<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
<TABLE>
<CAPTION>
Check the appropriate box:
<S> <C>
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
EEX Corporation
----------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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[_] Fee paid previously with preliminary materials:
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[_] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
EEX Corporation
Notice of Annual Meeting of Shareholders
To be Held on May 9, 2000
To the Shareholders of
EEX Corporation:
The Annual Meeting of the Shareholders of EEX Corporation, a Texas
corporation (the "Company"), will be held at the Company's offices at 2500
CityWest Blvd., Houston, Texas 77042 on Tuesday, May 9, 2000, at 10:00 a.m.,
for the following purposes:
1. To elect two Directors for terms expiring at the Annual Meeting held in
2003;
2. To ratify the Board of Directors' appointment of Ernst & Young LLP as
independent auditors of the Company for the year ended December 31,
2000; and
3. To consider and act upon such other business as may be properly
presented to the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business March 13, 2000, as
the record date for the determination of the shareholders entitled to notice
of and to vote at the meeting or any adjournment thereof. Only shareholders of
record at the close of business on the record date are entitled to notice of
and to vote at such meeting. A list of such shareholders will be available at
the time and place of the meeting and during the ten days prior to the meeting
at the office of the Corporate Secretary of the Company at the address above.
Shareholders are cordially invited to attend the Annual Meeting. Regardless
of whether you expect to attend the meeting in person, we urge you to read the
attached Proxy Statement and sign, date and mail the accompanying proxy card
in the enclosed postage-prepaid envelope. It is important that your shares are
represented at the meeting, and your promptness will assist us in making
necessary preparations for the meeting. If you receive more than one proxy
card because your shares are registered in different names or addresses, each
card should be completed and returned to assure that all your shares are
voted.
A form of Proxy, a Proxy Statement, and the Company's 1999 Annual Report on
Form 10-K accompany this Notice of Annual Meeting.
By Order of the Board of Directors,
Janice K. Hartrick
Senior Vice President, General Counsel
and Corporate Secretary
Houston, Texas
March 31, 2000
<PAGE>
EEX Corporation
2500 CityWest Boulevard
Suite 1400
Houston, Texas 77042
(713) 243-3100
PROXY STATEMENT
Annual Meeting of Shareholders
To be Held on May 9, 2000
This Proxy Statement is being mailed on or about March 31, 2000, to
shareholders of EEX Corporation, a Texas corporation (the "Company"), in
connection with the solicitation of proxies on behalf of the Board of
Directors of the Company for use at the Annual Meeting of Shareholders to be
held on May 9, 2000, at 10:00 a.m., at the Company's offices at 2500 CityWest
Blvd., Houston, Texas 77042.
The purpose of the Annual Meeting is to consider and vote upon (i) the
election of two Directors for terms expiring at the Annual Meeting held in
2003, (ii) the ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company, and (iii) such other matters as may be
properly presented to the meeting or any adjournment thereof.
The enclosed proxy may be revoked at any time before it is exercised by
filing with the Corporate Secretary an instrument revoking it, by submitting a
subsequently dated proxy, or by appearing at the annual meeting and voting in
person. Unless revoked, a properly signed and dated proxy that is returned
will be voted in accordance with the directions thereon. If no instructions
are specified, the shares will be voted for the election of the nominees for
Director and for the ratification of the appointment of Ernst & Young LLP as
independent auditors. If other matters are properly presented before the
Annual Meeting, the persons voting the proxies will vote them in accordance
with their best judgment.
Holders of record of the Company's common stock (the "Common Stock") at the
close of business on the record date, March 13, 2000, are entitled to vote at
the Annual Meeting. On March 13, 2000, the Company had outstanding 42,755,871
shares of Common Stock. Each share of Common Stock is entitled to one vote at
the Annual Meeting.
Holders of record of the Company's Series B 8% Cumulative Perpetual
Preferred Stock (the "Preferred Stock") are entitled to vote upon all matters
upon which holders of Common Stock have the right to vote. Each share of
Preferred Stock is entitled to the number of votes equal to the quotient of
(i) 8,000,000 divided by (ii) the number of outstanding shares of Preferred
Stock, but in no event more than 5.334 votes per share of Preferred Stock. On
March 13, 2000, the Company had
1
<PAGE>
outstanding 1,621,172 shares of Preferred Stock, entitling the holders thereof
to 8,000,000 votes at the Annual Meeting.
The holders of a majority of the shares issued and outstanding and entitled
to vote, present in person or represented by proxy, will constitute a quorum
for the transaction of business at the Annual Meeting. A plurality of the
votes cast at this meeting is required for the election of Directors. A
majority of the votes cast or expressly abstaining is required for the
ratification of the appointment of independent auditors. Other than a matter
for which a specified portion of the shares entitled to vote is required by
statute, the Company's Restated Articles of Incorporation or Bylaws, any other
matter submitted for approval would require the affirmative vote of the
holders of a majority of the shares entitled to vote at the meeting, and voted
for or against or expressly abstaining. The inspectors of election will treat
broker non-votes on any matter as to which the broker has indicated on the
proxy that it does not have discretionary authority to vote as shares not
entitled to vote with respect to that matter; however, such shares will be
considered present and entitled to vote for quorum purposes so long as they
are entitled to vote on other matters.
Enclosed with this Proxy Statement is a copy of the Company's 1999 Annual
Report which is not to be regarded as proxy soliciting material or as a
communication by means of which solicitation is made.
