SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[_] Preliminary Information Statement[_] Confidential, for Use of the
Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
San Diego Gas & Electric Company and
Southern California Gas Company
(Name of Registrant as Specified In Its Certificate)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) 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.:
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(4) Date Filed:
SAN DIEGO GAS & ELECTRIC COMPANY
AND
SOUTHERN CALIFORNIA GAS COMPANY
-----------------
NOTICE OF
ANNUAL MEETINGS OF SHAREHOLDERS
-----------------
The Annual Meetings of Shareholders of San Diego Gas & Electric Company and
Southern California Gas Company will be held on May 14, 2002 at 10:15 a.m. at
the offices of Sempra Energy, 101 Ash Street, San Diego, California. SDG&E and
SoCalGas are both indirect public utility subsidiaries of Sempra Energy.
Each Annual Meeting will be held for the following purposes:
(1) To vote upon an amendment to the Bylaws with respect to the authorized
number of directors.
(2) To elect directors for the ensuing year.
(3) To transact any other business that may properly come before the meeting.
Shareholders of record at the close of business on March 26, 2002 are
entitled to notice of and to vote at the Annual Meeting of each utility of
which they are a shareholder.
The Annual Meetings are business-only meetings. They will not include any
presentations by management.
Shareholders of SDG&E and SoCalGas are invited to attend the Annual Meeting
of Shareholders of Sempra Energy. It will be held on May 7, 2002 at 10:00 a.m.
at the Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine, California, and
will include management presentations regarding the utilities.
Only shareholders are entitled to attend the Annual Meetings. Shareholders
who own shares registered in their names will be admitted to the meetings upon
verification of record share ownership. Shareholders who own shares through
banks, brokerage firms, nominees or other account custodians must present proof
of beneficial share ownership (such as a brokerage account statement) to be
admitted.
SAN DIEGO GAS & ELECTRIC COMPANY
AND
SOUTHERN CALIFORNIA GAS COMPANY
-----------------
INFORMATION STATEMENT
-----------------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
San Diego Gas & Electric Company ("SDG&E") and Southern California Gas
Company ("SoCalGas") are providing this Information Statement in connection
with their respective Annual Meetings of Shareholders to be held on May 14,
2002. It is being mailed to shareholders beginning April 8, 2002.
THE UTILITIES
SDG&E and SoCalGas are indirect public utility subsidiaries of Sempra
Energy. SDG&E is a direct subsidiary of Enova Corporation and SoCalGas is a
direct subsidiary of Pacific Enterprises. Enova Corporation and Pacific
Enterprises are both direct subsidiaries of Sempra Energy.
SDG&E's principal executive offices are located at 8330 Century Park Court,
San Diego, California. Its telephone number is (619) 696-2000.
SoCalGas' principal executive offices are located at The Gas Company Tower,
555 West Fifth Street, Los Angeles, California. Its telephone number is (213)
244-1200.
OUTSTANDING SHARES AND VOTING RIGHTS
SDG&E
The SDG&E Board of Directors has fixed March 26, 2002 as the record date for
determining the shareholders of SDG&E entitled to notice of and to vote at the
SDG&E Annual Meeting. At that date, the outstanding shares of SDG&E consisted
of 116,583,358 shares of Common Stock, all of which is owned by Enova
Corporation, 1,373,770 shares of Cumulative Preferred Stock and 3,040,000
shares of Preference Stock all of which is publicly held.
In electing directors, each share of Cumulative Preferred Stock is entitled
to two votes and each share of Common Stock is entitled to one vote for each of
the three director positions but cumulative voting is not permitted. In voting
upon other matters to be considered at the Annual Meeting each share of
Cumulative Preferred Stock is entitled to two votes and each share of Common
Stock is entitled to one vote. Shares of Preference Stock do not have any
voting rights with respect to the matters to be considered at the Annual
Meeting.
The shares of SDG&E owned by Enova Corporation represent over 96% of the
outstanding shares and over 97% of the votes entitled to be cast on the matters
to be considered at the SDG&E Annual Meeting.
1
SoCalGas
The SoCalGas Board of Directors has fixed March 26, 2002 as the record date
for determining the shareholders of SoCalGas entitled to notice of and to vote
at the SoCalGas Annual Meeting. At that date, the outstanding shares of
SoCalGas consisted of 91,300,000 shares of Common Stock, all of which is owned
by Pacific Enterprises, and 862,043 shares of Preferred Stock, of which 50,962
shares are owned by Pacific Enterprises.
In electing directors, each share is entitled to one vote for each of the
three director positions and shareholders will be entitled to cumulate votes if
any shareholder gives notice at the meeting and prior to the voting of an
intention to do so. If that notice is given, all shareholders may cast all of
their votes for any one director candidate whose name has been placed in
nomination prior to the voting or distribute their votes among two or more such
candidates in such proportions as they may determine. In voting upon other
matters to be considered at the Annual Meeting each share is entitled to one
vote.
