<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
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
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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(Name of Registrant as Specified In Its Charter)
El Paso Electric Company
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
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(2) Aggregate number 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):
No Par Value
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
No Fee Required
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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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(3) Filing Party:
Terry Bassham, Esq.
General Counsel
El Paso Electric Company
123 W. Mills
El Paso, Texas 79901
(915) 543-5711
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(4) Date Filed:
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Notes:
<PAGE>
EL PASO ELECTRIC COMPANY
100 N. Stanton
El Paso, Texas 79901
(915) 543-5711
April 27, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of El Paso Electric Company will be
held at the Paul Kayser Center, located at 100 N. Stanton, El Paso, Texas 79901,
on Friday, May 29, 1998, at 10:00 a.m., Mountain Daylight Time.
The purpose of the Annual Meeting is to give shareholders an opportunity
to vote on the election of Class II Directors.
Information concerning this matter is set forth in the accompanying
notice of the meeting and Proxy Statement. Your Board of Directors recommends
that you vote FOR the election of the persons nominated by the Board to serve as
Class II Directors.
Your vote is important. To ensure your representation, even if you
cannot attend the Annual Meeting, please mark, sign, date and return the
enclosed Proxy promptly.
Sincerely,
/s/ JAMES HAINES
James S. Haines, Jr.
Chief Executive Officer and President
<PAGE>
EL PASO ELECTRIC COMPANY
100 N. Stanton
El Paso, Texas 79901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
El Paso Electric Company:
The Annual Meeting of Shareholders of El Paso Electric Company will be
held at the Paul Kayser Center, located at 100 N. Stanton, El Paso, Texas 79901,
on Friday, May 29, 1998, at 10:00 a.m., Mountain Daylight Time, for the
following purposes:
(1) To elect four of the Board of Directors for three-year terms; and
(2) To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors knows of no matter, other than that set forth in
paragraph (1) above (which is discussed at greater length in the accompanying
Proxy Statement), that will be presented for consideration at the Annual
Meeting.
The Board of Directors has fixed the close of business on March 31, 1998,
as the record date for the determination of shareholders entitled to vote at the
Annual Meeting.
Please mark, date and sign the enclosed Proxy and return it promptly in
the envelope provided for your convenience. If you attend the meeting and
decide to vote in person, you may revoke your Proxy. SHAREHOLDERS ATTENDING THE
MEETING WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER AND WHO INTEND TO
VOTE IN PERSON SHOULD BRING AN AFFIDAVIT OF OWNERSHIP FROM THE BROKER SO THAT
BENEFICIAL OWNERSHIP CAN BE VERIFIED WITHOUT DELAY ON THE MEETING DATE. The
prompt return of your Proxy will save the postage expense of additional
mailings.
By Order of the Board of Directors,
/s/ GUILLERMO SILVA, JR.
Guillermo Silva, Jr.
Secretary
April 27, 1998
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE, SIGN AND
PROMPTLY RETURN YOUR PROXY. THANK YOU.
<PAGE>
EL PASO ELECTRIC COMPANY
100 N. Stanton
El Paso, Texas 79901
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 29, 1998
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors of
El Paso Electric Company (the "Company") for use at its 1998 Annual Meeting of
Shareholders to be held on Friday, May 29, 1998, and at any adjournments
thereof. The Company's principal offices are located at the Paul Kayser Center,
100 N. Stanton, El Paso, Texas 79901.
The cost of soliciting proxies will be borne by the Company. In addition
to the use of the mails, proxies may be solicited by personal interview,
telephone, fax and telegram by the directors, officers and employees of the
Company. The Company will reimburse brokers, banks and other persons for
reasonable expenses in sending proxy materials to beneficial owners. To assist
in the distribution of proxy material and solicitation, the Company has engaged
Corporate Investor Communications, Inc. for a fee of $4,800 plus out-of-pocket
expenses.
This proxy statement and the accompanying form of proxy are first being
mailed to shareholders of the Company on or about April 27, 1998.
SHARES OUTSTANDING, VOTING RIGHTS AND REVOCABILITY OF PROXIES
At the close of business on March 31, 1998, the record date for
determination of the shareholders entitled to notice of and to vote at the 1998
Annual Meeting, the Company had outstanding 60,276,784 shares of its common
stock (the "Common Stock").
Each outstanding share of Common Stock is entitled to one vote. The
holders of at least a majority of the issued and outstanding shares of Common
Stock must be represented in person or by proxy at the Annual Meeting for a
quorum to be present and business to be conducted.
A shareholder having the right to vote may vote either in person or by
proxy executed in writing by the shareholder. A telegram, telex, cablegram or
similar transmission by a shareholder, or photographic, photostatic, facsimile
or similar reproduction of a writing executed by the shareholder, shall be
treated as an execution in writing.
A shareholder who signs and returns a proxy may revoke that proxy at any
time before the Annual Meeting or, by ballot at the meeting, cancel any proxy
previously returned. The shares represented by a proxy given and not so revoked
or revised will be voted and, where the shareholder specifies a choice with
respect to any matter to be acted upon and for which a ballot is provided in the
proxy form, the shares will be voted in accordance with the specification so
made. If a proxy is returned, but no choice is specified, the shares will be
<PAGE>
voted FOR the election of the nominees for director set forth in this proxy
statement and, in the discretion of the proxy holder, with respect to any other
business that may properly come before the Annual Meeting. If no proxy is
returned, the shares represented by such proxy will not be voted.
The Board of Directors is not aware of any matter that will be presented at
the Annual Meeting other than as set forth in the accompanying Notice. If,
however, any such matters are presented at the Annual Meeting, in the absence of
instructions to the contrary, the proxies will be voted in accordance with the
best judgment and in the discretion of the named proxy holders.
Abstentions are included in the determination of the number of shares
represented at the meeting for purposes of determining whether a quorum is
present, and are counted as a vote AGAINST for determining whether a proposal
has been approved. Broker non-votes are not included in the determination of
the number of shares represented at the meeting for purposes of determining
whether a quorum is present and are not counted for purposes of determining
whether a proposal has been approved.