2
<PAGE>
ELECTION OF DIRECTORS
Information Regarding Nominees
Two Directors will be elected at the Annual Meeting. The Company's Bylaws
provide for a classified Board. The Directors are divided into three classes
with staggered terms expiring at the third Annual Meeting following the one at
which members of the class are elected. The following Directors have been
nominated for election by the Board of Directors upon recommendation of the
Governance and Nominating Committee to serve for a term expiring at the Annual
Meeting in 2003:
B. A. Bridgewater, Jr.
Mr. Bridgewater, age 66, retired in 1999 as Chairman, President and Chief
Executive Officer of Brown Group, Inc., a wholesaler and retailer of footwear.
He has been a Director of the Company since January 1995. Mr. Bridgewater is
also a Director of FMC Corporation.
Michael P. Mallardi
Mr. Mallardi, age 66, retired in 1996 as the Senior Vice President of
Capital Cities/ABC, Inc., and President of Capital Cities/ABC Broadcast Group,
a part of the Walt Disney Company and a television and radio broadcaster. He
has been a Director of the Company since October 1996. Mr. Mallardi is also
the trustee of a number of mutual funds operated by J.P. Morgan.
The Board of Directors recommends a vote "FOR" election of the Nominees to
the Board of Directors.
Information about the Company's continuing Directors is set forth below:
Thomas M Hamilton (term expires 2001)
Mr. Hamilton, age 56, became a Director and was elected Chairman, President
and Chief Executive Officer of the Company in January 1997. Previously Mr.
Hamilton served Pennzoil Company for five years where he was Executive Vice
President, and President of Pennzoil Exploration & Production Company.
Pennzoil is engaged in exploration and production, refining, marketing and
franchising.
Frederick S. Addy (term expires 2002)
Mr. Addy, age 68, retired as Executive Vice President, Chief Financial
Officer, and Director of Amoco Corporation, an international integrated oil
and gas company, in 1994. Mr. Addy has been a Director of the Company since
January 1995. He also served the Company as interim Chairman and Chief
Executive Officer from September 1996 to January 1997 and as President from
October 1996
3
<PAGE>
to January 1997. He is also a Director of Baker, Fentress & Company and
trustee of The J. P. Morgan Funds.
Frederick M. Lowther (term expires 2001)
Mr. Lowther, age 56, has been a partner in the law firm of Dickstein,
Shapiro, Morin & Oshinsky, LLP, Washington, D.C. since 1973. He has been a
member of such firm's Executive Committee and chairman of its Compensation
Committee since 1989. He is also Counsel to the Chairman of Key Span Energy.
He has been a Director of the Company since August 1997. He is also a Director
of Poseidon Resources Corporation and Gulf Midstream Services.
Howard H. Newman (term expires 2002)
Mr. Newman, age 52, has been a Member and Managing Director of the
investment firm of E.M. Warburg, Pincus & Co., LLC and a general partner of
Warburg, Pincus & Co. since 1987. He is currently a member of the firm's
Operating Committee. Prior to joining Warburg, Pincus, he held various
positions with Morgan Stanley & Co., Incorporated. He became a director of the
Company on January 8, 1999. Mr. Newman also serves on the Board of the
Directors of ADVO, Inc., Newfield Exploration Company, RenaissanceRe Holdings,
Ltd., Cox Insurance Holdings, Plc, Eagle Family Foods Holdings, Inc.,
Spinnaker Exploration, Inc., and several private companies.
Executive Officers
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
T. M Hamilton............... 56 Chairman, President and Chief Executive Officer
D. R. Henderson............. 49 Executive Vice President and Chief Operating
Officer
R. S. Langdon............... 49 Executive Vice President, Finance and
Administration, and Chief Financial Officer
J. K. Hartrick.............. 47 Senior Vice President, General Counsel and
Corporate Secretary
</TABLE>
Mr. Hamilton was elected Chairman and President, Chief Executive Officer in
January 1997. Previously, Mr. Hamilton served Pennzoil Company for five years
where he was Executive Vice President and President of Pennzoil Exploration &
Production Company.
Mr. Henderson was elected Executive Vice President and Chief Operating
Officer in March 1997. He was Executive Vice President, Worldwide Exploration,
of the Company from January 1997 to March 1997. Previously he held the
position of Senior Vice President of Worldwide Exploration at Pennzoil
Exploration & Production Company. Prior to that, he held various positions
with Pennzoil Company and its subsidiaries, including Senior Vice President--
Exploration, Senior Vice President--International, and Senior Vice President--
Worldwide Exploration.
4
<PAGE>
Mr. Langdon was elected Executive Vice President, Finance and Administration
and Chief Financial Officer in March 1997. Previously, he was an oil and gas
consultant from August 1996 to March 1997. Prior to that, he held various
positions with the Pennzoil Companies since 1991, including: Executive Vice
President--International Marketing--Pennzoil Products Company, from June 1996
to August 1996; Senior Vice President--Business Development & Shared
Services--Pennzoil Company from January 1996 to June 1996; and Senior Vice
President--Commercial & Control--Pennzoil Exploration & Production Company
from December 1991 to December 1995.
Ms. Hartrick was elected Senior Vice President, General Counsel and
Corporate Secretary in October 1997. Before joining EEX, she held various
positions with Seagull Energy Corporation since 1987, including the office of
Chief Counsel and Vice President, Environmental Affairs.
All officers of the Company are elected annually by the Board of Directors.
Officers may be removed by the Board of Directors whenever, in its judgement,
the best interest of the Company will be served thereby.
5
<PAGE>
Stock Ownership of Management and Certain Beneficial Owners of the Company
Common Stock
The following table sets forth certain information concerning the beneficial
ownership of the Company's Common Stock as of March 13, 2000, by (i) each
person who is known by the Company to own beneficially more than five percent
of the such securities, (ii) each Director and nominee for Director, (iii)
each officer identified under "Executive Compensation" and (iv) all Directors
and executive officers as a group. Under Securities and Exchange Commission
rules, several persons may be deemed to be the beneficial owners of the same
shares. As a result, readers are urged to read the footnotes to the table.