The shares of SoCalGas owned by Pacific Enterprises represent over 99% of
the outstanding shares and the votes entitled to be cast on the matters to be
considered at the SoCalGas Annual Meeting.
GOVERNANCE OF THE COMPANY
Board of Directors
The business and affairs of SDG&E and SoCalGas are managed under the
direction of their respective Boards of Directors in accordance with the
California General Corporation Law as implemented by their respective Articles
of Incorporation and Bylaws. Shareholders who wish to suggest qualified
candidates for consideration as directors should write to the Corporate
Secretary at the applicable address set forth under the caption "The Utilities"
in this Information Statement, stating in detail the qualifications of the
suggested candidates.
During 2001, the Boards of Directors of SDG&E and SoCalGas held 11 meetings
and 8 meetings, respectively. Each director attended at least 75% of the
combined number of meetings of the board and board committees of which he or
she was a member.
The Audit Committees of the SDG&E and SoCalGas Boards of Directors each met
four times during 2001. The Compensation Committees and the Corporate
Governance Committees each met five times. These committees, as well as all
other committees of the boards (other than the respective Executive
Committees), were dissolved upon the restructuring of the boards described
under the caption "Amendments of Bylaws" in this Information Statement.
All of the current directors of SDG&E and SoCalGas are also officers of each
utility or Sempra Energy. They are not separately compensated for services as
directors of the utilities.
2
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, independent auditors for SDG&E and
SoCalGas, are expected to be present at the Annual Meetings. They will have the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions from shareholders.
Audit Fees
Fees of Deloitte & Touche LLP for the audit of the 2001 financial statements
of SDG&E and SoCalGas were $574,000 and $407,000, respectively.
All Other Fees
Fees of Deloitte & Touche LLP for all other services provided to SDG&E and
SoCalGas for 2001 were $80,450 and $9,400, respectively. The Boards of
Directors have considered whether the provision of these services is compatible
with maintaining the independence of Deloitte & Touche LLP.
AUDIT REPORT
The Boards of Directors of SDG&E and SoCalGas reviewed the audited financial
statements of the respective utilities for the year ended December 31, 2001,
with management and Deloitte & Touche LLP, the independent auditors.
The boards have also discussed and reviewed with Deloitte & Touche LLP all
the matters required to be discussed by Statement on Auditing Standards No. 61.
They have also received and reviewed the written disclosures and the letters
from Deloitte & Touche LLP required by Independence Standards Board Standard
No. 1 and have discussed with Deloitte & Touche LLP their independence.
Based on this review and discussions, the SDG&E and SoCalGas Boards of
Directors have directed that the audited financial statements of the respective
utilities be included in their Annual Reports on Form 10-K for the year ended
December 31, 2001, for filing with the Securities and Exchange Commission.
BOARDS OF DIRECTORS
Edwin A. Guiles, Chairman
Frank H. Ault
Debra L. Reed
March 7, 2002
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SHARE OWNERSHIP
All of the outstanding SDG&E Common Stock is owned by Enova Corporation and
all of the outstanding SoCalGas Common Stock is owned by Pacific Enterprises.
All of the outstanding Common Stock of both Enova Corporation and Pacific
Enterprises is owned by Sempra Energy. None of the directors or officers of
SDG&E or SoCalGas owns any preferred or preference shares of the utilities.
The following table sets forth the number of shares of Sempra Energy Common
Stock beneficially owned at March 1, 2002 by each director, by each of the
executive officers of SDG&E and SoCalGas named in the compensation tables of
this Information Statement, and by all directors and executive officers of
SDG&E and SoCalGas as a group. These shares, in the aggregate, represent less
than 1% of Sempra Energy's outstanding shares.
Sempra Energy Common Stock
Shares
Current Subject To
Beneficial Exercisable Phantom
Name Holdings Options (A) Shares (B) Total
- ---- ---------- ----------- ---------- ---------
Frank H. Ault................................................. 23,028 67,095 1,965 92,088
James P. Avery (C)............................................ 221 -0- 114 335
Steven D. Davis............................................... 5,092 53,356 1,105 59,553
Pamela J. Fair................................................ 7,573 70,625 1,411 79,609
Edwin A. Guiles............................................... 22,619 169,740 16,477 208,836
Richard M. Morrow............................................. 16,377 88,760 1,434 106,571
Roy M. Rawlings............................................... 10,094 94,623 1,985 106,702
Debra L. Reed................................................. 15,603 204,036 4,117 223,756
Anne S. Smith................................................. 7,697 87,301 2,207 97,205
Lee M. Stewart................................................ 17,726 185,739 3,431 206,896
SoCalGas Directors and Executive Officers as a group
(14 persons)................................................ 187,955 1,247,307 39,015 1,474,277
SDG&E Directors and Executive Officers as a group (15 persons) 188,176 1,247,307 39,129 1,474,612
- --------
(A) Shares which may be acquired through the exercise of stock options that are
currently exercisable or will become exercisable on or before May 15, 2002.