The affirmative vote of the holders of a majority of the votes cast at the
Annual Meeting is required to elect each of the nominees for director whose name
appears herein.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Bylaws divide the Board of Directors into three classes, as
nearly equal in number as possible, each of which is elected for a three year
term. Class II directors, consisting of the four nominees shown below, will
stand for election at the 1998 Annual Meeting for three-year terms expiring at
the annual meeting of shareholders in 2001 or until their successors are elected
and qualified. The terms of the other nine directors shown below will continue
as indicated.
The shares represented by the accompanying proxy will be voted to elect the
four nominees recommended by the Board of Directors, who are shown below as
nominees for Class II directors, unless authority to do so is withheld. Each
nominee has agreed to his or her nomination and has agreed to serve if elected.
Should any nominee become unavailable for election, the proxies will be voted
for the election of such other person as may be recommended by the Board of
Directors in place of such nominee.
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<TABLE>
<CAPTION>
NOMINEES AND DIRECTORS OF THE COMPANY
Director Principal Occupation and Employment
Name Age Since During the Past Five Years (1)
---- --- -------- -----------------------------------
<S> <C> <C> <C>
NOMINEES FOR CLASS II DIRECTORS (NEW TERM WILL EXPIRE IN 2001)
Wilson K. Cadman (2) 70 1992 Retired as Chairman of the Board, President and
Chief Executive Officer of Kansas Gas and Electric
Company and Vice Chairman of the Board of Western
Resources, Inc., in 1992.
James A. Cardwell (3) 65 1990 Chief Executive Officer, Petro Stopping Centers,
LP, a nationwide chain of truck stops.
James W. Cicconi 45 1997 Partner of Akin, Gump, Strauss, Hauer & Feld, a
law firm, since 1991.
Patricia Z. Holland-Branch 53 1997 President, Chief Executive Officer and Owner of
HB/PZH Commercial Environments Inc., a full
service office furniture dealership, project
management and design firm, since 1986. Franchise
owner of Office Furniture USA since 1997.
Chairman of the Board and Owner of Clean Team,
Inc., dba Millicare Environmental Services, a
commercial carpet maintenance franchise, since
1997.
CLASS I DIRECTORS (TERM EXPIRES IN 2000)
George W. Edwards, Jr. (4) 58 1992 Chairman of the Board since May 1996; Retired as
President, Chief Executive Officer and Director of
Kansas City Railway Company in May 1995, where he
served in that capacity for 4 years, from April
1991 to May 1995; Chairman and CEO of United
Illuminating Co. from April 1985 to April 1991.
Ramiro Guzman (5) 51 1996 President of Montana Distributing Company since
February 1998; President and Chief Executive
Officer of Dickshire Distributing for more than
five years prior to February 1998.
Stephen Wertheimer (6) 47 1996 Managing Director of Credit Research and Trading
since 1996; President and Founder of Water Capital
Corp. from 1991 to 1997.
Charles A. Yamarone (7) 39 1996 Executive Vice President of Libra Investments,
Inc., since 1991.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NOMINEES AND DIRECTORS OF THE COMPANY
Director Principal Occupation and Employment
Name Age Since During the Past Five Years (1)
---- --- -------- -----------------------------------
<S> <C> <C> <C>
CLASS III DIRECTORS (TERM WILL EXPIRE IN 1999)
James W. Harris 51 1996 Founder and President of Seneca Financial Group,
Inc., since 1993; Vice President and subsequently
Managing Director of Lehman Brothers, for more
than five years prior to 1993.
Kenneth R. Heitz 50 1996 Partner of Irell and Manella, a law firm, since
1991.
Michael K. Parks 38 1996 President of Aurora National Life Assurance
Company since 1994; Chief Investment Officer of
Aurora National Life Insurance Company since 1993;
financial consultant from September 1992 to August
1993 in the rehabilitation of Executive Life
Insurance Company; a Director of Leveraged Finance
and various other positions at Salomon Brothers
Inc., for more than five years prior to September
1992.
Eric B. Siegel (8) 40 1996 Principal of Pegasus Insurance Partners, a private
investment firm, since 1995; limited partner of
Apollo Advisors, L.P. and Lion Advisors, L.P., and
Vice President/principal of Apollo Advisors/Lion
Advisors from 1990 to 1995.
James S. Haines, Jr. (9) 51 1996 Chief Executive Officer and President of the
Company since May 1996; Executive Vice President
and Chief Operating Officer of Western Resources,
Inc. from June 1995 until May 1996; Executive Vice
President and Chief Administrative Officer of
Western Resources, Inc. from April 1992 to June
1995.
</TABLE>
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(1) Where no date is specfied, the director has held the position for more than
the past five years.
(2) Mr. Cadman is also a director of the Columbia Gas System, Inc., and
Clark/Bardes, Inc.
(3) Mr. Cardwell is also a trustee of Security Capital Pacific Trust, a real
estate investment trust, a director of Continental National Bank, N.A. and,
until his resignation on February 20, 1998, a director of Camino Real Bank
(formerly Texas Bank).
(4) Mr. Edwards is also a director and Chairman of the Board of Aquarion
Company and Hubbell, Inc.
(5) Mr. Guzman is also an advisory director of Chase Bank of Texas, N.A.
(6) Mr. Wertheimer is also Chairman of Advanced Mining Systems, Inc. and is a
director of Caribbean Cigar Company and Greenwich Fine Arts, Inc.
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<PAGE>
(7) Mr. Yamarone is also a director of Continental Airlines, Inc. since January
1995.
(8) Mr. Siegel is also a director of Sun International Hotels, Ltd.
(9) Mr. Haines is also an advisory director of Chase Bank of Texas, N.A.
DIRECTORS' MEETINGS, COMPENSATION AND COMMITTEES
The Board of Directors held 15 meetings during calendar year 1997. Each
director attended at least 75% of the total number of meetings of the Board and
the committees on which he served during the period he served in such position.