<TABLE>
<CAPTION>
Number of
Shares Percent
Beneficially of
Owned (1) Class
------------ -------
<S> <C> <C>
Wellington Management Company, LLP.................. 5,945,899(2) 13.9
Vanguard Windsor Funds--Windsor Fund................ 4,148,499(3) 9.7
Becker Capital Management, Inc...................... 2,399,064(4) 5.6
First Pacific Advisors, Inc......................... 2,280,000(5) 5.3
Warburg, Pincus Equity Partners, L.P................ 13,000,000(6) 23.3
T. M Hamilton....................................... 497,670(7) 1.2
F. S. Addy.......................................... 50,819(8) *
B. A. Bridgewater, Jr............................... 61,901(8) *
F. M. Lowther....................................... 27,722(8) *
M. P. Mallardi...................................... 33,567(8) *
H. H. Newman........................................ 13,024,800(8)(9) 23.4
D. R. Henderson..................................... 121,100(10) *
R. S. Langdon....................................... 112,563(10) *
J. K. Hartrick...................................... 78,023(11) *
All Directors and Executive Officers as a Group (9
persons)........................................... 14,008,165(12) 25.0
</TABLE>
- ---------
* Less than 1%
(1) The number of shares owned includes shares held in the Company's Employee
Stock Purchase and Savings Plan, restricted shares awarded under the
Revised and Amended 1996 Stock Incentive Plan and the Amended and
Restated 1998 Stock Incentive Plan, and shares subject to options or
warrants exercisable as of March 13, 2000, or within 60 days thereafter,
where applicable.
(2) Based on information set forth in an amendment to Schedule 13G, filed
February 11, 2000, these shares were reported, as of December 31, 1999,
by Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
MA 02109 as being owned by clients of WMC, of whom Vanguard Windsor Fund
held dispositive power over greater than 5% of the class. WMC reported
beneficial ownership of 1,071,400 shares with shared voting power and
5,945,899 shares with shared dispositive power.
6
<PAGE>
(3) Based on information set forth in an amendment to Schedule 13G, filed
February 4, 2000, these shares were reported, as of December 31, 1999, by
Vanguard Windsor Funds--Windsor Fund ("Vanguard"), P. O. Box 2600, Valley
Forge PA 19482-2600. Vanguard reported beneficial ownership of 4,148,499
shares with sole voting power and 4,148,499 shares with shared
dispositive power.
(4) Based on information set forth in a Schedule 13G, filed January 31, 2000,
these shares were reported, as of December 31, 1999, by Becker Capital
Management, Inc. ("Becker Capital"), 1211 S.W. Fifth Avenue, Suite 2185,
Portland, OR 97204. Becker Capital reported beneficial ownership of
1,983,096 shares with shared voting power and 2,399,064 shares with
shared dispositive power.
(5) Based on information set forth in an amendment to Schedule 13G, filed
February 8, 2000, these shares were reported, as of December 31, 1999, by
First Pacific Advisors, Inc. ("First Pacific"), 11400 West Olympic Blvd.,
Suite 1200, Los Angeles, CA 90064. First Pacific reported beneficial
ownership of 150,000 shares with shared voting power and 2,280,000 shares
with shared dispositive power.
(6) These shares represent warrants owned by Warburg Pincus Equity Partners,
L.P. and certain affiliated partnerships ("WPEP"). The sole general
partner of WPEP is Warburg, Pincus & Co., a New York general partnership
("WP"). E.M. Warburg, Pincus & Co., LLC, a New York limited liability
company ("EMW LLC"), manages WPEP. The members of EMW LLC are
substantially the same as the partners of WP. Lionel I. Pincus is the
managing partner of WP and the managing member of EMW LLC and may be
deemed to control both entities. WP and EMW LLC may be deemed to
beneficially own the warrants owned by WPEP. The address of each WPEP,
WP, EMW LLC, Mr. Pincus and Mr. Newman is 466 Lexington Ave., 10th Floor,
New York, NY 10017.
The warrants are in three series, each exercisable for $12 per share of
Common Stock: (a) Series A Warrants to acquire 10.5 million shares,
exercisable for 10 years; (b) Series B Warrants to acquire 2.5 million
shares, exercisable for 7 years, and (c) Series C Warrants to acquire 8
million shares, exercisable for 7 years. The Series A and Series B
Warrants are exercisable for shares of Common Stock by paying cash or
utilizing shares of Preferred Stock at the stated value on a gross or net
basis and are included in the table. The Series C Warrants are currently
exercisable only as a stock appreciation right (entitled to receive the
cash difference between the exercise price and the market price of the
Common Stock on the trading day prior to the date of exercise). The
Company may, at its option prior to July 30, 2002, elect to allow the
Series C Warrants to be exercised for shares of Common Stock by paying
cash or by utilizing shares of Preferred Stock at the stated value on a
gross or net basis. The Series C Warrants are not included in the table.
(7) Includes 110,000 shares that are subject to options exercisable as of
March 13, 2000, or within 60 days thereafter.
(8) Includes 17,182 shares that are subject to options exercisable as of
March 13, 2000, or within 60 days thereafter.
(9) Mr. Newman is a Managing Director and member of EMW LLC and a general
partner of WP. As such, Mr. Newman may be deemed to have an indirect
pecuniary interest (within the
7
<PAGE>
meaning of Rule 16a-1 under the Exchange Act) in the warrants described in
footnote (6), above. Mr. Newman disclaims beneficial ownership of the
warrants within the meaning of Rule 13d-3 under the Exchange Act or
otherwise.
(10) Includes 50,000 shares that are subject to options exercisable as of
March 13, 2000, or within 60 days thereafter.
