<PAGE> 1
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. 1)
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 sec. 240.14a-11(c) or sec. 240.14a-12
EL PASO ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
[EL PASO ENERGY LOGO]
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of El Paso Energy Corporation (the "Company"), which will
be held on Friday, April 28, 2000, at 9:00 a.m. (Pacific daylight savings time),
at the Four Seasons Hotel, 690 Newport Center Drive, Newport Beach, California
92660. The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the business to be transacted at the Annual Meeting.
The Company is pleased to offer you the option of voting your shares (1)
electronically via the Internet by following the instructions on your proxy
card, (2) by telephone by following the instructions on your proxy card, or (3)
by using the enclosed traditional paper proxy card. Whether or not you plan to
attend the Annual Meeting, please vote by one of the preceding methods to ensure
that your shares are represented and voted in accordance with your wishes. This
will help the Company avoid the expense of sending follow-up letters to ensure
that a quorum is represented.
Sincerely,
/s/ WILLIAM A. WISE
WILLIAM A. WISE
President and Chief Executive Officer
Houston, Texas
March 22, 2000
<PAGE> 3
EL PASO ENERGY CORPORATION
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 2000
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of El Paso
Energy Corporation (the "Company") will be held on Friday, April 28, 2000, at
9:00 a.m. (Pacific daylight savings time), at the Four Seasons Hotel, 690
Newport Center Drive, Newport Beach, California, 92660, for the following
purposes:
1. To elect twelve Directors, each to hold office for a term of one year;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
certified public accountants to audit the Company's financial statements
for the fiscal year ending December 31, 2000; and
3. To transact any other business which may be properly brought before the
Annual Meeting. The Board of Directors is not aware of any other matters
to be presented at the Annual Meeting.
Only stockholders of record at the close of business on March 1, 2000, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof. As an alternative to using the paper proxy card to vote,
stockholders may vote electronically via the Internet or by telephone. Please
see "Additional Information - Internet and Telephone Voting" in the Proxy
Statement for more details. Whether or not you plan to attend the Annual
Meeting, please complete, date, sign and return the proxy in the accompanying
envelope, electronically via the Internet or by telephone as promptly as
possible to ensure that your shares are represented and voted in accordance with
your wishes.
By Order of the Board of Directors
/s/ DAVID L. SIDDALL
DAVID L. SIDDALL
Corporate Secretary
Houston, Texas
March 22, 2000
<PAGE> 4
EL PASO ENERGY CORPORATION
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS -- APRIL 28, 2000
This Proxy Statement with the accompanying Notice of Annual Meeting of
Stockholders and proxy card are being mailed to stockholders beginning on or
about March 22, 2000. The proxy is solicited by the Board of Directors of El
Paso Energy Corporation (the "Company") for use at the 2000 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Friday, April 28, 2000. Shares
of the Company's common stock, par value $3.00 per share (the "Common Stock"),
represented by a properly executed proxy submitted either in the accompanying
form, via the Internet, or by telephone, will be voted at the Annual Meeting.
The proxy may be revoked at any time before its exercise by sending written
notice of revocation to Mr. David L. Siddall, Corporate Secretary, El Paso
Energy Corporation, 1001 Louisiana Street, Houston, Texas 77002, by signing and
delivering a subsequently dated proxy card; by attending the Annual Meeting in
person and giving notice of revocation to the Inspector of Election; or by
following the appropriate revocation procedures via the Internet or by
telephone.
On August 1, 1998, the Company succeeded El Paso Natural Gas Company
("EPNG") as a publicly traded parent corporation in a holding company
reorganization. On October 25, 1999, the Company completed its merger with Sonat
Inc. ("Sonat") in a transaction accounted for as a pooling of interests (the
"Merger"), with the Company being the surviving entity. Sonat was a diversified
energy holding company engaged in domestic oil and natural gas exploration and
production, the transmission and storage of natural gas, and natural gas power
and marketing. In the Merger, one share of the Company's Common Stock was issued
in exchange for each outstanding share of Sonat common stock. Stockholders will
be mailed a separate proxy statement and proxy card for a special meeting of
stockholders to be held in connection with the Company's acquisition of The
Coastal Corporation.
March 1, 2000, was the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting, or adjournments or
postponements of the Annual Meeting. On that date there were 236,316,867 shares
of Common Stock outstanding and entitled to vote, which is the Company's only
class of voting securities. For a period of at least ten days prior to the
Annual Meeting, a complete list of stockholders entitled to vote at the Annual
Meeting will be available for examination by any stockholder during ordinary
business hours at the Four Seasons Hotel, 690 Newport Center Drive, Newport
Beach, California.
Each stockholder is entitled to cast one vote on each proposal presented at
the Annual Meeting for each share of Common Stock held as of the record date.
One Inspector of Election, a representative from BankBoston, N.A. and appointed
by the Board of Directors, shall have authority to receive, inspect,
electronically tally and determine the validity of the proxies which are
received. In accordance with the Company's By-laws, in determining the number of
votes cast for or against a proposal, an abstention by a stockholder will be a
vote of abstention with respect to the proposal voted upon and will not be
treated as a vote "for" or "against" the proposal; however, an abstention and a
broker non-vote will be included when determining whether a quorum is present.
The Company's By-laws also provide that a non-vote by a broker will be treated
as if the broker never voted, but a non-vote by a stockholder will be deemed a
vote "for" the management proposal. Stockholders may vote for all, some or none
of the director nominees, and they may vote "for" or "against" the other
proposals or abstain from voting.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held twelve meetings during the fiscal year ended
December 31, 1999. The standing committees of the Board of Directors are the
Audit Committee, the Compensation Committee and the Governance Committee. The
Governance Committee performs the function of a nominating committee. During the
1999 fiscal year, and during their respective terms, each Director attended at
least 75% of the meetings of the Board of Directors and the committees on which
he or she served.
<PAGE> 5
THE AUDIT COMMITTEE
The Audit Committee held five meetings during the 1999 fiscal year. The
Audit Committee currently consists of Kenneth L. Smalley (Chairman), Juan Carlos
Braniff, Max L. Lukens, Adrian M. Tocklin and Malcolm Wallop, each a
non-employee Director. The Audit Committee makes a recommendation to the Board
of Directors for a firm of independent certified public accountants to audit the
Company's annual financial statements. In addition, the Audit Committee reviews
with management and the Company's independent certified public accountants the
Company's financial statements, the adequacy of the Company's internal
accounting controls, the Company's basic accounting and financial policies and
practices and the Company's risk management practices.
THE COMPENSATION COMMITTEE
The Compensation Committee held four meetings during the 1999 fiscal year.
The Compensation Committee currently consists of Ben F. Love (Chairman), Byron
Allumbaugh, James F. Gibbons and Joe B. Wyatt, each a non-employee Director. The
Compensation Committee currently administers the Company's executive stock
option plan, long-term incentive compensation plan, annual incentive
compensation plan and other executive compensation plans. In addition, the
Compensation Committee considers proposals with respect to the creation of and
changes to executive compensation plans and reviews appropriate criteria for
establishing performance targets and determining annual corporate and executive
performance ratings. The policies and mission of the Compensation Committee are
set forth in the "Compensation Committee Report on Executive Compensation,"
which begins on page 16 of this Proxy Statement.
THE GOVERNANCE COMMITTEE
The Governance Committee, a newly created committee of the Board of
Directors, held one meeting during the 1999 fiscal year. The Governance
Committee currently consists of Adrian M. Tocklin (Chairman), Kenneth L.
Smalley, Malcolm Wallop and Selim K. Zilkha, each a non-employee Director. The
Governance Committee currently reviews the qualifications and effectiveness of
incumbent Directors, and recommends to the Board criteria regarding size and
composition of the Board of Directors. It also reviews the qualifications of
potential candidates for the Board of Directors, evaluates the performance of
incumbent Directors and recommends to the Board nominees to be elected at the
Annual Meeting of Stockholders. Further, any nominations submitted by the
stockholders to the Corporate Secretary in accordance with the By-laws are
considered by the Governance Committee.
DIRECTOR COMPENSATION
Each member of the Board of Directors is reimbursed for the usual and
ordinary expenses of meeting attendance. Employee Directors receive no
additional compensation for serving on the Board of Directors or committees
thereof. Pursuant to the Company's 1995 Compensation Plan for Non-Employee
Directors, non-employee Directors receive an annual retainer of $60,000, with
$10,000 of said amount required to be paid in deferred shares of Common Stock
(plus a conversion premium), and the remaining $50,000 to be paid, at the option
of the Director, in cash, deferred cash or deferred shares of Common Stock (plus
a conversion premium) or a combination thereof. Each non-employee Director
receives a retirement benefit credit in the form of deferred shares of Common
Stock equal to the annual retainer (without the conversion premium) pursuant to
the Company's 1995 Compensation Plan for Non-Employee Directors. Each
non-employee Director receives a stock option grant of 3,000 options under the
Company's Stock Option Plan for Non-Employee Directors upon initial election to
the Board of Directors and an annual stock option grant of 2,000 options upon
each re-election to the Board of Directors.
2
<PAGE> 6
As part of its overall program to support charitable organizations, the
Company has a Director Charitable Award Plan. The plan provides for the
designation of up to four charitable organizations to receive a maximum of
$1,000,000 in the aggregate upon the death of each Director participant.
Pursuant to the plan, each Director is entitled to participate upon the
completion of two consecutive years of service on the Board of Directors.
Currently, all Directors other than Messrs. Kuehn, Lukens, Wyatt, Zilkha and
Mrs. Tocklin are eligible to participate in the plan.