(B) Represents deferred compensation deemed invested in phantom shares of
Sempra Energy Common Stock. These shares cannot be voted or transferred but
track the performance of Sempra Energy Common Stock.
(C) Mr. Avery is an officer of SDG&E only.
Share ownership guidelines for Sempra Energy Common Stock have been
established for SDG&E and SoCalGas officers to further strengthen the link
between performance and compensation. The guidelines are:
Sempra Energy Share
Executive Level Ownership Guidelines
--------------- --------------------
Chairman and Chief Executive Officer 3 x Base Salary
President........................... 2 x Base Salary
Vice Presidents..................... 1 x Base Salary
In setting the guidelines the boards considered then current share ownership
levels and the desirability of encouraging further share ownership. The
guidelines are expected to be met or exceeded within five years from their
adoption in 1998. For purposes of the guidelines, shares owned include phantom
shares into which compensation is deferred and the vested portion of certain
in-the-money stock options as well as shares owned directly or through benefit
plans.
4
Sempra Energy has approximately 175,000 shareholders. The only person known
to Sempra Energy to own more than 5% of its shares is Barclays Global
Investors, N.A. (45 Fremont Street, San Francisco, California 94105), which on
February 8, 2002 reported that it and related entities held 11,393,523 shares
of Sempra Energy Common Stock as to which they had sole dispositive power
(including 10,949,470 shares as to which they had sole voting power) in trust
accounts for the economic benefit of the beneficiaries of those accounts. These
shares represent approximately 5% of the outstanding Sempra Energy Common Stock.
Employee savings and stock ownership plans of Sempra Energy and its
subsidiaries held 24,241,792 shares of Sempra Energy Common Stock
(approximately 12% of the outstanding shares) for the benefit of employees at
March 11, 2002.
5
AMENDMENTS OF BYLAWS
The respective Bylaws of SDG&E and SoCalGas currently provide that the
authorized number of directors of the utility will be not less than nine nor
more than seventeen. The exact number of authorized directors (currently nine
for each utility) is fixed and may be altered, within these limits, by a
resolution of the respective boards. At the Annual Meetings, the respective
shareholders of each utility will consider and vote upon a bylaw amendment that
would decrease the range of the authorized number of directors of the utility
to a minimum of three and a maximum of five.
Background, Purpose and Effect
In November 2001, the Boards of Directors of SDG&E and SoCalGas restructured
the respective boards so that the incumbent directors of each consisted
entirely of the three current directors, each of whom is a director of both
utilities and is also an officer of both utilities or Sempra Energy.
Immediately prior to the restructuring, each board had consisted of Edwin A.
Guiles, the Chairman and Chief Executive Officer of both SDG&E and SoCalGas who
continues to serve as a director, and ten of the thirteen non-officer directors
of Sempra Energy.
The restructuring of the boards is intended to facilitate corporate
effectiveness and decision making and was taken as an initial step in the
integration of the operations of the utilities. In connection with the
restructuring, the boards fixed the authorized number of directors of the
respective utilities at nine directors (the minimum number permitted by then
applicable bylaw requirements) and amended related bylaw quorum requirements to
provide that one-third of the authorized number of directors (but not less than
two directors) would constitute a quorum for conduct of business. Consequently,
although there are currently six vacancies in each board, the three incumbent
directors are sufficient to constitute a quorum for the conduct of business.
The proposed amendment to the Bylaws of each utility provides that the
authorized number of directors of the utility will be not less than three nor
more than five with the exact number to be fixed, within these limits, by a
resolution of the board. The bylaw amendments were approved by the respective
boards in connection with the restructuring and authorized to be submitted for
requisite shareholder approval. Effective upon such approval being obtained,
each board also fixed the authorized number of directors at three.
The amendments would reduce the authorized number of directors to a number
consistent with the number of incumbent directors and thus eliminate the
current vacancies in the boards. Approval of the amendments would also have the
effect of reducing quorum requirements so corporate actions could be authorized
by two directors rather than, as now, requiring all three incumbent directors.
In addition, by providing for a range rather than a fixed number, each board
would retain the flexibility to increase or decrease the authorized number of
directors (within a minimum of three and maximum of five) without requiring
further shareholder approval.