(11) Includes 37,778 shares that are subject to options exercisable as of
March 13, 2000, or within 60 days thereafter.
(12) Includes 13,327,021 shares that are subject to options and warrants
exercisable as of March 13, 2000, or within 60 days thereafter.
Preferred Stock
All 1,621,172 outstanding shares of the shares of Preferred Stock are owned
by Warburg, Pincus Equity Partners, L.P. and certain affiliated partnerships
("WPEP"). The sole general partner of WPEP is Warburg, Pincus & Co., a New
York general partnership ("WP"). E.M. Warburg, Pincus & Co., LLC, a New York
limited liability company ("EMW LLC"), manages WPEP. The members of EMW LLC
are substantially the same as the partners of WP. Lionel I. Pincus is the
managing partner of WP and the managing member of EMW LLC and may be deemed to
control both entities. WP and EMW LLC may be deemed to beneficially own the
Preferred Stock owned by WPEP. Howard H. Newman, a director of the Company, is
a Managing Director and member of EMW LLC and a general partner of WP. As
such, Mr. Newman may be deemed to have an indirect pecuniary interest (within
the meaning of Rule 16a-1 under the Exchange Act) in an indeterminant portion
of the Preferred Stock owned by WPEP. Mr. Newman disclaims beneficial
ownership of the Preferred Stock within the meaning of Rule 13d-3 under the
Exchange Act or otherwise.
In addition, these shares of Preferred Stock, together with the warrants
owned by WPEP, (or a pro rata portion thereof), upon the occurrence of a
Change in Control (as defined in the Purchase Agreement between WPEP and the
Company dated December 22, 1998), may, at the option of WPEP, be exchanged for
27,907,050 shares of Common Stock (subject to pro rata reduction if only a
portion of the Preferred Stock and warrants are exchanged and subject to anti-
dilution adjustments); provided that under certain circumstances, the Company
may elect to pay WPEP cash in lieu of shares of Common Stock.
Board Committees
The standing committees of the Board of Directors are the Audit Committee,
the Compensation Committee and the Governance and Nominating Committee.
The Audit Committee meets periodically with the independent and internal
auditors; reviews annual financial statements and the independent auditors'
work and report thereon; reviews the independent auditors' report on internal
controls and related matters; selects and recommends to the
8
<PAGE>
Board of Directors the appointment of the independent auditors; reviews the
letter of engagement and statement of fees which pertain to the scope of the
annual audit and certain special audit and non-audit work which may be
required or suggested by the independent auditors; receives and reviews
information pertaining to internal audits; directs and supervises special
investigations; and performs any other functions deemed appropriate by the
Board of Directors. Members of the Audit Committee are Messrs. Addy
(Chairman), Bridgewater, Lowther, Mallardi and Newman. The Audit Committee met
three times during 1999.
The Compensation Committee establishes, approves, or recommends, to the
Board of Directors, in those instances where its approval is required, the
annual performance goals for and the compensation and major items related to
the compensation of the Chief Executive Officer, officers and other key
employees. The Committee also ensures that the Company implements plans for
Chief Executive Officer succession and executive succession and administers
the Company's stock option plans. Members of the Compensation Committee are
Messrs. Mallardi (Chairman), Addy, Bridgewater, Lowther and Newman. The
Compensation Committee met five times in 1999.
The function of the Governance and Nominating Committee of the Board of
Directors is to consider and make recommendations to the Board concerning the
appropriate size and needs of the Board, including the annual nomination of
Directors and names of candidates to fill vacant Board positions. The
Committee reviews and makes recommendations concerning other policies related
to the Board and Directors, including compensation, committee composition,
structure and size, and retirement and resignation policies. The Committee is
responsible for the periodic review of the Company's Corporate Governance
Principles and other corporate governance issues and trends. Members of the
Governance and Nominating Committee are Messrs. Bridgewater (Chairman), Addy,
Lowther, Mallardi and Newman. The Governance and Nominating Committee met two
times in 1999. The Governance and Nominating Committee will consider
nominations for Director made by shareholders. Such nominations should be
directed to the Corporate Secretary.
During 1999, the Board of Directors met seven times. No Director attended
fewer than 75 percent of the aggregate of the total number of Board meetings
and the meetings of a committee on which he served.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information as to compensation paid by the
Company and its subsidiaries for services rendered during the periods shown
for the chief executive officer and each of the executive officers whose
salary and bonus exceeded $100,000 in 1999 and who were serving at the end of
the year (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------- -----------------------------------
Awards Payouts
----------------------- ------------------------
Securities
Restricted Under-
Stock lying Long-Term All Other
Name and Principal Awards Options/ Incentive Compensation
Position Year Salary($) Bonus($) ($)(1) SARs (#) Payouts ($) ($)(2)
------------------ ---- --------- -------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. M. Hamilton.......... 1999 500,000 -- 315,650(3) 300,000 -- 2,400
Chairman and President, 1998 500,000 -- 307,520 230,000 -- 2,400
Chief Executive Officer 1997 484,848 300,000 -- 333,334 -- 901
D. R. Henderson......... 1999 262,000 -- 110,763(4) 130,000 -- 2,400
Executive Vice 1998 260,000 125,000 -- 50,000 -- 2,400
President 1997 242,424 150,000 -- 146,667 -- 2,000
and Chief Operating
Officer
R. S. Langdon........... 1999 262,000 -- -- 130,000 -- 2,367
Executive Vice 1998 260,000 125,000 -- 50,000 -- 1,766
President 1997 188,461(5) 150,000 -- 133,334 -- --
Finance and
Administration
and Chief Financial
Officer
J. K. Hartrick.......... 1999 200,000 -- 92,100(4) 100,000 -- 2,400
Senior Vice President, 1998 200,000 85,000 -- 33,333 -- 2,200
General 1997 42,436 25,000 -- 91,667 -- --
Counsel and Corporate
Secretary
</TABLE>
- ---------
(1) At December 31, 1999, the number and value (based upon the closing price
on that date) of the aggregate restricted stock holdings for named
executives were as follows: T. M Hamilton, 96,667 shares; $284,008; D. R.
