<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
EL PASO ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
EL PASO ELECTRIC COMPANY
100 N. Stanton
El Paso, Texas 79901
(915) 543-5711
March 27, 2000
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 Thursday, May 4, 2000, 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 I 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 proposal as explained in the attached Proxy Statement.
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 Haines
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 Thursday, May 4, 2000, at 10:00 a.m., Mountain Daylight Time, for the
following purposes:
(1) To elect four members of the Board of Directors for three-year
terms;
(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 the election of
Class I Directors (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 13, 2000,
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
March 27, 2000
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 4, 2000
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors of
El Paso Electric Company (the "Company") for use at its 2000 Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Thursday, May 4, 2000, 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 $4,500 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 March 27, 2000.
SHARES OUTSTANDING, VOTING RIGHTS AND REVOCABILITY OF PROXIES
At the close of business on March 13, 2000, the "record date" for
determination of the shareholders entitled to notice of and to vote at the
Annual Meeting, the Company had outstanding 54,778,810 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. The vote of a plurality of the votes cast
at the meeting is required for the election of each Class I Director.
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. The shares
represented by a proxy given and not so revoked 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
<PAGE>
specified, the shares will be voted FOR the election of the four nominees
described below as Class I Directors. If no proxy is returned, the shares
represented by such proxy will not be voted.
The election of Class I Directors is the only matter the Board of Directors
is aware of that will be presented at the Annual Meeting. If, however, any other
matters are properly presented at the Annual Meeting, the proxy holder will have
discretionary authority to vote the shares represented by properly executed
proxies in accordance with his discretion and judgment as to the best interests
of the Company.
Abstentions are included in the determination of the number of shares
represented at the Annual 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 Annual Meeting for purposes of determining
whether a quorum is present and are not counted for purposes of determining
whether a proposal has been approved.
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 I Directors, consisting of the four nominees shown below, will stand
for election at the Annual Meeting for three-year terms expiring at the annual
meeting of shareholders in 2003 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 I Directors, unless authority to do so is withheld. Each
nominee has agreed to his 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 the Board of Directors may recommend in place
of such nominee.
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NOMINEES AND DIRECTORS OF THE COMPANY
<TABLE>
<CAPTION>
Director Principal Occupation and Employment
Name Age Since During the Past Five Years(1)
- ------------------------ ------ ----------- ------------------------------
<S> <C> <C> <C>
CLASS I DIRECTORS (New Term will expire in 2003)
George W. Edwards, Jr. (2) 60 1992 Chairman of the Board since May 1996; Retired as
President, Chief Executive Officer and Director of
Kansas City Southern Railway Company in May 1995,
where he served in that capacity for 4 years, from
April 1991 to May 1995.
Ramiro Guzman (3) 53 1996 Owner of Ramiro Guzman & Associates since February
2000. President of Montana Beverage Company from
February 1998 through January 2000; President and
Chief Executive Officer of Dickshire Distributing
for more than five years prior to February 1998.
Stephen Wertheimer (4) 49 1996 Managing Director of Credit Research and Trading
since 1996; President and Founder of Water Capital
Corp. from 1991 to 1997.
Charles A. Yamarone (5) 41 1996 Executive Vice President of U.S. Bancorp Libra, a
division of U.S. Bancorp Investments, Inc. since
January 1999; Executive Vice President of Libra
Investments, Inc. from 1991 to 1999.
CLASS II DIRECTORS (Term will expire in 2001)
Wilson K. Cadman(6) 72 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(7) 67 1990 Chairman of the Board and Chief Executive Officer,
Petro Stopping Centers, LP, a nationwide chain of
truckstops.
James W. Cicconi 47 1997 General Counsel and Executive Vice President-Law
and Government Affairs of AT&T since December
1998; Senior Vice President of Governmental
Affairs & Federal Policy for AT&T from September
1998 to December 1998; Partner of Akin, Gump,
Strauss, Hauer & Feld, a law firm, for more than
five years prior to September 1998.
Patricia Z. Holland-Branch 55 1997 President, Chief Executive Officer and Owner of
HB/PZH Commercial Environments Inc., a full
service office furniture dealership, project
management and design firm. Franchise owner of
Office Furniture USA since 1997.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Director Principal Occupation and Employment
Name Age Since During the Past Five Years(1)
- ------------------------ ------ ----------- ------------------------------
<S> <C> <C> <C>
Chairman of the Board and Owner of Clean Team,
Inc., d/b/a Millicare Environmental Services,
a commercial carpet maintenance franchise,
since 1997.