Shareholder Approval
Adoption of the SDG&E bylaw amendment and the SoCalGas bylaw amendment
requires that the amendment be approved by a majority of the outstanding shares
of the respective utility that are entitled to vote on the amendment and the
number of votes cast against the adoption of the amendment does not exceed 16
2/3% of the outstanding shares entitled to vote. Enova Corporation and Pacific
Enterprises, as the respective parent corporations of SDG&E and SoCalGas, have
advised the utilities that they intend to vote all of their shares of the
respective utilities to approve the amendments. Consequently, no other
shareholder approvals would be required to adopt the amendments.
6
ELECTION OF DIRECTORS
The Boards of Directors of SDG&E and SoCalGas will each consist of three
directors upon shareholder approval of the bylaw amendments described under the
caption "Amendments of Bylaws" in this Information Statement. At the Annual
Meeting of each utility, three directors will be elected to hold office until
the next Annual Meeting and until their successors have been elected and
qualified. The three director candidates receiving the greatest number of votes
will be elected as directors.
The names of the three nominees for election as directors and biographical
information regarding each nominee are set forth below. Each has been nominated
as a director of SDG&E and SoCalGas by the respective Boards of Directors of
the two utilities and each is currently a director of both utilities. Each
nominee is also an officer of both utilities or Sempra Energy. Unless otherwise
noted, each nominee has held the position set forth beneath his or her name or
various positions with the same or predecessor or affiliated organizations for
at least the last five years.
[PHOTO] Frank H. Ault, 57, became a director in 2001. He is a Senior Vice President and the
Controller of Sempra Energy. He is immediate past Chair of the Board of the San Diego
Frank H. Ault Foundation and Chairman of the Board and Treasurer of the San Diego Regional Fire and
Emergency Services Foundation.
[PHOTO] Edwin A. Guiles, 51, has been a director since 2000. He is Chairman and Chief Executive
Officer of both SDG&E and SoCalGas and Group President - Regulated Business Units of
Edwin A. Guiles Sempra Energy. Mr. Guiles is a member of the boards of the California Chamber of
Commerce and San Diego County YMCA. He formerly served as planning commissioner
for the City of Chula Vista, and is a former director of the Arthritis Foundation, Wellness
Communities and San Diego Economic Development Council.
[PHOTO] Debra L. Reed, 45, became a director in 2001. She is the President and Chief Financial
Officer of SDG&E and SoCalGas. She is a director of Halliburton Company. She serves on
Debra L. Reed the Board and Executive Committee of the San Diego Regional Economic Development
Corporation and the Board of the Magdalena Ecke Family YMCA. She is a member of the
Board of Counselors of the University of Southern California College of Letters, Arts and
Sciences. She previously served on the Board of the Los Angeles Chamber of Commerce
and as a director of Dominguez Services Corporation.
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REPORT ON EXECUTIVE COMPENSATION
SDG&E and SoCalGas are subsidiaries of Sempra Energy. Sempra Energy's Board
of Directors maintains a Compensation Committee, consisting of independent
directors, that has established compensation principles and strategies for
Sempra Energy and its subsidiaries and designed a compensation program for
Sempra Energy executive officers. The committee also administers Sempra
Energy's base salary program, executive annual and long term incentive plans,
and executive benefit programs.
Edwin A. Guiles, the Chairman and Chief Executive Officer of both SDG&E and
SoCalGas, is also the Group President - Regulated Business Units of Sempra
Energy. Mr. Guiles' base salary is set by the Sempra Energy Compensation
Committee. His compensation, as well as that of other officers of SDG&E and
SoCalGas, also includes participation in Sempra Energy's various incentive and
employee benefit plans with participation levels established by the Sempra
Energy Compensation Committee. Other deliberations regarding SDG&E and SoCalGas
compensation are conducted by the respective Boards of Directors consisting of
Mr. Guiles and Debra L. Reed, who are officers of each utility, and Frank H.
Ault, who is an officer of Sempra Energy, based upon the principals and
strategies adopted by the Sempra Energy Compensation Committee.
Compensation Principles and Strategies
In developing compensation principles and strategies, the Sempra Energy
Compensation Committee considers the current and prospective business
environment for Sempra Energy and its subsidiaries and takes into account
numerous factors, including:
. The rapidly changing and increasingly competitive environment in which
Sempra Energy and its subsidiaries operate.
. The need to retain experienced executives of outstanding ability and to
motivate them to achieve superior performance.
. The need to attract executive talent from broader markets as the utility
and energy industries continue to rapidly evolve.
. The need to strongly link executive compensation to both annual and long
term corporate, business unit and individual performance.
. The need to strongly align the interests of executives with those of
shareholders.
To reflect these factors and assist Sempra Energy and its subsidiaries in
realizing the key objective of creating superior shareholder value, the
Compensation Committee has developed policies and programs that include the
following elements:
. An emphasis on "pay-for-performance" with a substantial portion of total
compensation reflecting corporate, business unit and individual
performance.
