<PAGE>
The Coastal Corporation The Energy People
March 27, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of The Coastal Corporation to be held on May 8, 1997, at the
Renaissance Houston Hotel, Greenway Plaza, Houston, Texas, at 10:00 a.m. Your
Board of Directors and executive officers look forward to personally greeting
those stockholders able to attend.
The matters to be acted on at the meeting are set forth in the
accompanying Notice of Annual Meeting and Proxy Statement.
It is important that your shares be represented at the meeting. Would
you please sign, date and mail the enclosed proxy in the envelope provided at
your earliest convenience.
Sincerely,
O. S. WYATT, JR.
----------------------------
O. S. Wyatt, Jr.
Chairman of the Board
DAVID A. ARLEDGE
----------------------------
David A. Arledge
President and
Chief Executive Officer
COASTAL TOWER
NINE GREENWAY PLAZA
HOUSTON, TEXAS 77046-0995
<PAGE>
THE COASTAL CORPORATION
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
NOTICE OF THE 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1997
To the Stockholders of The Coastal Corporation:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
The Coastal Corporation ("Coastal" or the "Company") will be held at 10:00 a.m.
on May 8, 1997, at the Renaissance Houston Hotel, Greenway Plaza, Houston,
Texas, for the following purposes:
(1) To elect four Class II directors to terms of office expiring
at the year 2000 Annual Meeting of Stockholders; and
(2) To consider a stockholder proposal, described in the
accompanying Proxy Statement, which is opposed by the Board
of Directors; and
(3) To transact such other business as may properly come before
the meeting or any adjournments thereof.
The voting stock of the Company should be represented as fully as
possible at the Annual Meeting. Therefore, it will be appreciated if you would
sign, date and return the enclosed proxy at your earliest convenience. You may,
of course, change or withdraw your proxy at any time prior to the voting at the
meeting. However, signing and returning the proxy will assure your
representation at the Annual Meeting.
The Board of Directors has fixed the close of business on March 12,
1997 as the record date for the determination of holders of Common Stock, Class
A Common Stock, $1.19 Cumulative Convertible Preferred Stock, Series A, $1.83
Cumulative Convertible Preferred Stock, Series B, and $5.00 Cumulative
Convertible Preferred Stock, Series C, entitled to notice of, and to vote at,
the Annual Meeting.
By Order of the Board of Directors,
AUSTIN M. O'TOOLE
-----------------------------------
Austin M. O'Toole
Senior Vice President and Secretary
March 27, 1997
YOUR VOTE IS IMPORTANT
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AT THE MEETING AND SAVE THE
EXPENSE OF A SECOND MAILING, WOULD YOU PLEASE SIGN, DATE AND MAIL YOUR PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
TABLE OF CONTENTS
Page
Stock Ownership........................................................... 2
Corporate Governance...................................................... 3
Proposal 1 - Election of Directors........................................ 3
Information Regarding Directors........................................... 5
Committees and Meetings............................................. 6
Compensation of Directors........................................... 7
Executive Compensation.................................................... 8
Summary of Cash and Certain Other Compensation...................... 8
Stock Options....................................................... 9
Option/SAR Exercises and Holdings................................... 10
Compensation and Executive Development Committee Report on Executive
Compensation........................................................ 10
Pension Plan Table........................................................ 13
Performance Graph - Shareholder Return on Common Stock.................... 14
Transactions with Management and Others................................... 14
Proposal 2 - Stockholder Proposal......................................... 15
Vote Required for Approval................................................ 16
Compliance with Section 16(a) of the Exchange Act......................... 16
Independent Auditors...................................................... 16
Stockholder Proposals..................................................... 16
Other Matters............................................................. 17
Availability of Form 10-K Annual Report .................................. 17
(i)
<PAGE>
THE COASTAL CORPORATION
PROXY STATEMENT
The enclosed proxy is being solicited by the Board of Directors of The
Coastal Corporation ("Coastal" or the "Company"), Coastal Tower, Nine Greenway
Plaza, Houston, Texas 77046-0995, telephone number (713) 877-1400, for use at
the 1997 Annual Meeting of Stockholders (the "Meeting") to be held at 10:00 a.m.
on May 8, 1997, at the Renaissance Houston Hotel, Greenway Plaza, Houston,
Texas, or any adjournments thereof. Certain directors, officers and employees of
the Company will solicit proxies by telephone, telegram, mail or personal
contact at the Company's expense. In addition, the Company has retained D. F.
King & Co., Inc. to assist in the solicitation of proxies and will pay such firm
a fee of $6,000 plus reimbursement of expenses. Arrangements will be made with
brokers, nominees and fiduciaries to send proxies and proxy material at the
Company's expense to their principals. This proxy statement is being mailed on
or about March 27, 1997 to stockholders of record on March 12, 1997.
The purpose of the Meeting is for the stockholders of the Company (1) to
elect four Class II directors to terms of office expiring at the year 2000
Annual Meeting of Stockholders; and (2) to consider and act on a stockholder
proposal, which is opposed by the Board of Directors; and (3) to transact such
other business as may properly come before the Meeting or any adjournments
thereof.
The total number of shares of stock of the Company outstanding and
entitled to vote at the Meeting is 105,995,018 consisting of: 59,068 shares of
$1.19 Cumulative Convertible Preferred Stock, Series A (the "Series A Preferred
Stock"), 72,398 shares of $1.83 Cumulative Convertible Preferred Stock, Series B
(the "Series B Preferred Stock"), and 31,940 shares of $5.00 Cumulative
Convertible Preferred Stock, Series C (the "Series C Preferred Stock") (the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
are referred to herein collectively as the "Preferred Stock"), 105,451,513
shares of Common Stock, and 380,099 shares of Class A Common Stock. Each share
of Common Stock or Preferred Stock entitles the holder to one vote with respect
to all matters to come before the Meeting and all of such shares will vote
together as a single class. Except with respect to the election of one of the
four Class II directors, each share of Class A Common Stock entitles the holder
to 100 votes with respect to all matters to come before the Meeting, voting with
the Common Stock and the Preferred Stock. In the election of directors, the
Class A Common Stock will vote, together as a class with the Common Stock and
Preferred Stock, for the election of three of the four Class II directors
standing for election. The Common Stock and Preferred Stock will vote together
as a class for the election of the remaining Class II director standing for
election. Only holders of voting securities of record at the close of business
on March 12, 1997 are entitled to notice of, and to vote at, the Meeting or any
adjournments thereof. Management knows of no person that owns beneficially more
than five percent (5%) of the outstanding shares of any class of voting
securities of the Company, other than as set forth below under "Stock
Ownership." The aggregate of all shares entitled to vote at the meeting have
143,624,819 votes. A quorum consists of a majority of the votes entitled to be
cast, or 71,812,410 votes.
