TENNECO AUTOMOTIVE INC, DEF 14A, 2000-04-03

TENNECO AUTOMOTIVE INC
DEF 14A, 2000-04-03
MOTOR VEHICLE PARTS & ACCESSORIES

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SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [x]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).

[x] Definitive proxy statement.

[ ] Definitive additional materials.

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.

TENNECO AUTOMOTIVE INC.
- --------------------------------------------------------------------------------
(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:

- --------------------------------------------------------------------------------

[ ] 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.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

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TENNECO AUTOMOTIVE INC.
500 NORTH FIELD DRIVE
LAKE FOREST, ILLINOIS 60045
(847) 482-5000 [TENNECO AUTOMOTIVE LOGO]<QR>

April 3, 2000

To the Stockholders of Tenneco Automotive Inc.:

The Annual Meeting of Stockholders of Tenneco Automotive Inc. will be held
on Tuesday, May 9, 2000, at 10:00 a.m., local time, at the Chicago Botanic
Garden, 1000 Lake Cook Road, Glencoe, Illinois. A Notice of the meeting, a
Proxy, and a Proxy Statement containing information about the matters to be
acted upon are enclosed.

Holders of common stock are entitled to vote at the Annual Meeting on the
basis of one vote for each share held.

A record of our activities for 1999 is contained in the Annual Report to
Stockholders. We urge each stockholder who cannot attend the Annual Meeting to
please assist us in preparing for the meeting by either completing, executing,
and returning your Proxy promptly, or by using our telephone or Internet voting
procedures.

Very truly yours,

/S/ MARK P. FRISSORA SIG
MARK P. FRISSORA

Chairman and Chief Executive
Officer

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TENNECO AUTOMOTIVE INC.
500 NORTH FIELD DRIVE
LAKE FOREST, ILLINOIS 60045
(847) 482-5000 [TENNECO AUTOMOTIVE LOGO]

NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000

The Annual Meeting of Stockholders of Tenneco Automotive Inc. will be held
at the Chicago Botanic Garden, 1000 Lake Cook Road, Glencoe, Illinois on
Tuesday, May 9, 2000, at 10:00 a.m., local time.

The purposes of the meeting are:

1. To elect two directors for a term to expire at the 2001 Annual Meeting
of Stockholders;

2. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as independent public accountants for the year 2000;

3. To consider and act upon a proposal to amend the Company's Restated
Certificate of Incorporation, as amended, to decrease the total number
of authorized shares of common stock from 350,000,000 shares to
135,000,000 shares; and

4. To consider and act upon such other matters as may be properly brought
before the meeting or any adjournment or postponement thereof.

The Board of Directors knows of no other matters at this time that may be
brought before the meeting. Holders of common stock of record at the close of
business on March 17, 2000 are entitled to vote at the meeting. A list of these
stockholders will be available for inspection for ten days preceding the meeting
at the Chicago Botanic Garden, and will also be available for inspection at the
meeting.

Each stockholder who does not expect to attend the meeting is urged to
either complete, date, and sign the enclosed Proxy card and return it to the
Company in the enclosed envelope, which requires no postage if mailed in the
United States, or utilize our telephone or Internet voting procedures.

By Order of the Board of Directors

KARL A. STEWART
Secretary

Lake Forest, Illinois

April 3, 2000

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TENNECO AUTOMOTIVE INC. [TENNECO AUTOMOTIVE LOGO]

500 NORTH FIELD DRIVE
LAKE FOREST, ILLINOIS 60045
(847) 482-5000

April 3, 2000

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Tenneco Automotive Inc. (the "Company") of
proxies (the "Proxies") to be voted at the Annual Meeting of Stockholders on May
9, 2000, or at any adjournment or postponement thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of the meeting. Holders of
common stock of record at the close of business on March 17, 2000 will be
entitled to vote at the Annual Meeting. Each share is entitled to one vote. At
March 17, 2000, there were 33,978,558 shares of common stock outstanding and
entitled to vote at the Annual Meeting. This Proxy Statement is first being
mailed to stockholders on or about April 3, 2000.

BACKGROUND

During 1999, Tenneco Inc. separated its automotive, packaging and
administrative services operations. This completed a series of transactions
begun in December 1996, when the company then known as Tenneco Inc. ("Old
Tenneco") separated its automotive and packaging operations from its energy and
shipbuilding businesses.

The final separation was accomplished in November 1999 through the spin-off
of Pactiv Corporation (the "Spin-off"), which at the time was known as Tenneco
Packaging Inc. and held Tenneco Inc.'s packaging and administrative services
businesses. Immediately following the Spin-off, Tenneco Inc. changed its name to
"Tenneco Automotive Inc." to reflect the fact that the continuing operations are
its automotive business. Because of the form of this transaction, the Company is
the continuing legal entity which from December 1996 until the Spin-off was
known as Tenneco Inc.

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ELECTION OF DIRECTORS
(ITEM 1)

GENERAL

The Board of Directors presently consists of eight members, divided into
three classes, serving staggered three-year terms. On October 25, 1999, the
Company's stockholders approved a proposal to eliminate the staggered board
structure and provide instead for the annual election of directors. Under this
proposal, the staggered board structure will be phased out over the next three
annual meetings of stockholders, beginning with this year's Annual Meeting.

The two nominees below are proposed to be elected at this Annual Meeting to
serve for terms to expire at the 2001 annual meeting of stockholders and until
their successors are chosen and have qualified. Six directors will continue to
serve as set forth below.

The persons named as proxy voters in the accompanying Proxy card, or their
substitutes, will vote your Proxy for all the nominees, each of whom has been
designated as such by the Board of Directors, unless otherwise indicated in your
Proxy. In the event that any nominee for director withdraws or for any reason is
not able to serve as a director, the Company will vote your Proxy for the
remainder of those nominated for director (except as otherwise indicated in your
Proxy) and for any replacement nominee designated by the
Compensation/Nominating/Governance Committee of the Board of Directors.

You may vote for or withhold your vote from the director nominees. Assuming
a quorum is present, the affirmative vote of the plurality of votes cast at the
Annual Meeting (in person or by proxy) will be required for the election of
directors.

Brief statements setting forth the age (at March 17, 2000), the principal
occupation, employment during the past five years, the year in which first
elected a director and other information concerning each nominee and the
continuing directors appear below.

As described above, the Company and Old Tenneco have engaged in a series of
restructuring transactions over the last several years. As a result of these
transactions, there is some continuity in the Boards of Directors of the Company
and Old Tenneco. Accordingly, for periods prior to December 1996, references
herein to service to "the Company" refer to service to Old Tenneco.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL OF THE NOMINEES
LISTED BELOW.

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NOMINEES FOR ELECTION

FOR ONE-YEAR TERMS EXPIRING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS

MARK ANDREWS -- Mr. Andrews has been Chairman of Andrews Associates, Inc.,
a government consulting firm, since February 1987. From 1963 to 1980, he served
in the U.S. House of Representatives, and from 1980 to 1986 he served in the
U.S. Senate. He is also a director of Union Storage Co. Mr. Andrews is 73 and
has been a director of the Company since 1987. He is also a director of Pactiv
Corporation. Mr. Andrews is a member of the Compensation/ Nominating/Governance
Committee.

DAVID B. PRICE, JR. -- Mr. Price has been an Executive Vice President of
the BF Goodrich Company and President and Chief Operating Officer of BF Goodrich
Performance Materials, a producer of chemical additives and specialty plastics
for use in consumer and industrial products, since July 1997. Prior to joining
BF Goodrich, Mr. Price held various executive positions over a 20-year span at
Monsanto Company, most recently serving as President of the Performance
Materials Division of Monsanto Company from 1995 to July 1997. From 1993 to
1995, he was Vice President and General Manager of commercial operations for the
Industrial Products Group and was also named to the management board of
Monsanto's Chemical Group. Mr. Price is 54 years old and was named a director of
the Company in November 1999 in connection with the Spin-off. Mr. Price is a
member of the Three-Year Independent Director Evaluation Committee and the
Compensation/Nominating/Governance Committee.

CONTINUING DIRECTORS
TERMS EXPIRING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS

M. KATHRYN EICKHOFF -- Ms. Eickhoff has been President of Eickhoff
Economics, Inc., a consulting firm, since 1987. From 1985 to 1987, she was
Associate Director for Economic Policy for the U.S. Office of Management and
Budget, and prior to 1985, was Executive Vice President and Treasurer of
Townsend Greenspan & Co., Inc., an economic consulting firm. She is also a
director of AT&T Corp., Pharmacia & Upjohn, Inc. and Fleet Bank, NA. Ms.
Eickhoff is 60 and has been a director of the Company since 1987. She also
served as a member of the Company's Board of Directors from 1982 until her
resignation to join the Office of Management and Budget in 1985. Ms. Eickhoff is
a member of the Audit Committee and Three-Year Independent Director Evaluation
Committee.

DANA G. MEAD -- In connection with the Spin-off, Mr. Mead retired as Chief
Executive Officer of Tenneco Inc. He also retired as Chairman of the Board of
Directors of the Company in March 2000. He served as an executive officer of
Tenneco Inc. from April 1992, when he joined as Chief Operating Officer, to
November 1999. Prior to joining Tenneco Inc., Mr. Mead served as an Executive
Vice President of International Paper Company, a manufacturer of paper, pulp,
and wood products, from 1988, and served as Senior Vice President of that
company from 1981. He

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is also a director of Packaging Corporation of America, Pactiv Corporation,
Textron Inc., Zurich Allied AG, Pfizer Inc. and Newport News Shipbuilding Inc.
Mr. Mead 64 years old and has been a director of the Company since 1992.

ROGER B. PORTER -- Mr. Porter is Director of the Center for Business and
Government at Harvard University and is the IBM Professor of Business and
Government. Mr. Porter has served on the faculty at Harvard University since
1977. Mr. Porter also held senior economic policy positions in the Ford, Reagan
and Bush White Houses, serving as special assistant to the President and
executive secretary of the Economic Policy Board from 1974 to 1977, as deputy
assistant to the President and director of the White House Office of Policy
Development from 1981 to 1985, and as assistant to the President for economic
and domestic policy from 1989 to 1993. He is also a director of RightCHOICE
Managed Care, Inc., National Life Insurance Company, Zions Bancorporation and
Pactiv Corporation. Mr. Porter is 53 and has been a director of the Company
since January 1998. Mr. Porter is the Chairman of the
Compensation/Nominating/Governance Committee and a member of the Three-Year
Independent Director Evaluation Committee.

TERMS EXPIRING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS

MARK P. FRISSORA, CHAIRMAN OF THE BOARD -- Mr. Frissora became the
Company's Chief Executive Officer in connection with the Spin-off and has been
serving as President of the automotive operations since April 1999. In March
2000, he was also named the Company's Chairman. From 1996 to April 1999, he held
various positions within the Company's automotive operations, including Senior
Vice President and General Manager of the worldwide original equipment business.
Mr. Frissora joined the Company in 1996 from AeroquipVickers Corporation, where
he served since 1991 as a Vice President. Previously, he spent 15 years with
both General Electric (10 years) and Philips Lighting Company in management
roles focusing on product development and marketing. He is a member of both The
Business Roundtable and the World Economic Forum's Automotive Board of
Governors. Mr. Frissora is 44 years old and became a director of the Company in
November 1999 in connection with the Spin-off.

