(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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14a-12
San Diego Gas and Electric Company
_____________________________________________________________
(Name of Registrant as Specified in its Charter)
_____________________________________________________________
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Registrant)
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San Diego Gas & Electric Company
An Enova company
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
APRIL 23, 1996
San Diego Gas & Electric Company
Dear Shareholder:
You are invited to attend the 1996 Annual Meeting of San
Diego Gas & Electric Company shareholders at 2:00 p.m. on
Tuesday, April 23, 1996, in the Auditorium, Corporate
Headquarters, 101 Ash Street, San Diego, California.
During the meeting, the business of San Diego Gas & Electric
Company will be reviewed.
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,
Thomas A. Page
Chairman
Map and Directions to 1996 Annual Meeting
Directions to SDG&E's
Corporate Headquarters.
Please park in the Ace parking lot,
enter on Second or Third Avenue.
Enter SDG&E building on Ash Street.
From the North
Driving South on Interstate 5:
Take I-5 South to Front Street/Civic Center.
Exit Front Street. Make left on A Street. Go
three blocks to Third Avenue. Make left on
Third Avenue.
From the South
Driving North on Interstate 5:
Take I-5 North to Sixth Avenue/Downtown.
Make left on Sixth Avenue. Go three blocks
to Ash Street. Make right on Ash Street. Go
four blocks to Second Avenue.
From the East
Driving West on Interstate 8:
Take I-8 West to 163 South. Exit Ash Street.
Go seven blocks west to Second Avenue.
Notice of Annual Meeting of Shareholders of San Diego Gas &
Electric Company
San Diego Gas & Electric Company
P.O. Box 1831, 101 Ash Street
San Diego, California 92112-4150
Tuesday, April 23, 1996
The annual meeting of shareholders of San Diego Gas &
Electric Company will be held on Tuesday, April 23, 1996, at
2:00 p.m. in the Auditorium, Corporate Headquarters, 101 Ash
Street, San Diego, California, to:
1. Elect 11 persons as directors of San Diego Gas &
Electric Company--the names of the 11 nominees intended to be
presented for election are Richard C. Atkinson, Stephen L.
Baum, Ann Burr, Richard A. Collato, Daniel W. Derbes, Donald
E. Felsinger, Robert H. Goldsmith, William D. Jones, Ralph R.
Ocampo, Thomas A. Page and Thomas C. Stickel; and
2. Act upon such other business as may properly come
before the meeting.
The board of directors has fixed the close of business on
March 1, 1996 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 11, 1996 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.
Notice of Annual Meeting of Shareholders
and Proxy Statement
Tuesday, April 23, 1996
Contents Page
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Meeting Date, Voting, Proxies . . . . . . . . . . . . . . . . . . . . 1
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . 2
Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Meetings/Committees . . . . . . . . . . . . . . . . . . . . . 5
Security Ownership of Management and Certain Beneficial Holders . . 6
Executive Compensation and Transactions with Management and Others . 8
Relationship with Independent Public Accountant . . . . . . . . . . .20
Annual Report and Availability of Form 10-K . . . . . . . . . . . . .20
Shareholder Proposals for 1997 Annual Meeting . . . . . . . . . . . .20
Proxy Solicitations . . . . . . . . . . . . . . . . . . . . . . . . .20
Other Business to Be Brought Before the Annual Meeting . . . . . . . .20
San Diego Gas & Electric Company
____________________
Proxy Statement
____________________
Introduction
This Proxy Statement is provided to the shareholders of
San Diego Gas & Electric Company (SDG&E) in connection with
its 1996 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
23, 1996 at 2:00 p.m., in the Auditorium, Corporate
Headquarters, 101 Ash Street, San Diego, California.
This Proxy Statement and the enclosed proxy were first
mailed on or about March 11, 1996 to shareholders entitled to
vote at the Annual Meeting.
Mail to SDG&E should be addressed to Shareholder
Services, San Diego Gas & Electric Company, P.O. Box 1831,
San Diego, CA 92112-4150.
Meeting Date, Voting, Proxies
The board of directors of San Diego Gas & Electric
Company is soliciting proxies for use at its 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
SDG&E, 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 board of directors has fixed the close of business
on March 1, 1996 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 116,583,358 shares of SDG&E Common
Stock, without par value, 1,373,770 shares of SDG&E
Cumulative Preferred Stock, $20 par value per share, and
3,040,000 shares of SDG&E Preference Stock (Cumulative),
without par value, outstanding. All outstanding shares of
SDG&E Common Stock are owned by Enova Corporation (Enova).