The Annual Report of the Company for the year ended December 31, 1996,
including financial statements, is being mailed on or about March 27, 1997,
together with this Proxy Statement to all stockholders of record as of March 12,
1997, except for accounts where the stockholder has filed a written request to
eliminate duplicate reports. Additional copies of the Annual Report are
available without charge, upon request. See "Availability of Form 10-K Annual
Report."
Each properly executed proxy received at or before the Meeting on May 8,
1997 will be voted at the Meeting as specified therein. If a stockholder does
not specify otherwise, the shares represented by his or her proxy will be voted
FOR the election of all the nominees as Class II directors and AGAINST the
stockholder proposal. The shares held by each stockholder who signs and returns
the enclosed proxy will be counted for purposes of determining the presence of a
quorum at the Meeting unless such proxy is timely revoked. If the enclosed form
of proxy is executed and returned, it may nevertheless be revoked at any time
before it is voted by giving written notice to the Secretary of the Company, or
by a stockholder personally voting his or her shares at the Meeting, or by
giving a later dated proxy.
<PAGE>
STOCK OWNERSHIP
The following table sets forth information, as of March 12, 1997, with
respect to each person known or believed by the Company to be the beneficial
owner, who has or shares voting and/or investment power (other than as set forth
below), of more than five percent (5%) of any class of its voting securities.
<TABLE>
<CAPTION>
Name and Address Percent (%)
of Beneficial Owner Title of Class Number of Shares of Class <F1>
------------------- ------------------ ---------------- ------------
<S> <C> <C> <C>
O. S. Wyatt, Jr. Class A Common Stock 154,577 <F2> 40.4
Chairman of the Board
of Coastal
Nine Greenway Plaza
Houston, Texas 77046-0995
Trustee/Custodian under the Common Stock 12,344,644 <F3> 11.7
Thrift Plan, ESOP and Class A Common Stock 64,429 <F3> 16.8
Pension Plan of Coastal
and its subsidiaries
Texas Commerce Bank
National Association
600 Travis, 10th Floor
Houston, Texas 77002
FMR Corp. Common Stock 7,411,815 7.0
82 Devonshire Street
Boston, Massachusetts 02109
Isabel H. Long Series A Preferred Stock 28,976 49.1
485 S. Parkview Ave.,
Columbus, Ohio 43209-1075
The DeZurik Family Series C Preferred Stock 31,940 <F4> 100.0
c/o David DeZurik
2460 S.E. 8th St.
Pompano Beach, Florida 33062
<FN>
- ----------
<F1>
Class includes presently exercisable stock options held by directors and
executive officers.
<F2>
Includes 7,354 shares of Class A Common Stock owned by the spouse and a son
of Mr. Wyatt, as to which shares beneficial ownership is disclaimed.
<F3>
The Trustee/Custodian is the record owner of these shares; and also is the
record owner of 742 shares of the Series B Preferred Stock, each of which is
convertible into 3.6125 shares of Common Stock and 0.1 share of Class A Common
Stock. Voting instructions are requested from each participant in the Thrift
Plan and ESOP and from the trustees under a Pension Trust. Absent timely voting
instructions, the Trustee is permitted to vote Thrift Plan and ESOP shares on
any matter, but has no authority to vote Pension Plan shares. Nor does the
Trustee/Custodian have any authority to dispose of shares except pursuant to
instructions of the administrator of the Thrift Plan and ESOP or pursuant to
instructions from the trustees under the Pension Trust.
<F4>
Members of the DeZurik family acquired the Series C Preferred Stock in
connection with a 1972 Agreement of Merger involving the acquisition of Colorado
Interstate Gas Company, a subsidiary of the Company.
</FN>
</TABLE>
2
<PAGE>
CORPORATE GOVERNANCE
The Board of Directors ("Board") presently consists of twelve members, of
whom nine are outside directors, including several former officers of the
Company. The Board also has one non-voting Director emeritus. Each of the
outside directors, in the opinion of the Board, is independent of management and
free of any relationship that would interfere with the exercise of independent
judgment and is eligible to serve as a member of the Board's independent
committees under the applicable rules and regulations of the Securities and
Exchange Commission and the New York Stock Exchange.
The Board is committed to the policy of having a majority of its directors
as "independent directors." In fact, since 1988, no additional insider (i.e.,
officer or employee) has been elected to the Board of Directors.
At the Annual Meeting of the Board of Directors, to be held immediately
following the Annual Meeting of Stockholders, the Board will appoint a
Nominating Committee consisting entirely of independent directors. The committee
will be charged with developing criteria for Board membership and will actively
seek to expand the composition of the Board of Directors from twelve to at least
14 members. Persons selected for nomination to the Board will not include
present officers or employees of the Company or persons having a significant tie
to the Company or management other than as stockholders.
The primary qualification for Board membership will continue to be the
individual's ability to contribute to the business success of the Company and
the best interests of its stockholders. The Nominating Committee will also be
available to senior management of the Company for consultation concerning Board
candidates.
The Company's Audit Committee and Compensation and Executive Development
Committee, consisting exclusively of independent, outside directors, will
continue to be so constituted.
The Board of Directors is also committed to regular assessments, at least
annually, of its own structure and performance. This assessment would include a
review of the number and length of Board meetings, the content, sufficiency and
timeliness of Board materials in support of agenda items, the accessability to
the Board of members of management of the Company, and the composition of Board
committees. The Nominating Committee would also be charged with the
responsibility of monitoring the availability, performance and contribution of
the incumbent directors and to make recommendations to the Board concerning the
re-nomination of directors whose terms are expiring at each Annual Meeting of
Stockholders.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a Board
of Directors to serve in three classes having staggered terms of three years
each. At present, there are twelve directors: four directors whose terms of
office expire at the 1997 Annual Meeting; four directors whose terms of office
expire at the 1998 Annual Meeting; and four directors whose terms of office
expire at the 1999 Annual Meeting. Information regarding each of the incumbent
directors is set forth herein under the headings "Information Regarding
Directors," and "Executive Compensation." At the 1997 Annual Meeting, the
stockholders will be asked to elect four Class II directors.
The four nominees for Class II director, each of whom is presently serving
in that capacity, and whose new terms would expire at the year 2000 Annual
Meeting of Stockholders, are: David A. Arledge, George L. Brundrett, Jr., L. D.
Wooddy, Jr. and O. S. Wyatt, Jr.
The holders of Common Stock, voting as a class with the Preferred Stock,
are entitled to elect 25% of the Company's directors standing for election at
each meeting held for the election of directors. Mr. Arledge has been nominated
by the Board of Directors to stand for election by the holders of Common Stock
and Preferred Stock at the 1997 Annual Meeting. Each share of Common Stock and
Preferred Stock has one vote for the election of this director. All directors
and executive officers as a group own shares representing 3.1% of the votes
entitled to be cast for the election of Mr. Arledge.
