For our discussion this morning

John:

I spoke with Tim yesterday evening regarding your feedback to the
compensation proposal I sent last week. Before our conversation this morning
I wanted to give you a chance to review some of thoughts I have which might
help keep our discussion more focused.

First, I think we've both been at Enron about the same amount of time and
probably share similar experiences about contracts and compensation at Enron.
In general, my experience is that there has never been any open information
by management about any overall compensation structures, equity plans,
compatability between ENA groups or other Enron companies. Just as we all
have to create our own path at Enron we generally must do our own research
and draw our own conclusions about compensation within and outside Enron. In
several cases we have lost people we are trying to contract as a result of
the contracting process! In my opionion, this is mostly because of the lack
of communication of any "overall compensation plan" which drives people to
the market to make an evaluation which they otherwise may not be inclined to
do if information were available. Among the many ENA managers I have worked
with none has ever explained any such "plan". Tim has indicated that there is
some sort of overall compensation structure plan that you and Dave Delainey
are trying to adhere to. I would appreciate some discussion about this as it
may relieve some of the concerns we all end up having about signing a
contract without being 100% satisfied with the minimum amounts in the
contract (primarily because we've experienced the verbal commitment which is
forgotten or lost in the latest management shuffle).

Second, Tim indicated some concern about locking in certain minimum overall
compensation levels and that "if a person were to have a bad year there may
be no room for bonus". I think this is a real concern particularly when we
consider a new trader from outside the company. In my case, while I currently
don't have a specific book that gets marked each day, I think there is a
clear record over the past seven years of significant value to ENA's west
power business. This value comes in several forms: value above the
offer/below the bid, market information driving both short and long-term
value into our books, developing new markets and products for ENA, extending
my market knowledge and deal structuring capabilities on a continuous basis
each day to other origination/strucuturing/mid-market/real time groups,
building a no-risk/high value Services business, and providing leadership to
employees about their role at Enron or Enron's role in the market. All of
these efforts are focused on adding mark-to-market value to ENA in more ways
than any single, specific book can measure. I am certain that I will continue
to add value in these ways and have little concern about this "bad year"
scenario.

Finally, I am trying to make sense of the proposed compensation that Tim has
relayed to me. If I understand it correctly my cash compensation pay would
change from $206k ($130 base /$56 COLA /$50 retention) over the past three
years as a Director to a base pay of $170k as a Vice President with higher
expections and increasing responsibilities. The equity plan that is currently
available to Vice Presidents and above would be locked in at values of
$175/$125. This one is a little hard for me to evaluate as it is new in its
current form (I have been a participant in prior years of similar equity
plans which have ranged in initial from $10k-$50k as a Director). Bonus would
be determined annually, I assume under similar process as past years. The
trouble I am having is evaluating a significant decrease in cash compensation
after being promoted and locking in a known (versus unknown) value in an
equity plan for which I presumably am already a participant in and for which
there is little other plan information available to evaluate. I would
appreciate your thoughts on this in relation to any overall compensation
"plan".

I'll look forward to our discussion.

Greg