Each share of SDG&E Cumulative Preferred Stock is
entitled to two votes and each share of SDG&E Common Stock
(all of which is held by Enova) is entitled to one vote on
each matter considered by SDG&E shareholders. Each share of
SDG&E Preference Stock (Cumulative) has voting rights only in
limited circumstances described in SDG&E's Restated Articles
of Incorporation and as allowed by California law. Shares of
SDG&E Preference Stock (Cumulative) do not vote in the
election of directors. Unless otherwise indicated herein,
shares of SDG&E Common Stock and SDG&E Cumulative Preferred
Stock are referred to as "shares."
Shares represented by properly executed proxies received
by SDG&E 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 "FOR"
the election of the nominees for directors of the board of
directors, unless authority to vote is withheld as provided
in the proxy. In the event that any other matters properly
come before the Annual Meeting, the holders of proxies
solicited by the 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 nominee will be counted in
the number of votes cast, but will not be counted as votes
for or against the nominee. If a broker or other nominee
holding shares for a beneficial owner does not vote on a
nominee, the shares will not be counted in the number of
votes cast.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THEIR
NOMINEES FOR DIRECTORS.
1
ELECTION OF DIRECTORS
(Item No. 1 on Proxy Card)
There are presently 12 members on the board of
directors. Catherine T. Fitzgerald has indicated she will not
stand for re-election at the Annual Meeting and the board
will be reduced to 11 members as a result. The board has
nominated these 11 current members of the board to be
reelected. Each nominee, except for Mr. Donald E. Felsinger,
presently serves as a director of SDG&E and Enova. Directors
elected to the board will serve a one-year term expiring in
1997.
Should any of the nominees for the board of directors
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 board as
replacements for those who become unavailable. The nominees
for the board of directors 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 board of director's nominees for reelection at the
Annual Meeting are R. C. Atkinson, S. L. Baum, A. Burr, R. A.
Collato, D. W. Derbes, D. E. Felsinger, R. H. Goldsmith, W.
D. Jones, R. R. Ocampo, T. A. Page and T. C. Stickel.
A brief biography of each nominee for election as a
director is presented below.
Nominees
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 66
Director of Enova (Class I) since 1994; Director of SDG&E
since 1992;
Member of the Audit (Chairman) and Executive Committees of
Enova and SDG&E.
2
Stephen L. Baum
[picture]
Mr. Baum has been the president and chief executive officer
of Enova and a member of the Enova and SDG&E boards since
January 1, 1996. He joined SDG&E as vice president and
general counsel in 1985, and became senior vice president and
general counsel in 1987. Mr. Baum was appointed as an
executive vice president in January 1993. He is a director of
Pacific Diversified Capital Company (PDC).
Age 55
Director of Enova (Class I) and SDG&E since January 1996.
Ann Burr
[picture]
Ms. Burr is president of the Rochester, N. Y. Division of
Time Warner Communica-tions. She was formerly president of
the San Diego Division of Time Warner Cable, which includes
Southwestern Cable TV and American Cablevision of Coronado.
Age 49
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
[picture]
Mr. Collato has been president and chief executive officer of
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 52
Director of Enova (Class I) since 1994; Director of SDG&E
since 1993; Member of the Finance and Nominating Committees
of Enova and SDG&E.
Daniel W. Derbes
[picture]
Mr. Derbes is president of Signal Ventures. From November
1985 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 the chairman of the Board of
Trustees of the University of San Diego.
Age 65
Director of Enova (Class II) since 1994; Director of SDG&E
since 1983; Member of the Finance (Chairman), Executive
Compensation and Technology Committees of Enova and SDG&E.
3
Donald E. Felsinger
[picture]
Mr. Felsinger has been the president and chief executive
officer of SDG&E and a member of the SDG&E board since
January 1, 1996. He was first appointed a vice president of
SDG&E in 1983 and became a senior vice president in January
1992. Mr. Felsinger was appointed an executive vice president
in January 1993.
Age 48
Director of SDG&E since January 1996.
Robert H. Goldsmith
[picture]
Mr. Goldsmith is a management consultant. He is a former
chairman, president and chief executive officer of Exten
Industries, Inc. and a former chairman and chief executive
officer of Rohr, Inc. He is also 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 65
Director of Enova (Class II) since 1994; Director of SDG&E
since 1992; Member of the Executive Compensation (Chairman),
Technology (Chairman) and Finance Committees of Enova and
SDG&E.
William D. Jones
[picture]
Mr. Jones is president, chief executive officer and a
director 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.
He 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 40
Director of Enova (Class III) and SDG&E since 1994;
Member of the Finance and Nominating Committees of Enova and
SDG&E.
Ralph R. Ocampo, M.D.
[picture]
Dr. Ocampo is a San Diego physician and surgeon.
Age 64
Director of Enova (Class III) since 1994; Director of SDG&E
since 1983; Member
of the Finance and Nominating Committees of Enova and SDG&E.