3
<PAGE>
The holders of Common Stock, Preferred Stock and Class A Common Stock,
voting together as a class, are entitled to elect the remaining 75% of the
Company's directors standing for election. Messrs. Brundrett, Wooddy and Wyatt
have been nominated by the Board of Directors to stand for election by the
holders of Common Stock, Preferred Stock and Class A Common Stock at the 1997
Annual Meeting. Each share of Common Stock or Preferred Stock has one vote for
the election of these three directors. Each share of Class A Common Stock has
100 votes for the election of these three directors. Holders of Class A Common
Stock entitled to vote at the Meeting have 38,009,900 votes of a total of
143,624,819 votes, or 26.5% of the votes entitled to be cast. All directors and
executive officers as a group own shares representing 15.1% of the votes
entitled to be cast for the election of Messrs. Brundrett, Wooddy and Wyatt.
If any nominee becomes unwilling or unable to serve, which is not
expected, the proxies will be voted for a substitute person, if any, designated
by the Board of Directors.
The enclosed form of proxy provides a means for stockholders to vote for
the election of the Class II directors listed above, to withhold authority to
vote for one or more of such directors, or to withhold authority to vote for all
of such directors. Unless a stockholder who withholds authority votes for the
election of one or more other persons at the Meeting or votes by means of
another proxy, the withholding of authority will have no effect upon the
election of directors, assuming that a quorum (a majority of the votes entitled
to be cast), is present at the Meeting.
4
<PAGE>
INFORMATION REGARDING DIRECTORS
The following table sets forth information, as of March 12, 1997,
regarding each of the current directors, including Class II directors standing
for election, and all directors and executive officers as a group. Each director
has furnished the information with respect to age, principal occupation and
ownership of shares of stock of the Company. Messrs. Arledge, Brundrett, Wooddy
and Wyatt are Class II directors whose terms expire in 1997; Messrs. Cordes,
Gates, Johnson and McDade are Class III directors whose terms expire in 1998;
and Messrs. Bissell, Burrow, Chapin and Katzin are Class I directors whose terms
expire in 1999.
<TABLE>
<CAPTION>
Number of Shares
Name, (Age), Year Offices with Coastal Beneficially Percent (%)
First Became Director and/or Principal Occupation Title of Class Owned<F1> of Class*
--------------------- --------------------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
O. S. Wyatt, Jr. Chairman of the Board Common Stock 2,858,863 <F2> 2.7
(72), 1955 Class A Common Stock 154,577 <F2> 40.4
Harold Burrow Vice Chairman of the Board; Common Stock 137,127 <F2>
(82), 1973 Chairman of Colorado Interstate Gas Class A Common Stock 13,601 3.6
Company and American Natural
Resources Company
David A. Arledge President and Common Stock 181,112
(52), 1988 Chief Executive Officer Class A Common Stock 2,352
John M. Bissell Chairman of the Board Common Stock 5,080
(66), 1985 of Bissell Inc. Class A Common Stock -0-
George L. Brundrett, Jr. Attorney Common Stock 4,910
(75), 1973 Class A Common Stock 2,290
Roy D. Chapin, Jr. Former Chairman and Common Stock 3,250 <F2>
(81), 1988 Chief Executive Officer Class A Common Stock -0-
of American Motors Corporation
James F. Cordes Retired; former Executive Vice Common Stock 18,708
(56), 1985 President of the Company Class A Common Stock -0-
Roy L. Gates Ranching and Investments Common Stock 4,095
(68), 1969 Class A Common Stock 2,736
Kenneth O. Johnson Senior Vice President Common Stock 40,020
(76), 1988 Class A Common Stock 9,604 2.5
Jerome S. Katzin Retired Investment Banker Common Stock 41,803
(78), 1983 Class A Common Stock -0-
Thomas R. McDade Senior Partner, Law Firm of McDade, Common Stock 500
(64), 1993 Fogler, Maines & Lohse L.L.P., Houston Class A Common Stock -0-
L. D. Wooddy, Jr. Retired; Former President of Exxon Common Stock 3,000
(70), 1992 Pipeline Company Class A Common Stock -0-
All directors and executive officers as a group Common Stock 3,711,260 <F3> 3.5
(33 persons, including the above) Class A Common Stock 186,568 <F3> 48.8
(See footnotes on following page)
<FN>
* Less than one percent unless otherwise indicated. Class includes
outstanding shares and presently exercisable stock options held by
directors and executive officers. Excluding presently exercisable
stock options, directors and executive officers as a group would own
184,288 shares of Class A Common Stock, which would constitute 48.5%
of the shares of such class.
5
<PAGE>
<F1>
Except for the shares referred to in Notes 2 and 3 below, and the shares
represented by presently exercisable stock options, the holders are believed by
Coastal to have sole voting and investment power as to the shares indicated.
Amounts include shares in Coastal ESOP and Thrift Plan, and presently
exercisable stock options held by Messrs. Arledge (162,093 shares of Common
Stock and 2,280 shares of Class A Common Stock), Cordes (8,000 shares of Common
Stock), and Johnson (7,848 shares of Common Stock).
<F2>
Includes shares owned by the spouse and a son of Mr. Wyatt (266,895 shares of
Common Stock and 7,354 shares of Class A Common Stock), by the spouse of Mr.
Burrow (5,000 shares of Common Stock) and by the spouse of Mr. Chapin (1,000
shares of Common Stock), as to which shares beneficial ownership is disclaimed.
<F3>
Includes presently exercisable stock options to purchase 453,829 shares of
Common Stock and 2,280 shares of Class A Common Stock; also includes 280,928
shares of Common Stock and 7,354 shares of Class A Common Stock owned by spouses
and children, as to which shares beneficial ownership is disclaimed. In
addition, one executive officer owns 8 shares of Series B Preferred Stock, each
of which is convertible into 3.6125 shares of Common Stock and 0.1 share of
Class A Common Stock.
</FN>
</TABLE>
No incumbent director is related by blood, marriage or adoption to another
director or to any executive officer of the Company or its subsidiaries or
affiliates.
Except as hereafter indicated, the above table includes the principal
occupation of each of the directors during the past five years. The listed
executive officers have held various executive positions with Coastal, American
Natural Resources Company, ANR Pipeline Company and/or Colorado Interstate Gas
Company during the five-year period.
Mr. Bissell is a member of the Boards of Directors of Old Kent Financial
Corporation and Batts Inc.
Mr. Cordes is a member of the Board of Directors of Comerica Inc.
Mr. Katzin is a member of the Board of Directors of Qualcomm Incorporated.
Mr. McDade is a trial lawyer and the founding senior partner of the
Houston law firm of McDade, Fogler, Maines & Lohse L.L.P. Prior to forming
McDade, Fogler, Maines & Lohse L.L.P., he was a senior partner in the Houston
law firm of Fulbright & Jaworski. He is a member of the Board of Directors of
Equity Corporation International.