. An emphasis on stock incentives closely aligning the interests of
executives with those of shareholders.
. An emphasis on total compensation with base salaries generally targeted
at or near median general industry levels for companies of comparable
size with annual cash and long term equity incentives providing
opportunities to earn total compensation at significantly higher levels
for superior performance.
. An appropriate balance of short term and long term compensation to retain
talented executives, reward effective long term strategic results and
encourage share ownership.
. An emphasis on placing at risk, through equity and other
performance-based incentives, a greater portion of an executive's total
compensation as levels of responsibility increase.
8
The Compensation Committee also takes into account provisions of the
Internal Revenue Code limiting to $1 million the annual amount of compensation
(other than compensation that qualifies as "qualified performance-based
compensation") that publicly held corporations may deduct for federal income
tax purposes for each of certain executive officers. The committee believes
that tax deductibility is an important factor but only one factor to be
considered in evaluating any executive officer compensation program.
Accordingly, the committee expects to design and implement policies and
programs that will maximize federal income tax deductions for compensation
expense to the extent that doing so is consistent with the other compensation
principles and strategies of Sempra Energy and its subsidiaries. The committee
believes, however, that there may be circumstances in which the interests of
shareholders would be best served by providing compensation that is not fully
tax deductible, and may exercise discretion to provide compensation that would
not qualify as a tax-deductible compensation expense.
Compensation Program
The primary components of the compensation program of Sempra Energy and its
subsidiaries are base salaries, annual cash incentive opportunities and long
term equity and equity-based incentive opportunities.
Base Salaries
Base salaries for executives are reviewed annually and, in general, are
targeted at the median of salaries at general industry companies of similar
size to Sempra Energy. This strategy, along with annual and long term incentive
opportunities at general industry levels, is intended to allow Sempra Energy
and its subsidiaries to retain and attract top quality executive talent. In
determining base salary adjustments, individual performance, executive
responsibilities, market characteristics and other factors are also taken into
account.
Survey data for assessing base salaries are based upon companies in the
Fortune 1000 and size-adjusted based upon Sempra Energy's revenues using
regression analysis. The Compensation Committee believes the Fortune 1000
appropriately reflects the broad group with which Sempra Energy and its
subsidiaries compete to retain and attract highly skilled and talented
executives.
Annual base salaries for executive officers of Sempra Energy and its
subsidiaries have been set at the approximate mid-point of these salary data.
For 2001, an annual base salary of $491,000 was established for Mr. Guiles with
corresponding lesser amounts for other officers of SDG&E and SoCalGas.
Annual Incentives
Annual performance-based incentive opportunities are provided to executive
officers through cash bonuses under the Sempra Energy Executive Incentive Plan.
This plan permits the payment of bonuses based upon the attainment of objective
financial performance goals. Bonus opportunities vary with the individual
officer's position and prospective contribution to the attainment of these
goals and no bonuses are paid unless a threshold performance level is attained
for the related performance period. Bonus opportunities increase for
performance above the threshold level with performance at targeted levels
intended to produce bonuses at the mid-point for bonuses for comparable levels
of responsibility at Fortune 1000 companies.
For 2001, Executive Incentive Plan award levels for SDG&E and SoCalGas
executive officers were based on attainment of Sempra Energy earnings per share
goals and utility net income and operating measures with target award levels
ranging from 70% of base salary for the Chairman and Chief Executive Officer to
45% of base salary for Vice Presidents, with maximum award levels ranging from
140% to 90% of base salary. Performance for the year resulted in a cash bonus
of $687,400 for Mr. Guiles, with corresponding lesser amounts to other
executive officers.
9
Long Term Incentives
Long-term incentive opportunities are provided by equity and equity-based
awards under Sempra Energy's 1998 Long Term Incentive Plan. The plan permits a
wide variety of awards to allow the Compensation Committee to respond to
changes in market conditions and compensation practices. During 2001, Sempra
Energy granted to executives and other employees of Sempra Energy and its
subsidiaries non-qualified stock options to purchase Sempra Energy Common
Stock. These option grants to executive officers of SDG&E and SoCalGas are
described in this Information Statement under the caption "Executive
Compensation--Stock Options and Stock Appreciation Rights."
Share Ownership Guidelines
Sempra Energy believes that a commitment to increased share ownership by
executives of Sempra Energy and its subsidiaries is an important element in
aligning the interests of executives with those of shareholders. This belief
has influenced the design of compensation plans and, in addition, stock
ownership guidelines have been established to further strengthen the link
between corporate performance and compensation. These guidelines are summarized
under the caption "Share Ownership" in this Information Statement.
BOARD OF DIRECTORS
Edwin A. Guiles, Chairman
Frank H. Ault
Debra L. Reed
March 7, 2002
10
EXECUTIVE COMPENSATION
Compensation Summary
The table below summarizes, for the last three years, the compensation paid
or accrued by Sempra Energy and its subsidiaries to each of the executive
officers of SDG&E and SoCalGas named in the table. Except as otherwise noted,
each individual holds the identical office in both utilities.