Henderson, 66,034 shares, $194,008; R. S. Langdon, 8,334 shares, $24,485;
and J. K. Hartrick, 39,034 shares, $114,682. The Company does not
currently pay dividends on Common Stock; however, it would pay dividends
on restricted stock shares at the same rate paid on Common Stock.
(2) Matching contributions to the Company's Employee Stock Purchase and
Savings Plan.
(3) Mr. Hamilton received a restricted stock award of 50,000 shares on
February 22, 1999. These shares are restricted for three years and subject
to continued employment; the restrictions will be removed as to one-third
of the shares at the end of each successive year. The restricted stock is
valued for purposes of the Summary Compensation Table at the closing price
of the Company's shares on the date of grant.
(4) In December 1999, the Company offered to exchange for restricted stock all
employees' stock options with an exercise price greater than $20. The
amount of the exchange was computed using a Black-Scholes option pricing
model (using a risk-free interest rate of 6.1%, based on the average ten-
year Treasury strip rates for October and November 1999 and stock price
volatility of 49% based on the historical volatility using daily stock
prices over the prior ten years). Mr. Henderson accepted the offer on
December 27, 1999, and received 37,700 shares of restricted stock for
stock options for 146,667 shares. Ms. Hartrick accepted the offer on
December 29, 1999 and received 30,700 shares of restricted stock for stock
options for 91,667 shares. Mr. Langdon accepted the offer in January 2000
and his exchange is not reported in this table. A similar offer was made
to and accepted by Mr. Hamilton in January 2000 and is not reported in
this table. The restrictions on the restricted stock exchanged are lifted
as to one-third of the shares each year beginning December 7, 2001,
subject to continued employment.
(5) Excludes $103,219 paid as fees and expenses in 1997 for consulting
services to the Company which were rendered prior to Mr. Langdon's
employment by the Company.
10
<PAGE>
Option Grants Table
The table below shows, for each of the named executive officers, certain
information with respect to options granted in 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Percentage
Securities of Total Grant
Underlying Options/SARs Exercise Date
Options/SARs Granted to Price Per Present
Granted Employees in Share Expiration Value
Name (#) (1) Fiscal Year ($/Sh) (2) Date $(3)
---- ------------ ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
T. M. Hamilton....... 300,000 17.5 6.00 2/23/09 1,421,071
D. R. Henderson...... 130,000 7.6 6.00 2/23/09 615,797
R. S. Langdon........ 130,000 7.6 6.00 2/23/09 615,797
J. K. Hartrick....... 100,000 5.8 6.00 2/23/09 473,690
</TABLE>
- ---------
(1) Options become exercisable as to one-third of the grant each year after
the date of grant beginning one year after the date of grant.
(2) Fair market value on the date of grant.
(3) Represents the hypothetical present value of each option determined by
using the Black-Scholes Option Valuation Method based upon the terms of
the option grant and the Company's stock price as of the date of the
grant. The actual value, if any, an executive may realize will depend on
the excess of the stock price on the date the option is exercised, and
there is no assurance that the value ultimately realized will be at or
near the value estimated. The assumptions used to arrive at the values
shown are as follows: risk free interest rate of 5.2%, based on the ten-
year Treasury strip rate on the date of the grant and stock price
volatility of 68.7% based on the historical volatility using weekly stock
prices over the prior three years, no dividend yield.
11
<PAGE>
Aggregated Option Exercise Table
The table below shows, for each of the named executive officers, the
information specified with respect to exercised, exercisable and unexercisable
options under all existing stock option plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Value December 31, 1999 (#) December 31, 1999 ($)
Acquired On Realized ------------------------- -------------------------
Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. M Hamilton........... -- -- 10,000 853,334 -- --
D. R. Henderson......... -- -- 6,667 173,333 -- --
R. S. Langdon........... -- -- 6,667 306,667 -- --
J. K. Hartrick.......... -- -- 4,444 128,889 -- --
</TABLE>
Pension Plan Table
Employees of the Company participate in the Retirement Plan of EEX
Corporation (the "Plan") and a retirement income restoration plan (the
"Restoration Plan"). The table below illustrates the amount of annual benefit
payable on a normal retirement basis beginning at normal retirement age to a
person in specified average salary and years-of-service classifications under
the Plan and the Restoration Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
---------------------------------------
Remuneration(1) 15 20 25 30 35
- --------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
200,000................................. 48,781 65,041 81,301 97,562 113,822
275,000................................. 68,468 91,291 114,114 136,937 159,759
350,000................................. 88,156 117,541 146,926 176,312 205,697
425,000................................. 107,843 143,791 179,739 215,687 251,634
500,000................................. 127,531 170,041 212,551 255,062 297,572
575,000................................. 147,218 196,291 245,364 294,437 343,509
650,000................................. 166,906 222,541 278,176 333,812 389,447
725,000................................. 186,593 248,791 310,989 373,187 435,384
800,000................................. 206,281 275,041 343,801 412,562 481,322
</TABLE>
- ---------
(1) Highest average covered compensation over any consecutive five-year period
Covered compensation consists of base wages. The credited years of service
under the Plan, as of February 28, 2000 for Messrs. Hamilton, Henderson and
Langdon, Ms. Hartrick are 3.1, 3.1, 2.9,
12
<PAGE>
and 2.3 years, respectively, and the highest average covered compensation
during any consecutive five-year period for each of them is $500,000,
$257,784, $258,229 and $200,000, respectively.