SIR DAVID PLASTOW -- Sir David Plastow was Chairman of the Medical Research
Council, which promotes and supports research and postgraduate training in the
biomedical and other sciences, from 1990 until his retirement in 1998. He served
as Chairman of Inchcape plc, a multinational marketing and distribution company,
from June 1992 to December 1995, and Chairman and Chief Executive Officer of
Vickers plc, an engineering and manufacturing company headquartered in London,
from January 1987 to May 1992. He is also a director of FT Everard & Sons
Limited. Sir David Plastow is 67 years old and has been a director the Company
since May 1996. He previously served as a member of the Board of Directors of
the Company from 1985 until 1992. Sir David Plastow is a member of the
Compensation/Nominating/Governance Committee.

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PAUL T. STECKO -- Mr. Stecko became the Chief Executive Officer of
Packaging Corporation of America in connection with the April 1999 formation of
Pactiv Corporation's containerboard joint venture. From November 1998 to April
1999, Mr. Stecko served as President and Chief Operating Officer of Tenneco Inc.
From January 1997 to November 1998, Mr. Stecko served as Chief Operating Officer
of Tenneco Inc. From December 1993 through January 1997, Mr. Stecko served as
Chief Executive Officer of Tenneco Packaging Inc. Prior to joining Tenneco
Packaging Inc., Mr. Stecko spent 16 years with International Paper Company. Mr.
Stecko is 55 years old and has been a director of the Company since November
1998. He is also a director of State Farm Mutual Insurance Company and Pactiv
Corporation, and is the Chairman of the Board of Packaging Corporation of
America. Mr. Stecko is the Chairman of the Audit Committee and the Chairman of
the Three-Year Independent Director Evaluation Committee.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the Company currently comprises eight members,
seven of whom are not officers of the Company (the "Outside Directors") and one
of whom is an officer of the Company (the "Inside Director"). The Board of
Directors believes that the Company's ratio of Outside Directors to Inside
Directors represents a commitment to the independence of the Board and a focus
on matters of importance to its stockholders.

During 1999, the Board of Directors held 13 meetings. Each director
attended more than 75% of the aggregate of all meetings of the Board of
Directors and all meetings of the committees of the Board on which the director
served.

The Board of Directors has three standing committees. These committees have
the following described responsibilities and authority.

The Audit Committee, comprised solely of Outside Directors, has the
responsibility, among other things, to: (1) recommend the selection of the
Company's independent public accountants; (2) review and approve the scope of
the independent public accountants' audit activity and extent of non-audit
services; (3) review with management and such independent public accountants the
adequacy of the Company's basic accounting system and the effectiveness of the
Company's internal audit plan and activities; (4) review with management and the
independent public accountants the Company's certified financial statements and
exercise general oversight of the financial reporting process; and (5) review
with the Company litigation and other legal matters that may affect the
Company's financial condition and monitor compliance with business ethics and
other policies. The Audit Committee held four meetings in 1999.

Mr. Stecko, the Chairman of the Audit Committee, was employed by the
Company or one of its subsidiaries from 1993 to April 1999, when he resigned to
become Chief Executive Officer of Packaging Corporation of America. The Board of
Directors has determined that it is in the best interests of the Company that
Mr. Stecko continue to serve even though he was employed by the

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Company within the last three years. This determination was based on, among
other things, the Board's belief that Mr. Stecko's familiarity with the Company,
both before and after the Spin-off, is of unique value in assuring continuity in
the functioning of the Audit Committee.

The Compensation/Nominating/Governance Committee, comprised solely of
Outside Directors, has the responsibility, among other things, to: (1) establish
the salary rate of officers and employees of the Company and its subsidiaries;
(2) examine periodically the compensation structure of the Company; and (3)
supervise the welfare and pension plans and compensation plans of the Company.
It also has significant corporate governance responsibilities including, among
other things, to: (a) review and determine the desirable balance of experience,
qualifications and expertise among members of the Board; (b) review possible
candidates for membership on the Board and recommend a slate of nominees for
election as directors at each annual meeting of stockholders; (c) review the
function and composition of the other committees of the Board and recommend
membership on these committees; and (d) review the qualifications and recommend
candidates for election as officers of the Company. The
Compensation/Nominating/Governance Committee was formed in connection with the
Spin-off and is the successor to the Company's former Compensation and Benefits
Committee and Nominating and Management Development Committee. This committee
and its predecessors held eight meetings during 1999.

The Three-year Independent Director Evaluation Committee, comprised solely
of Outside Directors, has the responsibility, among other things, to review the
Company's stockholder rights plan at least every three years and, if it deems it
appropriate, recommend that the full Board modify or terminate that plan. The
Three-year Independent Director Evaluation Committee held no meetings in 1999.

In connection with the Spin-off, the Company eliminated its Executive
Committee. The Executive Committee held no meetings during 1999.

A stockholder of the Company may nominate persons for election to the Board
of Directors at an annual meeting if the stockholder submits such nomination,
together with certain related information required by the Company's By-laws, in
writing to the Secretary of the Company at the principal executive offices of
the Company not later than the close of business on the 90th day nor earlier
than the close of business on the 120th day prior to the first anniversary of
the preceding year's annual meeting. In the event, however, that the date of the
annual meeting is more than thirty days before or more than seventy days after
that anniversary date, the notice must be delivered not earlier than the close
of business on the 120th day prior to such annual meeting and not later than the
close of business on the later of the 90th day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of the
meeting is first made.

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COMPENSATION OF DIRECTORS

FEE STRUCTURE. For 1999, each Outside Director was paid an annual retainer
fee of $47,000 for service on the Board of Directors. In connection with the
Spin-off, the annual retainer was reduced to $35,000. In general, beginning with
the Spin-off, 100% of that fee is to be paid in the form of stock-settled common
stock equivalents (the "directors' stock equivalents"), as described below. A
director may elect, however, to have up to 40%, or $14,000, of the fee paid in
cash. Prior to the Spin-off, 40% of the fee was automatically paid in cash and
the remainder was automatically paid in directors' stock equivalents. The
Outside Directors also receive cash attendance fees and committee chair and
membership fees, and reimbursement of their expenses for attending meetings of
the Board of Directors and its committees. For 1999 prior to the Spin-off,
Outside Directors received $1,500 for each meeting of the Board of Directors
attended. This attendance fee was reduced to $1,000 in connection with the
Spin-off. Each Outside Director who serves as a Chairman of the Audit Committee
or the Compensation/Nominating/Governance Committee is paid a fee of $7,000 per
chairmanship. Outside Directors who serve as members of these committees are
paid $4,000 per committee membership. Members of the Three-year Independent
Director Evaluation Committee receive $1,000 plus expenses for each meeting of
that committee attended.

COMMON STOCK EQUIVALENTS/OPTIONS. As described above, all or a portion of
an Outside Director's retainer fee is paid in common stock equivalent units.
These directors' stock equivalents are payable in shares of common stock after
an Outside Director ceases to serve as a director. Final distribution of these
shares may be made either in a lump sum or in installments over a period of
years. The directors' stock equivalents are issued at 100% of the fair market
value on the date of the grant. For 1999, each Outside Director also received an
option to purchase up to 1,000 shares of common stock (before giving effect to
the Company's November 1999 one-for-five reverse stock split) as additional
incentive compensation. Beginning with the Spin-off, each Outside Director will
receive annual grants of an option to purchase up to 5,000 shares of common
stock and 1,000 performance share equivalent units as additional incentive
compensation in January of each year. Directors' options: (a) are granted with
per share exercise prices equal to 100% of the fair market value of a share of
common stock on the day the option is granted; (b) have terms of ten years; and
(c) will fully vest six months from the grant date. Once vested, the directors'
options will be exercisable at any time during the option term. The performance
share equivalent units are payable in shares of common stock at the end of three
years based on achievement of performance goals like those set for the
executives' performance unit awards. See "Tenneco Automotive Inc.
Compensation/Nominating/Governance Committee Report on Executive Compensation."

DEFERRED COMPENSATION PLAN. The Company has a voluntary deferred
compensation plan for Outside Directors. Under the plan, an Outside Director may
elect, prior to commencement of the next calendar year, to have some or all of
the cash portion, that is, up to 40%, or $14,000, of

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his or her retainer fee and some or all of his or her meeting fees credited to a
deferred compensation account. The plan provides these directors with various
investment options. The investment options include stock equivalent units of the
Company's common stock, which may be paid out in either cash or shares of common
stock.

RESTRICTED STOCK. In satisfaction of residual obligations under the
discontinued retirement plan for directors, Ms. Eickhoff and Mr. Andrews will
receive a yearly grant of $15,400 in value of restricted shares of the Company's
common stock as long as they continue to serve. The restricted shares may not be
sold, transferred, assigned, pledged or otherwise encumbered and are subject to
forfeiture if Ms. Eickhoff or Mr. Andrews ceases to serve on the Board prior to
the expiration of the restricted period. This restricted period ends upon his or
her normal retirement from the Board, unless he or she is disabled or dies, or
the Compensation/Nominating/Governance Committee of the Board, at its
discretion, determines otherwise. During the restricted period, Ms. Eickhoff and
Mr. Andrews will be entitled to vote the shares and receive dividends.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

ARRANGEMENTS WITH FORMER EXECUTIVES

As described above, the Company is the continuing legal entity that before
November 1999 was known as Tenneco Inc. In connection with the Spin-off, the
employment of the then-existing executive officers of Tenneco Inc. terminated
and a subsidiary of Tenneco Inc. became obligated, in certain instances, to make
severance payments and honor prior employment agreements entered into with these
Tenneco Inc. executives. This subsidiary became a subsidiary of Pactiv
Corporation upon the Spin-off. Related costs were included in the Spin-off
expenses.

In connection with the Spin-off, Mr. Mead resigned as Chief Executive
Officer of the Company, and he entered into a revised agreement. Under that
agreement: (1) Mr. Mead was paid an amount equivalent to three times the total
of his annual salary plus bonus (which amount was consistent with the treatment
of prior chief executive officers); (2) if certain performance goals were met,
he would be entitled to an adjusted target bonus for 1999 prorated through the
date of his separation; (3) his stock options were made exercisable, one half
were replaced by Pactiv Corporation options and one half are continuing as the
Company's options (the number and exercise price of such options were determined
under the generally applicable rules applied in connection with the Spin-off and
which maintain the economic equivalent of the outstanding options prior to the
Spin-off); (4) for purposes of Tenneco's supplemental executive retirement plan,
he will be treated as though he had remained employed until age 65 (resulting in
an increase in the lump-sum benefit to which he was entitled of $890,000); and
(5) Mr. Mead was granted options to purchase up to 50,000 shares of Pactiv
Corporation common stock and options to purchase up to 50,000 shares of the
Company's common stock at the time of the Spin-off.