Messrs. Arledge and Burrow are directors of Colorado Interstate Gas
Company and ANR Pipeline Company. Both of these subsidiaries of the Company are
subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
Committees and Meetings
The Company's Board of Directors has an Executive Committee which consists
of Messrs. Wyatt (Chairman), Arledge, Burrow, Cordes and Wooddy which has
general authority to act in the management and business affairs of the Company
when the full Board of Directors is not in session, except for the review of
capital expenditures in excess of $15,000,000.
As permitted by the General Corporation Law of the State of Delaware and
the Company's By-Laws, the Board of Directors and the Executive Committee took
various corporate actions during 1996 by means of unanimous written consent.
These actions included approval or review of certain capital expenditures,
credit arrangements, corporate guarantees, elections of officers, establishment
of bank accounts and similar authorizations.
During 1996, the Board of Directors held 8 regular meetings and 5 special
meetings and also approved 1 action by unanimous consent. The Executive
Committee held 6 meetings and approved 65 matters by consent action.
6
<PAGE>
Each incumbent director attended a minimum of 83% of the aggregate of (i)
the 1996 meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board of Directors on which he served.
Nine directors attended 100% of such meetings. Attendance of all directors at
such meetings averaged 96%.
The Company also has an Audit Committee consisting of Messrs. Katzin
(Chairman), Bissell and Gates which meets periodically to review the results of
operations of the Company with members of the Company's staff who are
responsible for accounting matters and from time to time with the Company's
independent auditors, Deloitte & Touche LLP. During 1996, the Audit Committee
met 8 times.
In addition, the Company has a Compensation and Executive Development
Committee which consists of Messrs. Bissell (Chairman), Chapin and Katzin which
meets from time to time to review compensation, stock option awards and other
matters concerning remuneration of employees of the Company. During 1996, the
Compensation and Executive Development Committee met 5 times and also approved
20 matters by consent action.
The Company does not presently have a nominating committee (see discussion
under "Corporate Governance" concerning the establishment of a Nominating
Committee).
Compensation of Directors
There is a limitation of $60,000 per annum on director fees paid by
Coastal to any non-officer director. During 1996, each director, except Messrs.
Wyatt, Arledge, Cordes and Johnson received directors' fees at the annual rate
of $24,000 for services as a director; Mr. Burrow and Mr. Wooddy each received
fees of $24,000 for services as members of the Executive Committee; Messrs.
Bissell, Katzin and Gates each received fees of $24,000 for services as members
of the Audit Committee; Messrs. Bissell and Katzin each received fees of $12,000
for services as members of the Compensation and Executive Development Committee.
Mr. Chapin received fees of $15,000 for services as a member of the Compensation
and Executive Development Committee.
Mr. Burrow retired effective December 31, 1995 and entered into consulting
agreements with Colorado Interstate Gas Company and ANR Pipeline Company
pursuant to which he received consulting fees in the aggregate of $60,000 in
1996. He also received aggregate fees of $48,000 as a director and member of the
Executive Committee of Coastal, fees of $18,000 as a director of Colorado
Interstate Gas Company and fees of $24,000 as a director of ANR Pipeline
Company. Mr. Burrow has elected to defer receipt of his directors' fees until he
is no longer serving as a director.
Mr. Wooddy has elected to defer receipt of his directors' fees until he is
no longer serving as a director.
Mr. Cordes retired effective March 7, 1997. He will receive aggregate fees
of $4,000 per month (aggregating $40,000 in 1997) as a director and member of
the Executive Committee of Coastal.
Messrs. Bissell and Chapin received fees in 1996 of $10,875 and $12,000,
respectively, for services as directors of ANR Pipeline Company.
Mr. McDade's firm received a retainer of $250,000 for legal services
rendered to the Company in 1996; and is receiving a retainer of $200,000 for
legal services rendered and to be rendered in 1997.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth information for the fiscal years ended
December 31, 1996, 1995 and 1994 as to cash compensation paid by the Company and
its subsidiaries, as well as certain other compensation paid or accrued for
those years, to the Company's Chief Executive Officer ("CEO") and its four other
most highly compensated executive officers (the "Named Executive Officers").
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
------------------------------
Annual Compensation<F1> Awards Payouts
---------------------------------- ------------ -------------
Securities All Other
Underlying LTIP Compen-
Name and Options/ Payouts sation
Principal Position Year Salary ($) Bonus ($)<F2> SARs (#)<F3> ($)<F4> $<F5>
- ------------------ ---- ---------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
O. S. Wyatt, Jr., 1996 849,093 300,000 -0- 67,928
Chairman of the Board 1995 849,093 300,000 -0- 67,928
1994 849,093 200,000 -0- 67,928
David A. Arledge, 1996 707,194 300,000 150,000 56,576
President, CEO 1995 622,867 300,000 50,000 85,875 49,829
and Director 1994 553,873 150,000 -0- 44,310
James F. Cordes,<F6> 1996 592,223 -0- -0- 12,000
Executive V.P. 1995 592,223 135,000 15,000 42,937 47,378
and Director 1994 592,223 130,000 -0- 47,378
James A. King, 1996 343,823 80,000 10,000 13,572
Executive V.P. 1995 343,823 80,000 10,000 10,141
1994 343,823 75,000 -0- 6,877
Jerry D. Bullock, 1996 249,147 160,000 10,000 6,383
Senior V.P. 1995 249,147 75,000 10,000 6,766
1994 249,147 65,000 -0- 3,383
<FN>
- ------------------------
<F1>
Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed the
lesser of $50,000 or 10 percent of annual salary and bonus for any named
individual.
<F2>
Bonuses are based on the following factors: the individual's position; the
individual's responsibility; and the individual's ability to impact the
Company's financial success. See Committee Report on page 10.
<F3>
The options do not carry any stock appreciation rights.
<F4>
During 1995, Messrs. Arledge and Cordes received one-time cash payments in
the amounts indicated in connection with awards made in 1987 under the Company's
Performance Unit Plan. No further awards have been made under this Plan.
<F5>
All Other Compensation for 1996 consists of: (i) Company contributions to
the Coastal Thrift Plan (O. S. Wyatt, Jr. $12,000; David A. Arledge $12,000;
James F. Cordes $12,000; James A. King $6,000; and Jerry D. Bullock
8
<PAGE>
$6,000); and (ii) certain payments in lieu of Thrift Plan contributions (O.
S. Wyatt, Jr. $55,927; David A. Arledge $44,576; James F. Cordes $-0-; James A.
King $7,572; and Jerry D. Bullock $383); these payments are made to all
employees of the Company and its subsidiaries who participate in the Thrift Plan
who must discontinue their Thrift Plan participation due to federal statutory
limits.
<F6> Mr. Cordes retired as an officer of the Company effective March 7, 1997.