Summary Compensation Table
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
-------------------- ---------------- -----------
Securities LTIP All Other
Underlying Payouts ($) Compensation
Name and Principal Position Year Salary ($) Bonus ($) Options/SARS (#) (A) (B) ($) (C)
- --------------------------- ---- ---------- --------- ---------------- ----------- ------------
Edwin A. Guiles (D)....... 2001 $490,596 $687,400 271,200 $51,418 $98,212
Chairman and 2000 $373,740 $504,700 73,500 $35,685 $39,933
Chief Executive Officer 1999 $304,731 $243,750 54,500 $46,273 $46,931
Debra L. Reed (E)......... 2001 $388,538 $389,000 122,800 $30,621 $49,265
President and Chief 2000 $331,685 $335,900 73,500 $ -0- $37,315
Financial Officer 1999 $298,732 $243,750 52,300 $ -0- $38,432
Lee M. Stewart (F)........ 2001 $299,141 $300,000 94,700 $28,835 $47,090
Senior Vice President 2000 $297,029 $298,000 70,600 $ -0- $40,895
1999 $288,659 $235,544 50,500 $ -0- $40,855
James P. Avery (G)........ 2001 $234,616 $220,134 72,500 $ -0- $17,341
Senior Vice President
Roy M. Rawlings (F)....... 2001 $234,164 $211,500 55,700 $15,604 $42,042
Senior Vice President 2000 $224,259 $178,700 35,600 $ -0- $36,529
1999 $216,895 $177,795 25,500 $ -0- $33,417
Steven D. Davis (H)....... 2001 $215,692 $190,196 51,200 $12,479 $28,922
Senior Vice President 2000 $199,697 $122,800 31,600 $ -0- $26,545
1999 $172,962 $130,209 20,000 $ -0- $27,264
Pamela J. Fair (E)........ 2001 $215,317 $189,756 51,100 $13,536 $35,236
Vice President 2000 $205,835 $126,500 32,600 $ -0- $30,608
1999 $199,027 $149,612 22,900 $ -0- $27,264
Richard M. Morrow (F)..... 2001 $214,729 $193,950 51,100 $13,536 $36,158
Vice President 2000 $205,397 $163,600 32,600 $ -0- $27,884
1999 $195,415 $160,380 23,000 $ -0- $26,920
Anne S. Smith (F)......... 2001 $211,246 $190,800 50,200 $13,278 $34,164
Vice President 2000 $202,221 $161,200 32,100 $ -0- $28,352
1999 $188,767 $155,034 22,200 $ -0- $23,902
- --------
(A) Long term incentive plan payouts represent the fair market value of Sempra
Energy restricted shares for which forfeiture and transfer restrictions
terminated during the year based upon satisfaction of long term performance
goals.
11
(B) The aggregate holdings/value of Sempra Energy restricted shares held on
December 31, 2001 by the individuals listed in the table are: 3,984
shares/$97,807 for Mr. Guiles; 3,909 shares/$95,966 for Ms. Reed; 3,681
shares/$90,369 for Mr. Stewart; -0- shares/$-0- for Mr. Avery; 1,992
shares/$48,904 for Mr. Rawlings; 1,593 shares/$39,108 for Mr. Davis; 1,728
shares/$42,422 for Ms. Fair; 1,728 shares/$42,422 for Mr. Morrow; and 1,695
shares/$41,612 for Ms. Smith. Regular quarterly dividends are paid on
restricted shares.
(C) All other compensation includes amounts paid as (i) interest on deferred
compensation above 120% of the applicable federal rate, (ii) life insurance
premiums, (iii) financial and estate planning services, (iv) contributions
to defined benefit plans and related supplemental plans, and (v) car
allowances. The respective amounts paid in 2001 were $192, $45,593, $7,163,
$34,168 and $11,096 for Mr. Guiles; $1,198, $539, $10,000, $27,030 and
$10,498 for Ms. Reed; $4,718, $1,504, $6,675, $23,695 and $10,498 for
Mr. Stewart; $-0-, $887, $6,225, $-0- and $10,229 for Mr. Avery; $12,080,
$1,330, $7,000, $14,632 and $7,000 for Mr. Rawlings; $-0-, $787, $6,038,
$11,599 and $10,498 for Mr. Davis; $4,844, $1,119, $7,000, $11,775 and
$10,498 for Ms. Fair; $522, $2,578, $7,000, $15,560 and $10,498 for Mr.
Morrow; and $3,598, $385, $5,276, $14,407 and $10,498 for Ms. Smith.
(D) Mr. Guiles became an officer of SoCalGas in June 2000.