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During 1999, Mr. Mead was indebted to an affiliate of Tenneco Inc. in
connection with a relocation loan. In September 1999, that obligation, which
totalled approximately $432,000, was canceled, consistent with the treatment of
relocation loans for other Tenneco Inc. executives in connection with the
Spin-off.

In 1998, Robert T. Blakely, an executive officer prior to the Spin-off,
entered into an agreement which provided that, in the event of termination
arising from the restructuring of the Company he would receive payment of an
amount equal to three times his then-current annual base salary, a pro rata
adjusted target bonus for the year in which the termination occurred, and the
vesting and distribution of his restricted stock and performance shares (which
would be deemed to have been earned at target). Additionally, Mr. Blakely's
stock options would be deemed exercisable and would remain so for the lesser of
five years or the remaining period of the option, and the Company would forgive
the obligations under relocation loans made to him. In connection with the
Spin-off, Mr. Blakely received severance in accordance with terms of this
agreement. His relocation loan obligation, which totalled approximately
$440,000, was canceled in September 1999.

In April 1999, the Company caused the containerboard assets of its
Paperboard Packaging business to be contributed to a new joint venture with
Madison Dearborn Partners, in exchange for cash and debt assumption totaling
approximately $2 billion, assumption of the containerboard business liabilities
and a 45% common equity interest in the joint venture. This joint venture
interest remained an asset of Pactiv Corporation upon the Spin-off. The joint
venture entity, Packaging Corporation of America ("PCA"), is headed by Mr.
Stecko. Upon closing of the transaction, Mr. Stecko resigned his position as
President and Chief Operating Officer of the Company, but he continues to serve
as a director of the Company. As previously reported by the Company, payments
related to his severance in connection with this transaction included: (i) a
modified lump sum benefit, approximately $1.2 million greater than his
then-current benefit, under the supplemental executive retirement plan; (ii)
treatment of his resignation as an event qualifying him for the payment of the
severance amount under his prior employment contract (which entitled him to
three times his base salary upon termination); (iii) a payment of $1.5 million;
and (iv) the vesting of performance shares and restricted stock and a pro-rated
bonus for 1999. Upon closing, Mr. Stecko became an executive of, and received a
compensation package from, PCA.

During 1999, two former executive officers before the Spin-off, John
Castellani and Karl A. Stewart, were indebted to the Company in connection with
relocation loans of approximately $400,000 each. In September 1999, these
obligations were canceled.

During 1999, Tenneco Inc. and its subsidiaries paid the law firm of Jenner
& Block, of which Theodore R. Tetzlaff, an executive officer before the
Spin-off, is a partner, approximately $20 million for legal services. These fees
related to work performed for the Company and all its subsidiaries, which before
the Spin-off included Pactiv Corporation and its subsidiaries. Pursuant to an
agreement with the Company, Mr. Tetzlaff agreed to devote whatever time was
necessary

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to attend to his duties as an executive officer and that he would not receive
from Jenner & Block any part of the fees paid by the Company to that firm during
his service to the Company.

ARRANGEMENTS WITH DIRECTORS AND CURRENT EXECUTIVES

During 1999, Mr. Frissora was indebted to the Company. This indebtedness
was incurred in connection with his relocation and all amounts outstanding are
secured by a subordinated mortgage note, without interest. Principal will only
be payable in full upon termination of his employment prior to 2003 except for a
termination without cause or following a change in control. The approximate
aggregate amount outstanding is $400,000.

During 1999, Mr. McCollum was indebted to an affiliate of Tenneco Inc. in
connection with a relocation loan. In July 1999, that obligation, which totalled
approximately $418,000, was canceled.

During 1999, the Company paid Eickhoff Economics, Inc., of which Ms.
Eickhoff is the sole owner, $25,000 for financial consulting services.

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OWNERSHIP OF COMMON STOCK

MANAGEMENT

The following table shows, as of March 1, 2000, the number of shares of the
Company's common stock beneficially owned by: (1) each director and nominee for
director; (2) each person who is named in the Summary Compensation Table, below;
and (3) all directors and executive officers as a group. The table also shows:
(a) common stock equivalents held by the directors and executive officers under
the Company's benefit plans; and (b) the total number of shares of common stock
and common stock equivalents held.

<TABLE>
<CAPTION>
SHARES OF COMMON TOTAL
COMMON STOCK STOCK SHARES AND
(1)(2)(3) EQUIVALENTS(4) EQUIVALENTS
------------ -------------- -----------
<S> <C> <C> <C>
DIRECTORS AND NOMINEES
- --------------------------------------

Mark Andrews.......................... 6,947 1,969 8,916
M. Kathryn Eickhoff................... 7,434 1,969 9,403
Mark P. Frissora...................... 112,695 225,000 337,696
Dana G. Mead.......................... 1,016,484 8,633 1,025,117
Sir David Plastow..................... 4,900 2,561 7,461
Roger B. Porter....................... 2,711 2,722 5,433
David B. Price, Jr.................... 10,000 2,305 12,305
Paul T. Stecko........................ 4,972 2,305 7,277

CURRENT EXECUTIVE OFFICERS
- --------------------------------------

Mark A. McCollum...................... 88,654 134,430 223,084
Richard P. Schneider.................. 62,894 104,067 166,961
David G. Gabriel...................... 40,232 104,349 144,581
Timothy E. Jackson.................... 29,366 104,067 133,375

FORMER EXECUTIVE OFFICER
- --------------------------------------

Robert T. Blakely..................... 17,852 -- 17,852
All executive officers and directors
as a group.......................... 1,478,482(5) 998,058 2,476,540(5)
</TABLE>

- ---------------
(1) Each director and executive officer has sole voting and investment power
over the shares beneficially owned (or has the right to acquire shares as
described in note (2) below) as set forth in this column, except for: (a)
restricted shares; and (b) shares that executive officers and directors have
the right to acquire pursuant to stock options.

(Notes continued on following page.)
11
<PAGE> 15

(2) Includes restricted shares. At March 1, 2000, Messrs. Frissora, McCollum,
Schneider, Gabriel, Jackson, Andrews and Ms. Eickhoff held 68,385, 29,308,
29,308, 19,538, 29,308, 1,800 and 1,800 restricted shares, respectively.
Also includes shares that are subject to options that are exercisable within
60 days of March 1, 2000 for Ms. Eickhoff and Messrs. Andrews, Frissora,
Mead, Plastow, Porter, McCollum, Schneider and Gabriel to purchase 3,764,
1,882, 39,315, 977,507, 3,764, 1,882, 58,273, 29,830 and 18,534 shares,
respectively.

(3) The individuals listed in the table own less than one percent of the
outstanding shares of the Company's common stock, respectively, except (1)
for Mr. Mead, who beneficially owns approximately 3.0%, and (2) for all
directors and executive officers as a group, who beneficially own
approximately 4.4%.

(4) Common stock equivalents are distributed either in cash or in shares of the
Company's common stock, depending on the terms of the grant, in each case
after the individual ceases to serve as a director or officer or after the
applicable performance period. Mr. Mead's stock equivalent units are
credited to his account under the Company's deferred compensation plan and
are, therefore, already vested.

(5) Includes 1,136,320 shares that are subject to options that are exercisable
within 60 days of March 1, 2000, by all executive officers and directors as
a group, and includes 247,832 restricted shares for all executive officers
and directors as a group.

12
<PAGE> 16

CERTAIN OTHER STOCKHOLDERS

The following table sets forth, as of March 1, 2000, certain information
regarding each person known by the Company to be the beneficial owner of more
than five percent of the Company's outstanding common stock (the only class of
voting securities outstanding).

<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON PERCENT OF COMMON
OF BENEFICIAL OWNER(1) STOCK OWNED(1) STOCK OUTSTANDING(1)
---------------------- ---------------- --------------------
<S> <C> <C>
Barrow, Hanley, Mewhinney & Strauss, Inc. ...... 3,302,834(2) 9.7%(2)
One McKinney Plaza
3232 McKinney Avenue
15th Floor
Dallas, Texas 75204-2429
Gabelli Asset Management Inc. .................. 2,405,220(3) 7.1%(3)
One Corporate Center
Rye, New York 10580-1435
Highfields Capital Management LP................ 2,744,298(4) 8.1%(4)
200 Clarendon Street
Boston, Massachusetts 02117
The Baupost Group, L.L.C. ...................... 2,304,510(5) 6.8%(5)
44 Brattle Street
5th Floor
Cambridge, Massachusetts 02138
</TABLE>

- ---------------
(1) This information is based on information contained in filings made with the
Securities and Exchange Commission (the "SEC") regarding the ownership of
the Company's common stock.

(2) Barrow, Hanley, Mewhinney & Strauss, Inc. ("Barrow Hanley") has indicated
that it has sole voting power over 326,274 shares, shared voting power over
2,976,560 shares, and sole dispositive power over 3,302,834 shares. Barrow
Hanley also advised the Company that it is a registered investment advisor
and these shares are held on behalf of various clients. Barrow Hanley has
advised that these shares include 2,717,760 shares (8.0%) held on behalf of
the Vanguard Windsor II mutual fund, over which the fund has sole voting
power and shared dispositive power.

(3) Gabelli Funds, LLC ("Gabelli Funds"), a wholly-owned subsidiary of Gabelli
Asset Management Inc. ("GAMI"), is the beneficial owner of 2.7% of the
common stock outstanding. Gabelli Funds has indicated that it has sole
voting power over 903,000 shares and sole dispositive power over 903,000
shares. Gabelli Funds has the same principal business

(Notes continued on following page.)
13
<PAGE> 17

address as GAMI. GAMCO Investors, Inc. ("GAMCO"), a wholly owned subsidiary of
GAMI, is the beneficial owner of 4.4% of the common stock outstanding. GAMCO has
indicated that it has sole voting power over 1,481,820 shares and sole
dispositive power over 1,482,220 shares. GAMCO has the same principal
business address as GAMI. Gemini Capital Management Ltd. ("Gemini") is the
beneficial owner of .1% of the common stock outstanding. Gemini has
indicated that it has sole voting power over 20,000 shares and sole
dispositive power over 20,000 shares. The address of Gemini's principal
office is as follows: c/o Appleby, Spurling & Kempe, Cedar House, Cedar
Avenue, Hamilton HM12, Bermuda. Mario J. Gabelli is the Chief Executive
Officer of GAMCO and the Chief Investment Officer of GAMCO and Gabelli
Funds. Marc Gabelli is the President and Chief Investment Officer of
Gemini. Gabelli Funds and GAMCO also advise that they are registered
investment advisors.