4
Thomas A. Page
[picture]
Mr. Page has been chairman of Enova since December 1994 and
chairman of SDG&E since February 1983. He 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 62
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
[picture]
Mr. Stickel is the chairman and founder of American Partners
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 Catellus Development
Corporation, Onyx Corporation, O'Connor R.P.T., Scripps
International, Inc., Clair Burgener Foundation and the Del
Mar Thoroughbred Club.
Age 46
Director of Enova (Class III) and SDG&E since 1994; Member of
the Audit, Executive Compensation and Technology Committees
of Enova and SDG&E.
Footnotes
On March 4, 1993, Dr. Ocampo petitioned for protection
under Chapter 11 of the Federal Bankruptcy Code. This filing
was made in connection with certain legal proceedings
involving a limited partnership in which Dr. Ocampo is a
general partner. Dr. Ocampo's Chapter 11 Plan of
Reorganization was approved by the bankruptcy court on April
12, 1995. All payments required by the plan have been made
and the case is now closed.
Board Meetings/Committees
During 1995, the Audit and Executive Compensation
Committees each met two times while the Nominating Committee
did not meet. The board met 10 times.
During 1995, all directors attended 75% or more of the
aggregate total meetings of the board and committees on which
they served with the exception of Ms. Burr, who attended 67%
of such meetings.
In addition to Executive, Finance and Technology
Committees, the committees of the board 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. The
composition of each committee is the same for Enova and
SDG&E.
Audit Committee
In addition to recommending an independent auditor for
each ensuing year, this committee reviews (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. This committee is composed exclusively of directors
who are not salaried employees of Enova or SDG&E.
Executive Compensation Committee
This committee reviews the salaries and other forms of
compensation of executives and makes compensation
recommendations to the full board. This committee is composed
exclusively of directors who are not salaried employees of
Enova or SDG&E.
5
Nominating Committee
In addition to considering and recommending nominees to
the board, this committee recommends (1) criteria for board
and committee composition and membership and (2) directors'
compensation. This committee considers any nominees
recommended by shareholders by letter to the board. This
committee is composed of the chairman and at least three
directors who are not salaried employees of Enova or SDG&E.
Security Ownership of Management and Certain Beneficial
Holders
The following table presents certain information as of
January 31, 1996, except as otherwise noted, regarding the
equity securities of Enova and SDG&E 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 and SDG&E
as a group, and (iv) the only beneficial owners known to
Enova or SDG&E to hold more than 5% of any class of the
voting securities of Enova or SDG&E. All holdings listed
below are of Enova Common Stock.
Amount and Nature
of Beneficial
Ownership Percent of
Beneficial Owner (Shares)(A) Class
---------------- ----------------- ----------
Directors and Named Executive Officers:
R. C. Atkinson 1,315 *
A. Burr 1,300 *
R. A. Collato 2,398 *
D. W. Derbes 3,626 *
C. T. Fitzgerald 3,015 *
R. H. Goldsmith 1,486 *
W. D. Jones 350 *
R. R. Ocampo 13,443 *
T. C. Stickel 1,003** *
T. A. Page 184,641 *
S. L. Baum 44,421 *
D. E. Felsinger 35,981 *
G. D. Cotton 29,980 *
E. A. Guiles 14,111 *
All Directors and Executive Officers of
Enova and SDG&E as a group
(20 persons) 405,034(B) *
Others:
First Interstate Bank of California 18,251,955(C) 15.66%
Trust Securities, W11-4
707 Wilshire Boulevard Los Angeles, CA 90017
Franklin Resources, Inc. 7,267,210(D) 6.23%
777 Mariners Island Boulevard
San Mateo, CA 94404
Union Bank Trust Department 9,368,962(E) 8.04%
530 B Street
San Diego, CA 92101
* Less than 1% of the shares outstanding.
** Information as of February 6, 1996.
6
(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; 315 shares credited to a
Common Stock Investment Plan (CSIP) account with the
shareholders' agent.
- Mr. Collato: 1,909 shares held jointly with
spouse/children of same household; 489 shares credited to a
CSIP account with the shareholders' agent.
- Mr. Derbes: 2,926 shares credited to a CSIP account with
the shareholders' agent.
- Ms. Fitzgerald: 3,015 shares credited to a CSIP account
with the shareholders' agent.
- Mr. Goldsmith: 486 shares credited to a CSIP account
with the shareholders' agent.
- Dr. Ocampo: 13,128 shares held jointly with
spouse/children of same household; 15 shares credited to a
CSIP account with the shareholders' agent.