CLASS III DIRECTORS (Term will expire in 2002)
James W. Harris 53 1996 Founder and President of Seneca Financial Group,
Inc.
Kenneth R. Heitz 52 1996 Partner of Irell and Manella, a law firm.
Michael K. Parks 40 1996 President of Aurora National Life Assurance
Company since 1994; Chief Investment Officer of
Aurora National Life Insurance Company since 1993.
Eric B. Siegel (8) 42 1996 Independent investor and business consultant since
1999; Principal of Pegasus Insurance Partners, a
private investment firm, from 1995 to 1999;
limited partner of Apollo Advisors, L.P. and Lion
Advisors, L.P., investment firms, from 1990 to
1995.
James Haines(9) 53 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>
___________________________
(1) Where no date is specified, the director has held the position for more
than the past five years.
(2) Mr. Edwards is also a director of Hubbell, Inc.
(3) Mr. Guzman is also an advisory director of Chase Bank of Texas, N.A.
(4) Mr. Wertheimer is also a director of Greenwich Fine Arts, Inc., Trikon
Technologies, SpectruMedix Corp., and AMS, Inc.
(5) Mr. Yamarone is also a director of Continental Airlines, Inc., and New
Millenium Homes, L.L.C.
(6) Mr. Cadman is also a director of the Columbia Energy Group, and
Clark/Bardes Holdings, Inc.
(7) Mr. Cardwell is also a trustee of Archstone Communities, a real estate
investment trust and a director of State National Bancshares, Inc.
(8) Mr. Siegel is also a director of Sun International Hotels, Ltd., and XCL-
China, Ltd.
(9) Mr. Haines is also a director of the El Paso Branch, Federal Reserve Bank
of Dallas.
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<PAGE>
DIRECTORS' MEETINGS, COMPENSATION AND COMMITTEES
The Board of Directors held seven meetings during calendar year 1999. All
directors attended at least 75% of the total number of meetings of the Board and
the committees on which they served during the period they served in such
position.
Compensation of Directors
The compensation for non-employee members of the Board of Directors during
1999 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 (b) in accordance with the terms of the 1996 El Paso
Electric Company Long-Term Incentive Plan, 3,500 shares of restricted Common
Stock. In addition, the Board awarded Mr. Edwards, in consideration of his
service as Chairman of the Board during 1999, 25,000 shares of Common Stock that
are restricted as to sale until May 4, 2000. Further, the Company has at times
called upon directors for special expertise for which it pays an hourly
consulting fee. In 1999 two directors were paid a consulting fee which in
aggregate amounted to approximately $11,300.
During 2000 non-employee directors will receive the same compensation as in
1999. The shares so awarded will be subject to restrictions on sale or transfer
for one year and, in general, will vest if the director remains continuously in
the service of the Company as a non-employee director during such period.
The Board of Directors has the following standing committees: Audit/Ethics,
Civic and Charitable Affairs, Compensation/Benefits, Executive/Nominating, Palo
Verde Oversight, Environmental, and International Business.
During 1999 the Audit/Ethics Committee was composed of directors Yamarone,
Parks, Holland-Branch, Cicconi and Guzman. The Audit/Ethics Committee, which
held four meetings in 1999, is responsible for 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.
During 1999 the Civic and Charitable Affairs Committee was composed of
directors Cardwell, Holland-Branch, Guzman and Haines. The Civic and Charitable
Affairs Committee, which held four meetings in 1999, is responsible for setting
policy and reviewing an annual budget for civic and charitable contributions by
the Company in the communities it serves.
During 1999 the Compensation/Benefits Committee was composed of directors
Heitz, Cadman, Cicconi and Yamarone. The Compensation/Benefits Committee, which
held five meetings in 1999, is responsible for evaluating and approving the
compensation of executive
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<PAGE>
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 1999 the Executive/Nominating Committee was composed of directors
Wertheimer, Siegel, Haines, Harris and Parks. The Executive/Nominating
Committee, which held seven meetings in 1999, is the administrative and policy
making committee of the Board of Directors, and may exercise all powers of the
Board of Directors (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 of Directors regarding the
maximization of shareholder value. The Executive/Nominating Committee is
responsible for conducting peer reviews and evaluations of the members of the
Board of Directors.