</FN>
</TABLE>
Stock Options
The following table sets forth information with respect to stock options
granted on March 1, 1996 for the fiscal year ended December 31, 1996 to the
Named Executive Officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year (1996)
<CAPTION>
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise Grant Date
Options/SARs Employees in Price Expiration Present
Name Granted<F1> Fiscal Year<F2> ($/Sh) Date Value ($)<F3>
---- ----------------- --------------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
O. S. Wyatt, Jr. -0- -0- -0- -0- -0-
David A. Arledge 150,000 22.6 36.56 2/28/06 1,848,108
James F. Cordes -0- -0- -0- -0- -0-
James A. King 10,000 1.5 36.56 2/28/06 123,207
Jerry D. Bullock 10,000 1.5 36.56 2/28/06 123,207
<FN>
- ---------------------
<F1>
Options expire ten years from the date of issuance and are granted at the
fair market value of the Common Stock of the Company on the date of grant.
Options vest cumulatively at a rate of 20% of the option shares on each
anniversary date of the date of grant beginning with the second anniversary.
<F2>
The options do not carry any stock appreciation rights.
<F3>
Based on the Black-Scholes option pricing model expressed as a ratio .337 x
exercise price x number of shares. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on
assumptions that include (i) a stock price volatility of .1925, calculated using
monthly stock prices for the three years prior to the grant date, (ii) an
interest rate of 6.25%, (iii) a dividend yield of 1.40% and (iv) an expected
option holding period of eight years. No adjustments were made for the
non-transferability of the options or to reflect any risk of forfeiture prior to
vesting. The Securities and Exchange Commission ("S.E.C.") requires disclosure
of the potential realizable value or present value of each grant. The Company's
use of the Black-Scholes model to indicate the present value of each grant is
not an endorsement of this valuation.
</FN>
</TABLE>
9
<PAGE>
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the fiscal year ("FY") ended
December 31, 1996.
<TABLE>
Aggregated Option/SAR Exercises In Last Fiscal Year
And FY-End Option/SAR Values (1996)
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)<F1>
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- -------------------- ------------------- -------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
O. S. Wyatt, Jr. -0- -0- -0- / -0- -0- / -0-
David A. Arledge 55,000 1,118,737 187,373 / 228,000 3,943,307 / 3,595,560
James F. Cordes 30,000 234,914 -0- / 35,000 -0- / 754,500
James A. King -0- -0- 26,000 / 24,000 599,800 / 432,200
Jerry D. Bullock 6,000 69,920 2,000 / 27,000 41,760 / 491,860
<FN>
- ------------------
<F1>
$-based on the market price of $49.44 at December 31, 1996.
</FN>
</TABLE>
COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The following report has been provided by The Coastal Corporation's
Compensation and Executive Development Committee (the "Committee") of the Board
of Directors in accordance with current S.E.C. proxy statement disclosure
requirements. The members of the Committee include John M. Bissell (Chairman),
Roy D. Chapin, Jr., and Jerome S. Katzin.
This material states Coastal's current overall compensation philosophy and
program objectives. Detailed descriptions of the Company's compensation programs
are provided as well as the information on the Company's 1996 pay levels for the
CEO.
Overall Objectives of the Executive Compensation Program
The Company's compensation philosophy and program objectives are directed
by two primary guiding principles. First, the program is intended to provide
fully competitive levels of compensation - at expected levels of performance -
in order to attract, motivate and retain talented executives. Second, the
program is intended to create an alignment of interests between the Company's
executives and stockholders such that a significant portion of each executive's
compensation is directly linked to maximizing stockholder value.
In support of this philosophy, the executive compensation program is
designed to reward performance that is directly relevant to the Company's
short-term and long-term success. As such, the Company attempts to provide both
short-term and long-term incentive pay that varies based on corporate and
individual performance.
10
<PAGE>
To accomplish these objectives, the Committee has structured the executive
compensation program with three primary underlying components: base salary,
annual incentives, and long-term incentives (i.e., stock options). The following
sections describe the Company's plans by element of compensation and discuss how
each component relates to the Company's overall compensation philosophy.
In reviewing this information, reference is often made to the use of
competitive market data as criteria for establishing targeted compensation
levels. The Company targets the market 50th percentile for its total
compensation program and actual total compensation rates in 1996 were at or
below the targeted level. (However, the Company's competitive pay posture varies
by pay element, as described below.) Several market data sources are used by the
Company, including energy industry norms for the publicly traded peer companies
included in the Company's shareholder return performance graph, as reflected in
these companies' proxy statements. In addition, we utilize published survey data
and data obtained from independent consultants that are for general industry
companies similar in size (i.e., revenues) to the Company. The published surveys
include data on over 50 companies of comparable size to the Company, as measured
by revenues. Greater emphasis is placed on the published data and data obtained
from consultants than on the data for proxy peers, since the published data and
consulting data are reflective of company size.
Base Salary Program
The Company's base salary program is based on a philosophy of providing
base pay levels that fall between the market 50th and 75th percentiles. The
Company periodically reviews its executive pay levels to assure consistency with
the external market. Generally, the Company's actual base salary levels for 1996
for executives as a group were consistent with the targeted percentiles. We
believe it is crucial to provide strongly competitive salaries over time in
order to attract and retain executives who are highly talented.
Annual salary adjustments for the Company are based on several factors:
general levels of market salary increases, individual performance, competitive
base salary levels, and the Company's overall financial results. The Company
reviews performance qualitatively considering total shareholder returns, the
level of earnings, return on equity, return on total capital and individual
business unit performance. These criteria are assessed qualitatively and are not
weighted. All base salary increases are based on a philosophy of
pay-for-performance and perceptions of an individual's long-term value to the
Company. As a result, employees with higher levels of performance sustained over
time will be paid correspondingly higher salaries.
The Annual Bonus Plan
The Company's Annual Bonus Plan is intended to (1) reward key employees
based on company/business unit and individual performance; (2) motivate key
employees; and (3) provide competitive cash compensation opportunities to plan
participants. Under the plan, target award opportunities vary by individual
position and are expressed as a percent of base salary. The individual target
award opportunities, which are slightly below market median levels, are then
aggregated into a total target pool which is adjusted as described below. The
amount a particular executive may earn is directly dependent on the individual's
position, responsibility, and ability to impact our financial success.
The actual bonus pool is established each year by modifying the target
pool based on the Company's overall performance against measures established by
the Committee. In fiscal year 1996, the key performance measure considered was
earnings before interest and taxes ("EBIT") against plan. This measure was
weighted 50% of the total bonus program. In 1996 the Company's EBIT performance
was above threshold standards (minimum performance level for bonus payment) but
below a very aggressive plan, resulting in the EBIT portion of the bonus paid
being below target. The remaining 50% of the annual bonus opportunity in 1996 is
a discretionary annual bonus pool. As a result, no formula performance measures
were used in establishing the size of awards under this portion of the plan.