- Mr. Page: 89,165 shares held jointly with or separately
by spouse/children of same household; 284 shares credited to
a CSIP account with the shareholders' agent; 52,840 shares
credited to a Savings Plan account with the trustee; 42,635
shares of restricted stock purchased under the 1986 Long-Term
Incentive Plan (LTIP) as to which vesting has not occurred.
- Mr. Baum: 23,812 shares held jointly with or separately
by spouse/children of same household; 2,414 shares credited
to a Savings Plan account with the trustee; 18,195 shares of
restricted stock purchased under the LTIP as to which vesting
has not occurred.
- Mr. Felsinger:14,030 shares held jointly with or
separately by spouse/children of same household; 5,756 shares
credited to a Savings Plan account with the trustee; 16,195
shares of restricted stock purchased under the LTIP as to
which vesting has not occurred.
- Mr. Cotton: 7,896 shares credited to a Savings Plan
account with the trustee; 8,735 shares of restricted stock
purchased under the LTIP as to which vesting has not
occurred.
- Mr. Guiles: 2,267 shares credited to a Savings Plan
account with the trustee; 7,985 shares of restricted stock
purchased under the LTIP as to which vesting has not
occurred.
(B) Excludes 17,280 shares delivered to Enova in January,
1996, 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
beneficially owned by the directors and officers, with sole
voting and investment power, except for the following:
- 138,652 shares held jointly with or separately by
spouses or children living in the same household.
- 87,100 shares credited to the officers' Savings Plan
accounts with the trustee.
- 9,058 shares credited to CSIP accounts with the
shareholders' agent.
- 126,750 shares of restricted stock purchased by officers
in 1992, 1993, 1994 and 1995 under the LTIP, as to which
restrictions for vesting of shares have not yet been
satisfied.
(C) 12,797,501 shares are held by the bank in its capacity
as shareholders' agent for the CSIP. The bank holds 5,454,454
shares of Enova Common Stock and 28,765 shares of SDG&E
Cumulative Preferred Stock as trustee for various other
trusts.
(D) According to a Schedule 13G filed February 12, 1996, the
indicated shares are owned by Franklin Resources, Inc., its
subsidiaries and investment companies advised by such
subsidiaries.
(E) 9,321,687 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 agent
holds 47,275 shares of Enova Common Stock and 100 shares of
SDG&E Cumulative Preferred Stock as trustee for various other
trusts.
Change of Control/Voting of Shares
As a result of a parent company formation merger (the
Merger) which was approved by the SDG&E shareholders at their
1995 Annual Meeting (held on April 25, 1995) and which became
effective on January 1, 1996, Enova holds 100% of the issued
and outstanding shares of SDG&E Common Stock and effectively
controls SDG&E as a result. The holders of SDG&E Common Stock
immediately prior to the effectiveness of the Merger had
their shares of SDG&E Common Stock converted, on a share-for-
share basis, into shares of Enova Common Stock.
7
The Enova board of directors intends to vote all of the
shares of SDG&E Common Stock held by Enova in favor of the
board's nominees for election to the board of directors. As a
result of the voting power of such shares of SDG&E Common
Stock relative to the voting power of other shares entitled
to vote for the directors, the nominees proposed by the board
are assured of election.
Section 16 Reporting
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires SDG&E's directors and officers, and persons
who own more than 10% of a registered class of SDG&E's 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. American
Stock Exchange) upon which such securities are traded.
Directors, officers and greater than 10% shareholders are
required by SEC regulations to furnish SDG&E with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms
furnished to the company, SDG&E believes that from January 1,
1995 through December 31, 1995 its directors, officers and
greater than 10% beneficial owners complied with all Section
16(a) filing requirements except for Mr. Stickel, who
inadvertently neglected to report the ownership of 100 shares
of SDG&E Common Stock held by an affiliated charitable
foundation on his original Section 16(a) form at the time he
became a director.
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 four highest compensated executive
officers whose earned compensation exceeded $100,000. Since
Enova paid no amounts to any executives for services as such
in 1995, the following table presents information solely for
SDG&E. Moreover, Enova presently has 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
--------------------------
Long Term
Annual Compensation Compensation
------------------- ------------
Other Annual LTIP All Other
Salary Bonus Compensation Payouts Compensation
Name and Principal Position Year (A) (B) (C) (D)(E) (F)
- --------------------------- ----- -------- -------- ------------ -------- ------------
T. A. Page (G) 1995 $560,577 $404,000 $ 12,571 $549,205 $104,908
Chairman, Chief Executive 1994 528,615 253,000 11,228 76,147 60,078
Officer and President 1993 509,203 337,000 9,910 513,777 55,161
Enova and SDG&E
S. L. Baum (G) 1995 264,423 191,000 1,426 173,661 32,874
Executive Vice President 1994 244,999 90,000 1,278 23,969 18,606
Enova and SDG&E 1993 244,307 129,000 1,107 162,006 17,695
D. E. Felsinger (G) 1995 242,885 169,000 2,387 126,580 18,203
Executive Vice President 1994 228,076 81,000 2,137 13,644 14,103
Enova and SDG&E 1993 216,970 111,000 1,881 96,401 10,755
G. D. Cotton Sr. 1995 193,461 112,000 383 117,122 19,641
Sr. Vice President 1994 184,999 68,000 340 16,778 14,862
SDG&E 1993 184,722 98,000 302 105,076 14,160
E. A. Guiles 1995 190,773 109,000 - 91,127 14,124
Sr. Vice President 1994 172,692 64,000 - 10,325 7,922
SDG&E 1993 165,577 87,000 - 72,545 7,473
8
(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 1995 pursuant to the LTIP is reported below in the
Long-Term Incentive Plan 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 (and the performance of SDG&E for periods
prior to January 1, 1996, the effective date of the Merger),
as described below under "1986 Long-Term Incentive Plan."