(E) Ms. Reed and Ms. Fair transferred from SoCalGas to SDG&E in 2000 and 1998,
respectively, and each again became an officer of SoCalGas on January 1,
2002.
(F) Messrs. Stewart, Rawlings and Morrow and Ms. Smith became officers of SDG&E
on January 1, 2002.
(G) Mr. Avery became an officer on January 16, 2001. He is an officer of SDG&E
only.
(H) Mr. Davis became an officer of SoCalGas on January 1, 2002.
Stock Options and Stock Appreciation Rights
The following table shows information as to stock options granted during
2001 to the executive officers of SDG&E and SoCalGas named in the Summary
Compensation Table. All options are to purchase Sempra Energy Common Stock,
were granted at an exercise price of 100% of the fair market value of the
option shares on the date of the grant, are for a ten-year term subject to
earlier expiration following termination of employment, and are exercisable in
cumulative installments of one-fourth of the shares initially subject to the
option on each of the first four anniversaries of the grant date.
Option/SAR Grants in 2001
Number of % of Total
Shares Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in Price Expiration Grant Date
Name Granted (#) 2000 ($/Share) Date Present Value (A)
- ---- ------------ ------------ --------- ---------- -----------------
Edwin A. Guiles.. 271,200 9.55% $22.50 1/01/11 $1,374,984
Debra L. Reed.... 122,800 4.32% $22.50 1/01/11 $ 622,596
Lee M. Stewart... 94,700 3.33% $22.50 1/01/11 $ 480,129
James P. Avery... 72,500 2.55% $18.38 1/15/11 $ 300,150
Roy A. Rawlings.. 55,700 1.96% $22.50 1/01/11 $ 282,399
Steven D. Davis.. 51,200 1.80% $22.50 1/01/11 $ 259,584
Pamela J. Fair... 51,100 1.80% $22.50 1/01/11 $ 259,077
Richard M. Morrow 51,100 1.80% $22.50 1/01/11 $ 259,077
Anne S. Smith.... 50,200 1.77% $22.50 1/01/11 $ 254,514
- --------
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(A) Sempra Energy used a modified Black-Scholes option pricing model to develop
the theoretical values set forth under the "Grant Date Present Value"
column. Grant date present value per option share for the options granted
at an exercise price of $22.50 was $5.07 based on the following
assumptions: share volatility-23.60%; dividend yield-4.21%; risk-free rate
of return-5.28%; and outstanding term-10 years. Grant date present value
per option share for the options granted at an exercise price of $18.38 was
$4.14 based on the following assumptions: share volatility-23.60%; dividend
yield-4.21%; risk-free rate of return-5.28%; and outstanding term-10 years.
The following table shows information as to the exercise of options and
stock appreciation rights during 2001 and unexercised options and stock
appreciation rights held on December 31, 2001 by the executive officers of
SDG&E and SoCalGas named in the Summary Compensation Table.
Option/SAR Exercises and Holdings
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at the-Money Options/SARs
Shares Year-End (#) at Year-End ($)(A)
Acquired Value ------------------------- -------------------------
Name on Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------- ----------- ------------- ----------- -------------
Edwin A. Guiles.. -0- -0- 69,965 361,655 $197,393 $955,018
Debra L. Reed.... -0- -0- 141,886 212,205 $385,331 $647,071
Lee M. Stewart... -0- -0- 131,789 180,725 $328,282 $574,336
James P. Avery... -0- -0- -0- 72,500 $ -0- $447,688
Roy A. Rawlings.. 11,278 81,210 65,423 99,365 $204,350 $305,964
Steven D. Davis.. -0- -0- 27,656 88,152 $ 78,851 $270,514
Pamela J. Fair... 5,925 56,851 56,144 90,774 $163,994 $279,572
Richard M. Morrow -0- -0- 52,160 90,819 $130,292 $279,749
Anne S. Smith.... 11,278 110,863 51,251 89,016 $128,186 $274,427
- --------
(A) The exercise price of outstanding options ranges from $14.38 to $26.31.
Pension Plans
The following table shows the estimated single life annual pension annuity
benefit provided to the executive officers of SDG&E and SoCalGas named in the
Summary Compensation Table under the Sempra Energy Supplemental Executive
Retirement Plan (combined with benefits payable under the other pension plans
of SDG&E and SoCalGas and its affiliates in which the officers also
participate) based on the specified compensation levels and years of credited
service and retirement at age 65.