However, in establishing the size of the discretionary bonus pool, the Committee
considered the Company's Return on Equity relative to industry peers (using the
same peers included in the shareholder return graph), Return on Total Capital
compared to industry peers, the EBIT performance of each business unit, progress
made toward improving the Company's operational and financial performance, and
the need to reward unique individual contributions. These measures were not
formally weighted by the Committee. The size of the discretionary bonus pool
element was
11
<PAGE>
established above threshold but below target based on the qualitative
performance assessment described above. As a result, actual bonus payments for
1996 were below target and median market levels.
Individual awards from the established bonus pool are recommended by
senior management, with advice and consent from the Committee. Individual awards
from the pool are based on business unit and individual employee performance,
future potential, and competitive considerations. All individual performance
assessments are conducted in a non-formula fashion without specific goal
weightings. The total bonus awards made may not exceed the amount of funds in
the bonus pool.
Long-Term Incentive Plan
The Company's Long-Term Incentive Plan ("LTIP") is designed to focus
executive efforts on the long-term goals of the Company and to maximize total
return to our shareholders. While the Company's LTIP allows the Committee to use
a variety of long-term incentive devices, the Committee has relied solely on
stock option awards to provide long-term incentive opportunities in recent
years.
Stock options align the interests of employees and shareholders by
providing value to the executive through stock price appreciation only. All
stock options have a ten-year term before expiration and are fully exercisable
within 6 years of the grant date.
Stock options were granted to certain of the Named Executive Officers in
1996 and it is anticipated that stock option awards will be made periodically at
the discretion of the Committee in the future. As in past years, the number of
shares actually granted to a particular participant is also based on the
Company's financial success, its future business plans, and the individual's
position and level of responsibility within the Company. All of these factors
are assessed subjectively and are not weighted. Stock options granted by the
Company in 1996 were overall below market median levels.
1996 Chief Executive Officer Pay
As previously described, the Committee considers several factors in
developing an executive's compensation package. For the CEO, these include
competitive market practices (consistent with the philosophy described for other
executives), experience, achievement of strategic goals, and the financial
success of the Company (considering the factors described under the annual bonus
plan above).
David A. Arledge
Mr. Arledge's annual salary was increased to $725,000 in 1996. This action
moved his salary closer to, but still below, the market median levels of salary
for the CEO position in companies of comparable size.
Mr. Arledge's bonus for 1996 was $300,000, payable in 1997. This award was
below targeted levels (and below market median levels) since the Company's
aggregate performance on the measures described in the annual bonus section of
this report were below the aggressive Company targets.
The Committee granted stock options for 150,000 shares to Mr. Arledge in
1996 in recognition of his performance and as an incentive to continue his
efforts to increase shareholder value. These awards are tied to performance in
that the executive only realizes income from stock options if the stock price
rises. The grant is below market median levels for the executive positions held
by him.
$1 Million Pay Deductibility Cap
Under Section 162(m) of the Internal Revenue Code, public companies are
precluded from receiving a tax deduction on compensation paid to executive
officers in excess of $1 million. To address the $1 million pay deductibility
cap issue, the Company's 1996 LTIP is structured so that stock option awards
(which are intended to be the primary long-term incentive vehicle for the
present time) qualify for an exemption from the $1 million pay deductibility
limit.
12
<PAGE>
Also, at the present time, the Chairman of the Board of Directors and the
CEO are the only executives whose base salary plus target bonus exceeds $1
million. In order to preserve the Company's tax deduction for base salary plus
bonus for these individuals, the Company has established a nonqualified deferred
compensation program. Under this program, any annual incentive awards that bring
cash compensation to a level over $1 million may be deferred so that payments
occur after the individual is no longer a Named Executive Officer, thus
preserving the deductibility of the pay for the Company.
Compensation and Executive Development Committee
John M. Bissell, Chairman
Roy D. Chapin, Jr.
Jerome S. Katzin
Pension Plan Table
The following table shows for illustration purposes the estimated annual
benefits payable currently under the Pension Plan and the Company's Replacement
Pension Plan described below upon retirement at age 65 based on the compensation
and years of credited service indicated.
<TABLE>
<CAPTION>
Years of Credited Service
5-Year Final --------------------------------------------------------------------
Average Pay 15 Years 20 Years 25 Years 30 Years 35 Years
----------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 125,000................. $ 33,920 $ 45,226 $ 56,533 $ 67,840 $ 67,044
150,000................. 41,420 55,226 69,033 82,840 82,044
200,000................. 41,420 55,226 69,033 82,840 82,044
250,000................. 41,420 55,226 69,033 82,840 82,044
300,000................. 41,420 55,226 69,033 82,840 82,044
350,000................. 41,420 55,226 69,033 82,840 82,044
400,000................. 41,420 55,226 69,033 82,840 82,044
500,000................. 41,420 55,226 69,033 82,840 82,044
600,000................. 41,420 55,226 69,033 82,840 82,044
1,000,000................. 41,420 55,226 69,033 82,840 82,044
1,200,000................. 41,420 55,226 69,033 82,840 82,044
<FN>
(A) Compensation covered under the Pension Plan for employees of the Company
and the Company Replacement Pension Plan generally includes only base
salary and is limited to $150,000 for 1996.
(B) Federal legislation has reduced the benefit which may be earned due to
future service; however, benefits previously earned may not be reduced. At
December 31, 1996 each of the individuals named in the Summary Compensation
Table had covered salary for future benefit accrual of $150,000 and the
following years of credited service and pension payable at age 65 (or
current age, if over 65): Mr. Wyatt, 41 years, $460,768; Mr. Arledge, 16
years, $59,289; Mr. Cordes, 19 years, $81,059; Mr. King, 4 years $14,798
(not vested); and Mr. Bullock, 4 years, $14,132 (not vested). Mr. Wyatt
reached age 70 1/2 in January, 1995 and because of IRS requirements
concerning the Company's qualified pension plan he began receiving pension
payments in April, 1996. These payments amounted to $282,775 in 1996.
(C) The normal form of retirement income is a straight life annuity. Benefits
payable under the Pension Plan are subject to offset by 1.5% of applicable
monthly social security benefits multiplied by the number of years of
credited service (up to 33 1/3 years).
</FN>
</TABLE>
The Employee Retirement Income Security Act of 1974, as amended by
subsequent legislation, limits the retirement benefits payable under the
tax-qualified Pension Plan. Where this occurs, the Company will provide to
certain executives, including persons named in the Summary Compensation Table,
additional nonqualified retirement benefits
13
<PAGE>
under a Company Replacement Pension Plan. These benefits, plus payments under
the Pension Plan, will not exceed the maximum amount which the Company would
have been required to provide under the Pension Plan before application of the
legislative limitations, and are reflected in the above table and footnote (B).