(E) The aggregate holdings/value of restricted stock held on
December 31, 1995, by the individuals listed in this table,
are: T. A. Page, 58,420 shares/$1,241,425; S. L. Baum, 23,185
shares/$492,681; D. E. Felsinger, 19,920 shares/$423,300; G.
D. Cotton, 12,095 shares/$257,019; and E. A. Guiles, 10,660
shares/$226,525. The value of the aggregate restricted stock
holdings at December 31, 1995 is determined by multiplying
$23.75, the fair market value of SDG&E's Common Stock on
December 31, 1995, less the purchase price of $2.50 per
share, by the number of shares held. These December 31, 1995
share amounts include the share amounts shown in "Security
Ownership of Management and Certain Beneficial Holders"
above. All share amounts are in shares of Enova Common Stock
as shares of SDG&E Common Stock held on December 31, 1995
converted, on a share-for-share basis, to Enova Common Stock
on January 1, 1996 pursuant to the Merger. In certain
instances, the January 31, 1996 amounts are less due to the
vesting of certain shares in January 1996. Regular quarterly
dividends have been paid on restricted stock held by these
individuals, when declared by SDG&E, and from and after the
date of the Merger quarterly dividends will continue to be
paid on such restricted stock when and if 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 this agreement until the officer contributes
to the Savings Plan the maximum amount allowed by the tax
law; and (iii) SDG&E matching contributions to the Savings
Plan. The respective amounts paid in fiscal year 1995 for
each of the above officers were: T. A. Page, $88,035,
$14,969, and $1,904; S. L. Baum, $24,843, $6,085, and $1,946;
D. E. Felsinger, $12,349, $4,311, and $1,543; G. D. Cotton,
$13,765, $3,032, and $2,844; and E. A. Guiles, $9,744, $116,
and $4,264.
(G) As of January 1, 1996, (i) Mr. Page resigned as chief
executive officer and president of Enova and SDG&E, (ii) Mr.
Baum became the chief executive officer and president of
Enova, and (iii) Mr. Felsinger became the chief executive
officer and president of SDG&E.
Compensation of Directors
During 1995, SDG&E directors not holding salaried
positions in 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 board or of
any committee of the board. Non-employee directors are
reimbursed for their out-of-pocket expenses incurred to
attend meetings. All SDG&E directors except Mr. Page (and
Messrs. Baum and Felsinger, who joined the SDG&E board on
January 1, 1996) are non-salaried directors.
9
During 1995, Enova directors were not paid for their
service as such (all Enova directors during 1995 were also
SDG&E directors). All Enova board meetings during 1995 were
held in conjunction with SDG&E board meetings. Accordingly,
the directors incurred no incremental out-of-pocket expenses
in connection with Enova board meetings in 1995. A non-
salaried director serving on the boards of both Enova and
SDG&E will receive a single annual retainer in the amount of
$30,000. All Enova directors except Mr. Page (and Mr. Baum,
who joined the Enova board on January 1, 1996) are non-
salaried directors.
In addition to the annual retainer for service as a
director, the LTIP was amended at the 1995 Annual Meeting of
SDG&E shareholders to provide for the automatic grant of up
to 300 shares of SDG&E Common Stock (now Enova Common Stock)
per year to non-employee directors. This grant was first made
promptly following the 1995 Annual Meeting 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. As a result of the Merger, Enova has assumed the
LTIP and the obligation to issue shares thereunder. 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.
S. L. Baum, D. W. Derbes and T. A. Page are directors of
Enova and SDG&E who also served during 1995 as directors of
PDC. Messrs. Derbes and Page also served during 1995 as
directors of Wahlco Environmental. Mr. Page and Mr. Derbes
resigned from the board of directors of Wahlco Environmental
during 1995. As a non-employee director, Mr. Derbes received
a $500 fee for attending each meeting of PDC. Mr. Derbes also
received an annual retainer of $12,000 plus a $1,000 fee for
attending each meeting of Wahlco Environmental.