PROPOSALS
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
In accordance with the Company's By-laws, the Board of Directors has fixed
at twelve the number of Directors constituting the full Board of Directors. The
Company proposes to elect twelve Directors, each to hold office for a term of
one year and until his successor has been duly elected and shall qualify. With
the exception of broker non-votes and unless otherwise instructed by
stockholders, the persons named on the enclosed proxy card will vote the shares
of Common Stock represented by such proxy "for" the election of the twelve
nominees named in this Proxy Statement. However, if any of the named nominees
should be unavailable for election, the Board of Directors may substitute
nominees, in which event the shares of Common Stock represented by proxy will be
voted "for" such substitute nominees unless an instruction to the contrary is
contained on the proxy card. No circumstances are presently known which would
render any nominee named herein unavailable to serve as a member of the Board of
Directors. Pursuant to the Company's By-laws, the election of each Director
requires an affirmative vote of a plurality of the shares of Common Stock
represented at the Annual Meeting in person or by proxy and entitled to vote on
the proposal. Holders of Common Stock may not cumulate their votes for the
election of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE NOMINEES NAMED BELOW.
Each of the following nominees is currently a Director of the Company:
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING NOMINEES FOR DIRECTOR
--------------------------------
<S> <C>
BYRON ALLUMBAUGH Director since 1992
Business Consultant.
Age -- 68
Member -- Compensation Committee
Since February 1, 1997, Mr. Allumbaugh's principal occupation has been as a
business consultant. From February 1996 to his retirement in February 1997, Mr.
Allumbaugh was Chairman of the Board of Ralphs Grocery Company. He served as
Chief Executive Officer of Ralphs Grocery Company from June 1995 until February
1996. From 1976 to 1995, Mr. Allumbaugh served as Chairman of the Board and Chief
Executive Officer of Ralphs Grocery Company. Mr. Allumbaugh is a member of the
Board of Directors of CKE Restaurants, Inc., Penn Traffic Co. and Ultramar
Diamond Shamrock Inc.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING NOMINEES FOR DIRECTOR
--------------------------------
<S> <C>
JUAN CARLOS BRANIFF Director since 1997
Vice Chairman,
Grupo Financiero Bancomer,
Mexico City, Mexico -- Commercial Banking Institution.
Age -- 42
Member -- Audit Committee
Mr. Braniff has served as Vice Chairman of Grupo Financiero Bancomer since
October 1999. He served as Deputy Chief Executive Officer of Service Banking at
BANCOMER from September 1994 to October 1999. Mr. Braniff served as Executive
Vice President of Capital Investments and Mortgage Banking of BANCOMER from
December 1991 to September 1994. For more than five years prior to that date, he
held several positions in the real estate, corporate finance and brewing division
of Valores Industrales, S.A.-Fomento Economico Mexicano, S.A. de C.V. ("FEMSA")
and its affiliates. Mr. Braniff is currently a member of the Board of Directors
of FEMSA, S.A. de C.V., Coca Cola FEMSA, S.A. de C.V. and Grupo Financiero
Bancomer.
JAMES F. GIBBONS, PH.D. Director since 1994
Professor, Electrical Engineering,
Stanford University,
Stanford, California -- Higher Education.
Age -- 68
Member -- Compensation Committee
Dr. Gibbons has been on the faculty of Stanford University since 1957 and was
Dean of the School of Engineering from September 1984 until June 1996. Currently,
he is Professor of Electrical Engineering and special counsel to the President
for Industry Relations at Stanford University. He is a member of the Board of
Directors of Cisco Systems, Inc. and Lockheed Martin Corporation.
RONALD L. KUEHN, JR. Director since 1999
Non-executive Chairman of the Board,
El Paso Energy Corporation,
Houston, Texas -- Diversified Energy Company.
Age -- 65
Mr. Kuehn has been in the position identified above since October 25, 1999. He
served as President and Chief Executive Officer of Sonat from June 1984 until his
retirement on October 25, 1999. Mr. Kuehn was Chairman of the Board of Sonat from
April 1986 until his retirement. Currently, he is the non-executive Chairman of
the Board of the Company. He is a director of AmSouth Bancorporation, Praxair,
Inc., Protective Life Corporation, The Dun & Bradstreet Corporation, Transocean
Sedco FOREX Inc., and Union Carbide Corporation.
BEN F. LOVE Director since 1992
Investor.
Age -- 75
Chairman -- Compensation Committee
Since December 1989, Mr. Love's principal occupation has been as a private
investor. For more than five years prior to that date, Mr. Love was Chairman of
the Board and Chief Executive Officer of Texas Commerce Bancshares, Inc. He is a
member of the Board of Directors of Mitchell Energy & Development Corp.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING NOMINEES FOR DIRECTOR
--------------------------------
<S> <C>
MAX L. LUKENS Director since 1999
Business Consultant.
Age -- 51
Member -- Audit Committee
Mr. Lukens was Chairman, President and Chief Executive Officer of Baker Hughes
Incorporated until January 2000. He was elected Chairman of the Board in January
1997 and became Chief Executive Officer of Baker Hughes Incorporated in 1997. Mr.
Lukens had been with Baker Hughes Incorporated since 1981. Prior to the Merger,
he served as a director of Sonat since 1995. He served as director of Transocean
Sedco FOREX Inc. until December 1999.
KENNETH L. SMALLEY Director since 1992
Retired.
Age -- 70
Chairman -- Audit Committee
Member -- Governance Committee
Mr. Smalley has been retired since February 1992. For more than five years prior
to that date, Mr. Smalley was a Senior Vice President of Phillips Petroleum
Company and President of Phillips 66 Natural Gas Company, a Phillips Petroleum
Company subsidiary. He is a member of the Board of Directors of El Paso Tennessee
Pipeline Co.
ADRIAN M. TOCKLIN Director since 1999
President and Chief Executive Officer,
Tocklin & Associates, Inc.
St. Petersburg, Florida -- Insurance management and
Consulting.
Age -- 48
Chairman -- Governance Committee
Member -- Audit Committee
Mrs. Tocklin is the President and Chief Executive Officer of Tocklin &
Associates, Inc., an Insurance management and Consulting firm. Prior to the
Merger, she served as a director of Sonat since 1994. During the five years prior
to her retirement in April 1998, Mrs. Tocklin served as an executive officer of
CNA Insurance Companies and The Continental Corporation. She is a director of CNA
Surety Corp. and served as a director of First Insurance Company of Hawaii
through December 1999.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING NOMINEES FOR DIRECTOR
--------------------------------
<S> <C>
MALCOLM WALLOP Director since 1995
Chairman,
Western Strategy Group,
Arlington, Virginia -- Political Foundation.
Age -- 67
Member -- Audit Committee
Member -- Governance Committee
Mr. Wallop has been Chairman of the Western Strategy Group since January 1999. He
has been President of Frontiers of Freedom Foundation from January 1996 to
present. For eighteen years prior to that date, Mr. Wallop was a member of the
United States Senate. He is a member of the Board of Directors of Hubbell Inc.,
Sheridan State Bank and El Paso Energy Partners Company (f/k/a Leviathan Gas
Pipeline Company), the general partner of El Paso Energy Partners, L.P. (f/k/a
Leviathan Gas Pipeline Partners, L.P.).
WILLIAM A. WISE Director since 1984
President and Chief Executive Officer,
El Paso Energy Corporation,
Houston, Texas -- Diversified Energy Company.
Age -- 54
Mr. Wise has been Chief Executive Officer of the Company (the "CEO") since
January 1990. Mr. Wise has been President of the Company from January 1990 to
April 1996 and from July 1998 to present. He was Chairman of the Board of the
Company from January 1994 to October 1999. Mr. Wise served as President and Chief
Operating Officer of the Company from April 1989 to December 1989. From March
1987 to April 1989, Mr. Wise was an Executive Vice President of the Company. From
January 1984 to February 1987, he was a Senior Vice President of the Company. He
is a member of the Board of Directors of Battle Mountain Gold Company and is
Chairman of the Board of El Paso Tennessee Pipeline Co. and El Paso Energy
Partners Company (f/k/a Leviathan Gas Pipeline Company), the general partner of
El Paso Energy Partners, L.P. (f/k/a Leviathan Gas Pipeline Partners, L.P.).
JOE B. WYATT Director since 1999
Chancellor, Chief Executive Officer and Trustee,
Vanderbilt University,
Nashville, Tennessee -- Higher Education.
Age -- 64
Member -- Compensation Committee
Mr. Wyatt has served as Chancellor, Chief Executive Officer and Trustee of
Vanderbilt University for more than the past five years. Prior to the Merger, he
served as a director of Sonat since 1994. He is a director of Ingram Micro, Inc.
and Reynolds Metals Company.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING NOMINEES FOR DIRECTOR
--------------------------------
<S> <C>
SELIM K. ZILKHA Director since 1999
Investor.
Age -- 72
Member -- Governance Committee
Mr. Zilkha has been in the position identified above since January 1998. Prior to
the Merger, he served as a director of Sonat since January 1998. Mr. Zilkha is
the former Chief Executive Officer of Zilkha Energy Company. He served as the
sole director and Chief Executive Officer of Zilkha Energy from March 1984 until
January 1998. Prior to such time, Mr. Zilkha was a banker with Zilkha & Sons in
the United States and Europe from 1947 to 1955 and in London from 1955 to 1960.
In 1960, he founded Mothercare, PLC, a retail chain catering to mothers-to-be,
babies and small children in Great Britain, Europe and the United States. Mr.
Zilkha sold his interest in Mothercare, PLC in January 1982.