(4) Highfields Capital Management LP, Highfields GP LLC, Jonathon S. Jacobson
and Richard L. Grubman (collectively, the "Reporting Persons") have reported
that, with respect to common stock of the Company directly owned by
Highfields Capital I LP, Highfields Capital II LP and Highfields Capital
Ltd. (collectively, the "Funds"), each of the Reporting Persons has sole
voting and sole dispositive power over 2,744,298 shares. In addition,
Highfields Capital Ltd. indicated that it has sole dispositive and sole
voting power over 1,972,621 shares, or 5.8% of the outstanding common stock.
Neither Highfields Capital I LP or Highfields Capital II LP reported
ownership of more than 5% of the outstanding common stock. Highfield Capital
Ltd.'s principal business address is: c/o Goldman Sachs (Cayman) Trust,
Limited, Harbour Centre, North Church Street, P.O. Box 896, George Town,
Grand Cayman, Cayman Islands.

(5) The Baupost Group, L.L.C., along with SAK Corporation and Seth A. Klarman,
has indicated that it has sole voting and sole dispositive power over
2,304,510 shares.

14
<PAGE> 18

EXECUTIVE COMPENSATION

The following table shows the compensation paid by the Company, for the
periods indicated, to: (1) the Company's current Chief Executive Officer, who
became Chief Executive Officer upon the Spin-off of Pactiv Corporation; (2) each
of the Company's next four most highly compensated executive officers who are
continuing after the Spin-off, other than the Chief Executive Officer; and (3)
three former officers who qualified for inclusion herein (collectively, the
"Named Executives"). The table shows amounts paid to the Named Executives for
all services provided to the Company and its subsidiaries, which before the
Spin-off included Pactiv Corporation and its subsidiaries.

In connection with the Spin-off, substantial changes in the management of
the Company and its automotive operations occurred. Mark P. Frissora and David
G. Gabriel were promoted to become executive officers of the Company. In
addition, several others were added to the senior management team. Richard P.
Sloan, with over 18 years experience in the automotive industry, was named
Executive Vice President and Managing Director -- Europe in October 1999.
Timothy E. Jackson, with over 14 years automotive experience, was named Senior
Vice President and General Manager -- North American Original Equipment and
Worldwide Program Management in June 1999. In addition, Timothy R. Donvoan, who
had served as the Company's principal outside legal counsel for over three
years, joined the team in August 1999 as Senior Vice President and General
Counsel. The rules of the Securities and Exchange Commission require that
inclusion in the Summary Compensation Table be based on actual 1999 salary and
bonus. The Company expects that, had the newly hired executives been employed by
the Company for a full year, each would have been included in the Summary
Compensation Table below.

SUMMARY COMPENSATION TABLE

15
<PAGE> 19

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ -------------------------------------
AWARDS PAYOUTS
OTHER ------------------------ ----------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS SATION(2) AWARDS(3) OPTIONS(4) PAYOUTS(5) SATION(6)
--------------------------- ---- --------- ----- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David G. Gabriel............... 1999 $ 211,187 $ 72,000 $ 4,944 $ 167,254 75,000 $ 76,373 $ 7,008
Senior Vice President and
G.M. -- North American
Aftermarket
Timothy E. Jackson(8).......... 1999 $ 138,195 $ 120,000 $ 66,250 $ 250,876 90,000 -- $ 636
Senior Vice President and
G.M. -- North American OE and
Worldwide Program Mgt.
FORMER EXECUTIVE OFFICERS:
Dana G. Mead................... 1999 $ 901,400 $ 1,002,000 $291,297 $ -- -- $1,469,820 $6,104,100
Former Chairman and Chief
Executive Officer 1998 $1,029,617 $ 540,000 $362,191 $ 1,521,450 -- -- $ 39,959
1997 $1,012,638 --(9) $332,874 $950,078(10) 192,000 -- $ 39,251
Paul T. Stecko(11)............. 1999 $ 168,250 $ 139,726 $ 25,479 -- -- $1,899,784 $3,217,602
Former President and 1998 $ 592,063 $ 400,000 $365,501 $ 845,250 -- -- $ 10,869
Chief Operating Officer 1997 $ 531,767 $ 550,000 $ 90,539 $ 604,650 94,509 -- $ 8,708
Robert T. Blakely.............. 1999 $ 421,251 $ 450,000 $ 44,386 -- -- $ 547,580 $1,722,102
Former Executive Vice
President and Chief Financial 1998 $ 445,760 $ 220,000 $134,544 $ 507,150 -- -- $ 15,254
Officer 1997 $ 441,960 $480,000(10) $577,513 $199,957(10) 40,000 -- $ 14,693
</TABLE>

- ------------
(1) Includes base salary plus amounts paid in lieu of matching contributions to
the Company's 401(k) plans.

(2) Includes amounts attributable to: (a) the value of personal benefits
provided by the Company to Named Executives, which have an aggregate value
in excess of the lesser of $50,000 and 10% of the executive's salary and
bonus for the year, such as the personal use of Company-owned property and
relocation expenses; (b) reimbursement for taxes; and (c) amounts paid as
dividend equivalents on performance share equivalent units ("Dividend
Equivalents"). The amount of each personal benefit that exceeds 25% of the
estimated value of the total personal benefits reported for the Named
Executive, reimbursement for taxes, and amounts paid as Dividend
Equivalents to the Named Executives were as follows:

<TABLE>
<CAPTION>
NAME YEAR EXPLANATION
---- ---- -----------
<S> <C> <C>
Mr. Frissora............ 1999 $12,661 for reimbursement of taxes; $11,070 for
Dividend Equivalents; $33,333 perquisite allowance;
and $75,625 for relocation expenses.
Mr. McCollum............ 1999 $351,947 for reimbursement of taxes; and $9,900 for
Dividend Equivalents.
Mr. Schneider........... 1999 $174 for reimbursement of taxes; and $11,250 in
Dividend Equivalents.
</TABLE>

(Notes continued on following page)
16
<PAGE> 20

<TABLE>
<CAPTION>
NAME YEAR EXPLANATION
---- ---- -----------
<S> <C> <C>
Mr. Gabriel............. 1999 $174 for reimbursement of taxes; and $4,770 in
Dividend Equivalents.
Mr. Jackson............. 1999 $7,609 for reimbursement of taxes; and $47,808 for
relocation expenses.
Mr. Mead................ 1999 $72,508 for reimbursement of taxes; $91,800 in
Dividend Equivalents; $40,000 perquisite allowance;
and $86,989 in the use of Company-owned property.
1998 $49,000 for relocation expenses; $76,886 for
reimbursement of taxes; $80,400 in Dividend
Equivalents; and $92,150 in the use of Company-owned
property.
1997 $119,398 for relocation expenses; $52,965 for
reimbursement of taxes; $38,400 in Dividend
Equivalents; and $60,994 in the use of Company-owned
property.
Mr. Stecko.............. 1999 $20,400 in Dividend Equivalents; and $5,079 for
reimbursement of taxes.
1998 $144,456 for relocation expenses; $92,951 in
reimbursement for taxes; and $52,800 in Dividend
Equivalents.
1999 $40,000 perquisite allowance; $18,841 for financial
planning services; and $24,000 in Dividend
Equivalents.
Mr. Blakely............. 1999 $10,186 for reimbursement for taxes; and $34,200 in
Dividend Equivalents.
1998 $21,000 for relocation expenses; $40,000 perquisite
allowance; $5,140 in reimbursement of taxes; and
$30,000 in Dividend Equivalents.
1997 $280,665 for relocation expenses; $194,510 in
reimbursement of taxes; and $14,400 in Dividend
Equivalents.
</TABLE>

(3) Includes the dollar value of grants of restricted shares based on the price
of the Company's common stock on the date of grant. At December 31, 1999,
Messrs. Frissora, McCollum, Schneider, Gabriel and Jackson held 68,385,
29,308, 29,308, 19,538, and 29,308 restricted shares, respectively. Messrs.
Mead, Stecko and Blakely held no restricted shares. The value at December
31, 1999, based on a per share price of $9.31 on that date, of all
restricted shares held was $636,664 for Mr. Frissora, $272,857 for Mr.
McCollum, $272,857 for Mr. Schneider, $181,898 for Mr. Gabriel and $272,857
for Mr. Jackson. Dividends are paid on restricted stock. Upon the Spin-off,
restricted stock outstanding at the time was vested.

(4) Upon completion of the Spin-off, employee stock options granted before the
Spin-off which remained outstanding were adjusted to give effect to (1) the
Spin-off, and (2) the one-for-five reverse stock split of the Company's
common stock effected in connection with the Spin-off. The adjustment for
the Spin-off amended the number of shares subject to these options, as well
as their exercise prices, so

(Notes continued on following page)
17
<PAGE> 21

that the options immediately after the Spin-off had equivalent economic
terms to the options immediately before the Spin-off. Amounts presented
give effect to this adjustment.

(5) Reflects the vesting and payment of all outstanding performance share
equivalent units immediately prior to the Spin-off.

(6) Includes amounts attributable during 1999 to benefit plans as follows:

(a) The dollar values paid by the Company for insurance premiums under the
group life insurance plan (including dependent life) for Messrs.
Frissora, McCollum, Schneider, Gabriel, Jackson, Mead, Stecko and
Blakely, were $2,818, $2,103, $6,546, $2,008, $636, $23,852, $1,352 and
$3,735, respectively.

(b) The amounts contributed pursuant to the Company's 401(k) plans for the
accounts of Messrs. Frissora, McCollum, Schneider, Gabriel, Jackson,
Mead, Stecko and Blakely were $6,400, $0, $6,250, $5,000, $0, $7,500,
$6,250 and $0, respectively.

(c) Includes for Mr. McCollum forgiveness of a relocation loan of $410,818.
Prior to the Spin-off, Mr. Mead entered into a severance agreement with
a company that was, at the time, a subsidiary of the Company (but
became a subsidiary of Pactiv Corporation upon the Spin-off). Under
this agreement, Mr. Mead has been paid $5,640,000 in severance
payments. Before the Spin-off he also received $432,748 for forgiveness
of a relocation loan. In connection with the formation of the Company's
former containerboard joint venture (which remained an asset of Pactiv
Corporation in connection with the Spin-off), Mr. Stecko left
employment with the Company to head the joint venture and received
$3,214,500 in severance-related payments from the Company (including a
payment of $1.5 million and a termination payment of three times his
base salary). Amounts for Mr. Blakely include $1,273,800 in
severance-related payments and $438,601 for forgiveness of a relocation
loan. See "Election of Directors -- Transactions with Management and
Others."

(7) Compensation information for the Company's CEO and other current executive
officers is presented for 1999, the only year in which these individuals
served as executive officers of the Company.

(8) Mr. Jackson joined the Company in June 1999.

(9) No cash bonus was paid to Mr. Mead in 1997. Mr. Mead elected to receive, in
lieu of a cash bonus, options to purchase the Company's common stock.

(10) Includes a special one-time award of restricted shares to Messrs. Mead and
Blakely, and a special award of $200,000 to Mr. Blakely, to reflect their
contributions to Old Tenneco's 1996 reorganization.

(11) Mr. Stecko's employment terminated in April 1999 in connection with the
formation of the Company's former containerboard joint venture.

At the time of the Spin-off, salary and bonus targets for the Company's
executive officers were increased to reflect their promotions and the assumption
of new duties in connection with the Spin-off and the establishment of the
Company as a stand-alone public company. See "-- Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."