PERFORMANCE GRAPH - SHAREHOLDER RETURN ON COMMON STOCK
[GRAPH]
<TABLE>
Five-Year Cumulative Values
$100 Invested 12/31/91
Dividends Reinvested
<CAPTION>
DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31,
-----------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Company $ 100 $ 99 $ 118 $ 109 $ 157 $ 207
S&P 500 100 108 118 120 165 203
Index<F1><F2> 100 112 132 119 128 196
<FN>
<F1>
The Index is based on Value Line's Diversified Natural Gas Group - the
Performance Graph reflects total shareholder return weighted to reflect the
market capitalization of the peer companies. The peer group is comprised of:
Burlington Res., Cabot, Columbia, Consolidated Nat. Gas, Eastern Enterprises,
Enron, Enserch, Equitable Res., KN Energy, Mitchell Energy, National Fuel Gas,
Noram Energy, Panhandle Eastern, Questar, Seagull Energy, Sonat, Southwestern
Energy, Valero and Williams Cos.
<F2>
Coastal is excluded from the Index.
</FN>
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1987, Coastal Mart, Inc. ("Coastal Mart"), a subsidiary of the Company,
entered into a ten-year lease/purchase agreement with Pester Marketing Company
("Pester Marketing") for 220 gasoline service stations (subsequently reduced to
182 stations through disposition of assets) located in the midwestern region of
the United States. Jack Pester, a principal stockholder and Chief Executive
Officer of Pester Marketing, subsequently became an employee, officer and
director of Coastal Mart and was elected a Senior Vice President of the Company.
Mr. Pester is no longer active in the management of Pester Marketing, and his
stock interest in that company has been placed in trust. In 1994, the lease
transaction was terminated pursuant to an agreement under which Coastal Mart
acquired ownership of and title to 175 of the gasoline service stations and
Pester Marketing retained the seven remaining stations.
During 1996, the Company and/or its subsidiaries sold approximately
14,576,400 gallons of gasoline to Pester Marketing at prevailing market prices
totaling approximately $10,036,200.
14
<PAGE>
PROPOSAL 2 - STOCKHOLDER PROPOSAL
Management has been advised by two stockholders that they will introduce a
resolution at the Annual Meeting of Stockholders. The names and addresses of the
co-sponsors, and the information they have provided as to the number of shares
of stock of the Company they own, will be furnished by the Company either orally
or in writing upon request. The proposal follows:
BOARD INCLUSIVENESS
We believe the employee and board composition of major corporations should
reflect the people in the workforce and marketplace of the 21st century if our
company is going to remain competitive. Our employees, customers and
stockholders are now made up of a greater diversity of backgrounds than ever
before. The report of the Department of Labor's 1995 bi-partisan Glass Ceiling
Commission, "Good For Business: Making Full Use of the Nation's Human Capital,"
confirms diversity and inclusiveness in the workplace has a positive impact on
the bottomline. A report of Standard and Poor 500 companies provided by Covenant
Fund revealed "...firms that succeed in shattering their own glass ceiling
racked up stock-market records that were nearly 2 1/2 times better than
otherwise - comparable companies."
In 1994 the Investor Responsibility Research Center reported inclusiveness
at senior management and board levels was only 9% of the fortune 500 companies
in a comparable workforce of 57% diversity. The Glass Ceiling Commission
reported that companies are selecting from only half of the talent of our
workforce. Therefore we urge our corporation to enlarge its search for the best
qualified board members by casting a wider net. If we are to be prepared for the
21st century we must learn how to compete in a growingly diverse global market
place by promoting and selecting the best people regardless of race, gender or
physical challenge. We believe the judgements and perspectives of a diverse
board would serve to improve the quality of corporate decision-making.
Since the board is responsible for representing shareholder interests in
corporate meetings, a growing proportion of stockholders is now attaching value
to board inclusiveness. A 1994 Investor Responsibility Research Center survey
revealed 37% of respondents cited board diversity as the influencing factor for
supporting votes.
The Teachers Insurance and Annuity Association and College Retirement
Equities Fund, the largest institutional investor in the United States, recently
issued a set of corporate governance guidelines including a call for "diversity
of directors by experience, sex, age and race."
Robert Campbell, CEO of Sun Oil, stated in the Wall Street Journal, August
12, 1996, "Often what a woman or minority person can bring to the board is some
perspective a company hasn't had before--adding some modern day reality to the
deliberation process. Those perspectives are of great value, and often missing
from an all-white-male gathering. They can also be inspirational to the
company's diverse work force."
Be it resolved that shareholders request:
1. The nominating committee of the Board make a greater effort to find
qualified women and minority candidates for nomination to the Board.
2. The Board issue a statement publicly committing the company to a policy of
board inclusiveness with a program of steps to take and the timeline
expected to move in that direction.
3. The Company issue a report by September 1997 at a reasonable expense that
includes a description of:
a) efforts to encourage diversified representation on our board
b) criteria for board qualification
c) the process of selecting the board candidates
d) the process of selecting the board committee members
15
<PAGE>
Board of Directors Statement in Opposition to Stockholder Proposal
The Company has a firm employment policy requiring fair and equal
treatment regardless of race, color, religion, sex, age, national origin,
physical or mental handicap and veteran status. The Company abides by Federal
and State regulations in these regards.
The Board of Directors believes that the key qualifications in the
selection of directors should be their business background and experience.
The Board of Directors also believes that the interests of the Company and
its stockholders are best served by having highly qualified and independent
directors with diverse backgrounds and that Board of Directors membership should
be based on a person's ability to contribute to the enhancement of stockholder
value. The Company and the directors believe that Coastal has such a Board of
Directors, that the factors discussed above are meaningful to stockholders, and
that the stockholder proposal is unduly restrictive.
Your Board of Directors has therefore concluded that this proposal is not
in the best interest of the Company or its stockholders, which interests are
best served by permitting the Board of Directors maximum flexibility to seek
highly qualified directors with complimentary skills and backgrounds. See
"Corporate Governance" herein.
Accordingly, the Board of Directors unanimously recommends a vote AGAINST
the stockholder proposal (Proposal 2).
VOTE REQUIRED FOR APPROVAL
The nominees for director receiving a majority of the votes cast at the
Meeting by stockholders present in person or by proxy and entitled to vote shall
be elected. The stockholder proposal requires the affirmative vote of a majority
of the votes cast attributable to shares present in person or by proxy at the
Meeting and entitled to vote. For purposes of counting the vote, abstentions,
broker non-votes and other votes not cast will not be counted as voted, and the
number of votes of which a majority is required will be reduced by the number of
votes not cast.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers to file reports of ownership and changes in ownership of shares of the
Company's stock with the S.E.C. Directors and officers are required by S.E.C.
regulations to furnish the Company with copies of all Section 16(a) reports they
file. Based on its review of the copies of such reports received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, from January 1 through
December 31, 1996, its directors and officers complied with all applicable
filing requirements.