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 SDG&E board adopted a
Retirement Plan for Directors applicable to directors serving
on the SDG&E board on or after such date. As of the date of
the Merger, 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 boards of
SDG&E and Enova will not result in double-counting of years
of service.
Relocation Arrangements
In connection with her hiring as a vice president in
July 1994, SDG&E arranged for a relocation firm to assist K.
A. Flanagan with the potential sale of her former personal
residence. Under the agreement with the relocation firm, Ms.
Flanagan had the option to cause that entity to purchase her
former residence within one year of her start date with SDG&E
at an agreed price which was $40,000 above the appraised
value of the residence at the time of her employment by
SDG&E. In July 1995, Ms. Flanagan exercised her right to sell
the former residence to the relocation firm. SDG&E incurred
expenses totaling approximately $190,000 representing the
$40,000 referenced above, the loss on the sale price due to
deterioration of the Los Angeles real estate market, costs of
sale, and certain carrying costs.
10
Employment Contract of Mr. Page
On September 12, 1988, Thomas A. 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. Such
resignation did not trigger a termination under the
employment agreement 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
(the 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 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.
1986 Long-Term Incentive Plan
Long-Term Incentive Plan
Awards in Last Fiscal Year
Estimated Future
Payouts
Number Under
of Non-Stock-
Restricted Performance Period Price-Based
Name Shares Until Payout Plans (A)(B)
---- ---------- ------------------ ---------------
T. A. Page 18,660 Four Annual Periods $370,868
S. L. Baum 5,680 Four Annual Periods 112,890
2,500 One-Year (1997)(C) 49,688
D. E. Felsinger 5,020 Four Annual Periods 99,773
2,500 One-Year (1997)(C) 49,688
G. D. Cotton 3,680 Four Annual Periods 73,140
E. A. Guiles 3,580 Four Annual Periods 71,153
11
(A) The value (target) of the restricted stock awards is
determined by multiplying $22.375, the fair market value of
SDG&E Common Stock on the date of grant, December 6, 1995,
less the purchase price of $2.50 per share, by the number of
shares awarded (shares of SDG&E Common Stock have since
converted, as of the date of the Merger (January 1, 1996) and
on a share-for-share basis, into Enova Common Stock).
(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.
(C) Special grants of 2,500 shares each were made in 1995
to S.L. Baum and D.E. Felsinger. Lifting of restrictions on
these shares is dependent upon Enova performance for 1997
(discussed below).
The LTIP provides that the Enova Executive Compensation
Committee may grant to certain executives any combination of
non-qualified stock options, incentive stock options,
restricted stock, stock appreciation rights, performance
awards, stock payments or dividend equivalents. As of
December 31, 1995, all grants made to executives under the
LTIP have been in the form of restricted stock.
With respect to LTIP shares purchased in 1986 through
1990, all restrictions have been lifted in prior years.
With respect to LTIP shares purchased in 1991, 1992 and
1993, the earnings per share target was met for the 12 months
ended June 30, 1995, and the shares which would have been
released if the December 31, 1994 target had been met, were
released from restrictions and delivered to the executives.
The earnings target was met for the year ended December 31,
1995 and one-quarter of the LTIP shares purchased in 1991,
1992, 1993 and 1994 were released from restrictions and
delivered to the executives. All restrictions have now been
lifted on LTIP shares purchased in 1991.
With respect to LTIP shares purchased in 1992, 1993,
1994 and 1995, 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 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 12 months then ending equal
or exceed the weighted average of the targets for the prior
year and the current year. In addition, as to shares
purchased in 1992, the restrictions on all remaining shares
that are not released in such manner will be released and the
shares will be delivered to executives at the end of the
fourth succeeding calendar year, if and only if, a total
return to shareholders goal, as determined by the Executive
Compensation Committee or the Enova board, is met. Shares
purchased in 1993 have no end-of-term goal. As to shares
purchased in 1994 and 1995, the restrictions on all remaining
shares may be released by the Enova board of directors after
considering the impact on 1995--1998 earnings and 1996--1999
earnings, respectively, of industry and corporate
restructuring during such period.
In addition to the above-described restricted shares
with four-year performance period-based restrictions, 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 as set by the Executive Compensation Committee at
the time of grant. Such target earnings may be adjusted to
reflect industry and corporate restructuring.
In general, restricted shares may not be sold,
transferred or pledged until restrictions are removed or
expire. Purchasers 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 purchased are placed in
escrow. It is anticipated that restricted stock would be
forfeited and would be resold to Enova at original cost in
the event that vesting is not achieved by virtue of
performance or other criteria.
