Performance Management Process

As our existing businesses grow and new businesses are created, ease of=20
movement and development of our top talent becomes essential to our success=
. =20
As you heard at the Management Conference all officers will be titled,=20
reviewed, promoted, and compensated according to a more standard set of=20
guidelines. The process recognizes the intrinsic value of each officer,=20
rather than tying that individual to the value of their specific job or=20
reporting relationship.

Officer titling has been standardized throughout Enron. There are four=20
levels of officers: members of the Enron Office of the Chairman make up Lev=
el=20
4. Level 3 includes all other members of the Enron Executive Committee. =
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Level 2 is made up of managing directors, including company presidents and=
=20
some senior vice presidents. Level 1 are vice presidents and some senior=
=20
vice presidents with grandfathered titles.

This year a common evaluation process is being implemented for Level 1 and=
=20
Level 2 officers. Officers will be evaluated by a committee, through a=20
process referred to as the Performance Review Committee (PRC), utilizing a=
=20
standard set of performance criteria and performance ratings. Performance=
=20
committee reviews will occur twice a year =01) in July for feedback purpose=
s and=20
at year-end for feedback as well as bonus and total compensation=20
considerations. The Executive Committee will handle the PRC for all Level =
2=20
officers. Review of Level 1 officers will occur at the business-unit level=
=20
first with the results =01&cross calibrated=018 by the Executive Committee =
and a=20
group of approximately sixteen managing directors.

The goals of the PRC process is to insure a consistent standard for our=20
overall pool of executive talent and to provide a tool to more effectively=
=20
utilize talent throughout the organization. To further promote consistency=
=20
the Executive Committee will consider all promotions in January of each=20
year. Exceptions, internally or externally, will be infrequent.

The individual=01,s performance evaluation will be the starting point for a=
ll=20
compensation decisions. Compensation includes base pay, bonus and long-ter=
m=20
awards. A long-term program that replaces individual or business unit plan=
s=20
has been approved and will be communicated to individuals before bonus=20
payments are made.

In addition to the Level 1 and Level 2 reviews, business unit, global and=
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corporate cross-functional PRC reviews for directors, senior directors and=
=20
general managers have started. This year-end process will be utilized as a=
=20
benchmark to determine how we further refine the evaluation process at this=
=20
level in the future.

If you should have any questions about the process, please direct them to=
=20
your Human Resources Business Unit Leads per the following:

Mary Ann Long (GPG) x36810 David Oxley (ENA/EEL/Global Trading) X33557
Ray Bennett (EES) X37039 Robert Jones (Global Technology/Global=20
Finance/Global
Gwen Petteway (Corp) X37351 Asset Operations/Global Engineering &=20
Construction) X35810
Janie Bonnard (Caribbean/Middle East/ Scott Gilchrist (Asia=20
Pacific/Africa/China) X67081
LNG) X68202 Gerry Chatham (EGEP) X35141
Miguel Padron (ESA) X66552 Marla Barnard (ECI) X58158
Ranen Sengupta (India) X67967 =20

cc: Enron Executive Committee Members =20

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