During 1999 the Palo Verde Oversight Committee was composed of directors
Cadman, Guzman, Siegel and Cardwell. The Palo Verde Oversight Committee, which
held two meetings in 1999, is responsible for reviewing and assessing the
activities and operations of the Palo Verde Nuclear Generating Station, in which
the Company is a participant.
During 1999 the Environmental Committee was composed of directors Cardwell,
Harris, Wertheimer and Heitz. The Environmental Committee, which held two
meetings in 1999, 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.
The International Business Committee was created in 2000, and is composed
of directors Holland-Branch, Cardwell and Wertheimer. The International Business
Committee is responsible for assisting management in formulating a business
development strategy for Mexico and evaluating business opportunities in Mexico.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 13, 2000 (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 I 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, 1999, and (iv) all directors and
current executive officers of the Company as a group (23 persons).
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C>
Westport Asset Management, Inc. 6,008,250 (1) 10.38%
253 Riverside Avenue
Westport, CT 06880
Highfields Capital Management LP 5,753,600 (2) 9.9%
200 Clarendon Street - 51st Floor
Boston, MA 02117
Merrill Lynch & Co., Inc. 4,085,281 (3) 7.06%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
George W. Edwards, Jr. 120,540 (4) *
Wilson K. Cadman 20,540 (5) *
James A. Cardwell 20,640 (6) *
James W. Cicconi 8,500 (7) *
Ramiro Guzman 20,540 (5) *
James W. Harris 35,540 (8) *
Kenneth R. Heitz 20,540 (5) *
Patricia Z. Holland-Branch 9,905 (9) *
Michael K. Parks 30,540 (10) *
Eric B. Siegel 26,540 (11) *
Stephen Wertheimer 26,790 (12) *
Charles A. Yamarone 33,130 (13) *
James Haines 768,405 (14) 1.4%
Eduardo A. Rodriguez 127,374 (15) *
Gary R. Hedrick 119,463 (16) *
Julius F. Bates 118,890 (17) *
Michael L. Blough 118,343 (18) *
Other Executive Officers 248,712 (19) *
All directors and executive officers 3.4%
As a group 1,874,932 (20)
(23 persons)
</TABLE>
- -----------------------------------------
* Less than 1%.
(1) Information regarding ownership of Common Stock by Westport Asset
Management Inc., ("Westport") and Westport Advisors LLC ("Wesport
Advisors") is included herein in reliance on information set forth in
Amendment No. 2 to Schedule 13-G filed by Westport and Westport Advisors on
February 16, 2000, with the Securities and Exchange Commission (the
"Commission"), reflecting ownership as of December 31, 1999. Westport is a
parent holding company pursuant to Rule 13d-1 (b) (ii) (G) of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), and owns
50% of Westport Advisors. Westport is an Investment Advisor registered
under Section 203 of the Investment Advisors Act of 1940. Westport Advisors
is an Investment Advisor for a
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<PAGE>
series of public mutual funds. According to the filing, Westport and
Wesport Advisors beneficially own 6,008,250 shares for purposes of Rule 13d
and maintain shared voting, disposition, and investment power of the
Company's Common Stock. Westport disclaims beneficial ownership of such
Common Stock.
(2) Information regarding ownership of Common Stock by Highfields Associates
LLC ("Highfields Associates"), Highfields Capital Management LP
("Highfields Capital"), Highfields GP LLC ("Highfields GP"), Mr. Johnathon
S. Jacobson ("Mr. Jacobson"), Mr. Richard L. Grubman ("Mr. Grubman"), and
Highfields Capital Ltd., ("Highfields Ltd.") is included herein in reliance
on information set forth in Amendment No. 2 to Schedule 13-G filed by
Highfields Associates, Highfields Capital, Highfields GP, Mr. Jacobson, Mr.
Grubman, and Highfields Ltd., on February 14, 2000, with the Commission and
reflecting ownership as of December 31, 1999. On November 30, 1999,
Highfields Associates, Highfields Capital, Mr. Jacobson, and Mr. Grubman
dissolved their status as a group under Rule 13d of the 1934 Act.
Highfields Capital, Highfields GP, Highfields Ltd., Mr. Jacobsen, and Mr.