COMPENSATION OF DIRECTORS
The compensation for non-employee directors of the Board of Directors
during 1997 consisted of the following: (a) $20,000 per year, for four meetings
of the Board of Directors or committees thereof per year, an additional $1,000
for each meeting beyond four, and established hourly compensation for special
projects; and (b) in accordance with the terms of the 1996 El Paso Electric
Company Long-Term Incentive Plan, stock options covering 5,000 shares of Common
Stock. In addition, the Board awarded Mr. Edwards, in consideration of his
service as Chairman of the Board during 1997, 25,000 shares of Common Stock that
are restricted as to sale until May 29, 1998. Further, the Company has at times
called upon directors for special expertise for which it pays an hourly
consulting fee. In 1997, three directors were paid a consulting fee which in
aggregate amounted to approximately $9,000.
The compensation for non-employee directors of the Board of Directors
during 1998 is anticipated to be unchanged from 1997.
The Board of Directors has the following standing committees: Audit/Ethics,
Civic and Charitable Affairs, Compensation/Benefits, Executive/Nominating, Palo
Verde Oversight, and Environmental.
During 1997, the Audit/Ethics Committee was composed of directors Yamarone,
Parks, Guzman and Houghton(1). The Audit/Ethics Committee, which held seven
meetings in 1997, is responsible for recommending the appointment of the
independent auditors of the Company, reviewing all recommendations of the
Company's independent auditors and the Company's internal auditors, reviewing
and approving non-audit services performed by accountants and other consultants
retained by the Company, reviewing the Company's periodic reports filed with the
Securities and Exchange Commission and otherwise overseeing the Company's
financial reporting system. The Audit/Ethics Committee also performs the
functions of an ethics committee and in that capacity is responsible for
ensuring integrity is maintained in all business dealings involving the Company,
that self-dealing and the appearance of impropriety are avoided in such business
transactions, and the Company's ethical standards of conduct comply with legal
requirements.
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(1) Mr. Houghton served until his resignation on May 22, 1997.
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<PAGE>
During 1997, the Civic and Charitable Affairs Committee was composed of
directors Houghton(1), Cardwell, Guzman and Haines. The Civic and Charitable
Affairs Committee, which held four meetings in 1997, is responsible for setting
policy and reviewing an annual budget for civic and charitable contributions by
the Company in the communities it serves.
During 1997, the Compensation/Benefits Committee was composed of directors
Heitz, Cadman, Houghton(1) and Yamarone. The Compensation/Benefits Committee,
which held six meetings in 1997, is responsible for evaluating and approving the
compensation of executive officers. It also reviews and approves recommended
Company-wide increases for employees, as well as approving the adoption of
contracts with union employees. The Compensation/Benefits Committee is also
responsible for evaluating and adopting benefit plan programs.
During 1997, the Executive/Nominating Committee was composed of directors
Wertheimer, Siegel, Haines, Harris and Parks. The Executive/Nominating
Committee, which held twenty-two meetings in 1997, is the administrative and
policy making committee of the Board, and may exercise all powers of the Board
(except as prohibited by the Texas Business Corporation Act) between meetings.
In addition, the Committee's responsibilities include analyzing and making
recommendations to the Board regarding the maximization of shareholder value.
The Executive/Nominating Committee is responsible for conducting peer reviews
and evaluations of the members of the Board.
During 1997, the Palo Verde Oversight Committee was composed of directors
Cadman, Guzman, Siegel and Cardwell. The Palo Verde Oversight Committee, which
held two meetings in 1997, is responsible for reviewing and assessing the
activities and operations of the Palo Verde Nuclear Generating Station, in which
the Company is a minority participant.
During 1997, the Environmental Committee was composed of directors
Cardwell, Harris, Wertheimer and Heitz. The Environmental Committee, which held
two meetings in 1997, is responsible for overseeing the affairs and operations
of the Company to determine whether the Company has operated Company facilities
in compliance with applicable environmental laws and regulations; and
identifying existing and potential environmental issues facing the Company under
federal, state or local law.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1998 (except as indicated
in the footnote to the table), certain information regarding ownership of Common
Stock by (i) each person known to the Company to own beneficially more than 5%
of its Common Stock; (ii) each of the current directors, including those who
have been nominated to serve as a Class II director, of the Company; (iii) the
Company's Chief Executive Officer and certain other executive officers of the
Company during the year ended December 31, 1997 and (iv) all directors and
current executive officers of the Company as a group (21 persons). None of the
persons described in items (ii)-(iv) owns any Preferred Stock of the Company.
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<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class
------------------- ----------------------- --------
<S> <C> <C>
FMR Corp. 6,270,276 (2) 10.40%
82 Devonshire Street
Boston, MA 02109
Ryback Management Corporation 6,023,900 (3) 9.99%
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
Princeton Services, Inc. 4,660,894 (4) 7.73%
80 Scudders Mill Road
Plainsboro, NJ 08536
Westport Asset Management, Inc. 3,790,950 (5) 6.29%
253 Riverside Avenue
Westport, CT 06880
George W. Edwards, Jr. 62,040 (6) *
Wilson K. Cadman 12,040 (7) *
James A. Cardwell 12,091 (7) *
James W. Cicconi 0 *
Ramiro Guzman 12,040 (7) *
James W. Harris 27,040 (7) *
Kenneth R. Heitz 12,040 (7) *
Patricia Z. Holland-Branch 0 *
Edward C. Houghton, IV** 6,232 (8) *
Michael K. Parks 22,040 (7) *
Eric B. Siegel 18,040 (7) *
Stephen Wertheimer 18,290 (7) *
Charles A. Yamarone 22,040 (7) *
James S. Haines, Jr. 411,181 (9) *
Eduardo A. Rodriguez 30,865 (10) *
Gary R. Hedrick 27,350 (11) *
Julius F. Bates 27,619 (12) *
Michael L. Blough 27,274 (13) *
John C. Horne 27,293 (14) *
Other Executive Officers 32,142 (15) *
All directors and executive officers
as a group** 801,425 (16) 1.32%
(21 persons)
</TABLE>
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* Less than 1%.
** Mr. Houghton resigned from the Board of Directors effective May 22, 1997,
and his shares are excluded from total of all directors and executive
officers.