Compensation of Directors
The compensation program for non-employee Directors, effective January 1,
1999, provides for an annual award to continuing Directors at the time of each
annual meeting of the following:
. Restricted stock with a value of $50,000, provided that a Director may
elect to take up to 40% of the $50,000 in cash. The restrictions on the
shares lapse five years after the award, or upon the Director's earlier
retirement, death, disability, failure to be reelected or a change in
control of the Company. On May 18, 1999, Messrs. Bridgewater, Lowther,
Mallardi and Newman were awarded 7,618 shares of restricted stock, and
Mr. Addy was awarded 4,571 shares of restricted stock and received
$20,000.
. A stock option valued at $50,000 under the Black-Scholes method. The
stock option vests six months, and expires ten years, after the date of
grant. On May 18, 1999, each of Messrs. Addy, Bridgewater, Lowther,
Mallardi and Newman were awarded a stock option of 17,182 shares with an
exercise price of $6.563.
. A performance-based stock option that will vest, all or in part, after
three years if the Company achieves certain performance goals during the
three-year period. If the threshold performance goal is not met, then
none of the option vests. On May 18, 1999, each of Messrs. Addy,
Bridgewater, Lowther, Mallardi and Newman were awarded a performance
stock option of 25,773 shares with an exercise price of $6.563.
Employment Contracts and Termination of Employment and Change in Control
Agreements
Messrs. Hamilton, Henderson and Langdon and Ms. Hartrick have entered into
employment contracts with the Company providing for the employment of: Mr.
Hamilton as Chairman and President, Chief Executive Officer; Mr. Henderson as
Executive Vice President and Chief Operating Officer; Mr. Langdon as Executive
Vice President, Finance and Administration, and Chief Financial Officer; and
Ms. Hartrick as Senior Vice President, General Counsel and Corporate
Secretary. Each of the contracts, as amended in February 1999, is
automatically extended for a two-year term on a daily continuing basis. The
contracts provided for a minimum annual salary of $500,000 for Mr. Hamilton,
$250,000 for Mr. Henderson, $250,000 for Mr. Langdon, and $200,000 for Ms.
Hartrick, plus an annual incentive bonus based upon performance goals set by
the Compensation Committee that are reasonably expected to yield a target
bonus. In 1999, the target bonuses for Messrs. Hamilton, Henderson and Langdon
and Ms. Hartrick were 85%, 80%, 80% and 75%, respectively, of their annual
base salaries. The contracts also contain provisions relating to the grant of
stock options and the award of restricted stock. Each of Messrs. Hamilton,
Henderson and Langdon and Ms. Hartrick have executed change in control
agreements ("CIC Agreements") with the Company that provide
13
<PAGE>
certain benefits in the event their employment is terminated subsequent to a
change in control of the Company (as defined in the CIC Agreements). The CIC
Agreements are for continuous three-year terms until terminated by the Company
upon specified notice and continue for three years following a change in
control of the Company. The CIC Agreements provide that if the officer is
terminated or if the officer elects to terminate employment under certain
circumstances, within three years following a change in control of the
Company, the officer shall be entitled to a lump-sum severance payment of
three times the sum of the officer's base salary and target bonus, a prorated
bonus in the year of termination, the value over exercise price of certain
unexercised stock options, a three-year continuation of employee benefits, the
equivalent of two years of service credit under the retirement program, and
reimbursement of certain legal fees, expenses, and any excise taxes. In the
event the same type of benefits or payments are payable under both the
employment contracts and the CIC Agreements, the officers will receive the
higher benefit or payment, but not duplicate benefits or payments.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for oversight and administration
of the Company's compensation policies and programs and specific salary,
incentive, stock option and long term incentive awards to the Chief Executive
Officer and the named executive officers. The Committee is composed entirely
of outside directors. From time to time, the Committee receives advice on
competitive pay levels and practices from independent, recognized consultants.
It also reviews survey information on compensation collected by the Company
and obtained from industry groups of which the Company is a member.
Compensation Policies and Objectives. The Board Compensation Committee
develops and oversees compensation programs it believes are needed to enhance
shareholder value. The Committee has been guided by two primary objectives:
. Offer incentive for business success by putting a significant portion of
each executive's total pay at risk, based on Company performance.
. Attract and keep outstanding executives by providing compensation
opportunities consistent with or superior to those in the Company's
industry for similar positions.
The Company's compensation programs for executives are composed of the
following elements:
Base Salary Program. The Committee believes it is important to attract and
retain high-caliber executives and employees, and in order to do this, the
Company should attempt to pay fully competitive base salaries. The Committee
has determined that base salaries, as a matter of policy, should be targeted
at the 50th percentile of competitive levels for similarly qualified
executives and employees in independent oil and gas companies. Additional pay,
if any, should be through bonuses based on annual operating performance or
through stock programs, reflecting total shareholder return.
14
<PAGE>
Salary levels for the executive officers are based upon assessment of each
individual's performance, experience and value in attaining corporate
financial and strategic objectives. The Committee compares the Company's
annual cash payments (both salary and annual incentive) for named executive
officers to recognized annual surveys of practice in its industry.
Since Mr. Hamilton's employment as Chief Executive Officer in January 1997,
he has been paid a base salary of $500,000 per year. He received no salary
increase during 1999.
Incentive Plan Compensation. It is the practice of the Committee to
encourage positive annual operating results by annual incentive opportunities
that put a significant portion of total pay at risk. The portion of
compensation at risk is intentionally greater at higher executive levels in
the Company. The incentive plan implemented for 1999 included financial
targets and milestones related to exploration and development efficiency.