12
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 in 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
Pension Plan and SERP Table
-------------------------------------------------
Aggregate Annual Benefit for Credited
Years of Service(1)
---------------------------------------
Assumed Annual 10 Years
Compensation 5 Years and thereafter
-------------- --------- --------------
$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
____________
(1) Credited years of service under the Pension Plan for
the five highest paid executive officers are: T. A. Page, 18
years; S. L. Baum, 11 years; D. E. Felsinger, 23 years; G. D.
Cotton, 20 years; and E. A. Guiles, 23 years.
In addition to the Pension Plan, the SERP provides a
supplemental retirement benefit for certain executives. As a
result of the Merger, 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
13
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 in 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. Some or all of the amounts to be paid will be
funded out of the cash value of life insurance policies paid
for by the employer on behalf of the executive.
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 in 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. An Enova- or SDG&E-initiated merger in which Enova or
SDG&E, as the case may be, is the surviving entity is not a
change in control; accordingly, the Merger did 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.
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. As a result of the
Merger, 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.
14
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 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 Enova 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.
Compensation policy with respect to executives of Enova
and SDG&E, is to provide a total compensation package wherein
the mix and total of base salary, annual incentive and long-
term incentive, the composition of its benefit programs, and
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)
align the amount of compensation with corporate performance,
and (4) will continue to motivate and reward on the basis of
Enova, SDG&E 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 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 may elect 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. In addition, the Executive Compensation Committee
reviews economic and comparative compensation surveys
compiled and provided by the Human Resources Division of
SDG&E. The Executive Compensation Committee believes that by
taking into account the compensation practices of other
comparative utilities 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.
15
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 Mr. Page represents the positions he
held in 1995 of chairman, president and chief executive
officer. Mr. Page's compensation, as well as that of the
other executives, is directly tied to the achievement of the
corporate goals described below. Effective January 1, 1996,
Mr. Page resigned his positions as president and chief
executive officer of Enova and SDG&E. He will continue to
serve as chairman of the board of both companies. Effective
January 1, 1996, Mr. Stephen L. Baum was elected president
and chief executive officer of Enova and Mr. Donald E.
Felsinger was elected president and chief executive officer
of SDG&E.
The base salary of the chief executive officers, and the
other executives, is targeted at the competitive median (50th
percentile) for comparably sized utilities and companies.
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 1995, the targeted participation levels were 50% under
the EICP and 70% 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, 55% of
Mr. Page'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, and SDG&E operating and
maintenance expenses, 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 companies. 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 of the year. A target
and a minimum and maximum performance range are established
for each goal. Financial
16
goals address (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 include (1) adherence to SDG&E's operating
and capital budgets, (2) an electric rate target, (3)
customer service satisfaction as measured by customer
surveys, (4) customer average electric outage, and (5)
employee lost-time accidents. 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 1995 operating performance minimum goals were
exceeded by SDG&E, with customer satisfaction achieving an
all-time high and safety experiencing an all-time low number
of accidents. The 1995 financial goal of return on
shareholders' equity was exceeded and the market-to-book
ratio is still in the top 25% of utilities. For 1995, the
individual awards could not exceed 75% of base salary for the
chairman, president, chief executive officer, and executive
vice presidents and 60% for other executives. The EICP
compensation component represents 23% of the chairman,
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. The LTIP was assumed by Enova as a result of
the Merger. 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,
Enova sells shares of Enova Common Stock to executives at a
fixed price of $2.50 per share. These shares are subject to
substantial restrictions on the rights of executives to
benefit fully from such shares unless and until certain
earnings improvement 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 they would be sold back to Enova at
their original purchase price.
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 1995 the chairman, president, and
chief executive officer participated at 70% of base salary,
making the LTIP equal to 31% of his mix of total target
compensation. 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.
With respect to LTIP shares purchased in 1992, 1993,
1994 and 1995 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 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 addition, as to shares
purchased in 1992, the restrictions on all remaining shares
that are not released in such manner will be released and the
shares will be delivered to executives at the end of the
fourth succeeding calendar year, if and only if, a total
return to shareholders goal, as determined by the Executive
Compensation Committee or the Enova board, is met. Shares
purchased in 1993
17
have no end-of-term goal. As to shares purchased in 1994 and
1995, 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
with four-year performance period-based restrictions, 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 number of restricted shares sold to SDG&E's five
highest-compensated executives in 1995, pursuant to the LTIP,
is shown in the Long-Term Incentive Plan Table.