</TABLE>
7
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 1, 2000,
regarding the beneficial ownership of Common Stock by (i) each Director of the
Company, (ii) the Company's Chief Executive Officer and the four other most
highly compensated executives officers in the last fiscal year (together, the
"named executives"), and (iii) all Directors and executive officers of the
Company as a group. No person or entity (other than Mr. Zilkha) is known by the
Company to own beneficially more than 5% of its outstanding shares of Common
Stock. No family relationship exists between any of the Directors and executive
officers of the Company.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNERSHIP STOCK PERCENT
TITLE OF CLASS BENEFICIAL OWNER (EXCLUDING OPTIONS)(1) OPTIONS(6) TOTAL OF CLASS
- -------------- ---------------- ---------------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Common Stock B. Allumbaugh.................. 29,553 20,000 49,553 *
Common Stock J.C. Braniff................... 4,393 10,000 14,393 *
Common Stock J.F. Gibbons................... 19,757 18,000 37,757 *
Common Stock R.L. Kuehn..................... 260,471(2) 682,900 943,371 *
Common Stock B.F. Love...................... 46,846 6,000 52,846 *
Common Stock M.L. Lukens.................... 4,572 3,000 7,572 *
Common Stock K.L. Smalley................... 32,787 16,000 48,787 *
Common Stock A.M. Tocklin................... 5,399(3) 3,000 8,399 *
Common Stock M. Wallop...................... 12,495 16,000 28,495 *
Common Stock W.A. Wise...................... 1,845,857(4) 1,394,646 3,240,503 1.36%
Common Stock J.B. Wyatt..................... 5,866 3,000 8,866 *
Common Stock S.K. Zilkha.................... 14,011,261(5) 3,000 14,014,261 5.93%
Common Stock H.B. Austin.................... 340,034 209,260 549,294 *
Common Stock J.W. Somerhalder II............ 319,861 192,716 512,577 *
Common Stock J. Richards III................ 326,652 179,050 505,702 *
Common Stock B. White Jr. .................. 326,549 179,050 505,599 *
Common Stock Directors and executive
officers as a group (22 persons
total, including those
individuals listed above)...... 18,813,799 3,621,372 22,435,171 9.35%
</TABLE>
- ---------------
* Less than 1%
(1) Directors and executive officers have sole voting and investment power over
the shares of Common Stock reflected in the table above, except that each of
Messrs. Allumbaugh, Gibbons, Wise, Austin and White shares with one or more
other individuals voting and investment power with respect to 4,603, 2,000,
11,694, 318 and 2,000 shares of Common Stock, respectively. Some shares of
Common Stock reflected in this column for certain individuals are subject to
restrictions. In addition, shares of Common Stock (as of December 31, 1999)
reflected for Mrs. Tocklin (866) and Messrs. Allumbaugh (24,901),
Braniff (4,393), Gibbons (17,757), Kuehn (385), Love (16,846), Lukens
(465), Smalley (22,787), Wallop (12,495), Wyatt (666), Zilkha (465), Wise
(1,357,656), Austin (258,169), Somerhalder (243,725), Richards(245,239) and
White(246,745) include shares held in the Benefits Protection Trust as a
result of deferral elections made pursuant to applicable Company plans.
These individuals share voting power with the Trustee and receive dividends
on such shares, but do not have the power to dispose of, or direct the
disposition of, such shares until such shares are distributed.
(2) Mr. Kuehn's beneficial ownership excludes 11,500 shares of Common Stock
owned by his wife, 20 shares owned by his children, and 3,200 shares held in
trust for his children, of which Mr. Kuehn disclaims any beneficial
ownership.
(3) Mrs. Tocklin's beneficial ownership excludes 100 shares of Common Stock
owned by her husband, of which Mrs. Tocklin disclaims any beneficial
ownership.
(4) Mr. Wise's beneficial ownership excludes 400 shares of Common Stock owned by
his children under the Uniform Gifts to Minors Act, of which Mr. Wise
disclaims any beneficial ownership.
(5) The number of shares of Common Stock reflected for Mr. Zilkha includes
14,008,696 shares held in the Selim K. Zilkha Trust (of which Mr. Zilkha is
settlor, trustee and beneficiary).
8
<PAGE> 12
(6) The Directors and executive officers have the right to acquire the shares of
Common Stock reflected in this column within 60 days of February 1, 2000,
through the exercise of stock options.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation awarded
to, earned by or paid to any person serving as the Company's CEO or acting in a
similar capacity during the last completed fiscal year, and the other named
executives for services rendered to the Company and its subsidiaries in all
capacities during each of the last three fiscal years. The table also identifies
the principal capacity in which each of the named executives served the Company
at the end of fiscal year 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------------------------
AWARDS PAYOUTS
------------------------- --------------
OTHER SECURITIES LONG-TERM ALL
ANNUAL RESTRICTED UNDERLYING INCENTIVE PLAN OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(2) ($)(3) ($)(4) (#)(5) ($)(6) ($)(7)
------------------ ---- -------- ---------- ------------ ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Wise 1999 $275,001(1) $3,800,000 $139,006 $2,199,966 500,000 $29,254,410 $148,368
President & CEO 1998 -- $1,600,000 $152,939 $1,599,985 98,000 -- $105,227
1997 -- $1,105,000 $203,182 $1,104,971 -- -- $106,209
H. Brent Austin 1999 $386,253 $1,113,000 -- $ 674,994 125,000 $ 5,531,256 $ 42,628
Executive Vice 1998 $305,417 $ 438,000 $ 201 $ 437,972 26,250 -- $ 32,410
President & Chief 1997 $300,000 $ 330,000 $ 93,435 $ 329,970 -- -- $ 36,150
Financial Officer
John W. Somerhalder II 1999 $360,000 $1,071,000 $ 643 $ 674,994 125,000 $ 5,495,006 $ 36,985
President, Tennessee 1998 $302,500 $ 396,000 $ 575 $ 395,987 26,250 -- $ 30,335
Gas Pipeline Company 1997 $300,000 $ 330,000 $ 578 $ 329,970 -- -- $ 34,837
Joel Richards III 1999 $347,502 $ 956,000 $ 6,440 $ 559,999 125,000 $ 5,458,756 $ 42,254
Executive Vice 1998 $279,584 $ 396,000 $ 221 $ 395,987 26,250 -- $ 32,579
President 1997 $275,000 $ 302,500 $ 27,514 $ 302,472 -- -- $ 35,088
Britton White Jr. 1999 $347,502 $ 956,000 -- $ 559,999 125,000 $ 5,458,756 $ 53,202
Executive Vice 1998 $279,584 $ 396,000 $ 284 $ 395,987 26,250 -- $ 32,774
President & General 1997 $275,000 $ 302,500 $ 34,899 $ 302,472 -- -- $ 35,219
Counsel
</TABLE>
- ---------------
(1) The Compensation Committee determined that Mr. Wise's base salary, which was
eliminated in 1996, should be reinstated in connection with the Merger with
Sonat. The amount reflected is for a partial year.
(2) The value reflected represents the value of restricted Common Stock and/or
cash awarded to each of the named executives for their incentive bonus.
Pursuant to the Company's 1995 Incentive Compensation Plan and 1999 Omnibus
Incentive Compensation Plan, the named executives are required to receive a
substantial part of their annual bonus in restricted Common Stock. The
amounts reflected in this column represent a combination of the market value
of the restricted Common Stock and cash awarded under the applicable plan.
Dividends are paid directly to the holders of the restricted Common Stock
during the four-year vesting schedule. In addition, as a result of the
stockholders' approval of the Merger with Sonat, that transaction
constituted a change in control under the Company's benefit plans and
resulted in the automatic cash payment equal to the maximum bonus
opportunity for each of the named executives.
(3) The amount reflected for Mr. Wise in fiscal year 1999 includes, among other
things, $90,000 for a perquisite and benefit allowance. The amount reflected
for Mr. Wise in fiscal year 1998 includes, among other things, $90,000 for a
perquisite and benefit allowance and $36,088 in value attributed to use of
the Company's aircraft. In fiscal year 1997, the amount for Mr. Wise
includes, among other things, a tax gross-up associated with his relocation
to Houston and $85,167 for a perquisite and benefit allowance. The amounts
reflected for fiscal year 1997 for the other named executives, except for
Mr. Somerhalder,
9
<PAGE> 13
are tax gross-ups associated with their relocation to Houston. The aggregate
value of the perquisites and other personal benefits received by the other
named executives in fiscal years 1999, 1998 and 1997 have not been reflected
because the amounts were below the Securities and Exchange Commission's (the
"SEC") required reporting threshold.
(4) The Company's 1999 Omnibus Incentive Compensation Plan and 1995 Incentive
Compensation Plan provide for and encourage participants to elect to take
the cash portion of their annual bonus award in shares of restricted Common
Stock. The amounts reflected in this column include the market value of
restricted Common Stock on the date of grant, subject to a four-year vesting
schedule, received by each of the named executives pursuant to such
election. The total shares of restricted Common Stock, including those
shares reflected in this column, held on December 31, 1999 by Messrs. Wise,
Austin, Somerhalder, Richards and White was 150,000, 30,000, 30,000, 30,000,
and 30,000, respectively. These shares of restricted stock are subject to
performance vesting, in addition to time vesting. If the required
performance targets are not achieved within the required time period, all
unvested shares will be forfeited. The aggregate dollar value on December
31, 1999, of all shares of restricted Common Stock held by Messrs. Wise,
Austin, Somerhalder, Richards and White was $5,821,875, $1,164,375,
$1,164,375, $1,164,375 and $1,164,375, respectively. Dividends are paid
directly to the holders of the restricted Common Stock. The foregoing values
can be realized by the named executives if, and only if, they remain
employees of the Company for the specified time period and the Company's
stockholders realize the required total stockholder value during the
specified time period.
(5) The number of stock options granted in 1999 are intended as a three-year
grant, designed to provide an incentive for successful integration of the
Sonat organization following the Merger and will provide compensation only
if all stockholders benefit from stock price appreciation.
(6) The amounts in this column for fiscal year 1999 represent the market value
of Common Stock and/or cash payout of performance units ("PUs") for the
four-year cycle ended on December 31, 1998. In addition, as a result of the
stockholders' approval of the Merger with Sonat, that transaction
constituted a change in control under the Company's benefit plans and
resulted in the automatic cash payment of 25% of the PUs outstanding, and
the remaining PUs were cancelled. The amount reflected also includes the
value of performance-based restricted Common Stock, which was granted in
1996 and which had achieved all performance targets. No named executive
received a long-term incentive plan payout from the Company during fiscal
years 1997 and 1998.
(7) The compensation reflected in this column for fiscal year 1999 is comprised
of Company contributions to the Company's Retirement Savings Plan,
supplemental Company contributions under the Supplemental Benefits Plan and
the above-market interest earned on deferred compensation. Specifically,
these amounts for fiscal year 1999 were $0, $123,749 and $24,618 for Mr.