Based upon the Committee's review of the Company's performance with respect to
these goals, the Committee determined that, overall, the threshold level was
not met.
The Committee reviewed Mr. Hamilton's performance during 1999 and noted the
successful acquisition of the Tesoro assets at the end of the year. The
Committee further noted that, although oil and gas prices rebounded during
1999, the Company was not able to take full advantage of these higher prices,
in part because of lack of success in exploration efforts. Accordingly, no
bonuses for 1999 were paid to Mr. Hamilton and the named executives.
During 1999, the Committee worked with management to develop a goal-based
incentive plan for 2000, which was approved in December 1999. The plan is
based upon measurable financial targets and milestones, and will be used as
the basis for incentive compensation decisions in 2000.
Stock Incentive Plans. The Committee believes that stock-based compensation
programs are the single most important compensation vehicle available for
encouraging senior executives to maximize total shareholder return, and that
stock compensation can be an important part of the pay package for lower-level
employees as well. In February 1999, the Committee awarded Mr. Hamilton 50,000
shares of restricted stock as a part of its incentive compensation
determinations. The restrictions on the stock are lifted as to one-third of
the shares each year beginning one year after the date of grant. Also in
February, the Committee awarded Mr. Hamilton a stock option for 300,000 shares
as a part of annual grants to all employees. Mr. Henderson, Mr. Langdon and
Ms. Hartrick received stock option grants of 130,000 shares, 130,000 shares,
and 100,000 shares, respectively. The exercise price of these options equaled
the fair market value of the shares on the date the options were granted. One-
third of these options will vest each year beginning one year after the date
of grant.
In December 1999, the Committee reviewed the stock options outstanding to
all employees of the Company. In order to provide greater and more immediate
incentives to maximize total shareholder return and to provide retention of
key employees, the Committee decided to offer each
15
<PAGE>
holder an exchange of his or her stock options with an exercise price greater
than $20 for restricted stock. The amount of the exchange was computed using a
Black Scholes option pricing model. Mr. Hamilton's exchange offer was made and
effective January 2000 and resulted in his receiving 123,300 shares of
restricted stock in exchange for stock options for 463,334 shares. Similarly,
Mr. Henderson received 37,700 shares of restricted stock for stock options for
146,667 shares in December 1999, Mr. Langdon received 40,600 shares of
restricted stock for stock options for 133,334 shares in January 2000, and Ms.
Hartrick received 30,700 shares of restricted stock for stock options for
91,667 shares in December 1999. The restrictions on the stock are lifted as to
one-third of the shares each year beginning one year after the date of grant,
subject to continued employment.
Peer Group Selection. In May 1998, the Committee designated a peer group of
companies. These companies (taking into account mergers and acquisitions that
occurred within the group) continue to reflect those who most closely resemble
the Company in assets and focus, and/or are among those that analysts
routinely compare to the Company: Anadarko Petroleum Corp., Apache Corp.,
Burlington Resources, Inc., EOG Resources, Inc., Forest Oil Corp., Newfield
Exploration Co., Noble Affiliates, Inc., Ocean Energy Inc., Pioneer Natural
Resources Co., POGO Producing Co., Santa Fe Snyder Corp., Union Pacific
Resources Group, Inc., and Vastar Resources, Inc.
Section 162(m). No formal policy has been adopted by the Company with
respect to qualifying compensation paid to its executive officers for
deductibility under Section 162(m) of the Internal Revenue Code. The Committee
intends to consider tax deductibility as one relevant factor in making future
awards to executives but may decide that other factors outweigh the
presentation of deductibility.
Dated: March 20, 2000 Compensation Committee
M.P. Mallardi, Chairman
F. S. Addy
B.A. Bridgewater, Jr.
F.M. Lowther
H. H. Newman
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Mr. Addy, a member of the Compensation Committee served as interim Chairman
and Chief Executive Officer from September 10, 1996 to January 13, 1997, and
as President from October 30, 1996 to January 13, 1997.
Mr. Newman became a Director in January 1999 and a member of the
Compensation Committee in February 1999. In January 1999, the Company issued
1.5 million shares of Series B 8% Cumulative Perpetual Preferred Stock (the
"Preferred Stock"), and warrants to acquire 21 million
16
<PAGE>
shares of Common Stock Warburg Pincus Equity Partners, L.P. and certain
affiliated partnerships ("WPEP") in exchange for $150 million. The sole
general partner of WPEP is Warburg, Pincus & Co., a New York general
partnership ("WP"). E.M. Warburg, Pincus & Co., LLC, a New York limited
liability company ("EMW LLC"), manages WPEP. The members of the EMW LLC are
substantially the same as the partners of WP. Mr. Newman is a Managing
Director and member of EMW LLC and a general partner of WP. In addition, these
shares of Preferred Stock, together with warrants owned by WPEP, (or a pro
rata portion thereof), upon the occurrence of a Change in Control, may, at the
option of WPEP, be exchanged for 27,907,050 shares of Common Stock (subject to
pro rata reduction if only a portion of the Preferred Stock and warrants are
exchanged and subject to anti-dilution adjustments); provided that under
certain circumstances, the Company may elect to pay WPEP cash in lieu of
shares of Common Stock.