Grubman have agreed to file a joint Schedule 13G as individuals. Highfields
Associates is a limited liability company organized under the laws of the
State of Delaware and serves as a general partner for Highfields Capital I
LP ("Highfields I") and Highfields Capital II LP ("Highfields II").
Highfields I, Highfields II, and Highfields Ltd., are collectively known as
the "Funds". Highfields Capital, a Delaware limited partnership, serves as
an Investment Manager to each of the Funds. Highfields Ltd. is an exempted
limited liability company organized under the laws of the Cayman Islands.
Mr. Jacobson and Mr. Grubman are Managing Members of Highfields GP, a
Delaware limited liability company, which is the general partner of
Highfields Capital. According to the filing, the Funds beneficially own the
Company's Common Stock. Highfields Ltd. beneficially owns 7% of the shares
of Common Stock and maintains sole voting and dispositive power over
4,048,447 shares. Highfields Associates, as general partner of Highfields I
and Highfields II, beneficially owns a total of 2.9% of Common Stock and
maintains sole voting and dispositive power over 1,705,153 shares of Common
Stock. The aggregate amount beneficially owned by the Funds is 5,753,600
shares of Common Stock (9.9%). Highfields Capital, Highfields GP, Mr.
Jacobsen, and Mr. Grubman each have the power to direct the proceeds of the
sale of shares owned by the Funds.
(3) Information regarding ownership of Common Stock by Merrill Lynch & Company
Inc. ("ML&Co.") on behalf of Merrill Lynch Asset Management Group ("AMG")
and Merrill Lynch Global Allocation Fund, Inc. (the "Fund") is included
herein in reliance on information set forth in Amendment No. 3 to Schedule
13-G filed by ML&Co., AMG, and the Fund on February 7, 2000, with the
Commission, reflecting ownership as of December 31, 1999. ML&Co. is a
parent holding company pursuant to Rule 13d-1 (b) (ii) (G) of the 1934 Act;
AMG is an operating division of ML&Co., which is registered as an
Investment Advisor under Section 203 of the Investment Advisors Act of
1940. The Fund is an investment company registered under Section 8 of the
Investment Company Act of 1940. According to the filing, ML&Co., AMG, and
the Fund have shared voting, dispositive and investment power over
4,085,281 of the Company's Common Stock. ML& Co. disclaims beneficial
ownership of this Common Stock.
(4) Includes (i) 10,000 shares of Common Stock that Mr. Edwards has the right
to acquire by exercising options granted under the 1996 Long-Term Incentive
Plan ("1996 Plan"); and (ii) 110,540 shares of restricted Common Stock
awarded under the 1996 Plan over
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<PAGE>
which he has voting power but no investment power, except for 80,632 shares
over which he has investment power.
(5) Includes (i) 10,000 shares of Common Stock that this director has the right
to acquire by exercising options granted under the 1996 Plan; and (ii)
10,540 shares of restricted Common Stock awarded under the 1996 Plan over
which each director has voting power but no investment power, except for
5,632 shares over which he has investment power.
(6) Includes (i) 10,000 shares of Common Stock that Mr. Cardwell has the right
to acquire by exercising options granted under the 1996 Plan; (ii) 10,540
shares of restricted Common Stock awarded under the 1996 Plan over which
he has voting power but no investment power, except for 5,632 shares over
which he has investment power; and (iii) 100 shares owned by Mr. Cardwell
over which he has sole voting and investment power.
(7) Represents (i) 5,000 shares of Common Stock that Mr. Cicconi has the right
to acquire by exercising options granted under the 1996 Plan; and (ii)
3,500 shares of restricted Common Stock awarded under the 1996 Plan over
which he has voting power but no investment power.
(8) Includes (i) 10,000 shares of Common Stock that Mr. Harris has the right to
acquire by exercising options granted under the 1996 Plan; (ii) 10,540
shares of restricted Common Stock awarded under the 1996 Plan over which
he has voting power but no investment power, except for 5,632 shares over
which he has investment power; and (iii) 15,000 shares owned by Mr. Harris
over which he has sole voting and investment power.
(9) Represents (i) 5,000 shares of Common Stock that Ms. Holland-Branch has the
right to acquire by exercising options granted under the 1996 Plan; and
(ii) 4,905 shares of restricted Common Stock awarded under the 1996 Plan
over which she has voting power but no investment power.