Wise; $7,200, $29,890 and $5,538 for Mr. Austin; $7,200, $26,819 and $2,966
for Mr. Somerhalder; $7,200, $26,257, and $8,797 for Mr. Richards and
$7,200, $26,257 and $19,745 for Mr. White, respectively.
STOCK OPTION GRANTS
The table on the following page sets forth the number of stock options
granted at fair market value to each of the named executives during the fiscal
year 1999. In satisfaction of applicable SEC regulations, the table further sets
forth the potential realizable value of such stock options in the year 2009 (the
expiration date of the stock options) at arbitrarily assumed annualized rates of
stock price appreciation of 5% and 10% over the full ten-year term of the stock
options. As the table indicates, the annualized stock price appreciation of 5%
and 10% will result in stock prices in the year 2009 of approximately $68.62 and
$109.26, respectively. The amounts shown in the table as potential realizable
values for all stockholders' stock (approximately $5.2 billion and $13.2
billion), represent the corresponding increases in the market value of
235,440,039 shares of the Common Stock outstanding as of December 31, 1999. No
gain to the named executives is possible without an increase in stock price,
which would benefit all stockholders proportionately. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There can
be no assurances that the potential realizable values shown in this table will
be achieved.
10
<PAGE> 14
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
INDIVIDUAL GRANTS(1) APPRECIATION FOR OPTION TERM
------------------------------------------------ -------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS IF STOCK PRICE AT IF STOCK PRICE AT
UNDERLYING GRANTED TO EXERCISE $68.62 $109.26
OPTIONS EMPLOYEES PRICE EXPIRATION IN 2009 IN 2009
NAME GRANTED(#) IN 1999 ($/SHARE) DATE 5% ($) 10% ($)
---- ---------- ---------- --------- ---------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
ALL STOCKHOLDERS' STOCK
APPRECIATION.......... N/A N/A N/A N/A $5,242,496,350 $13,285,515,051
William A. Wise......... 500,000 5.19% $42.125 10/25/09 $ 13,246,093 $ 33,568,201
H. Brent Austin......... 125,000 1.30% $42.125 10/25/09 $ 3,311,523 $ 8,392,050
John W. Somerhalder
II.................... 125,000 1.30% $42.125 10/25/09 $ 3,311,523 $ 8,392,050
Joel Richards III....... 125,000 1.30% $42.125 10/25/09 $ 3,311,523 $ 8,392,050
Britton White Jr........ 125,000 1.30% $42.125 10/25/09 $ 3,311,523 $ 8,392,050
</TABLE>
- ---------------
(1) The stock options granted in 1999 by the Company to the named executives
vest one-third on each of the first three anniversaries of the grant date.
There were no stock appreciation rights ("SARs") granted in 1999. Any
unvested stock options become fully exercisable in the event of a "change in
control" (see page 20 of this Proxy Statement for a description of the
Company's 1999 Omnibus Incentive Compensation Plan and the definition of the
term "change in control.") Under the terms of the Company's 1999 Omnibus
Incentive Compensation Plan, the Compensation Committee may, in its sole
discretion and at any time, change the vesting of the stock options. Certain
non-qualified stock options may be transferred to immediate family members,
directly or indirectly or by means of a trust, corporate entity or
partnership. Further, stock options are subject to forfeiture and/or time
limitations in the event of a termination of employment. Certain of these
stock options are automatically converted into shares of restricted Common
Stock if certain performance targets are achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning option exercises and
the fiscal year-end values of the unexercised stock options (and SARs), provided
on an aggregate basis, for each of the named executives.
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME # ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Wise......... 305,828 $11,154,601 1,439,356 500,000 $33,464,855 $0
H. Brent Austin......... 60,000 $ 2,203,128 209,260 125,000 $ 4,440,652 $0
John W. Somerhalder
II.................... 60,000 $ 2,203,128 192,716 125,000 $ 4,006,794 $0
Joel Richards III....... 60,000 $ 2,203,128 179,050 125,000 $ 3,551,345 $0
Britton White Jr........ 60,000 $ 2,203,128 179,050 125,000 $ 3,551,345 $0
</TABLE>
- ---------------
(1) The figures presented in this column have been calculated based upon the
difference between the fair market value of the securities underlying each
stock option/SAR on the date of exercise and its exercise price. In
addition, as a result of the stockholders' approval of the Merger with
Sonat, that transaction constituted a change in control under the Company's
benefit plans and resulted in the automatic conversion of certain stock
options into shares of Common Stock, without cost to the named executive.
The value of that conversion is reflected in this column.
11
<PAGE> 15
(2) The figures presented in these columns have been calculated based upon the
difference between $38.9375, the fair market value of the Common Stock on
December 31, 1999, for each in-the-money stock option/SAR, and its exercise
price. No cash is realized until the shares received upon exercise of an
option are sold. Mr. Wise has tandem SARs attached to some of his stock
options. If his stock options are exercised, the tandem SARs expire and vice
versa. The exercise of a tandem SAR would have a market value equivalent to
the exercise of a stock option.
LONG-TERM INCENTIVE AWARDS
Restricted Stock
The following table provides information concerning incentive awards of
restricted Common Stock made under the Company's 1999 Omnibus Incentive
Compensation Plan. The number of shares of restricted Common Stock will vest if,
and only if, the named executive remains in the employ of the Company for the
specified time period and the required increase in total stockholder return is
achieved during such time period.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1999
RESTRICTED STOCK
<TABLE>
<CAPTION>
ESTIMATED NUMBER OF SHARES TO BE VESTED UNDER
PERFORMANCE OR THE RESTRICTED STOCK GRANT(1)
OTHER PERIOD ----------------------------------------------
NUMBER UNTIL BELOW THRESHOLD THRESHOLD TARGET MAXIMUM
NAME OF SHARES MATURATION (#) (#) (#) (#)
---- --------- -------------- --------------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
William A. Wise............ 150,000 4 years 0 45,000 90,000 150,000
H. Brent Austin............ 30,000 4 years 0 9,000 18,000 30,000
John W. Somerhalder II..... 30,000 4 years 0 9,000 18,000 30,000
Joel Richards III.......... 30,000 4 years 0 9,000 18,000 30,000
Britton White Jr........... 30,000 4 years 0 9,000 18,000 30,000
</TABLE>
- ---------------
(1) The indicated number of shares of restricted Common Stock vesting at the
Threshold, Target and Maximum levels vest only if total shareholder return
equals or exceeds 15%, 40% and 65%, respectively, within the indicated
performance period.
Performance Units
The table on the following page provides information concerning long-term
incentive awards of performance units ("PUs") under the Company's 1995 Omnibus
Incentive Compensation Plan and the 1999 Omnibus Incentive Compensation Plan.
The first grant reflected vests equally per year over the indicated maturation
performance period, at the end of which (or at an interim time) the Company's
total stockholder return is compared to that of its peer group. The second grant
reflected for each of the named executives vests at the end of the performance
period, at the end of which the Company's total stockholder return is compared
to that of its peer group. With respect to each grant, if the Company's total
stockholder return ranks in the first, second, third or fourth quartiles, the
value of each unit is $150, $100, $50 and $0, respectively. The payouts will
consist of Common Stock and/or cash, as determined by the Compensation
Committee. All the amounts shown are potential assumed amounts. There can be no
assurance that the Company will achieve the results that would lead to final
payments under the plans.
12
<PAGE> 16
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1999
PERFORMANCE UNITS
<TABLE>
<CAPTION>
ESTIMATED PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
NUMBER PERIOD UNTIL ------------------------------------------------------
OF UNITS MATURATION BELOW THRESHOLD THRESHOLD TARGET MAXIMUM
NAME (#) (1) OR PAYOUT ($) ($) ($) ($)
---- -------- ------------ --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William A. Wise............ 35,500 4 years $0 $1,775,000 $3,550,000 $5,325,000
35,500 4 years $0 $1,775,000 $3,550,000 $5,325,000
H. Brent Austin............ 10,000 4 years $0 $ 500,000 $1,000,000 $1,500,000
15,000 4 years $0 $ 750,000 $1,500,000 $2,250,000
John W. Somerhalder II..... 10,000 4 years $0 $ 500,000 $1,000,000 $1,500,000
15,000 4 years $0 $ 750,000 $1,500,000 $2,250,000
Joel Richards III.......... 10,000 4 years $0 $ 500,000 $1,000,000 $1,500,000
12,000 4 years $0 $ 600,000 $1,200,000 $1,800,000
Britton White Jr........... 10,000 4 years $0 $ 500,000 $1,000,000 $1,500,000
12,000 4 years $0 $ 600,000 $1,200,000 $1,800,000
</TABLE>
- ---------------
(1) The first grant reflected was for a four-year performance cycle beginning
January 1, 1999. However, as a result of the Merger with Sonat, that
transaction resulted in the automatic cash payout of 25% of the units
reflected for that grant. All remaining performance units associated with
the January grant were cancelled. The second grant is for a four-year
performance cycle which began on July 1, 1999 and will end on June 30, 2003.
PENSION PLAN
Set forth below is a table describing the Company's Pension Plan in which
the named executives, as well as other Company employees, may be entitled to
participate. The following table lists current annual retirement benefits
payable under the Pension Plan and the Company's Supplemental Benefits Plan
(collectively, the "Plans") for the assumed average annual earnings and years of
credited service shown for a participant retiring at the normal retirement age
of 65. Under the Pension Plan and applicable Internal Revenue Code ("IRC")
provisions, compensation in excess of $160,000 cannot be taken into account and
the maximum payable benefit in 1999 is $130,000. Any excess benefits otherwise
accruing under the Pension Plan are payable under the Supplemental Benefits
Plan.