18
<PAGE> 22

OPTIONS GRANTED IN 1999

The following table shows the number of options to purchase the Company's
common stock granted during 1999 to the persons named in the Summary
Compensation Table above.

<TABLE>
<CAPTION>
PERCENT OF
SHARES OF TOTAL OPTIONS
COMMON STOCK GRANTED
UNDERLYING TO THE COMPANY'S
OPTIONS EMPLOYEES EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(#) IN 1999(%) PRICE($)(1) DATE PRESENT VALUE(2)
---- ------------ ---------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS:
Mr. Frissora(3)...... 375,000 18.6% $8.56 11/05/09 $768,750
Mr. McCollum(3)...... 120,000 6.0% $8.56 11/05/09 $246,000
Mr. Schneider(3)..... 90,000 4.5% $8.56 11/05/09 $184,500
Mr. Gabriel(3)....... 75,000 3.7% $8.56 11/05/09 $153,750
Mr. Jackson(3)....... 90,000 4.5% $8.56 11/05/09 $184,500
FORMER EXECUTIVE OFFICERS:
Mr. Mead............. 50,000 2.5% $8.56 11/05/09 $102,500
Mr. Stecko........... -- -- -- -- --
Mr. Blakely.......... -- -- -- -- --
</TABLE>

- ---------------
(1) All options were granted with exercise prices equal to 100% of the fair
market value of a share of the Company's common stock on the date of grant.
All options, except for Mr. Mead's, vest one-third on each of the first,
second and third anniversaries of the grant date. Mr. Mead's options were
vested upon grant. The options include a reload feature, whereby upon
exercise the option holder receives a new option if the exercise price is
delivered in shares of common stock. The new option would cover the number
of shares so delivered and have an exercise price equal to 100% of the fair
market value of the common stock on the new grant date.

(2) The Black-Scholes valuation was performed using the following assumptions:
26.8% volatility, 5.97% risk free interest rate, 2.46% expected dividend
rate and five-year option life.

(3) Reflects grants made in connection with the Spin-off, which are intended to
represent three-year awards. The Company made these three-year awards in
recognition of the importance of equity incentives to retention and
recruiting in light of the potential risks and uncertainties surrounding the
Company's transition to a stand-alone public company following the Spin-off.

1999 YEAR-END OPTION VALUES

The following table shows the number of options to purchase the Company's
common stock, and the value of unexercised in-the-money options, held at
December 31, 1999 by the persons

19
<PAGE> 23

named in the Summary Compensation Table above. No options to purchase the
Company's common stock were exercised in 1999.

<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
HELD AT HELD AT
DECEMBER 31, 1999(1) DECEMBER 31, 1999(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS:
Mr. Frissora....................... 17,355 496,540 -- $281,250
Mr. McCollum....................... 58,273 197,367 -- $ 90,000
Mr. Schneider...................... 37,073 175,776 -- $ 67,500
Mr. Gabriel........................ 18,535 111,392 -- $ 56,250
Mr. Jackson........................ -- 90,000 -- $ 67,500
FORMER EXECUTIVE OFFICERS:
Mr. Mead........................... 977,516 -- $37,500 --
Mr. Stecko......................... -- -- -- --
Mr. Blakely........................ -- -- -- --
</TABLE>

- ---------------
(1) Gives effect to the adjustments of outstanding options in connection with
the Spin-off and the one-for-five reverse stock split in November 1999. See
Note (4) to the Summary Compensation Table above.

20
<PAGE> 24

LONG-TERM INCENTIVE PLANS
AWARDS IN 1999

The following table shows information concerning performance-based awards
made during 1999 to the persons named in the Summary Compensation Table above.

<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OR UNTIL MATURATION ---------------------------------------
NAME OTHER RIGHTS OR PAYOUT(3) THRESHOLD(4) TARGET(4) MAXIMUM(4)
---- ------------- ---------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS:
Mr. Frissora......... 150,000(1) 1 year 25% 100% 150%
75,000(2) 3 years 25% 100% 150%
Mr. McCollum......... 113,430(1) 3 years 25% 100% 150%
21,000(2) 3 years 25% 100% 150%
Mr. Schneider........ 87,567(1) 3 years 25% 100% 150%
16,500(2) 3 years 25% 100% 150%
Mr. Gabriel.......... 89,349(1) 3 years 25% 100% 150%
15,000(2) 3 years 25% 100% 150%
Mr. Jackson.......... 87,567(1) 3 years 25% 100% 150%
16,500(2) 3 years 25% 100% 150%
FORMER EXECUTIVE OFFICERS:
Mr. Mead............. -- -- -- -- --
Mr. Stecko........... -- -- -- -- --
Mr. Blakely.......... -- -- -- -- --
</TABLE>

- ---------------

(1) Represents awards of stock equivalent units made in connection with the
Spin-off which, except in the case of Mr. Frissora, were intended to
represent three-year awards. Stock equivalent units generally vest at the
following rates, based on the achievement of annual performance goals: 39%
first year, 30.5% second year and 30.5% third year. Stock equivalent units
are payable yearly in cash in an amount equal to the number of units earned
times the value per share of the Company's common stock at the time of
payment (as determined in accordance with the terms of the grant). The
future payouts for 2000, 2001 and 2002 are based on Economic Value Added
(EVA(R), a registered trademark of Stern Stewart & Co.) improvement against
the prior year. EVA is generally defined as operating profit minus the
annual cost of capital. Mr. Frissora's stock equivalent units vest at the
end of one year, based on the EVA criteria described above. The number of
stock equivalent units listed in this column represents the target number of
units that may be earned under the award.

(2) Represents awards of performance units made in connection with the Spin-off
which were intended to represent three-year awards. The performance units
vest at the rate of one-third of the award each year for three years, based
on the achievement of annual performance goals described below. They are
payable at the end of three years in shares of the Company's common stock in
an amount equal to

(Notes continued on following page.)
21
<PAGE> 25

the number of performance units earned. The future payouts are based on EVA
improvement during the three-year period ended December 31, 2002. The number
of performance units listed in this column represents the target number of
units that may be earned under the award.

(3) The Company made these three-year awards in recognition of the importance of
equity incentives to retention and recruiting in light of the potential
risks and uncertainties surrounding the Company's transition to a
stand-alone public company following the Spin-off

(4) Represents the percentage of the units reflected in the first column of this
table that will be earned based on the achievement of the performance goals
at the threshold, target and maximum levels. The final performance units
earned will be based on the higher of performance units earned on an
individual year basis or performance units earned on an accumulated
three-year basis.

22
<PAGE> 26

PENSION PLAN TABLE

The following table shows the aggregate estimated total annual benefits
payable upon normal retirement pursuant to the Tenneco Retirement Plan, the
Tenneco Inc. Supplemental Executive Retirement Plan and the Tenneco Automotive
Retirement Plan for Salaried Employees to persons in specified remuneration and
years of credited participation classifications. In connection with the
Spin-off, Pactiv Corporation became the sponsor of the Tenneco Retirement Plan.
The Company adopted a salaried defined benefit pension plan patterned after the
Tenneco Retirement Plan. The plan counts service prior to the Spin-off for all
purposes, including benefit accrual, but there will be an offset for benefits
accrued under the Tenneco Retirement Plan. Therefore, as to the Company's
continuing employees, the benefits described in the table will be provided by a
combination of payments from the Tenneco Retirement Plan and the new plan. The
Company also adopted plans similar to the Tenneco Inc. supplemental pension
plan. The Company also adopted a key executive pension plan covering executive
officers, which will provide benefits, commencing at age 55, of 4% of
compensation (salary and bonus) per year of service up to a maximum of 50%,
reduced by payments under all other company sponsored qualified and nonqualified
defined benefit pension plans.

<TABLE>
<CAPTION>
YEARS OF CREDITED PARTICIPATION
ANNUAL -------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------ - -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 250,000 $19,642 $ 39,285 $ 58,928 $ 78,571 $ 98,214 $117,857 $137,500
300,000 23,571 47,142 70,714 94,285 117,857 141,428 165,000
350,000 27,500 55,000 82,500 110,000 137,500 165,000 192,500
400,000 31,428 62,857 94,285 125,714 157,142 188,571 220,000
450,000 35,357 70,714 106,071 141,428 176,785 212,142 247,500
500,000 39,285 78,571 117,857 157,142 196,428 235,714 275,000
550,000 43,214 86,428 129,642 172,857 216,071 259,285 302,500
600,000 47,142 94,285 141,428 188,571 235,714 282,857 330,000
650,000 51,071 102,142 153,214 204,285 255,357 306,428 357,500
700,000 55,000 110,000 165,000 220,000 275,000 330,000 385,000
750,000 58,928 117,857 176,785 235,714 294,642 353,571 412,500
800,000 62,857 125,714 188,571 251,428 314,285 377,142 440,000
850,000 66,785 133,571 200,357 267,142 333,928 400,714 467,500
900,000 70,714 141,428 212,142 282,857 353,571 424,285 495,000
950,000 74,642 149,285 223,928 298,571 373,214 447,857 522,500
1,000,000 78,571 157,142 235,714 314,285 392,857 471,428 550,000
</TABLE>

- ---------------
(1) The benefits shown above are computed as a straight life annuity and are
based on years of credited participation and the employee's average
compensation, which is comprised of

(Notes continued on following page.)
23
<PAGE> 27

salary and bonus. These benefits are not subject to any deduction for Social
Security or other offset amounts. The years of credited participation for
Messrs. Frissora, McCollum, Schneider, Gabriel and Jackson are 3, 4, 4, 4,
and 1 respectively. See the Summary Compensation Table above for salary and
bonus information for these individuals.

(2) If Mr. Frissora completes 10 years of service in the period commencing
January 1, 1999, he will be entitled to benefits commencing at age 55 of at
least 40% of his average salary plus bonus determined over a three-year
period.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

The Company maintains a key executive change-in-control severance benefit
plan. The purpose of the plan is to enable the Company to continue to attract,
retain and motivate highly qualified employees by eliminating, to the maximum
practicable extent, any concern on the part of such employees that their job
security or benefit entitlements will be jeopardized by a "change-in-control" of
the Company, as that term is defined in the plan. The plan is designed to
achieve this purpose through the provision of severance benefits for key
employees and officers whose positions are terminated following a
change-in-control as provided in the plan. Under the plan, a severed executive
would receive a cash payment equal to three times (1) his or her base salary
plus (2) the higher of (a) his or her average bonuses for the prior three years
(or such shorter period as the executive had been employed by the Company) and
(b) his or her targeted annual bonus in effect immediately prior to the change
in control. The Company expects that Messrs. Frissora, McCollum, Schneider,
Gabriel and Jackson would have become entitled to receive payments from the
Company in the amount of $3,390,000, $1,470,000, $1,470,000, $945,000 and
$1,170,000, respectively, had their positions been terminated on December 31,
1999 following a change-in-control, based on their salaries/target bonuses of
$580,000/550,000, $315,000/175,000, $315,000/175,000, $235,000/80,000 and
$250,000/140,000, respectively, at that time. In addition, restricted shares
held in the name of those individuals under restricted stock plans would have
automatically reverted to the Company, and the Company would have been obliged
to pay those individuals the fair market value of those restricted shares. Their
performance units and stock equivalent units would also have been fully vested
and paid and their stock options would have been fully vested.