17
<PAGE>
Performance Graph
Set forth below is a line graph comparing the percentage change in the
cumulative total return to shareholders on the Company's Common Stock since it
first began trading against (i) the cumulative total return of the S&P 500
Composite Stock Index and (ii) the Company's peer group consisting of Anadarko
Petroleum Corp., Apache Corp., Burlington Resources, Inc., EOG Resources,
Forest Oil Corp., Newfield Exploration Co., Noble Affiliates, Inc., Ocean
Energy Inc., Pioneer Natural Resources Co., POGO Producing Co., Santa Fe Snyder
Corp., Union Pacific Resources Group, Inc., and Vastar Resources, Inc. The
graph assumes that the value of the investment in the Company's Common Stock,
the index and peer group was $100 at January 3, 1995, the date the Company's
stock first began trading, and that all dividends are reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*
AMONG EEX CORPORATION, THE S & P 500 INDEX
AND A PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------
1/3/95 12/95 12/96 12/97 12/98 12/99
------ ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
EEX CORPORATION 100.00 114.81 116.05 89.51 23.05 9.67
PEER GROUP 100.00 124.32 154.09 134.94 96.05 112.30
S & P 500 100.00 137.40 168.95 225.31 289.70 350.67
</TABLE>
18
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company and persons who own more than 10% of a registered
class of the equity securities of the Company to file reports of beneficial
ownership and changes in beneficial ownership with the SEC and the New York
Stock Exchange. Based solely on its review of the copies of such reports
received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Company believes that during
1999 its officers, directors and shareholders holding greater than 10% of the
Company's Common Stock complied with all applicable filing requirements.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On the recommendation of the Audit Committee, the Board of Directors has,
subject to ratification by the shareholders, appointed Ernst & Young LLP as
independent Certified Public Accountants of the Company for the year 2000.
Ernst & Young LLP has been the Company's independent auditors since September
1997. Neither the firm nor any of its members has any direct financial
interest or any material indirect financial interest in the Company or any of
its affiliates. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting and will be provided the opportunity to make a
statement and will be available to respond to appropriate questions.
Ratification of the appointment of Ernst & Young LLP as independent auditors
for the year 2000 requires the majority of the votes cast on this proposal.
The Board of Directors recommends that the shareholders vote "FOR" the
ratification of Ernst & Young LLP as independent auditors.
SOLICITATION OF PROXIES
This solicitation is being made by the Company. The cost of preparing,
assembling and mailing the Notice of Annual Meeting, Proxy Statement, and
Proxy, and the cost of further solicitation are to be borne by the Company.
Solicitations may further be made by directors, officers, and regular
employees of the Company, without additional compensation, use of the mails,
telephone, facsimile transmission, or personal interview. No additional
compensation will be paid for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock. The
Company has retained W. F. Doring & Co. at a cost of approximately $4,000 to
assist in the solicitation of proxies.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's Proxy Statement
relating to its 2000 Annual Meeting, the Company must receive a shareholder's
proposal no later than December 1, 2000. Such proposals should be addressed to
the Corporate Secretary.
19
<PAGE>
The Company's Bylaws provide that in addition to any other applicable
requirements, in order for a shareholder to properly bring business before an
annual meeting or nominate a person for election to the Board, the shareholder
must give timely written notice to the Corporate Secretary and provide certain
specified information. The Company anticipates that the 2001 Annual Meeting of
Shareholders will be held on May 8, 2001. To be timely, advance notice of any
shareholder nominations of directors and of any shareholder proposal must be
delivered to or mailed and received at the Company's principal executive
offices on or before March 19, 2001 but no earlier than February 22, 2001. If
a shareholder fails to provide timely notice of a proposal to be presented at
the 2001 Annual Meeting, the Company's management will have discretionary
authority with respect to proxies submitted to the 2001 Annual Meeting of
Shareholders on any such proposal. Details regarding the procedural
requirements for presenting a matter before a meeting of shareholders are
available upon written request to the Corporate Secretary.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the meeting and has no reason to believe any will be presented to the meeting.
If, however any other business should be properly presented at the meeting,
the proxies named in the enclosed form of proxy will vote the proxy in
accordance with their best judgment.
AVAILABILITY OF FORM 10-K
Shareholders may obtain without charge another copy of the Company's Annual
Report on Form 10-K (excluding certain of the exhibits thereto) for the fiscal
year ended December 31, 1999, as filed with the Securities and Exchange
Commission, by writing to the Corporate Secretary, EEX Corporation, 2500 City
West Blvd., Suite 1400, Houston, TX 77042.
By order of the Board of Directors
Janice K. Hartrick
Senior Vice President, General Counsel,
and Corporate Secretary
Houston, Texas
March 31, 2000
20
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
EEX CORPORATION
TO BE HELD ON MAY 9, 2000
The undersigned hereby appoints T. M Hamilton and J. K. Hartrick, or either
of them, as the lawful agents and Proxies of the undersigned (with all the
powers the undersigned would possess if personally present, including full power
of substitution), and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of EEX Corporation held of
record by the undersigned on March 13, 2000, at the Annual Meeting of
Shareholders of EEX Corporation to be held at 2500 CityWest Blvd., Houston,
Texas 77042 at 10:00 a.m. on May 9, 2000, or any adjournment or postponement
thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED "FOR" THE NOMINEES FOR
DIRECTOR IN NO. 1 AND "FOR" THE PROPOSAL SET FORTH IN NO. 2, BELOW.
The undersigned hereby revokes all previous proxies relating to the shares
of Common Stock covered hereby and confirms all that said Proxy may do by virtue
hereof.
EEX CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors--B. A. Bridgewater, Jr. and M. P. Mallardi
FOR WITHHOLD FOR
BOTH BOTH EXCEPT*
[_] [_] [_]
_______________________________
*Nominee Exception (print name)
2. Ratify the appointment of Ernst & Young as independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In his discretion, the Proxy is authorized to vote upon any matters
which may properly come before the Annual Meeting, or any adjournment
or postponement thereof.
Dated: _________________, 2000
__________________________________
__________________________________
Signature of Shareholder(s)
This proxy must be signed exactly as the name
appears hereon. Executors, administrators,
trustees, etc., should give full title as
such. If the signer is a corporation, please
sign full corporate name by duly authorized
officer.