Estimated annual benefit levels under the Plans, based on earnings and
years of credited service at the normal retirement age, is reflected in the
following table:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE AT NORMAL RETIREMENT AGE
FINAL AVERAGE ------------------------------------------------------
PENSION EARNINGS 15 20 25 30
---------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
$ 400,000..................... $ 94,095 $125,460 $ 156,825 $ 188,190
$ 800,000..................... 190,095 253,460 316,825 380,190
$1,200,000.................... 286,095 381,460 476,825 572,190
$1,600,000.................... 382,095 509,460 636,825 764,190
$1,900,000.................... 454,095 605,460 756,825 908,190
$2,100,000.................... 502,095 669,460 836,825 1,004,190
$2,500,000.................... 598,095 797,460 996,825 1,196,190
$2,800,000.................... 670,095 893,460 1,116,825 1,340,190
$3,100,000.................... 742,095 989,460 1,236,825 1,484,190
</TABLE>
Benefits which accrue under the Plans are based upon the gross salary
amount of each individual, including base incentive bonus amounts, but excluding
all commissions and other compensation or benefits of
13
<PAGE> 17
any kind. For the named executives, the amounts reflected in the Salary and
Bonus columns of the "Summary Compensation Table" are generally considered to
calculate benefits under the Plans. The Pension Plan formula for retirement at
age 65 is 1.1% of the highest five-year average earnings, plus 0.5% of the
highest five-year average earnings in excess of one-third of the FICA taxable
wage base in effect during the year of termination, times the number of years of
credited service up to a maximum of 30 years. There is no deduction for Social
Security amounts paid; however, an early retirement supplement equal to 1% of
the highest five-year average earnings up to one-third of the FICA taxable wage
base in effect in the year of termination, times the number of years of credited
service up to a maximum of 30 years, is payable from retirement until age 62.
Both the basic benefit and the early retirement supplement are reduced by 2% for
each year the participant's actual retirement date precedes the date the
participant would have attained age 65, or the date the participant could have
retired after attaining age 60 with 30 years of service, if earlier. Years of
credited service under the Pension Plan at age 65 for Messrs. Wise, Austin,
Somerhalder, Richards and White are 30, 30, 30, 28 and 25 (including 7 years of
credited service pursuant to Mr. White's employment agreement, which is
described on page 19 of this Proxy Statement), respectively.
Effective January 1, 1997, the Company amended its noncontributory defined
Pension Plan to determine benefits by a cash balance formula in which the named
executives, as well as other Company employees, may be entitled to participate.
During a five-year transition period, ending December 31, 2001, eligible
participants will continue to accrue a minimum benefit under the previous
formula, as described above. On December 31, 2001, this benefit will be frozen.
The actual benefit paid to participants with a minimum benefit will be the
greater of the minimum benefit and the cash balance benefit. Under the cash
balance formula, each participant has a cash account which is credited quarterly
with a percentage of earnings. The annual percentage is based on a combination
of age and service as shown below:
<TABLE>
<CAPTION>
IF AGE PLUS PAY CREDIT SERVICE ON THE APPLICABLE ANNUAL %
THE PRECEDING DECEMBER 31 IS: OF EARNINGS IS:
- ------------------------------------------------------------ -----------------------
<S> <C>
Under 35.............................................. 4%
35 through 49......................................... 5%
50 through 64......................................... 6%
65 and over........................................... 7%
</TABLE>
Estimated annual benefits payable under the cash balance pension plan and
Supplemental Benefits Plan upon retirement at age 65 for Messrs. Wise, Austin,
Somerhalder, Richards and White are $1,337,390, $266,256, $340,188, $231,012,
and $233,703, respectively (based on assumptions that each named executive
receives no pay increases, receives maximum bonuses and cash balances are
credited with interest at a rate of 3% per annum).
PERFORMANCE GRAPHS
The graphs on the following page show the changes in the value of $100
invested since December 31, 1994 and since March 12, 1992 (the date on which the
Common Stock was initially offered to the public), respectively, in the Common
Stock, the Standard & Poor's Natural Gas Index and the Standard & Poor's 500
Stock Index.
The Company has made previous filings and may make future filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that incorporate future filings, including this Proxy Statement, in
whole or in part. However, the following Performance Graphs and the Compensation
Committee Report on Executive Compensation shall not be incorporated by
reference into any such filings.
14
<PAGE> 18
COMPARISON OF ANNUAL CUMULATIVE TOTAL VALUES FROM 1994-1999 FOR THE
COMPANY, THE S&P NATURAL GAS INDEX AND THE S&P 500 STOCK INDEX
[GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company $100.0 $ 98.7 $179.3 $241.9 $258.8 $294.9
S&P Natural Gas Index $100.0 $137.6 $169.2 $225.6 $290.1 $373.0
S&P 500 Stock Index $100.0 $141.4 $188.0 $221.8 $243.4 $289.7
</TABLE>
COMPARISON OF ANNUAL CUMULATIVE TOTAL VALUES FROM 1992-1999 FOR THE
COMPANY, THE S&P NATURAL GAS INDEX AND THE S&P 500 STOCK INDEX
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
3/12/92 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company $100.0 $167.6 $200.4 $176.1 $173.9 $315.6 $426.0 $455.8 $519.4
S&P 500 Stock Index $100.0 $108.3 $119.2 $120.7 $166.1 $204.3 $272.4 $350.3 $450.4
S&P Natural Gas Index $100.0 $122.6 $145.6 $138.9 $196.4 $261.0 $308.0 $337.9 $402.3
</TABLE>
The annual values of each investment are based on the share price
appreciation and assumes cash dividend reinvestment. The calculations exclude
any applicable brokerage commissions and taxes. Cumulative total stockholder
return from each investment can be calculated from the annual values given
above.
15
<PAGE> 19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive officer compensation program is administered and
reviewed by the Compensation Committee. The Compensation Committee currently
consists of Messrs. Allumbaugh, Gibbons, Love and Wyatt. The Compensation
Committee has neither interlocks nor insider participation.
POLICIES AND MISSION
The Compensation Committee has determined that the compensation program of
executive officers should not only be adequate to attract, motivate and retain
competent executive personnel, but should also be directly and materially
related to the short-term and long-term objectives and operating performance of
the Company. To achieve these ends, executive compensation (including base
salary, year-end bonus, restricted stock awards, stock option grants and other
long-term incentive awards) is, to a significant extent, dependent upon the
Company's financial performance and the return on its Common Stock. However, to
ensure that the Company is strategically and competitively positioned for the
future, the Compensation Committee also has the discretion to attribute
significant weight to other factors in determining executive compensation, such
as maintaining competitiveness, implementing capital improvements, expanding
markets, pursuing growth opportunities and achieving other long-range business
and operating objectives.
In order to determine appropriate levels of executive compensation, the
Compensation Committee periodically conducts a thorough competitive evaluation,
reviews proprietary and proxy information, and consults with and receives advice
from an independent compensation consulting firm. The Compensation Committee
also considers relevant industry and market changes when evaluating the
Company's performance as well as each individual executive's performance. The
independent consulting firm provides data and information that compares the
Company with a peer group of companies for evaluation purposes. The peer group
consists of a majority of the companies included in the S&P Natural Gas Index
(reflected in the Performance Graphs found on page 15 of this Proxy Statement)
along with certain additional companies which the consulting firm and the
Compensation Committee believe represent the Company's most direct competition
for executive talent.
During 1999, the Compensation Committee requested an independent executive
compensation consulting firm to conduct an analysis of the Company's executive
compensation and benefit plans, including a survey and comparative analysis of
compensation plans of other companies of similar size, post-merger with Sonat,
engaged in similar businesses. The Compensation Committee believed such an
analysis and reevaluation were timely and necessary in light of the substantial
increase in the size of the organization and substantially broader business
scope and focus of the Company following the Merger with Sonat. After the study
was completed, the Compensation Committee met with the compensation consulting
firm to review its conclusions and consider its recommendations for appropriate
changes. In a session with the consultant, the Compensation Committee reviewed
not only the compensation levels and components of the total compensation
package for the CEO and other named executives vis-a-vis similar positions in
comparable companies, but also reevaluated the compensation philosophy and plans
described herein to confirm that they remain consistent with, and continue to
contribute to the accomplishment of, the overall business objectives of the
Company.
A primary mission of the Compensation Committee is to ensure that each
executive officer's compensation is directly related to the performance of the
Company and its Common Stock, and the performance of the individual executive
officer. Toward that end, the Compensation Committee has established an
executive compensation program with a strong performance-based orientation. In
particular, the Compensation Committee has determined, in consultation with the
independent consulting firm, that the value of long-term incentive awards for
executive officers, including the CEO, should be targeted in the top one-half of
the peer group. These long-term incentive awards should tie directly to the
performance of the Common Stock and consist of approximately 50% in stock
options and 50% in PUs. With respect to cash
16
<PAGE> 20
compensation, the base salary of executive officers is targeted at or near the
50th percentile of the peer group (described above). Total cash compensation
under the Company's current plans can reach approximately the 90th percentile of
such peer group with the year-end incentive bonuses.
As a result of the analysis and reevaluation process described above, the
Compensation Committee determined that potential year-end bonuses should range,
depending upon the Company and individual performance, from 0% to 200% of base
salary for the CEO, from 0% to 150% for Messrs. Austin and Somerhalder and from
0% to 140% for the other named executives. Based on objectives established each
year, the Compensation Committee determines the specific percentage bonus to be
awarded to each recipient based upon both the Company's and the individual
executive's performance. Mr. Wise's employment agreement, as described on page
18 of this Proxy Statement, does not affect the amount of his compensation. Mr.
Wise's compensation and benefits are determined under Company plans and programs
in effect from time to time in accordance with the policies described above. As
a result of the extensive reevaluations discussed above, the Compensation
Committee determined that it was necessary and appropriate to reinstate Mr.
Wise's base salary (which had been eliminated in 1996), effective October 1999.
None of the other named executives received compensation governed or affected by
employment agreements.