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, if any, 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 such grants may in the
future 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
Catherine T. Fitzgerald
Thomas C. Stickel
18
Comparative Common Stock Performance
The following graph compares the percentage change in
SDG&E's cumulative total shareholder return on SDG&E 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 SDG&E Common Stock, the
S&P 500, and the Dow Jones Utilities Index on December 31,
1990, and reinvestment of all dividends. Note that for future
years, periods from and after the date of the Merger (January
1, 1996) will be measured in terms of Enova Common Stock.
[INSERT TOTAL SHAREHOLDER RETURN GRAPH]
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
AMONG SDG&E, DOW JONES UTILITIES INDEX AND S&P 500 INDEX
Measurement Period
(Fiscal Year Covered)
Company S&P 500 Index Dow Jones
Utilities Index
Measurement Pt-- 12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 $107.41 $130.47 $115.09
FYE 12/31/92 $121.44 $140.41 $119.71
FYE 12/31/93 $133.22 $154.56 $131.19
FYE 12/31/94 $111.30 $156.60 $111.41
FYE 12/31/95 $147.31 $215.45 $147.25
(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.
(C) Beginning in 1988 and through May 1991 SDG&E was
involved in merger negotiations and SDG&E Common Stock was
trading at inflated prices. SDG&E estimates that, absent the
merger negotiations, the cumulative total shareholder return
on SDG&E Common Stock over the last five fiscal years would
have been $179.
19
Relationship with Independent Public Accountant
Deloitte & Touche LLP (or its predecessor firm, Deloitte
Haskins & Sells) has been employed regularly by SDG&E for
many years (and has now been appointed by Enova) 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 and SDG&E 1995 Annual Report to Shareholders
accompanies this Proxy Statement. The Annual Report of Enova
and SDG&E to the SEC on Form 10-K for 1995 will be provided
to shareholders, without charge, upon written request, to
Shareholder Services, San Diego Gas & Electric Company, P.O.
Box 1831, San Diego, California 92112-4150.
Shareholder Proposals for 1997 Annual Meeting
Proposals that shareholders may wish to have included in
the proxy materials relating to the next Annual Meeting
(1997) must be received by SDG&E, by November 14, 1996.
Proxy Solicitations
SDG&E 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 or SDG&E.
Other Business to Be Brought Before the Annual Meeting
The board of directors 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 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 11, 1996
PROXY
This Proxy is Solicited on Behalf of the Board of Directors of
SAN DIEGO GAS & ELECTRIC COMPANY
Post Office Box 1831, San Diego, California 92112-4150
Annual Meeting of Shareholders April 23, 1996
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 1, 1996, at the annual meeting of
shareholders of San Diego Gas & Electric Company (''SDG&E''), to be held
at the Corporate Headquarters, 101 Ash Street, San Diego, California, on
April 23, 1996, and at any adjournment or postponement thereof, as
indicated on reverse side.
THIS CARD IS ONLY FOR SHARES OF PREFERRED STOCK.
(Continued and to be signed on other side)
FOLD AND DETACH HERE
[MAP TO SDG&E's HEADQUARTERS GOES HERE]
Please mark X
your votes
as this
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.
FOR
1. ELECTION OF DIRECTORS The Board / /
of Directors recommends a vote FOR the
following Nominees: Richard C. Atkinson,
Stephen L. Baum, Ann Burr,
Richard A. Collato, Daniel W. Derbes,
Donald E. Felsinger, Robert H. Goldsmith,
William D. Jones, Ralph R. Ocampo,
Thomas A. Page and Thomas C. Stickel.
FOR all nominees listed; except vote withheld
for the following nominees (if any):
- ------------------------------------
WITHHELD FOR ALL
/ / WITHHELD for all nominees listed.
2. In their discretion, act upon such other business
as may properly come before the meeting.
YES NO
I am planning to attend the Annual / / / /
Meeting of SDG&E Shareholders.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING
please mark, sign, date and return the proxy card
promptly in the enclosed postage-paid envelope.
Signature(s)
-------------------------------
Signature(s)
-------------------------------
Dated ,1996
---------------------------------
[Shareholder Name and Address]
NOTE: Please sign exactly as name appears at left. If
signing as executor, administrator, attorney, agent,
trustee or guardian, please give full title as such. If a
corporation or partnership, please sign in full such name
by authorized person.
(SEE OTHER SIDE)
Please indicate any change in the above address
FOLD AND DETACH HERE
[SDG&E ANNOUNCEMENT GOES HERE]
Annual Meeting of Shareholders
of SAN DIEGO GAS & ELECTRIC COMPANY
Tuesday, April 23, 1996
2:00 p.m.
San Diego Gas & Electric Company
Corporate Headquarters
101 Ash Street
San Diego, California 92101
YOUR VOTE IS IMPORTANT
Please complete, date and sign your proxy and
promptly return is in the enclosed envelope.
March 11, 1996