Mr. Frissora has entered into a letter agreement, dated as of January 11,
2000, with the Company which sets forth certain terms and conditions of his
employment with the Company. Beginning with the calendar year 2000, the
agreement guarantees Mr. Frissora a minimum annual base salary of $640,000 and a
minimum annual target bonus of $590,000 (subject to the fulfillment of
performance goals). The letter agreement provides that, under the Company's
change-in-control severance benefit plan, Mr. Frissora's cash payment in
connection with a change-in-control termination will equal three times the total
of his then current base salary plus

24
<PAGE> 28

his highest annual target bonus over the prior three years. The letter agreement
also provides that, other than in connection with a change-in-control, if Mr.
Frissora's employment is terminated other than for death, disability or
nonperformance of duties, he will be paid two times the total of his current
salary and bonus for the immediately preceding year, all outstanding stock based
awards would be vested, subject to Board approval, and his stock options would
remain exercisable for at least 90 days. The Company has agreed to provide Mr.
Schneider severance benefits in circumstances not involving a change-in-control
similar to Mr. Frissora's, except he would be paid one and one half times the
total of his current salary plus bonus for the immediately preceding year.

25
<PAGE> 29

The report of the Compensation/Nominating/Governance Committee and the
performance graphs that appear immediately below are not deemed to be soliciting
material or to be filed with the Securities and Exchange Commission under the
Securities Act of 1933 or the Securities Exchange Act of 1934 or incorporated by
reference in any document so filed.

TENNECO AUTOMOTIVE INC. COMPENSATION/NOMINATING/GOVERNANCE COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

The executive compensation philosophy, policies, plans, and programs of the
Company are under the supervision of the Compensation/Nominating/Governance
Committee (the "Committee"), which is composed of the directors named below,
none of whom is an officer or employee of the Company. Before the Spin-off, the
Committee's functions were performed by the Compensation and Benefits Committee,
on which two of the members of the current Committee served. The Committee has
furnished the following report on executive compensation:

BACKGROUND

As described above, during 1999 Tenneco Inc. completed the separation of
its automotive, packaging and administrative services businesses. This was
accomplished through the Spin-off of Pactiv Corporation, which at the time of
the Spin-off was named Tenneco Packaging Inc. and held the packaging and
administrative services operations. Immediately following the Spin-off, Tenneco
Inc. changed its name to Tenneco Automotive Inc. to reflect the fact that its
continuing operations are the automotive business. Because of the form of this
transaction, the Company is the continuing legal entity which formerly was known
as Tenneco Inc.

As a result of the Spin-off, substantial changes in the management of the
Company occurred. The senior management of the Company's automotive operations
became the executive officers of the Company and the previous executive officers
resigned. Following the Spin-off, the Company's Board of Directors consisted of
six continuing directors and two new directors. The remaining four directors of
Tenneco Inc. resigned. In addition, the committees of the Board of Directors
were restructured and two members were appointed to the Committee to replace the
directors who left office and were members of the former Compensation and
Benefits Committee.

The Committee, which was established upon completion of the Spin-off, has
written this report to stockholders regarding the compensation of the Chief
Executive Officer ("CEO") and the other executives named in the Summary
Compensation Table (collectively with the CEO, the "Named Executives"). These
individuals were compensated by Tenneco Inc. prior to the Spin-off based on
their responsibilities and performance. In connection with the Spin-off, the
Committee was charged with implementing a comprehensive executive compensation
program to aid in the transition of the Company to an independent, publicly
owned corporation. The Committee, working directly with nationally recognized,
independent compensation consultants, reviewed and, in certain circumstances,
amended the pre-existing plans in an effort to develop compensation appropriate
for the Company following the Spin-off.

26
<PAGE> 30

COMPENSATION PHILOSOPHY

The basic philosophy underlying the Company's executive compensation
policies, plans, and programs is that executive and stockholder financial
interests should be aligned as closely as possible, and the compensation package
should be based on delivering pay in line with performance.

Accordingly, the executive compensation program for the Company's CEO and
the other Named Executives, as well as other executives of the Company, has been
structured to:

-- Reinforce a results-oriented management culture with executive pay that
varies according to overall corporate and individual performance against
aggressive goals.

-- Focus on annual and long-term business results that lead to improvement
in stockholder value.

-- De-emphasize fixed compensation and place greater emphasis on variable,
performance-based and long-term compensation.

-- Provide incentives, in the form of substantial long-term reward
potential, for high-performing senior executives to remain employees of
the Company.

-- Align the interests of the Company's executives and stockholders through
equity-based compensation awards.

Based on these objectives, the executive compensation program has been
designed to promote appropriate levels of compensation derived from several
sources: salaries; annual cash incentive awards; stock ownership opportunities;
and other benefits typically offered to executives by major corporations.

The Company's policy is to provide total compensation to its executives
based on performance that is competitive and at market levels, for comparable
companies, when financial and qualitative targets are met. In determining
competitive compensation for each of the components of executive compensation
described below, the Committee engages nationally recognized, independent
compensation consultants who report directly to the Committee. In connection
with the Spin-off and its analysis of the Company's compensation policies as a
stand-alone automotive parts supplier, the Committee also commissioned and
reviewed a supplemental compensation survey prepared by its independent
consultants which focused on participants in the automotive parts industry.
Salary levels are structured within a range of reputable survey data for
comparable companies without regard to the performance of the companies
surveyed. The Company's compensation plans provide that as an executive's level
of responsibility increases, (i) a greater portion of his/her potential total
compensation is based on performance (both individual and corporate), and a
lesser portion is comprised of salary, causing greater potential variability in
the individual's total compensation from year-to-year, and (ii) the mix of
compensation for that executive shifts to a greater portion being derived from
compensation plans that result in stock ownership.

In designing and administering the components of the executive compensation
program, the Committee strives to balance short- and long-term incentive
objectives and to employ prudent

27
<PAGE> 31

judgment when establishing performance criteria, evaluating performance, and
determining actual incentive payments.

Total executive compensation has two major components: (1) annual cash
compensation comprised primarily of salary and bonus; and (2) long-term
incentives comprised of some combination of stock options, performance-based
shares and share equivalents and restricted stock. The following is a
description of each of the components of the executive compensation program,
along with a discussion of the decisions and action taken by the Committee with
regard to 1999 compensation. There also follows a discussion regarding CEO
compensation.

ANNUAL CASH COMPENSATION PROGRAM

An executive's annual cash compensation consists of a base salary plus
amounts paid in lieu of Company matching contributions to the Company's 401(k)
plans (when Internal Revenue Service maximums are reached) and bonuses under the
Company's Executive Incentive Compensation Plan. Each year, the Committee
reviews with the CEO and the senior human resources executive of the Company an
annual salary plan for the Company's executives and other key management
personnel (excluding the CEO), following which the Committee approves that plan
with changes that the Committee deems appropriate. The salary plan that is
developed is based in part on competitive market data and on assessments of past
and anticipated future performance. The Committee employs competitive market
data for directional and guideline purposes in combination with corporate,
divisional, and individual performance results. The Committee also reviews (with
the assistance of the senior human resources executive and nationally
recognized, independent compensation consultants engaged directly by the
Committee) and sets the salary of the CEO based on similar information and
criteria and the Committee's assessment of his past performance with the Company
and its expectations as to his future contribution in leading the Company.

Annual performance goals are established under the Executive Incentive
Compensation Plan at the beginning of each year for purposes of determining
incentive awards for that year. The performance goals are generally developed by
senior management and reviewed and approved by the Committee, with such changes
as the Committee determines appropriate. At the conclusion of each year, the
Committee approves incentive award payments to executives based on the degree of
achievement of the goals established at the beginning of that year and on
judgments of individual performance. Using EBITDA (earnings before interest,
income taxes, depreciation and amortization and minority interest), cash flow
and EVA(R)(1) objectives, as a starting point, each strategic business unit
receives incentive compensation funds based on judgmental considerations
including the degree of difficulty in meeting targets, contribution to overall
corporate performance, environmental and safety performance, quality
initiatives, equal employment opportunities performance, and technology
leadership. The Committee does not place a greater value on any particular one
of these considerations but considers performance against such goals as part of
the overall information considered by the Committee. The

- ---------------
(1) EVA(R) is after-tax operating profit minus the annual cost of capital.
EVA(R) is a registered trademark of Stern Stewart & Co.
28
<PAGE> 32

Committee makes individual awards based upon its evaluation of the
individual's contribution to the overall performance results of his/her
strategic business unit.

The 1999 Executive Incentive Compensation Plan payouts for employees of the
Company's continuing automotive operations were on average paid at 80% of
target. This reflects the Committee's assessment of the Company's automotive
operating performance during 1999, as well as the efforts of its management team
in transitioning the Company to a stand-alone public company.

In connection with the Spin-off, the Committee reviewed and, in certain
circumstances, adjusted the base salary and bonus targets for the individuals
who became executives in connection with the Spin-off. As part of this process,
the Committee analyzed competitive market data prepared by independent
compensation consultants regarding other participants in the automotive
industry. In general, the Committee set the total base salaries and bonus
targets for these new executives at approximately the 50th percentile when
compared to total base salaries and bonus targets paid by peer companies in the
automotive industry to their executives.

LONG-TERM INCENTIVES

The Company's long-term incentive plan (the Stock Ownership Plan) is
designed to align a significant portion of executive compensation with
stockholder interests. This plan permits the granting of a variety of long-term
awards including stock options, restricted stock, stock equivalent units and
performance units. Long-term awards are based on an analysis of competitive
levels of similar awards and an assessment of individual performance. As an
individual's level of responsibility increases, a greater portion of variable
performance-related compensation will be in the form of long-term awards.

In connection with the Spin-off, the Committee reviewed the long-term
incentives given to executives of the ongoing automotive operations in light of
the foregoing principles and the independent compensation survey described
above. The Committee designed a long-term compensation program for the Company's
continuing executives that is comprised of (1) stock options, (2) awards of
restricted stock which vest over three years, (3) cash-settled stock equivalent
units which are payable annually based on the achievement of EVA targets and (4)
stock-settled performance units which are payable at the end of three years
based on the achievement of EVA targets. The Committee granted long-term awards
to these executives that were designed to place the Company's executives in the
75th percentile range when compared to the value of similar awards granted by
peer companies to their executives. The Committee's awards of options, stock
equivalent units and performance units to the senior management team were
generally intended to represent three-year awards, in recognition of the
importance of equity incentives to retention and recruiting in light of the
potential risks and uncertainties surrounding the Company's transition to a
stand-alone public company following the Spin-off.