PENSION PLAN TABLE
($000's)
Years of Service
Pension Plan ------------------------
Compensation 5 10 20 30 40
------------ ---- ---- ---- ---- ----
$ 250 $ 50 $100 $150 $156 $163
$ 500 $100 $200 $300 $313 $325
$ 750 $150 $300 $450 $469 $488
$1,000 $200 $400 $600 $625 $650
$1,250 $250 $500 $750 $781 $813
$1,500 $300 $600 $900 $938 $975
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Pension benefits are based on average salary for the highest two years of
service and the average of the three highest annual bonuses during the last ten
years of service. Years of service includes service with subsidiaries and
number 29 years for Mr. Guiles, 23 years for Ms. Reed, 34 years for Mr.
Stewart, one year for Mr. Avery, 28 years for Mr. Rawlings, 21 years for Mr.
Davis, 17 years for Ms. Fair, 27 years for Mr. Morrow, and 24 years for Ms.
Smith.
Mr. Guiles is entitled to pension benefits at the greater of that provided
by Sempra Energy's pension plans or that to which he would have been entitled
under the Enova Corporation pension plans (including a supplemental pension
plan) had those plans remained in effect. Under the Enova Corporation plans and
retirement after attaining age 62, Mr. Guiles would be entitled to a monthly
pension benefit of 60% of his final pay. Final pay is defined as the monthly
base pay rate in effect during the month immediately preceding retirement, plus
one-twelfth of the average of the highest three years' gross bonus awards. The
plans provide for reduced pension benefits for retirement between the ages of
55 and 61, and surviving spouse and disability benefits equal to 50% and 100%,
respectively, of pension benefits.
Employment-Related Agreements
Sempra Energy has entered into a severance agreement with each of the
executive officers of SDG&E and SoCalGas providing for the payment of benefits
in the event Sempra Energy or its subsidiaries terminates the executive's
employment (other than for cause, death or disability) or the executive
terminates his or her employment for good reason.
The benefits payable under the severance agreements include (i) a lump sum
cash payment equal to the executive's annual base salary and average annual
bonus for the two years prior to termination multiplied, in certain cases
depending upon the officer's position, by as much as two; (ii) continuation of
health benefits for a period of two years; and (iii) financial planning and
outplacement services. In addition, if the termination occurs within two years
after a change in control of Sempra Energy, (i) the lump sum cash payment
multiple is increased to as much as three; (ii) all equity-based incentive
awards immediately vest and become exercisable or payable and all restrictions
on the awards immediately lapse; (iii) all deferred compensation is paid out in
a lump sum; (iv) a lump sum cash payment is made equal to the present value of
the executive's benefits under the Supplemental Executive Retirement Plan
calculated as if the executive had attained age 62 (or, if the executive is
older than 62, based on the executive's actual age) and applying certain early
retirement factors; and (v) continued life, disability, accident and health
insurance for two years. The agreements also provide for a gross up payment to
offset the effects of any excise tax imposed on the executive under Section
4999 of the Internal Revenue Code.
Good reason is defined in the severance agreements to include the assignment
to the executive of duties materially inconsistent with those appropriate for
an executive of Sempra Energy and its subsidiaries, a material reduction in the
executive's overall standing and responsibilities within Sempra Energy and its
subsidiaries and a material reduction in the executive's annualized
compensation and benefit opportunities other than across-the-board reductions
affecting all similarly situated executives of comparable rank. In addition,
following a change in control of Sempra Energy, good reason also includes an
adverse change in the executive's title, authority, duties, responsibilities or
reporting lines, a 10% or greater reduction in the executive's annualized
compensation and benefit opportunities, relocation of the executive's principal
place of employment by more than 30 miles, and a substantial increase in
business travel obligations. A change in control is defined to include the
acquisition by one person or group of 20% or more of the voting power of Sempra
Energy's shares; the election of a new majority of the board of Sempra Energy
comprised of individuals who are not recommended for election by two-thirds of
the current directors or successors to the current directors who were so
recommended for election; certain mergers, consolidations or sales of assets
that result in the shareholders of Sempra Energy owning less than 60% of the
voting power of Sempra Energy or of the surviving entity or its parent; and
shareholder approval of the liquidation or dissolution of Sempra Energy.
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SHAREHOLDER PROPOSALS
Shareholders intending to bring any business before an Annual Meeting of
Shareholders of SDG&E or SoCalGas, including nominations for election as
directors, must give written notice to the Corporate Secretary of the business
to be presented. The notice must be received within the specified periods and
must be accompanied by the information required by the Bylaws. A copy of the
applicable bylaw requirements will be provided upon request in writing to the
Corporate Secretary.
The period for notice of business to be brought by shareholders before the
2002 Annual Meetings of Shareholders has expired. The period for the receipt of
notice of business to be brought by shareholders before the 2003 Annual
Meetings of Shareholders will commence on January 14, 2003 and end on March 14,
2003.
ANNUAL REPORTS
The respective Annual Reports to the Securities and Exchange Commission on
Form 10-K of SDG&E and SoCalGas are being mailed to the respective shareholders
of each utility together with this Information Statement.
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