(1) Each individual director, the chief executive officer and certain other
executive officers has sole voting power and investment power with respect
to his/her shares (or shares such power with spouse), except as noted
below.
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<PAGE>
(2) Information regarding ownership of Common Stock by FMR Corp. is included
herein in reliance on information set forth in Amendment 10 dated March 27,
1998 to a Schedule 13-D filed by FMR Corp. with the Securities and Exchange
Commission (the "Commission") and on information set forth in a
Schedule 13-G dated April 13, 1998 filed by FMR Corp. with the Commission.
FMR is a holding company one of whose principal assets is the capital stock
of a wholly-owned subsidiary, Fidelity Management & Research Company
("Fidelity"). Fidelity is an investment advisor which is registered under
Section 203 of the Investment Advisors Act of 1940 and which provides
investment advisory services to more than 30 investment companies which are
registered under Section 8 of the Investment Company Act of 1940 and serves
as investment advisor to certain other funds which are generally offered to
limited groups of investors (the "Fidelity Funds"). Fidelity Management
Trust Company ("FMTC"), a wholly-owned subsidiary of FMR Corp. and a bank
as defined in Section 3(a)(6) of the Securities Exchange Act of 1934,
serves as trustee or managing agent for various private investment
accounts, and serves as investment adviser to certain other funds which are
generally offered to limited groups of investors (the "Accounts"). FMR
beneficially owns, through Fidelity, as investment advisor to the Fidelity
Funds, 5,412,213 Shares, and through FMTC, the managing agent for the
Accounts, 858,063 Shares. The combined holdings of FMR, Fidelity, and FMTC,
are 6,270,276 Shares. FMR, through its control of Fidelity, investment
advisor to the Fidelity Funds, and the Funds each has sole power to dispose
of the Shares. FMR does not have the sole power to vote or direct the
voting of the 5,412,213 Shares owned directly by the Fidelity Funds, which
power resides with the Funds' Boards of Trustees. Fidelity carries out the
voting of the Shares under written guidelines established by the Funds'
Board of Trustees. FMR, through its control of FMTC, investment manager to
the Accounts, and the Accounts each has sole dispositive power over 858,063
Shares and sole power to vote or to direct the voting of 746,272 Shares,
and no power to vote or to direct the voting of 111,791 Shares owned by the
Accounts.
(3) Information regarding ownership of Common Stock by Ryback Management
Corp. ("Ryback") is included herein in reliance on information set forth in
a Schedule 13-G filed by Ryback on January 23, 1998 with the Commission,
reflecting ownership as of December 31, 1997. The shares reflected in the
Schedule 13-G were held in a fiduciary capacity by either Ryback and/or
Lindner Investment Series Trust. Ryback is an Investment Company Advisor
registered under Section 203 of the Advisors Act and Lindner Investment
Series Trust is an Investment Company registered under Section 8 of the
Investment Company Act. Lindner Dividend Fund, a registered investment
company that is a separate series of the Lindner Investment Series Trust,
owns 3,700,700 shares, and Ryback manages 2,323,200 shares. Ryback retains
sole voting and investment power over all shares shown in the table.
(4) Information regarding ownership of Common Stock by Princeton Services,
Inc. ("PSI"), Merrill Lynch Asset Management, L.P. ("MLAM") and Merrill
Lynch Global Allocation Fund, Inc. (the "Fund") is included herein with
reliance on information set forth in a Schedule 13-G filed by PSI, MLAM and
the Fund on January 29, 1998 with the Commission, reflecting ownership as
of December 31, 1997. PSI is a parent holding company in accordance with
(Section) 240.13d-1(b)(ii)(G) of the Securities Exchange Act of 1934. MLAM
is an investment adviser registered under (Section) 203 of the
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<PAGE>
Investment Advisers Act of 1940. The Fund is an investment company
registered under Section 8 of the Investment Company Act of 1940. According
to the filing, PSI, MLAM and the Fund have shared voting and investment
power over the Company's Common Stock reported on their Schedule 13-G. PSI
disclaims beneficial ownership of such common stock.
(5) Information regarding ownership of Common Stock by Westport Asset
Management Inc., ("Westport") is included herein with reliance on
information set forth in Schedule 13-G filed by Westport on February 20,
1998. Westport is an Investment Advisor registered under Section 203 of the
Investment Advisors Act of 1940. According to the filing, Westport
maintains shared voting and dispositive power over 3,790,950 of the
Company's Common shares.
(6) Includes (i) 5,000 shares of common stock that Mr. Edwards has the right
to acquire within 60 days of March 27, 1998, by exercising options granted
under the 1996 Long-Term Incentive Plan ("1996 Plan"); and (ii) 29,224
shares of restricted stock awarded under the 1996 Plan over which he has
voting power but no investment power.
(7) Includes (i) 5,000 shares of common stock that each director has the
right to acquire within 60 days of March 27, 1998, by exercising options
granted under the 1996 Plan; and (ii) 4,224 shares of restricted stock
awarded under the 1996 Plan over which each director has voting power but
no investment power.
(8) Includes (i) 600 shares of common stock owned by Mr. Houghton's dependent
son over which Mr. Houghton has no voting power or investment power and
(ii) 4,224 shares of restricted stock awarded under the 1996 Plan over
which he has voting power but no investment power.
(9) Includes (i) 320,000 shares of common stock that Mr. Haines currently has
the right to acquire through the earlier of April 30, 2006 or 90 days
following termination of employment by exercising options granted under the
1996 Plan; and (ii) 60,000 shares of restricted stock awarded under the
1996 Plan over which he has voting power but no investment power.
(10) Includes (i) 20,000 shares of common stock that Mr. Rodriguez currently
has the right to acquire through the earlier of June 10, 2006 or 90 days
following termination of employment, by exercising options granted under
the 1996 Plan; (ii) 7,519 shares of restricted stock awarded under the
1996 Plan over which he has voting power but no investment power; and (iii)
185 shares held for the benefit of Mr. Rodriguez in the Company's Leveraged
Employee Stock Ownership Plan and Trust ("Leveraged ESOP") over which he
has voting power but no investment power.