INDEPENDENT AUDITORS
The Board of Directors of Coastal has designated Deloitte & Touche LLP to
audit the books and accounts of the Company for the year ending December 31,
1997. Deloitte & Touche LLP have been auditors for the Company since 1957. It is
anticipated that representatives of such firm will be present at the Annual
Meeting for the purpose of making a statement, should they desire, and
responding to appropriate stockholder questions.
STOCKHOLDER PROPOSALS
Stockholders who desire to submit proposals to the Company for
consideration for inclusion in the Company's Proxy Statement and form of proxy
for the 1998 Annual Meeting of Stockholders of Coastal must submit such
proposals to the Secretary of the Company by November 28, 1997.
16
<PAGE>
OTHER MATTERS
Management does not intend to present any business at the Annual Meeting
other than as set forth in the Notice of Annual Meeting and knows of no other
business to be presented for action at the Meeting. If, however, any other
business should properly come before the Annual Meeting or any adjournments
thereof, it is intended that all proxies will be voted with respect thereto in
accordance with the best judgment of the persons named in the proxies.
AVAILABILITY OF FORM 10-K ANNUAL REPORT
Copies of Coastal's Annual Report to Stockholders or its Annual Report on
Form 10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission, are available without charge to stockholders upon request
to Mr. Austin M. O'Toole, Senior Vice President and Secretary, The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995.
17
<PAGE>
PROXY
THE COASTAL CORPORATION
Proxy Solicited by the Board of Directors for the May 8, 1997 Annual Meeting
The undersigned hereby appoints O. S. WYATT, JR., HAROLD BURROW and DAVID A.
ARLEDGE, and each of them, proxies, with power of substitution, to vote all
stock owned by the undersigned of THE COASTAL CORPORATION at the Annual Meeting
of its Stockholders to be held on May 8, 1997, and at any and all adjournments
thereof, hereby revoking any proxy heretofore given.
Please sign, date and return your Proxy
promptly in the enclosed envelope. Sign
exactly as name(s) appear(s) hereon. Joint
owners should each sign. When signing in a
fiduciary capacity, please give full title.
-----------------------------
Date
--------------------------------------------
Signature(s)
--------------------------------------------
- CONTINUED ON REVERSE SIDE -
- -------------------------------------------------------------------------------
PLEASE DETACH, SIGN, DATE AND MAIL YOUR PROXY
YOUR VOTE IS IMPORTANT
To secure the largest possible representation at the
Annual Meeting of Stockholders and save the expense
of a second mailing, would you please return your
Proxy promptly in the enclosed envelope which
requires no postage if mailed in the United States.
<PAGE>
PROXY (Continued)
This Proxy will be voted as directed, but if not otherwise directed, it will
be voted FOR all nominees named below and AGAINST Proposal 2.
The shares represented hereby shall be voted as follows:
(1) The Board of Directors unanimously recommends a vote FOR all persons
named below:
Elect four Class II directors to terms of office expiring at the 2000
Annual Meeting of Stockholders as follows:
Election of one director by holders of Common and Preferred Stock
voting together as a class:
David A. Arledge
Election of three directors by holders of Common, Class A Common and
Preferred Stock voting together as a class:
George L. Brundrett, Jr., L. D. Wooddy, Jr. and O. S. Wyatt, Jr.
FOR [ ] all persons named above except, WITHHOLD [ ] authority to vote
authority withheld as to the following for all persons named above.
person(s), if any.
- ------------------------------------------------------------
(2) The Board of Directors unanimously recommends a vote AGAINST the
following proposal:
FOR [ ] AGAINST [ ] ABSTAIN [ ] stockholder proposal described in
the accompanying Proxy Statement.
(3) In their discretion on such other matters as may properly come before
the meeting.
PLEASE DETACH, SIGN AND DATE (ON REVERSE) AND MAIL YOUR PROXY
YOUR VOTE IS IMPORTANT
To secure the largest possible representation at the
Annual Meeting of Stockholders and save the expense
of a second mailing, would you please return your
Proxy promptly in the enclosed envelope which
requires no postage if mailed in the United States.
<PAGE>
THE COASTAL CORPORATION
Voting Instructions for the May 8, 1997 Annual Meeting
The undersigned hereby instructs Texas Commerce Bank National Association,
the Plan Trustee of the securities identified below, to vote all stock
beneficially owned by the undersigned in such plan of THE COASTAL CORPORATION at
the Annual Meeting of Stockholders to be held on May 8, 1997, and at any and all
adjournments thereof, hereby revoking any instructions heretofore given.
Please sign, date and return your INSTRUCTIONS
promptly in the enclosed envelope. Sign
exactly as name appears hereon. When
signing in a fiduciary capacity, please
give full title.
-----------------------------
Date
--------------------------------------------
Signature(s)
- CONTINUED ON REVERSE SIDE -
- -------------------------------------------------------------------------------
PLEASE DETACH, SIGN, DATE AND MAIL YOUR INSTRUCTIONS
YOUR INSTRUCTIONS ARE IMPORTANT
To secure the largest possible representation at the
Annual Meeting of Stockholders and save the expense
of a second mailing, would you please return your
Instructions promptly in the enclosed envelope which
requires no postage if mailed in the United States.
<PAGE>
These INSTRUCTIONS will be followed as directed, but if not otherwise
directed, the shares will be voted FOR all nominees named below and AGAINST
Proposal 2.
The shares represented hereby shall be voted as follows:
(1) The Board of Directors unanimously recommends a vote FOR all persons
named below:
Elect four Class II directors to terms of office expiring at the year 2000
Annual Meeting of Stockholders as follows:
Election of one director by holders of Common and Preferred Stock voting
together as a class:
David A. Arledge
Election of three directors by holders of Common, Class A Common and
Preferred Stock voting together as a class:
George L. Brundrett, Jr., L. D. Wooddy, Jr. and O. S. Wyatt, Jr.
FOR [ ] all persons named above except, WITHHOLD [ ] authority to vote for all
authority withheld as to the following persons, named above.
person(s), if any.
- ------------------------------------------------------------
(2) The Board of Directors unanimously recommends a vote AGAINST the
following proposal:
FOR [ ] AGAINST [ ] ABSTAIN [ ] stockholder proposal described in
the accompanying Proxy Statement.
(3) In their discretion on such other matters as may properly come before
the meeting.
- ------------------------------------------------------------------------------
PLEASE DETACH, SIGN AND DATE (ON REVERSE) AND MAIL YOUR INSTRUCTIONS
YOUR INSTRUCTIONS ARE IMPORTANT
To secure the largest possible representation at the
Annual Meeting of Stockholders and save the expense
of a second mailing, would you please return your
Instructions promptly in the enclosed envelope
which requires no postage if mailed in the
United States.