CEO COMPENSATION

In connection with the Spin-off, the Committee analyzed Mr. Frissora's
compensation in light of his assumption of duties as the CEO of a newly
independent public company. In determining

29
<PAGE> 33

the overall level of Mr. Frissora's compensation and each component thereof, the
Committee took into consideration information provided by an independent
compensation consultant, as described below. Based on this analysis, Mr.
Frissora's base salary was increased from $400,000 to $580,000 and his
annualized bonus target was revised to $550,000 in connection with the Spin-
off. The Committee approved a 1999 annual incentive award of $325,000 for Mr.
Frissora based on his performance as CEO, as well as his performance as
president of the Company's automotive operating division during most of 1999 and
his role in transitioning the Company into a stand-alone public company. Mr.
Frissora's base salary and bonus target are moderately below the 50(th)
percentile of base salaries and bonuses paid to chief executive officers of the
automotive industry participants surveyed. In recognition of Mr. Frissora's new
duties and the role he will be expected to play in the Company's success
following the Spin-off, in connection with the Spin-off the Committee awarded
Mr. Frissora (1) options to purchase 375,000 shares of common stock, (2) 68,385
shares of restricted stock, (3) 75,000 performance units payable in stock at the
end of three years, based on the achievement of EVA targets, and (4) 150,000
stock equivalent units payable in cash at the end of one year, based on the
achievement of EVA targets. The option and performance unit awards were intended
to represent three-year grants, for the reasons described above.

In 1999, the Company's former CEO, Dana Mead, received a base salary at the
annual rate of $980,000 (of which $857,500 was paid before his resignation in
connection with the Spin-off). This base salary had not been increased since
January 1998 and was below the 50(th) percentile of base salary paid to chief
executive officers at companies surveyed by the Committee. The Committee
approved an annual incentive award of $1,002,000 to Mr. Mead for 1999,
reflecting Mr. Mead's contribution to the separation of the Company's automotive
and former packaging and administrative services operations during 1999,
including the November 1999 Spin-off and the sale of the containerboard
operations in April 1999.

TAX LIMITATIONS ON THE DEDUCTIBILITY OF EXECUTIVE COMPENSATION

The Internal Revenue Code of 1986, as amended, imposes a $1 million limit
on the amount that a publicly traded corporation may deduct for compensation
paid to the CEO or a Named Executive who is employed on the last day of the
year. "Performance based compensation" is excluded from this $1 million
limitation.

The Stock Ownership Plan incorporates the applicable requirements for
"performance based compensation" with respect to certain types of awards.

Compensation / Nominating / Governance Committee

Roger B. Porter -- Chairman
Mark Andrews
David B. Price, Jr.
Sir David Plastow

30
<PAGE> 34

PERFORMANCE GRAPHS

Two performance graphs are presented below to provide cumulative total
stockholder return for (i) Tenneco Automotive Inc. after the Spin-off of Pactiv
Corporation, reflecting continuing operations, and (ii) for Tenneco Inc. for the
period beginning December 31, 1994 through the date of the Spin-off. The
Spin-off of Pactiv Corporation changed the Company in terms of revenue size and
market capitalization, and also represented the final step in the Company's
transition from a diversified holding company to a product- and market-focused
company in the automotive parts industry. The performance graphs assume an
investment of $100 in each of the Company's common stock, the Standard & Poor's
500 Stock Index and the respective peer groups identified and described below at
the beginning of the respective periods. The performance graphs are not intended
to be indicative of future stock performance.

The first graph compares the cumulative total stockholder return on the
Company's common stock from November 5, 1999 (the first trading day after the
Spin-off) through December 31, 1999 with the Standard & Poor's 500 Stock Index
and a peer group of companies chosen by the Company (the "New Peer Group"). The
companies comprising the New Peer Group represent other participants in the
automotive industry.

The second graph compares the cumulative total stockholder return on the
common stock of Tenneco Inc. (including, for periods prior to December 1996, Old
Tenneco) from December 31, 1994 through November 4, 1999 (the date of the
Spin-off) with the Standard & Poor's 500 Stock Index and an industry peer group
that includes representative companies in the automotive and packaging
industries (the "Old Peer Group"). The second performance graph is shown for
historical purposes only and will not be included in the Company's future proxy
statements.

31
<PAGE> 35

TENNECO AUTOMOTIVE INC.
COMPARISON OF CUMULATIVE TOTAL RETURN FROM
NOVEMBER 5, 1999 THROUGH DECEMBER 31, 1999

[PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
5-Nov-99 31-Dec-99
<S> <C> <C>
Tenneco Automotive Inc. $ 100 $ 115
S&P 500(R) $ 100 $ 107
New Peer Group $ 100 $ 102
</TABLE>

- ------------
NOTES:

1. Cumulative total stockholder return is based on share price appreciation plus
the reinvestment of dividends. Cumulative total stockholder return for the
New Peer Group is based on the market capitalization weighted cumulative
total stockholder return of the companies comprising the New Peer Group.

2. The New Peer Group is comprised of the following companies: Arvin Industries,
Inc., Borg Warner Inc., Cummins Engine Company, Inc., Dana Corporation,
Delphi Automotive Systems Corporation, Federal-Mogul Corporation, Lear
Corporation, Magna International Inc., Meritor Automotive, Inc., Simpson
Industries, Inc., and Tower Automotive, Inc.

32
<PAGE> 36

TENNECO INC.
COMPARISON OF CUMULATIVE TOTAL RETURN FROM
DECEMBER 31, 1994 THROUGH NOVEMBER 4, 1999

PERFORMANCE GRAPH

31-Dec-94 31-Dec-95 31-Dec-96 31-Dec-97 31-Dec-98 4-Nov-99
<S> <C> <C> <C> <C> <C> <C>
Tenneco Inc. $100 $121 $133 $119 $106 $ 52
S&P 500(R) $100 $138 $169 $226 $290 $351
Old Peer Group $100 $114 $140 $162 $174 $180
</TABLE>

- ------------
NOTES:

1. Cumulative total stockholder return is based on share price appreciation plus
the reinvestment of dividends (also assuming for Tenneco Inc. the
reinvestment of the value of the Newport News Shipbuilding Inc. and El Paso
Natural Gas Company shares, received as part of Old Tenneco's 1996
reorganization, into shares of Tenneco Inc.'s common stock). The Old Peer
Group is based on market capitalization weighted cumulative total stockholder
return of the companies comprising the Automotive Parts Portfolio and the
Packaging/Forest & Paper Products Portfolio, respectively. Each portfolio is
then weighted to reflect Tenneco Inc.'s revenues within such industry for
each year. Such portfolios are reweighted on a quarterly basis for corporate
actions such as divestitures, acquisitions, mergers and bankruptcies.

2. Automotive Parts Portfolio: Arvin Industries, Inc., Cooper Industries, Inc.,
Dana Corporation, Honeywell Inc. (the successor by name change to Allied
Signal Inc.), Magna International Inc., and TRW, Inc. Packaging/Forest &
Paper Products Portfolio: AEP Industries Inc., Bemis Company, Inc., First
Brands Corporation (through the date of its acquisition by Clorox), Great
Pacific Enterprises Inc., GeorgiaPacific Corporation, International Paper
Company, Fort James Corp., Sonoco Products Company, Smurfit-Stone Container
Corp., The Carlisle Companies Inc., and TempleInland Inc.
33
<PAGE> 37

RATIFY APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2)

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

Financial statements of the Company and its consolidated subsidiaries will
be included in the Company's Annual Report furnished to all stockholders. Upon
recommendation of the Audit Committee of the Board of Directors, the Board of
Directors has appointed Arthur Andersen LLP as independent public accountants
for the Company to examine its consolidated financial statements for the year
ending December 31, 2000, and has determined that it would be desirable to
request that the stockholders ratify the appointment. You may vote for, vote
against or abstain from voting with respect to this proposal. Assuming the
presence of a quorum, the affirmative vote of a majority of the shares, present
in person or by proxy, at the Annual Meeting and entitled to vote is required to
ratify the appointment. If the stockholders should not ratify the appointment,
the Audit Committee and the Board would reconsider the appointment. Arthur
Andersen LLP also acted as the Company's principal accountants for the fiscal
year ended December 31, 1999. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they desire to do so and are also expected to be available
to respond to appropriate questions.

AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO PROVIDE FOR A DECREASE IN THE
AUTHORIZED SHARES OF COMMON STOCK
(ITEM 3)

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

THE PROPOSED AMENDMENT

The Board of Directors has declared advisable and approved, and recommends
to stockholders that they consider and approve, an amendment to the Company's
Restated Certificate of Incorporation, as amended, to decrease the authorized
shares of common stock from 350,000,000 shares to 135,000,000 shares.

If the amendment is approved, the FOURTH Article of the Company's Restated
Certificate of Incorporation, as amended, would be amended by deleting Paragraph
A in its entirety and inserting the following in lieu thereof:

FOURTH: A. The total number of shares of all classes of stock
which the corporation shall be authorized to issue is
185,000,000 shares, divided into 135,000,000 shares of common
stock, par value $.01 per share (herein called "Common Stock"),
and 50,000,000 shares of preferred stock, par value $.01 per
share (herein called "Preferred Stock").
34
<PAGE> 38

You may vote for, vote against or abstain from voting with respect to this
proposal. The affirmative vote of the majority of the outstanding shares of
common stock as of the record date for the Annual Meeting is required to approve
the proposed amendment.

BACKGROUND AND REASONS FOR PROPOSED AMENDMENT

In connection with the Spin-off, the Company recommended, and the
stockholders approved, a one-for-five reverse stock split of the Company's
common stock. This reverse split was effected on November 5, 1999 and reduced
the number of issued shares of common stock from approximately 174,864,667 to
approximately 34,972,933. The number of shares which the Company was authorized
to issue was not correspondingly reduced at that time and remained 350,000,000
shares of common stock. While the Company currently does not have plans to issue
any shares of common stock other than under existing options and benefit plans,
the Board believes that an adequate reserve of authorized and unissued common
stock preserves important flexibility for possible issuances in connection with
equity incentive plans, equity financings or acquisition transactions. The Board
believes, however, that the Company's current number of authorized shares of
common stock may be excessive in light of the Company's anticipated needs. The
Board also recognizes that an excessive reserve may be viewed as having a
chilling effect on hostile takeover bids and aiding in the possible improper
entrenchment of management by enabling the Board to dilute stockholder
ownership, make a hostile takeover bid more costly or place stock with parties
who would support management.

The Board therefore believes that the proposal to reduce the amount of
authorized common stock to 135,000,000 shares from 350,000,000 shares balances
the foregoing considerations.

EFFECTS OF THE PROPOSED AMENDMENT

The principal effect of the proposed amendment would be to reduce the
number of authorized but unissued shares of common stock which the Company may
issue in the future. As of March 17, 2000, the Company had 316,021,442 shares of
common stock available for future issuance (in addition to 1,294,773 shares of
common stock held in treasury available for future sale). If the proposed
amendment becomes effective, the Company will have approximately 101,021,442
shares of common stock available for future issuance (and will continue to have
approximately 1,294,773 shares of treasury stock), based on issued share amounts
as of March 17, 2000.