(11) Includes (i) 20,000 shares of common stock that Mr. Hedrick currently
has the right to acquire through the earlier of June 10, 2006 or 90 days
following termination of employment, by exercising options granted under
the 1996 Plan; (ii) 5,085 shares of restricted stock awarded under the
1996 Plan over which he has voting power but no investment power; (iii) 94
shares held for the benefit of Mr. Hedrick in the Leveraged ESOP over which
he has voting power but no investment power; and (iv) 41 shares owned by
his spouse over which Mr. Hedrick has no voting power or investment power.
(12) Includes (i) 20,000 shares of common stock that Mr. Bates currently has
the right to acquire through the earlier of June 10, 2006 or 90 days
following termination of employment, by exercising options granted under
the 1996 Plan; (ii) 4,985 shares of restricted stock awarded under the
1996 Plan over which he has voting power but no
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<PAGE>
investment power; and (iii) 175 shares held for the benefit of Mr. Bates in
the Leveraged ESOP over which he has voting power but no investment power.
(13) Includes (i) 20,000 shares of common stock that Mr. Blough currently has
the right to acquire through the earlier of June 10, 2006 or 90 days
following termination of employment, by exercising options granted under
the 1996 Plan; (ii) 4,985 shares of restricted stock awarded under the 1996
Plan over which he has voting power but no investment power; (iii) 124
shares held for the benefit of Mr. Blough in the Leveraged ESOP over which
he has voting power but no investment power; and (iv) 78 shares owned by
his spouse over which Mr. Blough has no voting power or investment power.
(14) Includes (i) 20,000 shares of common stock that Mr. Horne currently has
the right to acquire through the earlier of June 10, 2006 or 90 days
following termination of employment, by exercising options granted under
the 1996 Plan; (ii) 4,929 shares of restricted stock awarded under the
1996 Plan over which he has voting power but no investment power; and (iii)
163 shares held for the benefit of Mr. Horne in the Leveraged ESOP over
which he has voting power but no investment power.
(15) Includes (i) 20,000 shares of common stock that other executive officers
currently have the right to acquire through the earlier of June 10, 2006 or
90 days following termination of employment, by exercising options granted
under the 1996 Plan; (ii) 8,603 shares of restricted stock awarded under
the 1996 Plan over which they have voting power but no investment power;
and (iii) 282 shares held for the benefit of other executive officers in
the Leveraged ESOP over which they have voting power but no investment
power.
(16) Includes (i) 490,000 shares underlying stock options subject to exercise
currently within various dates as discussed above, (ii) 163,346 shares of
restricted stock awarded to named executives and directors under the 1996
Plan over which they have voting power but no investment power; and (iii)
1,023 shares held for benefit of executive officers in the Leveraged ESOP
over which they have voting power but no investment power. Also includes
119 shares owned by spouses of executive officers over which they have no
voting power or investment power. Does not include shares attributed to
Mr. Houghton who resigned from the Board of Directors effective May 22,
1997.
CERTAIN BUSINESS RELATIONSHIPS
During 1997, the Company engaged the services of several law firms
including Akin, Gump, Stauss, Hauer and Feld, LLP, a law firm of which James W.
Cicconi, a Class II director, is a partner. The Company believes that the fees
paid to such firm are comparable to the fees paid for comparable legal services
to firms not affiliated with any director of the Company.
Also during 1997, the Company purchased office furniture and carpeting from
HB/PZH Commercial Environments, Inc., in the approximate amount of $284,000.
Patricia Z. Holland-Branch, a Class II Director, is the principal shareholder
and president of HB/PZH Commercial Environments, Inc. The Company also
purchased diesel fuel, bulk motor oil and hydraulic fluid during 1997 in the
approximate amount of $153,000 from C&R Distributing. James A. Cardwell, a
Class II Director, is owner and Vice President of C&R Distributing. The Company
believes that the amounts paid to such firms are comparable to amounts payable
for comparable products to firms not affiliated with any director of the
Company.
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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act, requires the Company's directors, officers
and holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. The Company believes
that during and for the fiscal year ended December 31, 1997, its officers,
directors and 10% shareholders (of which the Company is aware of one) complied
with all Section 16(a) filing requirements.
CERTAIN ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the cash and
non-cash compensation paid to the chief executive officer during 1997, and each
of the other five most highly compensated executive officers other than the
chief executive officer who were serving as executive officers at December 31,
1997 (the "Named Executive Officers"), for the fiscal years ended December 31,
1997, December 31, 1996, and December 31, 1995, for service in the capacities
indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation
Compensation Awards
------------------------------------ --------------------------
Other Securities All
Base Annual Restricted Underlying Other
Name and Salary Bonus Compensation(1) Stock Options/SARs Compensation(2)
Principal Position Year ($) ($) ($) ($) (#) ($)
------------------ ---- ------ ----- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James S. Haines, Jr..................... 1997 425,000 0 24,519 0 4,750
Chief Executive Officer 1996 282,789 125,000 84,880(3) 532,150(4) 800,000 0
& President (since May 1,1996)
Eduardo A. Rodriguez.................... 1997 210,000 32,010(5) 2,423 0 3,998
Senior Vice President- 1996 196,271 296,097(6) 13,846 100,000 4,750
Customer and Corporate 1995 169,000 0 9,750 0 1,498
Services
Gary R. Hedrick......................... 1997 147,000 22,415(5) 6,785 0 317
Vice President-Treasurer 1996 129,792 205,216(6) 8,384 100,000 0
& Chief Financial Officer 1995 124,800 0 9,600 0 0
Julius F. Bates......................... 1997 141,000 21,499(5) 5,748 0 4,253
Vice President- 1996 129,792 180,216(6) 5,990 100,000 4,750
Transmission & Distribution 1995 124,800 0 3,879 0 3,837
Michael L. Blough....................... 1997 141,000 21,499(5) 6,833 0 4,444
Vice President- 1996 129,792 205,216(6) 6,508 100,000 4,750
Administration 1995 114,381 0 9,120 0 4,077
John C. Horne........................... 1997 137,700 20,986(5) 5,296 0 4,131
Vice President- 1996 129,792 180,216(6) 5,990 100,000 4,750
Power Supply 1995 124,800 0 5,760 0 1,296
</TABLE>
- -------------------------------
(1) Represents payments for accrued and unused vacation and personal holiday
time pursuant to Company policy. Excludes perquisites representing less
than ten percent of annual salary.