Section 162(m) of the IRC ("Section 162(m)") was enacted in 1993 and
generally affects the Company's federal income tax deduction for compensation
paid to the Company's CEO and four other highest paid executive officers. To the
extent compensation is "performance-based" within the meaning of Section 162(m),
the Section's limitations will not apply. In 1995 and in 1999, the Board of
Directors adopted, and the stockholders approved, certain Company compensation
plans which were structured to qualify as performance-based compensation under
Section 162(m). In addition to requiring and encouraging stock ownership by
Company executives, these plans are designed to allow the Compensation Committee
to provide appropriate compensation when certain performance goals have been
achieved. The Compensation Committee awards under the Company plans during 1999
are intended to qualify as performance-based compensation under Section 162(m).
It is possible under certain circumstances that some portion of the compensation
paid to the Company's CEO and other executive officers will not meet the
standards of deductibility under Section 162(m). The Compensation Committee
reserves the right to award compensation which does not qualify as
performance-based under Section 162(m) if it determines that such awards are
necessary to provide a competitive compensation package to attract and retain
qualified executive talent.
COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee reviewed the Company's 1999 financial goals
(consisting of earnings before interest and taxes, earnings per share, after tax
return on common equity, cash flow and operating and maintenance cost
objectives) and this Company's 1999 non-financial goals consisting of achieving
certain progress in the regulatory segment (primarily the recontracting effort
of Tennessee Gas Pipeline Company capacity and remarketing of turned back
capacity on El Paso Natural Gas Company); optimizing and rationalizing assets in
the field services segment (including the Deepwater Gulf of Mexico); certain
contract restructurings in the merchant energy segment; restructuring certain
holdings of the international segment in South America, and acquiring and
restructuring certain Asian assets; and operating matters (primarily safety
goals), and this Committee hereby certifies that this Company has attained the
necessary performance goals for the 1999 performance period to make incentive
awards under the Company's 1999 Omnibus Incentive Compensation Plan, the
Company's 1995 Incentive Compensation Plan or the Company's 1995 Omnibus
Compensation Plan, as applicable. Although the attainment of all performance
targets is not required, all such performance targets are evaluated to determine
the maximum incentive award opportunity in a given year and what incentive
awards are actually made. The Compensation Committee does not assign relative
weights to each of the factors and criteria used in determining executive
compensation. Moreover, any publication of sensitive and proprietary
quantifiable targets and other specific goals for both the Company and the CEO
which are established and applied each year could adversely affect the Company.
The Compensation Committee, consistent with its policies and mission,
applied the information and performance factors for 1999 to determine the
appropriate compensation for Mr. Wise and other executive officers. Mr. Wise's
accomplishments during 1999 resulted in a successful year that was full of
challenges,
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<PAGE> 21
including pursuing and closing significant acquisitions such as Sonat and EnCap
Investments, L.P., developing several strategic international projects,
restructuring the merchant energy function and implementing expansion projects
and innovative financing structures. These achievements, along with his
implementation of innovative marketing strategies for excess pipeline capacity,
and continued operating efficiencies, has resulted in a successful year for this
Company and its stockholders. Having reviewed the contribution that the CEO made
to this Company's performance in 1999, the Compensation Committee believes that
he continues to demonstrate the motivational, planning and leadership qualities
that the executive compensation program was designed to foster and reward.
In recognition of Mr. Wise's overall performance and his responsibility for
the Company's successes during 1999, the Compensation Committee determined that
he should receive the highest rating, and awarded him the maximum incentive
bonus available under the incentive award opportunity discussed above (200% of
base salary). In support of the Compensation Committee's long-term compensation
mission to provide competitive compensation incentives to retain and motivate
executive officers, Mr. Wise was granted 500,000 stock options, 150,000 shares
of performance-based restricted common stock, and 35,500 performance units. The
specific amounts of these equity grants for Mr. Wise and the other named
executives was determined in accordance with the targets and formulas
recommended by the Company's independent consulting firm, as described in more
detail above. The Compensation Committee, in consultation with the independent
consulting firm, adjusted the Mr. Wise's base salary to $1,100,000 to remain
competitive for executive talent. In January 1999, the Compensation Committee
granted 35,500 performance units to Mr. Wise, consistent with the Compensation
Committee's long-term compensation mission. However, the stockholder approval of
the Merger with Sonat caused 25% of those performance units to immediately vest
and the remaining performance units were cancelled.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Compensation Committee, in consultation with the independent consulting
firm, applied the information and performance factors outlined above in
reviewing and approving the compensation of the Company's other executive
officers. This process resulted in a determination that, based upon individual
performance and their significant individual contributions to overall Company
performance during the fiscal year 1999, each of the other four named executive
officers should be awarded the maximum incentive bonus available under the
incentive award opportunity discussed above (140% or 150% of base salary, as
applicable). Stock options, shares of performance-based restricted common stock
and performance units were granted in 1999 to executive officers to provide
continuing incentives for future performance. The number of options,
performance-based restricted stock and performance units granted to such
executives was determined in accordance with the targets and formulas
recommended by the Company's independent consulting firm in light of the
significant Merger with Sonat, as described in more detail above. Base salaries
were adjusted for the other named executive officers, determined in consultation
with the independent consulting firm, to remain competitive for executive
talent, and in consideration of the increased job responsibilities associated
with the Merger with Sonat.
THE 1999 COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Byron Allumbaugh James F. Gibbons Ben F. Love Joe B. Wyatt
(Member) (Member) (Chairman) (Member)
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Mr. Wise effective
July 31, 1992. The term of the agreement is three years from its initial
effective date and is automatically renewed at the end of every month
(re-establishing a three-year term on the first of each month), unless either
party notifies the other that it elects not to extend the term of the agreement.
Mr. Wise's compensation and benefits are determined under Company plans and
programs in effect from time to time. If Mr. Wise's employment is terminated
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<PAGE> 22
involuntarily, without cause, or is voluntarily terminated by Mr. Wise for "good
reason" (as defined in the Severance Plan, which is discussed below), Mr. Wise
will receive his salary, bonus (equal to fifty percent of the maximum bonus
opportunity in effect at the time of termination, but not less than fifty
percent of annual salary) and benefits through the end of the term of the
employment agreement. Unless termination follows a "change in control" (as
defined in the Severance Plan), any continued salary, bonus or benefits (not
including defined benefit pension plan payments) will be reduced by comparable
compensation from subsequent employment. If Mr. Wise's employment is terminated
because of death, involuntary termination for cause or is voluntarily terminated
by Mr. Wise other than for "good reason," Mr. Wise's right to receive his salary
shall terminate on the date of termination of his employment and his right to
receive benefits will be determined according to the terms of the Company's
applicable plans. In March 1999, subject to certain conditions, Mr. Wise waived
his right to terminate his employment for "good reason" by reason of no longer
serving as the Chairman of the Board of the Company following the Merger with
Sonat. Mr. Wise is also be entitled to pension benefits under the terms of the
Company's Supplemental Benefits Plan, however, such pension benefits will be
based on one additional year of "age" and "service" credit for each year of the
term. Upon termination of his employment, this benefit will be funded through a
trust. If Mr. Wise's employment is terminated prior to the end of the term,
other than as a result of either a "change in control" of the Company or his
voluntary termination of the agreement for "good reason" pursuant to six months
prior written notice to the Company of such termination, Mr. Wise will be
subject to a noncompetition provision through the end of the term. Any
compensation and benefits received by Mr. Wise under the Severance Plan will
offset obligations of a similar nature under Mr. Wise's employment agreement. In
1999, the Compensation Committee decided to reinstate Mr. Wise's base salary
(which had been eliminated in 1996) in connection with the Merger with Sonat.
During 1997, the Company loaned Mr. Wise $1,564,000 for the purchase of his
residence in Houston in connection with the Company's relocation to Houston from
El Paso, Texas. The loan and interest (at 6.8%) thereon is payable at the end of
ten years, or at the time of Mr. Wise's retirement from the Company, whichever
is earlier. The loan is secured by Mr. Wise's Houston residence. In the event of
a "change in control" (as defined in the Severance Plan) and Mr. Wise meets all
the requirements for a severance benefit under the Severance Plan, he will not
be required to repay the loan and accrued interest and he may be entitled to a
payment to cover any adverse tax consequences (as provided in the Severance
Plan).
As part of the Merger, the Company entered into a termination and
consulting agreement with Ronald L. Kuehn, Jr., dated October 25, 1999. In
accordance with the termination and consulting agreement, Mr. Kuehn will serve
as the non-executive Chairman of the Company's Board of Directors through
December 31, 2000, and will receive a fee of $20,833 per month for a period of
12 months. In addition, during this time, Mr. Kuehn will receive the perquisites
that were available to him prior to the Merger, as well as non-cash compensation
available to other non-employee Directors. From October 25, 1999, and for the
remainder of his life, Mr. Kuehn will receive certain ancillary benefits made
available to him prior to the Merger, including the provision of office space
and related services, and payment of life insurance premiums sufficient to
provide a death benefit equal to four times his base pay as in effect
immediately prior to October 25, 1999. Mr. Kuehn and his eligible dependents
will also receive retiree medical coverage.
Pursuant to the Second Amended and Restated Agreement and Plan of Merger
dated March 13, 1999, by and between the Company and Sonat, Mr. Selim Zilkha
will be nominated by the Board of Directors (or a committee thereof) for
election to serve as a director of the Company as long as Mr. Zilkha and members
of his immediate family and trust own at least 5% of the then outstanding shares
of the Company's Common Stock.
The Company entered into a letter agreement with Mr. White dated February
22, 1991, which provides that Mr. White is entitled to additional years of
credited service with respect to pension benefits which are payable under the
Company's Supplemental Benefits Plan if he remains employed with the Company
until the specified age set forth in his letter agreement.