35
<PAGE> 39

OTHER MATTERS

The Board of Directors is not aware of any other matters that may properly
come before the Annual Meeting. However, should any such matters come before the
Annual Meeting, it is the intention of the persons named in the enclosed form of
Proxy card to vote all Proxies (unless otherwise directed by stockholders) in
accordance with their judgment on such matters.

SOLICITATION OF PROXIES AND VOTING

Stockholders may specify their choices by marking the appropriate boxes on
the enclosed Proxy card. Alternatively, in lieu of returning signed Proxy cards,
stockholders can submit a Proxy over the Internet or by calling a specially
designated telephone number which appears on the Proxy cards. These Internet and
telephone voting procedures are designed to authenticate stockholders'
identities, allow stockholders to provide their voting instructions and confirm
the proper recording of those instructions. Specific instructions for
stockholders who wish to use the Internet or telephone voting procedures are set
forth on the enclosed Proxy card.

All properly completed, unrevoked Proxies, which are received prior to the
close of voting at the Annual Meeting, will be voted in accordance with the
specifications made. If a properly executed, unrevoked written Proxy card does
not specifically direct the voting of shares covered, the Proxy will be voted
(i) FOR the election of all nominees for election as director described in this
Proxy Statement, (ii) FOR the ratification of the appointment of Arthur Andersen
LLP, (iii) FOR the proposal to amend the Company's Restated Certificate of
Incorporation as described in this Proxy Statement, and (iv) in accordance with
the judgment of the persons named in the Proxy as to such other matters as may
properly come before the Annual Meeting.

A Proxy may be revoked at any time prior to the voting at the Annual
Meeting by submitting a later-dated proxy (including a later-dated Proxy via the
Internet or telephone), giving timely written notice of such revocation to the
Secretary of the Company or by attending the Annual Meeting and voting in
person.

The presence at the Annual Meeting, in person or by proxy, of holders of a
majority of the issued and outstanding shares of common stock as of the record
date is considered a quorum for the transaction of business. If you submit a
properly completed Proxy or if you appear at the Annual Meeting to vote in
person, your shares of common stock will be considered part of the quorum.
Directions to withhold authority to vote for any director, abstentions, and
broker non-votes (described below) will be counted to determine if a quorum for
the transaction of business is present. Once a quorum is present, voting on
specific proposals may proceed.

The cost of solicitation of Proxies will be borne by the Company.
Solicitation will be made by mail, and may be made by directors, officers, and
employees, personally or by telephone, telecopy, or telegram. Proxy cards and
material also will be distributed to beneficial owners of

36
<PAGE> 40

stock through brokers, custodians, nominees, and other like parties, and the
Company expects to reimburse such parties for their charges and expenses.
Georgeson & Co. Inc., New York, New York, has been retained to assist the
Company in the solicitation of proxies at a fee estimated not to exceed $25,000.

EFFECT OF ABSTENTIONS AND BROKER NON-VOTES

Directions to withhold authority, abstentions and "broker non-votes" (which
occur when a nominee holding shares for a beneficial owner does not vote on a
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) will be counted in determining the presence or absence of a quorum for
the transaction of business at the Annual Meeting.

Assuming the presence of a quorum, the affirmative vote of (1) a plurality
of the votes cast at the Annual Meeting (in person or by proxy) is required for
the election of directors, (2) holders of a majority of the common stock present
at the Annual Meeting (in person or by proxy) and entitled to vote is required
to ratify Arthur Andersen LLP as the Company's independent public accountants
and (3) the holders of a majority of the common stock outstanding on the record
date for the Annual Meeting is required to approve the amendment to the
Company's Restated Certificate of Incorporation.

Because the election of directors is determined on the basis of a plurality
of the votes cast, abstentions and broker non-votes have no effect on the
election of directors. Because the vote standard for the approval of Arthur
Andersen LLP is a majority of shares present and entitled to vote, abstentions
have the effect of a vote against and broker non-votes would have no effect on
the proposal. Because the vote standard for the approval of the amendment to the
Company's Restated Certificate of Incorporation is a majority of outstanding
shares, abstentions and broker non-votes have the effect of votes against the
proposal.

SUBMISSION OF STOCKHOLDER PROPOSALS

STOCKHOLDER PROPOSALS -- INCLUSION IN COMPANY PROXY STATEMENT

For a stockholder proposal to be considered by the Company for inclusion in
the Company's proxy statement and form of proxy relating to the annual meeting
of stockholders to be held in 2001, the proposal must be received by the Company
by December 3, 2000.

OTHER STOCKHOLDERS PROPOSALS -- DISCRETIONARY VOTING AUTHORITY AND BY-LAW
REQUIREMENTS

With respect to stockholder proposals not included in the Company's proxy
statement and form of proxy, the Company may utilize discretionary authority
conferred by proxy in voting on
37
<PAGE> 41

any such proposals if, among other situations, the stockholder does not give
timely notice of the matter to the Company by the date determined under the
Company's By-laws for the submission of business by stockholders. This notice
requirement and deadline are independent of the notice requirement and deadline
described above for a shareholder proposal to be considered for inclusion in the
Company's proxy statement. The Company's By-laws state that, to be timely,
notice and certain related information must be received at the principal
executive offices not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day prior to the first
anniversary of the preceding year's annual meeting. However, in the event that
the date of the annual meeting is more than thirty days before or more than
seventy days after the anniversary date, the notice must be delivered not
earlier than the close of business on the 120th day prior to such annual meeting
and not later than the close of business on the later of the 90th day prior to
such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Therefore, to be timely
under the Company's By-laws, a proposal not included by or at the direction of
the Board must be received not earlier than January 9, 2001, nor later than
February 8, 2001.

KARL A. STEWART
Secretary

------------------------

THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE DIRECTED TO
TIMOTHY R. DONOVAN, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, 500 NORTH FIELD
DRIVE, LAKE FOREST, ILLINOIS 60045.

38
<PAGE> 42

NOTICE OF ANNUAL
MEETING AND
PROXY STATEMENT
-------------------------------------

ANNUAL MEETING
OF STOCKHOLDERS
MAY 9, 2000

TENNECO
AUTOMOTIVE INC.
500 NORTH FIELD DRIVE, LAKE FOREST,
ILLINOIS 60045

[TENNECO AUTOMOTIVE LOGO]
<PAGE> 43

PROXY

[TENNECO AUTOMOTIVE LOGO]

TENNECO AUTOMOTIVE INC.

ANNUAL MEETING OF STOCKHOLDERS MAY 9, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned does hereby appoint Mark P. Frissora, Paul T. Stecko
and Karl A. Stewart, and any of them, with full power of substitution, as
Proxies to vote, as directed on the reverse side of this card, or, if not so
directed, in accordance with the Board of Directors' recommendations, all shares
of Tenneco Automotive Inc. held of record by the undersigned at the close of
business on March 17, 2000, and entitled to vote at the Annual Meeting of
Stockholders of Tenneco Automotive Inc. to be held at 10:00 a.m., local time,
May 9, 2000, at the Chicago Botanic Garden, 1000 Lake Cook Road, Glencoe,
Illinois, or at any adjournment or postponement thereof, and to vote, in their
discretion, upon such other matters as may properly come before the Annual
Meeting.

Election of Directors - Nominees:
01) Mark Andrews
02) David B. Price, Jr.

You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot
vote your shares unless you sign and return this card or use the telephone or
Internet voting procedures.

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL

[TENNECO AUTOMOTIVE LOGO]

TENNECO AUTOMOTIVE INC.

Annual Meeting of Stockholders
May 9, 2000

10:00 a.m., local time
Chicago Botanic Garden
1000 Lake Cook Road
Glencoe, Illinois 60022
<PAGE> 44
<TABLE>
<S><C>
X Please mark your
votes as in this
example. 5260

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEMS 1, 2 AND 3.
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
- -------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN

1. Election of 2. Ratify 3. Approval of amendment
Directors Independent of Restated Certificate of
(see reverse) Accountants Incorporation to Decrease
for year 2000 Authorized Shares of
Common Stock
For, except vote withheld from --------------------------------------------------------
the following nominee(s): 4. In the discretion of the Proxies named herein,
the Proxies are authorized to vote upon such other
- ------------------------------ matters as may properly come before the
meeting.
- ------------------------------------------------------------------------------------------------------------------------------------

The signer hereby revokes all proxies heretofore
given by the signer to vote at said meeting or any
adjournments thereof.

NOTE: Please sign exactly as name
appears hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee, or guardian, please give full
title as such.

---------------------------------------------

---------------------------------------------
SIGNATURE DATE
</TABLE>

- --------------------------------------------------------------------------------

- FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL -

TENNECO AUTOMOTIVE INC.

Dear Stockholder:

Tenneco Automotive Inc. encourages you to take advantage of new and convenient
ways by which you can vote your shares. You can vote your shares electronically
through the Internet or the telephone. This eliminates the need to return the
proxy card.

To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear
in the box above must be used to access the system.

1. To vote over the Internet:
Log on to the Internet and go to the web site
HTTP://WWW.EPROXYVOTE.COM/TEN

2. To vote over the telephone:
On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) 24 hours
a day, 7 days a week

Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.

If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.

<PAGE> 45

TENNECO AUTOMOTIVE INC.
500 NORTH FIELD DRIVE
LAKE FOREST, ILLINOIS 60045 [TENNECO AUTOMOTIVE LOGO]

April 3, 2000

Dear Benefit Plan Participant:

The Annual Meeting of Stockholders of Tenneco Automotive Inc. (the
"Company") is scheduled to be held at the Chicago Botanic Garden, 1000 Lake Cook
Road, Glencoe, Illinois at 10:00 a.m., local time, on Tuesday, May 9, 2000. A
copy of the Notice and Proxy Statement, which is being sent to all registered
stockholders in connection with the Annual Meeting, is enclosed for your
information.

Also enclosed with this letter is a form of proxy card, which designates
the number of shares held in your benefit plan account. By executing this proxy
card you instruct the benefit plan trustee (the "Trustee") how to vote the
shares of Tenneco Automotive Inc. stock in your account which you are entitled
to vote. The Trustee will vote all shares eligible to be voted by benefit plan
participants in accordance with their instructions.

If you return your form of proxy executed but without furnishing voting
instructions, the eligible shares in your account will be voted by the Trustee,
as holder of record of the shares in your account, FOR the election of the
nominees for directors named in the Proxy Statement, FOR the ratification of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for the year 2000, FOR the amendment to the Company's Restated
Certificate of Incorporation to decrease the number of authorized shares of
common stock and in the discretion of the proxies on all other matters to be
considered at the Annual Meeting.

If you do not return your executed form of proxy to the Trustee, then your
shares can be voted by the Trustee only in accordance with the requirements of
your benefit plan, which may or may not reflect your views.

Your vote is important. Please send your executed form of proxy card with
your voting instructions at your earliest opportunity. For your convenience, a
return envelope is enclosed.

YOUR BENEFITS COMMITTEE