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<PAGE>
(2) Includes matching contributions made by the Company under the Company's
401(k) Plan.
(3) Includes commissions and certain closing costs and fees associated with the
sale of Mr. Haines' home in Kansas and reimbursement of moving expenses for
Mr. Haines to relocate to El Paso.
(4) Mr. Haines owned 100,000 restricted shares at year-end and the value of
these shares at December 31, 1997 was $731,250. These shares vest over a
five year period in increments of 20% per year beginning January 1, 1997.
Mr. Haines will receive cash dividends if and when declared on vested
shares; dividends on unvested shares will be used to acquire additional
restricted shares.
(5) Messrs. Rodriguez, Hedrick, Bates, Blough and Horne owned 4,370, 3,060,
2,935, 2,935 and 2,865 shares of restricted stock, respectively, under the
1997 Bonus Plan. Such shares vest over 4 years with 20% vesting on the day
of the grant and 20% vesting on each annual anniversary of the grant. Each
individual will receive cash dividends if and when declared on vested
shares; dividends on unvested shares will be used to acquire additional
shares. The value of these shares at December 31, 1997 for Messrs.
Rodriguez, Hedrick, Bates, Blough and Horne was $31,956, $22,376, $21,462,
$21,462 and $20,950, respectively.
(6) Includes compensation for the unique or extraordinary demands placed on and
the contribution of the officers for the Company's emergence from
Bankruptcy. Also reflects the ownership by Messrs. Rodriguez, Hedrick,
Bates, Blough and Horne of 6,705, 4,395, 4,395, 4,395 and 4,395 shares of
restricted stock, respectively, under the 1996 Annual Incentive Plan. Such
shares vest over 4 years with 20% vesting on the day of the grant and 20%
vesting on each annual anniversary of the grant. Each individual will
receive cash dividends if and when declared on vested shares; dividends on
unvested shares will be used to acquire additional shares. The value of
these shares at December 31, 1997 for Messrs. Rodriguez, Hedrick, Bates,
Blough and Horne was $49,030, $32,138, $32,138, $32,138 and 32,138,
respectively.
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
Number of Securities Value of
Underlying Exercisable/Unexercised
Exercisable/Unexercised In-the-Money
Options/SARS at Options-SARS at
Name Fiscal Year-end Fiscal Year-end
- ------------------------ ------------------------ -----------------------
James S. Haines, Jr. 320,000/480,000 637,120/955,680
Eduardo A. Rodriguez 20,000/80,000 35,050/140,200
Gary R. Hedrick 20,000/80,000 35,050/140,200
Julius F. Bates 20,000/80,000 35,050/140,200
Michael L. Blough 20,000/80,000 35,050/140,200
John C. Horne 20,000/80,000 35,050/140,200
RETIREMENT INCOME PLAN TABLE
The table set forth below shows estimated annual benefits payable at the
normal retirement age of 65 upon retirement under the Company's Retirement
Income Plan for the years of service and levels of final average compensation
specified.
-12-
<PAGE>
PENSION PLAN TABLE
Years of Service
----------------------------------------------------
Compensation 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
$125,000 $23,438 $31,250 $39,062 $46,875 $54,688
150,000 28,125 37,500 46,875 56,250 65,625
175,000 30,000 40,000 50,000 60,000 70,000
200,000 30,000 40,000 50,000 60,000 70,000
225,000 30,000 40,000 50,000 60,000 70,000
250,000 30,000 40,000 50,000 60,000 70,000
300,000 30,000 40,000 50,000 60,000 70,000
400,000 30,000 40,000 50,000 60,000 70,000
450,000 30,000 40,000 50,000 60,000 70,000
500,000 30,000 40,000 50,000 60,000 70,000
The compensation covered by the Retirement Income Plan is the annual salary
paid to the participant, which is reflected in the column titled "Base Salary"
in the Summary Compensation Table. The estimated credited years of service for
each of Messrs. Haines, Rodriguez, Hedrick, Bates, Blough and Horne at December
31, 1997 was 2, 17, 21, 25, 16 and 25, respectively. The benefits are computed
based on straight-life annuity amounts and are not subject to any deduction or
offset for social security benefits or other amounts. Pursuant to applicable
federal regulations, for periods after December 31, 1992, the maximum amount of
compensation on which the benefits can be based was reduced to $150,000 per
year, as such amount may be adjusted in $10,000 increments. The maximum amount
of compensation on which benefits may be based is currently $160,000.
Participants in the Retirement Income Plan will receive the greater of the
accrued benefit at December 31, 1992, or the benefits accrued using the
compensation limitation.
EMPLOYMENT AGREEMENTS AND RELATED MATTERS
James S. Haines, Jr. became the Company's Chief Executive Officer and
President on May 1, 1996. The Company has entered into an employment agreement
with Mr. Haines for an initial term of five years at an initial base salary of
$425,000 per year. In addition, pursuant to the agreement, Mr. Haines was
awarded 100,000 shares of restricted stock and was granted options covering
800,000 shares of Common Stock with an exercise price of $5.3215 per share. The
restrictions on the restricted stock are scheduled to lapse in 20% increments
annually beginning January 1, 1997 and the options are scheduled to vest in 20%
increments per year beginning December 31, 1996, subject to earlier lapsing and
vesting under certain circumstances (including a change of control of the
Company).
The Company has a four-year employment contract with Mr. Rodriguez, which
expires on February 12, 2000 and provides for certain minimum base salary
levels, which escalate to not less than $220,000 in the final year of the
agreement.
The Company had two-year employment agreements with each of Mr. Hedrick and
Mr. Blough, which expired on February 28, 1998. Such agreements provided for a
minimum base salary level of not less than $129,792 annually.
