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