The Company has a Key Executive Severance Protection Plan (the "Severance
Plan") which provides severance benefits following a "change in control" (as
defined below) of the Company for all officers of the Company and certain of its
subsidiaries in an amount equal to three times annual salary, including maximum
bonus amounts as specified in the plan. The Severance Plan also provides for the
continuation of life and
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<PAGE> 23
health insurance for a period of 18 months subsequent to a participant's
termination of employment following a "change in control" of the Company, as
well as a supplemental pension payable under the Company's Supplemental Benefits
Plan calculated by adding three years of additional credited pension service and
certain other benefits. Benefits are payable under the Severance Plan for any
termination of employment within two years of the date of a "change in control"
of the Company, except where termination is by reason of death, disability, for
cause or instituted by the employee for other than "good reason." The Severance
Plan provides that certain additional payments will be made to terminated
participants following a "change in control" of the Company if the participant's
payments are subjected to a specified adverse excise tax. The Severance Plan
also provides that the Company will pay legal fees and expenses incurred by a
participant to enforce rights or benefits under the plan. For purposes of the
Severance Plan, a "change in control" of the Company is deemed to occur if (a)
any person or entity becomes the beneficial owner of 20% or more of the
Company's outstanding voting securities, (b) any person or entity purchases the
Common Stock pursuant to a tender offer or exchange offer, other than a tender
offer or exchange offer made by the Company, (c) the stockholders of the Company
approve a merger or consolidation, a sale or disposition of all or substantially
all of the Company's assets or a plan of liquidation or dissolution of the
Company, or (d) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof. Notwithstanding the foregoing,
a "change in control" will not be deemed to have occurred if the Company is
involved in a merger, consolidation or sale of assets which is in connection
with a corporate restructuring wherein stockholders of the Company immediately
before such transaction own at least 80% of the combined voting power of all
outstanding classes of securities of the company resulting from such transaction
in substantially the same proportion as their ownership in the Company
immediately prior to such transaction.
The Company's 1999 Omnibus Incentive Compensation Plan provides that stock
options, SARs, limited stock appreciation rights ("LSARs"), PUs and restricted
stock may be granted to officers and key employees of the Company and its
subsidiaries. This plan, approved by stockholders in 1999, succeeds both the
1995 Omnibus Compensation Plan and the 1995 Incentive Compensation Plan, which
have been terminated except as to currently outstanding awards under each of
those plans. The Plan Administrator will designate which employees are eligible
to participate, the amount of any grant and the terms and conditions (not
otherwise specified in the plan) of such grant. Pursuant to the terms of the
plan, if a "change in control" of the Company occurs, all outstanding stock
options become fully exercisable, SARs and LSARs become immediately exercisable,
designated amounts of PUs become fully vested and all restrictions placed on
awards of restricted Common Stock automatically lapse. For purposes of the plan,
the term "change in control" has the same meaning given such term in the
Severance Plan.
The Company's 1995 Omnibus Compensation Plan provided that stock options,
SARs, LSARs, PUs and restricted stock could be granted to officers and key
employees of the Company and its subsidiaries. Although this plan has been
terminated with respect to any new grants, certain stock options remain
outstanding thereunder. Pursuant to the terms of the plan, if a "change in
control" of the Company occurs, all outstanding stock options become fully
exercisable. For purposes of the plan, the term "change in control" has the same
meaning given such term in the Severance Plan.
The Company's Omnibus Compensation Plan, which is the predecessor to the
Company's 1995 Omnibus Compensation Plan, provided for the grant of stock
options, SARs, LSARs, performance share units and restricted Common Stock to
officers and key employees of the Company and its subsidiaries. Although this
plan has been terminated with respect to any new grants, certain stock options
remain outstanding thereunder. Pursuant to the terms of the plan, if a "change
in control" of the Company occurs, all outstanding stock options become fully
exercisable. For purposes of the plan, the term "change in control" has the same
meaning given such term in the Severance Plan, except that the definition does
not contain the exclusion dealing with mergers, consolidations or sales of
assets of the Company in connection with a corporate restructuring of the
Company.
The Company's 1995 Incentive Compensation Plan provided that awards of cash
and/or shares of restricted Common Stock could be granted to eligible officers
of the Company and its subsidiaries. Although this plan has been terminated with
respect to any new grants, certain shares of restricted common stock
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<PAGE> 24
remain outstanding thereunder. Pursuant to the terms of the plan, if a "change
in control" of the Company occurs, the current year's maximum incentive award
for each officer becomes fully payable within 30 days following such "change in
control" and all restrictions placed on restricted Common Stock lapse. For
purposes of the plan, the term "change in control" has the same meaning given
such term in the Severance Plan.
The El Paso Energy Corporation Strategic Stock Plan provides that stock
options, SARs, LSARs and shares of restricted Common Stock may be granted to
officers and key employees of the Company and its subsidiaries, primarily in
connection with the Company's strategic acquisitions. The Plan Administrator (as
defined in the plan) determines which employees are eligible to participate, the
amount of any grant and the terms and conditions (not otherwise specified in the
plan) of such grant. Pursuant to the terms of the plan, if a "change in control"
of the Company occurs, all outstanding stock options become fully exercisable,
SARs and LSARs become immediately exercisable and all restrictions placed on
awards of restricted Common Stock automatically lapse. For purposes of the plan,
the term "change in control" has the same meaning given such term in the
Severance Plan.
The Company's Supplemental Benefits Plan provides benefits to officers and
certain key management employees of the Company and its subsidiaries. The
benefits equal the amount that a participant failed to receive under the
Company's Pension Plan because the Pension Plan does not consider deferred
compensation (whether in deferred cash or deferred restricted Common Stock) for
purposes of calculating benefits and is subject to IRC limitations on the amount
of compensation to be considered when calculating benefits and on the amount of
benefits that can be paid to a participant. The plan also provides an additional
benefit equal to the amount of the Company's matching contribution to the
Company's Retirement Savings Plan that cannot be made because of deferred
compensation and IRC limitations. The plan may not be terminated so long as the
Pension Plan and/or Retirement Savings Plan remain in effect. The Management
Committee (as defined in the plan) designates who may participate and
administers the plan. Benefits under the Company's Supplemental Benefits Plan
are paid upon termination of employment in a lump-sum payment, in annuity or in
periodic installments. In the event of a "change in control," the supplemental
pension benefits become fully vested and nonforfeitable. For purposes of the
plan, the term "change in control" has the same meaning given such term in the
Severance Plan.
The Company's Deferred Compensation Plan allows eligible executives and key
management employees of the Company and its subsidiaries to defer all or a
portion of their base salaries and any other deferrals (including certain equity
awards) made in accordance with certain of the Company's compensation plans. The
Management Committee (as defined in the plan) designates the executives and key
management employees who may participate. Amounts deferred are payable upon
termination of employment in a lump-sum payment or in periodic installments,
except that the Management Committee may, in its discretion, accelerate
payments. Any amounts deferred shall be credited with interest, gains/losses
based on investments or other indices specified by the Management Committee.
The Company has a Senior Executive Survivor Benefits Plan which provides
certain senior executives of the Company and its subsidiaries, who are
designated by the Management Committee (as defined in the plan), with survivor
benefit coverage in lieu of the coverage provided generally for employees under
the Company's group life insurance plan. The amount of benefits provided, on an
after-tax basis, is two and one half times the executive's annual salary.
Benefits are payable in installments over 30 months beginning within 31 days
after the executive's death, except that the Management Committee may, in its
discretion, accelerate payments.
The Company had a Domestic Relocation Plan, under which the Company is
obligated, upon the termination of employment of the named executives (as a
result of death, retirement, or permanent disability) or in the event of a
change in control, as defined in the Severance Plan described above, to purchase
their residences in Houston which they acquired during the Company's relocation
from El Paso to Houston in 1997.
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PROPOSAL NO. 2 -- RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors desires to obtain stockholder ratification of the
resolution appointing PricewaterhouseCoopers LLP, 1100 Louisiana Street, Suite
4100, Houston, Texas 77002, as independent certified public accountants for the
Company for fiscal year 2000. PricewaterhouseCoopers LLP has served continuously
in such capacity for the Company since 1983.
If the appointment is not ratified, the adverse vote will be considered as
an indication to the Board of Directors that it should select other independent
certified public accountants for the following fiscal year. Given the difficulty
and expense of making any substitution of accountants after the beginning of the
current fiscal year, it is contemplated that the appointment for the fiscal year
2000 will be permitted to stand unless the Board of Directors finds other good
reason for making a change.
A representative from PricewaterhouseCoopers LLP will attend the Annual
Meeting to respond to appropriate questions raised during the Annual Meeting or
submitted to PricewaterhouseCoopers LLP in writing prior to the Annual Meeting,
and to make a statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR 2000.
COST OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card, and the cost of solicitation of proxies on behalf of
the Company's Board of Directors will be borne by the Company. The Company has
retained Georgeson Shareholder Communications Inc. to assist in the solicitation
of proxies from stockholders at an estimated fee of $10,000, plus reimbursement
of out-of-pocket expenses. In addition to the use of the mail, proxies may be
solicited personally or by telephone by regular employees of the Company without
additional compensation, as well as by Georgeson Shareholder Communications Inc.
Brokerage houses and other custodians and nominees will be asked whether other
persons are beneficial owners of the shares of Common Stock which they hold of
record and, if so, they will be supplied with additional copies of the proxy
materials for distribution to such beneficial owners. The Company will reimburse
banks, nominees, fiduciaries, brokers and other custodians for their costs of
sending the proxy materials to the beneficial owners of Common Stock.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. If, however, any other matters should come before the
Annual Meeting all proxies which have been signed and returned without further
instruction will give the persons designated thereon discretionary authority to
vote according to their best judgment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and beneficial owners of more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the SEC and the New York Stock Exchange. Directors, officers
and beneficial owners of more than 10% of the Company's equity securities are
also required by SEC regulations to furnish the Company with copies of all such
reports that they file. Based on the Company's review of copies of such forms
and amendments provided to it, the Company believes that all filing requirements
were complied with during the fiscal year ended December 31, 1999.
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SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Proxy Statement for
the Company's 2001 Annual Meeting of Stockholders must be mailed to the
Corporate Secretary, El Paso Energy Corporation, 1001 Louisiana Street, Houston,
Texas 77002, telephone (713) 420-6195, facsimile (713) 420-4099, and must be
received by the Corporate Secretary on or before November 22, 2000. The Company
will consider only proposals meeting the requirements of applicable SEC rules.