-13-
<PAGE>
COMPENSATION/BENEFITS COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
GENERAL. The Compensation/Benefits Committee (the "Committee") of the
Board of Directors is comprised entirely of non-employee Directors. The
Committee is responsible for reviewing and approving the compensation of all
executive officers of the Company, including the Named Executive Officers and
for administering the 1996 Long-Term Incentive Plan. Following review and
approval by the Committee, all significant issues pertaining to executive
compensation are submitted to the full Board of Directors for approval.
COMPENSATION PROGRAM. Following its emergence from bankruptcy, the Company
retained an international benefits and compensation consulting firm to advise
the Board in designing an overall executive compensation program. Specific
information was provided for 13 organizations engaged primarily in the electric
utility business, and more general data was made available covering other
organizations of a size comparable to the Company. In addition, the Company's
internal staff provides the Committee with salary and benefits information
compiled by the Edison Electric Institute (EEI) covering electric utilities with
annual revenues between $500 million and $1 billion. This overall group of
companies is thus smaller than the "EEI 100" index used to prepare the
performance graph that appears later in this Proxy Statement, and at the same
time broader than that index because of the Committee's view that the Company is
entering a deregulated environment and must compete for executive talent against
non-utility companies.
The Committee believes that the executive compensation program should
include a base salary that is at or near the mean for peer utilities (as
described above), adjusted as appropriate for regional price and compensation
levels and trends, and short-term and long-term incentive compensation that
aligns the interests of the executive with the total return to the Company's
shareholders. The incentive components of compensation are intended to provide
total compensation that is commensurate with a broader industry group as well as
utilities. The use of stock-based compensation that vests over time has the
additional effect of retaining quality talent.
Based on the above parameters, the Committee and Board adopted during 1996
a total compensation program for executives that is comprised of three elements:
base salary; short-term incentives; and long-term incentives.
BASE SALARY. Each executive officer position is assigned a salary grade
with minimum, midpoint and maximum ranges established to reflect salary
information from comparable electric utility companies as described above. Once
the range is established for a particular position, the base salary of each
executive officer is determined by his or her skills and experience and
potential impact on the Company's operations. Base salary adjustments are
affected by the officer's individual performance and success in achieving
specific corporate and individual goals. The Chief Executive Officer reviews
the performance of the other executive officers and makes recommendations to the
Committee based on each officer's performance. Based on the information
available to it, the Committee believes that the base salary of these
individuals is generally near the median for comparable electric utilities.
-14-
<PAGE>
SHORT-TERM INCENTIVES. Each executive officer other than the Chief
Executive Officer may earn an incentive bonus of up to 50% of his or her base
compensation if the Company achieves specific annual goals that are established
in advance by the Committee and the Board. All short-term incentive awards are
paid in Common Stock and vest equally over a four year period with 20% vesting
once the goal is achieved and 20% vesting on each one year anniversary of such
date for the next four years. It is anticipated that the annual performance
goals will be "stretch" goals based on the achievement of corporate objectives
(such as cash flow, expense reduction, customer satisfaction, etc.) that will
lead to enhanced shareholder value. In 1997, the performance goals included
safety, customer satisfaction and deleveraging. Executive officers earned a
1997 short-term incentive award of 15.24% of base salary for partial achievement
of the deleveraging and customer satisfaction performance goals. For the 1998
incentive plan, goals have been established for safety, customer satisfaction
and deleveraging/cash flow. No short-term incentive awards will be granted,
however, unless the deleveraging/cash flow goal is met.
LONG-TERM INCENTIVES. During 1996, each current Named Executive Officer
other than the Chief Executive Officer was awarded a stock option grant to
acquire 100,000 Common Shares at the market price on the date of grant. The
stock options vest in equal 20% increments over five years. The options were
designed as both a retention plan as well as a long-term incentive plan, and the
number of options granted was by reference to both the base salaries and the
Committee's view of appropriate incentives in an industry moving to greater
competition. The long-term incentive plan is intended to promote long-term
growth and stability and to allow executive officers to acquire the Company's
common stock and directly align the executive officers' personal interest with
that of other shareholders.
STOCK OWNERSHIP GUIDELINES. Recognizing that stock ownership by executive
officers and directors can directly correlate to improved performance and
shareholder enhancement, the Committee also established stock ownership
guidelines for executive officers and directors. The guidelines suggest that
the Chief Executive Officer own common stock with a value equal to three times
his base salary and that other executive officers and directors own common stock
with a value equal to two times their base salary or annual retainer,
respectively. The ownership guidelines were set with the intention that they be
met within 5 years.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The philosophy of the
Committee and the Board of Directors is to directly tie the most significant
portion of the chief executive officer's compensation to the Company's success
in maximizing shareholder value. The shareholders will benefit through the
chief executive officer's leadership in establishing and meeting short-term and
medium-term financial and operational goals and his initiative in developing and
implementing long-term strategy. The need to use cash to deleverage and the
constraints on the Company's ability to enhance revenues from customers through
rate increases require that the cash portion of the chief executive officer's
compensation initially be fixed. At the same time, the Committee strongly
believes that the chief executive officer's total compensation should directly
reflect increases in the value of the Common Shares.
-15-
<PAGE>
The philosophy described above guided the Board in establishing Mr. Haines'
compensation in 1996 after he was selected, following an extensive search, with
the assistance of a prominent executive search firm, for a chief executive
officer with the experience and vision to lead the Company into the deregulated
market. Mr. Haines' compensation, which is contained in a five-year employment
contract, has three elements: a base salary payable in cash; restricted stock;
and stock options. Mr. Haines' base salary is $425,000, which is comparable to
the cash portion of his compensation in his previous position as a senior
officer of a major electric and gas utility and well within the range of
salaries of CEOs of electric utilities. There is no provision in Mr. Haines'
contract for annual cash bonuses or for automatic increases in his base salary,
and the Committee has not exercised its discretion to award Mr. Haines a cash
bonus for 1997 or to increase his base salary in 1998. Instead, Mr. Haines will
be compensated for the achievement of short and medium-term goals through
increases in the value of 100,000 restricted Common Shares, which will vest in
equal increments over the term of his contract. Mr. Haines has also been
motivated to build long-term value for shareholders through the award of 800,000
stock options with an exercise price equal to the value of the Common Shares on
the date he began his service as the Company's chief executive officer. The
number of restricted shares and options awarded to Mr. Haines was arrived at
through negotiation and is consistent with utility industry norms for overall
compensation. The Committee believes that the bias in favor of stock-based
compensation will provide the greatest incentive for Mr. Haines to create and
implement value enhancing strategies for the benefit of the Company's
shareholders.
