Leader of the How. of Commons and Lords. He served as a Member of Psniiament from 1974 until his retirement from the House of Commons in April, 1992. Prior to his government service, Lord Wakeham managed a large private practice as a chartered accountant. In the U.K. he is currently Chairman of the Press Complaints Commission and chairman or director of a number of publicly traded U.K. companies. CHARLS E. WALKER, 74, Director since 1985 Dr. Walker is currently Chairman of Walker & Walker, LLC. a consulting firm in Potomac, Maryland. For two decades prior to establishing Walker & Walker LLC, Dr. Walker was Chairman of CharIs E. Walker Associates, a governmental relations consulting firm, in Washington, D.C. He Is also Adjunct Professor at The Univeraity of Tessi at Austin. Dr. Walker, a former Deputy Secretary of the Treasury, Is chairman of the American Council for Capital Formation. 6 (PHOTO) (PHOTO] (PHOTO) * mud Typuanias Sysam S-MAR-N 2036 JST;39 DOPOOOtOI4PueVS.t9BIS C 200 lead OD'pomaia. Nan land 1202), Vjuau 1:2 .iCORP. DOWNEOPHOUSTON.IN (713)69-gtit &PS7 11AM CUMULAllYB ~MAA.i9W 0007 NEXT PCN: 032.00.00.00 - Page Ii vilid. no pap~ics JTh!t~OO!tI~ItLOUE~N: LSX EMPLOYMENT CONTRACTS Mr. Lay entered Into an emolovment aureement with Enron in December. 1996. which orovides for a minimum salary effective January 1. 1997. of SI.200.000. To preserve tax deductibility. mv base salary in excess of S1.000.000 must be deferred into Enron's 1994 Deferral Plan. The aureement orovides for a grant or 1.275.000 stock options. 50% uranted in December. 1996 and 50% aranted in January. 1997. at market value on each date or urant. The stock potions vested 20% on date of urant and will be 100% vested on November 1. 2003. However, the vestina schedule may be accelerated if Enron's total stockholder return eauals or exceeds 120% of the ~&P 500 in enlendar warn 1097 100R and 1009 The alan ~ ~' a pnl.i..Anll.. lire insurance arrangement. whereby Enron will pay five annual oremiums of S250.000 each on a life insurance oclicy already owned by Mr. Lay, with recovery of the cost of such premiums upon Mr. Lay's death: benefits oavable under Enrona Deferral PLans and the HNG Deferral Plan in the event of Mr. Lay's tennination of employment, will be oaid as if Mr. Lay had retired from Enron. resardless of the reason for terminatiozt and the maturiw date on Mr. Lays S4.000.000 interest bearina line of credit was extended to December 31. 2001. The hiuhest outatandina orincioal balance on the line of credit durinu 1997 was S2.903.116. Mr. Lay naid accrued interest in 1997 totalina S83.324.'72. at an avenue rate of 6.36%. reoresentine the mid-term AFR. As of February 29. 1998. the outatandine orincioal balance w~s S2.390.000. In the event of his involunfI~~ v 5 r '~''---------~ by ~nmn thmnwh the t-- wh4,~h emw.a nn ~~--~- 31. liable as a result of receipt of the oavment for such tax oenaltf a and oavment for such reimbursement for additional tax. The employment sareement contains nonec,, r t v f r. a termination of employment. Mr. Sklllinu entered into an emolovment asreement with -uron in January. 1996. which as amended. orovides for a minimum annual salary of S750.000. In January. ;97. the aureement was amended to reflect Mr. Skillina's enhanced duties as President and Chief Ooeratin Officer of Enron. The amended aureement orovides for a revision of the vestine schedule on 500.000 stock d,tions aranted on Auuust 29. 1994. such that one-third of the options will vest on each May 1 in 1997. 19~. and 1999. In the event of his involuntary a r Ur iveamounts cribe *n h reementthrou hthetermof he e e In order so tie Mr. Skilling's compensation more closely to Enufun Corn, stock performance as onoosed to any oe nrn* n cc an in Ocober 1997 is cc Cr was neoiated and exended th u h December 31. 2001. As a result. Mr. Skilling receiyed on Odober 13. 1997. a arant of 972.090 Enron Cow. k o dons with standard vesun of 20% at t and 2 n each of the folIo *n four annivera di es a nt of 2 58 h f R tncted St k o vest 33Yj% o each of the first three date anniv aries and a tAd~V1Nlfll,.., t,......... ~ 2907 ,L.J AFR nf 6 ~ inmiy,tgnvtei4 tpmin.,nunll,, until maturity date of December 31. 2001. The terms of she contra&soecifv that if Mr. Skillina fully t,ezlorms all the duties and r ~ exeected of him b( hit finhitiOn antI tinder hit r--'-----* throuuh December 31. 2001. then 50% of the loan zinount will be forgiven and the remasnina 50% shall be repaid by Enron. Mr. Skilline is resoonsible for 10O~~ of the loan interest. IrMr. Sidilina voluntarily terminates e I ent r is a d f cause riot t ecem er 31 2 the entire loan m un an nterest is due and payable. As an additional benefit to MrAldllinu. Enron has entered into an agreement with Mr. Skillina li-d ew rb nron ll a onof annu *u on life u Ii o b r '1 withre ye oftheco or uc re iumsu nMr. ' death. In 1997. the ---~*'~ naid by Fnrnn wat ~IA7 It7~ wh~,.h 28 0~E 0 nn ,nwnmtpA 4nrnn,e as 2 EC 002666327