Pursuant to the Company's By-laws, in order for stockholder proposals that are
not included in such Proxy Statement to be brought before the 2001 Annual
Meeting of Stockholders, such proposals must be mailed to the Corporate
Secretary at the foregoing address and received not less than 90 days nor more
than 120 days prior to the scheduled date of such annual meeting.
ADDITIONAL INFORMATION -- INTERNET AND TELEPHONE VOTING
You may vote shares registered in your name, as well as shares that you
beneficially own and hold in "street name" through a broker, via the Internet or
by telephone. Votes submitted electronically via the Internet or by telephone
must be received by 5:00 p.m. eastern daylight time, on April 27, 2000. The
giving of such a proxy will not affect your right to vote in person at the
Annual Meeting. To vote via the Internet or by telephone, please follow the
instructions on your proxy card.
The Internet voting procedures are designed to authenticate stockholder
identities, to allow stockholders to give voting instructions, and to confirm
the accurate recording of stockholder instructions. Stockholders voting via the
Internet should understand that there may be costs associated with electronic
access, such as usage charges from Internet access providers and telephone
companies, that must be paid by the stockholder.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders not receiving a copy of such Annual Report may obtain one
free of charge by writing or calling Mr. David L. Siddall, Corporate Secretary,
El Paso Energy Corporation, 1001 Louisiana Street, Houston, Texas 77002,
telephone (713) 420-6195 and facsimile (713) 420-4099.
By Order of the Board of
Directors
/s/ DAVID L. SIDDALL
DAVID L. SIDDALL
Corporate Secretary
Houston, Texas
March 22, 2000
23
<PAGE> 27
SKU El Paso-AMPS-00
<PAGE> 28
DETACH HERE
SOLICITED BY THE BOARD OF DIRECTORS
EL PASO ENERGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 2000
The undersigned hereby appoints William A. Wise and Britton White Jr., and
each or any of them, with power of substitution, proxies for the undersigned and
authorizes them to represent and vote, as designated, all of the shares of
common stock of El Paso Energy Corporation, held of record by the undersigned
on March 1, 2000 at the Annual Meeting of Stockholders to be held at the Four
Seasons Hotel, 690 Newport Center Drive, Newport Beach, California 92660 on
April 28, 2000, and at any adjournment(s) or postponement(s) of such meeting
for the purposes identified on the reverse side of this proxy and with
discretionary authority as to any other matters that may properly come before
the Annual Meeting, including substitute nominees if any of the named nominees
for Director should be unavailable to serve for election, in accordance with and
as described in the Notice of Annual Meeting of Stockholders and Proxy
Statement. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS RETURNED
WITHOUT DIRECTION BEING GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
[SEE REVERSE] (IMPORTANT-TO BE SIGNED AND DATED ON REVERSE SIDE) [SEE REVERSE]
[SIDE] [SIDE]
<PAGE> 29
EL PASO ENERGY CORPORATION
C/O EQUISERVE
P.O BOX 8040
BOSTON, MA 02266-8040
<TABLE>
<CAPTION>
VOTE BY TELEPHONE VOTE BY INTERNET
<S> <C>
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
In addition, after your vote, you will have the opportunity
If outside the continental U.S. call collect on a to sign up and indicate your consent to receive future
Touch-Tone Phone (201-536-8073). shareholder communications via the Internet, if available.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy Statement
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website.
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/epg
3. Enter your 14-digit Control Number located 3. Enter your 14-digit Control Number located on
on your Proxy Card above your name. your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE (1-877-779-8683) anytime! Go to http://www.eproxyvote.com/epg anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
</TABLE>
DETACH HERE
<TABLE>
<S> <C> <C>
PLEASE MARK YOUR
VOTES AS INDICATED
[X] IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors. 2. Ratification of the appointment FOR AGAINST ABSTAIN
of PricewaterhouseCoopers LLP, as
NOMINEES: (01) Byron Allumbaugh, (02) Juan Carlos Braniff, Independent Certified Public [ ] [ ] [ ]
(03) James F. Gibbons, (04) Ronald L. Kuehn, Jr., (05) Ben Accountants of the Company for
F. Love, (06) Max L. Lukens, (07) Kenneth L. Smalley, (8) Adrian for fiscal year 2000.
M. Tocklin, (09) Malcolm Wallop, (10) William A. Wise, (11) Joe
B. Wyatt, (12) Selim K. Zilkha
Please sign exactly as your name appears. If acting
FOR WITHHOLD as attorney, executor, trustee or in other
ALL NOMINEES [ ] [ ] AUTHORITY TO VOTE representative capacity, sign name and title. If a
LISTED ABOVE FOR ALL NOMINEES corporation, please sign in full corporate name
LISTED ABOVE by President or other authorized officer. If a
partnership, please sign in partnership name by
[ ] authorized person. If held jointly, both parties must
--------------------------------------- sign and date.
For all nominees except as noted above
Signature: Date: Signature: Date:
------------------------------ ----------- ----------------------------- -----------
</TABLE>
<PAGE> 30
CONFIDENTIAL VOTING INSTRUCTIONS
EL PASO ENERGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - APRIL 28, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: BANKERS TRUST COMPANY, TRUSTEE UNDER EL PASO
ENERGY CORPORATION RETIREMENT SAVINGS PLAN
The undersigned hereby directs the Trustee to vote, in person or by
proxy, the full and fractional shares of common stock of El Paso Energy
Corporation, credited to my account under the referenced Plan at the close of
business on March 1, 2000, the record date, at the Annual Meeting of
Stockholders to be held at the Four Seasons Hotel, 690 Newport Center Drive,
Newport Beach, California, 92660 on Friday, April 28, 2000, and at any
adjournment(s) or postponement(s) of such meeting for the purpose identified on
the reverse side of this proxy and with discretionary authority as to any other
matters that may properly come before the Annual Meeting, including substitute
nominees if any of the named nominees for Director should be unavailable to
serve, in accordance with and as described in the Notice of Annual Meeting of
Stockholders and Proxy Statement.
If this proxy is completed, dated, signed and returned in the
accompanying envelope to the Trustee by April 25, 2000, the shares of stock
represented by this proxy will be voted in the manner directed herein by the
undersigned. IF THIS PROXY IS RETURNED TO THE TRUSTEE WITHOUT DIRECTION BEING
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
TO BE COMPLETED, SIGNED AND DATED ON REVERSE SIDE.
<PAGE> 31
PLEASE MARK YOUR CHOICE LIKE THIS [ ] IN
DARK INK AND SIGN AND DATE BELOW
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<S> <C> <C> <C>
1. Election of Directors-Nominees:
Byron Allumbaugh, Juan Carlos Braniff, James F. Gibbons, Ronald L. For All Nominees Withhold Authority to
Kuehn, Jr., Ben F. Love, Max L. Lukens, Kenneth L. Smalley, Adrian Vote for all nominees
M. Tocklin, Malcolm Wallop, William A. Wise, Joe B. Wyatt, Selim K. [ ] [ ]
Zilkha
[ ]
-------------------------------------
For all Nominees Except as Noted
2. Ratification of the appointment of PricewaterhouseCoopers LLP as For Against Abstain
Independent Certified Public Accountants for fiscal year 2000 [ ] [ ] [ ]
If acting as attorney, executor, trustee or in other representative
capacity, sign name and title. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
IMPORTANT: Please mark, sign, date, and return this proxy card
promptly using the enclosed envelope.
Shares held as of
March 1, 2000
----------------------------------------- -------------------
SIGNATURE DATE
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE> 32
CONFIDENTIAL VOTING INSTRUCTIONS
EL PASO ENERGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - APRIL 28, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: BANKERS TRUST COMPANY, TRUSTEE UNDER EL PASO
ENERGY CORPORATION BENEFITS PROTECTION TRUST
The undersigned hereby directs the Trustee to vote, in person or by
proxy, the full and fractional shares of common stock of El Paso Energy
Corporation, credited to my account under the referenced Plan at the close of
business on March 1, 2000, the record date, at the Annual Meeting of
Stockholders to be held at the Four Seasons Hotel, 690 Newport Center Drive,
Newport Beach, California, 92660 on Friday, April 28, 2000, and at any
adjournment(s) or postponement(s) of such meeting for the purpose identified on
the reverse side of this proxy and with discretionary authority as to any other
matters that may properly come before the Annual Meeting, including substitute
nominees if any of the named nominees for Director should be unavailable to
serve, in accordance with and as described in the Notice of Annual Meeting of
Stockholders and Proxy Statement.
If this proxy is completed, dated, signed and returned in the
accompanying envelope to the Trustee by April 25, 2000, the shares of stock
represented by this proxy will be voted in the manner directed herein by the
undersigned. IF THIS PROXY IS RETURNED TO THE TRUSTEE WITHOUT DIRECTION BEING
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
TO BE COMPLETED, SIGNED AND DATED ON REVERSE SIDE.
<PAGE> 33
PLEASE MARK YOUR CHOICE LIKE THIS [ ] IN
DARK INK AND SIGN AND DATE BELOW
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<S> <C> <C> <C>
1. Election of Directors-Nominees:
Byron Allumbaugh, Juan Carlos Braniff, James F. Gibbons, Ronald L. For All Nominees Withhold Authority to
Kuehn, Jr., Ben F. Love, Max L. Lukens, Kenneth L. Smalley, Adrian Vote for all nominees
M. Tocklin, Malcolm Wallop, William A. Wise, Joe B. Wyatt, Selim K. [ ] [ ]
Zilkha
[ ]
-------------------------------------
For all Nominees Except as Noted
2. Ratification of the appointment of PricewaterhouseCoopers LLP as For Against Abstain
Independent Certified Public Accountants for fiscal year 2000 [ ] [ ] [ ]
If acting as attorney, executor, trustee or in other representative
capacity, sign name and title. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
IMPORTANT: Please mark, sign, date, and return this proxy card
promptly using the enclosed envelope.
Shares held as of
December 31, 1999
----------------------------------------- -------------------
SIGNATURE DATE
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