Members of the Compensation/Benefits Committee:
Kenneth R. Heitz - Chairman
Wilson K. Cadman
Charles A. Yamarone
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the performance of the American Exchange Market Value Index (XAM) and the
Edison Electric Institute's Index of 100 investor-owned electric utilities (EEI
100). The graph assumes that the value of El Paso Electric Common Stock on
February 16, 1996 (when it began trading on the American Stock Exchange), and
the value of the XAM on February 16, 1996 were $100 and the value of the EEI 100
on January 1, 1996 was $100 and that all dividends were reinvested. The EEI 100
is not published daily. The common shares of the Company prior to February 12,
1996 (the effective date of the plan of reorganization) were canceled as part of
the bankruptcy and their performance is not comparable to that of the common
shares of the reorganized Company. The table sets forth the relative yearly
percentage change in the Company's cumulative total shareholder return as
compared to the XAM and the EEI 100, as reflected in the graph.
-16-
<PAGE>
[GRAPH APPEARS HERE]
Base December 31, 1996 December 31, 1997
---- ----------------- -----------------
El Paso Electric 100.000 136.84 153.94
XAM 100.000 103.82 125.91
EEI 100 100.000 101.20 128.57
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
public accountants, who have served as independent auditors of the Company's
financial statements since 1983, to serve as the independent auditors of the
Company's financial statements for the 1998 fiscal year. Representatives of KPMG
Peat Marwick LLP will be present at the Annual Meeting and will have an
opportunity to make a statement if they desire to do so and will respond to
appropriate questions.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Under certain circumstances, shareholders are entitled to present proposals
at shareholders meetings. To be eligible for inclusion in the proxy statement
for the Company's 1999 Annual Meeting of Shareholders, a shareholder proposal
must be received at the Company's principal executive offices on or prior to
December 8, 1998. A shareholder's notice should list each proposal and a brief
description of the business to be brought before the meeting; the name and
address of the shareholder proposing such business; the class and number of
shares held by the shareholder; and any material interest of the shareholder in
the business. If a shareholder wishes to nominate a director he must provide
the nomination to the Executive/Nominating Committee in writing at the Company's
principal offices pursuant to the notice provisions provided in the Company's
By-Laws.
OTHER BUSINESS
The Board of Directors knows of no business, other than as stated in the
Notice of Annual Meeting of Shareholders, that will be presented for
consideration at the Annual Meeting. If, however, other matters are properly
brought before the Annual Meeting, it is the intention of the persons named in
the accompanying form of proxy to vote the shares
-17-
<PAGE>
represented thereby on such matters in accordance with their best judgment and
in their discretion.
ANNUAL REPORT
The Company's 1997 Annual Report, which includes financial statements, but
which does not constitute a part of the proxy solicitation material, accompanies
this proxy statement.
EL PASO ELECTRIC COMPANY
By Order of the Board of Directors
/s/ GUILLERMO SILVA, JR.
Guillermo Silva, Jr.
Secretary
Dated: April 27, 1998
-18-
<PAGE>
[FORM OF PROXY CARD]
EL PASO ELECTRIC COMPANY
For the Annual Meeting of Shareholders
to be held May 29, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominate(s), constitute(s) and appoint(s) James S.
Haines, Jr., Terry D. Bassham and Guillermo Silva, Jr., and each of them, the
attorneys, agents and proxies of the undersigned, with full powers of
substitution to each, to attend and act as proxy or proxies of the undersigned
at the Annual Meeting of Shareholders (the "Annual Meeting") of El Paso Electric
Company (the "Company") to be held at the Paul Kayser Center, 100 N. Stanton, El
Paso, Texas 79901, on Friday, May 29, 1998 at 10:00 a.m., MDT, or at any
adjournments thereof, and vote as specified herein the number of shares that the
undersigned, if personally present, would be entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
DESCRIBED IN THE PROXY STATEMENT AS CLASS II DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES DESCRIBED
IN THE PROXY STATEMENT AS CLASS II DIRECTORS. IF ANY MATTERS NOT SPECIFIED IN
THE NOTICE OF MEETING ARE PRESENTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE BEST JUDGMENT AND IN THE DISCRETION OF THE NAMED PROXY HOLDERS. THIS PROXY
MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY
AN INSTRUMENT IN WRITING REVOKING THE PROXY OR A DULY EXECUTED PROXY BEARING A
LATER DATE. THIS PROXY MAY ALSO BE REVOKED BY ATTENDING THE MEETING AND VOTING
IN PERSON.
[REVERSE OF CARD]
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<PAGE>
[ ]
1. Election of Directors Listed Below (to FOR all nominees
serve for a term of three years to expire listed below [X]
at the annual meeting in 2001)
WITHHOLD AUTHORITY to vote *EXCEPTIONS
for all nominees listed below [X] [X]
Nominees: WILSON K. CADMAN JAMES A. CARDWELL JAMES W. CICCONI
PATRICIA Z. HOLLAND-BRANCH
INSTRUCTIONS: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write that nominee's name on the space
provided below.
*Exceptions
-------------------------------------------------------------------
Address Changes
and/or Comments [X]
Please date and sign exactly as name
appears. If shares are held jointly, each
should sign, if signing as attorney,
executor, administrator, trustee or
guarantee, etc., so indicate when
signing. If a corporation, please sign in
full corporate name by an authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated
------------------------------------
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
Votes must be indicated
(x) in Black or Blue ink. [X]
---------
Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
-2-