(10) Includes (i) 10,000 shares of Common Stock that Mr. Parks has the right to
acquire by exercising options granted under the 1996 Plan; (ii) 10,540
shares of restricted Common Stock awarded under the 1996 Plan over which
he has voting power but no investment power, except for 5,632 shares over
which he has investment power; and (iii) 10,000 shares owned by Mr. Parks
over which he has sole voting and investment power.
(11) Includes (i) 10,000 shares of Common Stock that Mr. Siegel has the right to
acquire by exercising options granted under the 1996 Plan; (ii) 10,540
shares of restricted Common Stock awarded under the 1996 Plan over which
he has voting power but no investment power, except for 5,632 shares over
which he has investment power; and (iii) 6,000 shares owned by Mr. Siegel
over which he has sole voting and investment power.
(12) Includes (i) 10,000 shares of Common Stock that Mr. Wertheimer has the
right to acquire by exercising options granted under the 1996 Plan; (ii)
10,540 shares of restricted Common Stock awarded under the 1996 Plan over
which he has voting power but no investment power, except for 5,632 shares
over which he has investment power; and (iii) 6,250 shares owned by Mr.
Wertheimer over which he has sole voting and investment power.
(13) Represents (i) 10,000 shares of Common Stock that Mr. Yamarone has the
right to acquire by exercising options granted under the 1996 Plan; (ii)
13,130 shares of restricted Common Stock awarded under the 1996 Plan over
which he has voting
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<PAGE>
power but no investment power, except for 5,632 shares over which he has
investment power; and (iii) 10,000 shares owned by Mr. Yamarone over which
he has sole voting and investment power.
(14) Includes (i) 690,000 shares of Common Stock that Mr. Haines currently has
the right to acquire by exercising options granted under the 1996 Plan;
(ii) 75,005 shares of restricted Common Stock awarded under the 1996 Plan
over which he has voting power but no investment power, except for 55,005
shares over which he has investment power; and (iii) 3,400 shares owned by
Mr. Haines over which he has sole voting and investment power.
(15) Includes (i) 100,000 shares of Common Stock that Mr. Rodriguez currently
has the right to acquire by exercising options granted under the 1996
Plan; and (ii) 27,374 shares of restricted Common Stock awarded under the
1996 Plan over which he has voting power but no investment power, except
for 11,233 shares over which he has investment power.
(16) Includes (i) 100,000 shares of Common Stock that Mr. Hedrick currently has
the right to acquire by exercising options granted under the 1996 Plan;
(ii) 19,439 shares of restricted Common Stock awarded under the 1996 Plan
over which he has voting power but no investment power, except for 7,733
shares over which he has investment power; (iii) 19 shares owned by Mr.
Hedrick over which he has sole voting and investment power; and (iv) 5
shares owned by his spouse over which Mr. Hedrick has no voting power or
investment power.
(17) Includes (i) 100,000 shares of Common Stock that Mr. Bates currently has
the right to acquire by exercising options granted under the 1996 Plan;
(ii) 18,601 shares of restricted Common Stock awarded under the 1996 Plan
over which he has voting power but no investment power, except for 7,685
shares over which he has investment power; and (iii) 289 shares owned by
Mr. Bates over which he has sole voting and investment power.
(18) Includes (i) 100,000 shares of Common Stock that Mr. Blough currently has
the right to acquire by exercising options granted under the 1996 Plan;
(ii) 18,342 shares of restricted Common Stock awarded under the 1996 Plan
over which he has voting power but no investment power, except for 7,426
shares over which he has investment power; and (iii) 1 share owned by Mr.
Blough over which he has sole voting and investment power.
(19) Includes (i) 190,000 shares of Common Stock that other executive officers
currently have the right to acquire by exercising options granted under the
1996 Plan; (ii) 58,406 shares of restricted Common Stock awarded under the
1996 Plan over which they have voting power but no investment power, except
for 22,151 shares over which they have investment power; and (iii) 306
shares owned by the other executive officers over which they have sole
voting and investment power.
(20) Includes (i) 1,390,000 shares underlying stock options as discussed above;
(ii) 433,562 shares of restricted Common Stock awarded to executives and
directors under the 1996 Plan over which they have voting power but no
investment power, except for 242,553 shares over which they have investment
power; and (iii) 51,365 shares owned by them over which they have sole
voting and investment power. Also includes 5 shares owned by a spouse of
an executive officer over which he has no voting power or investment power.
-10-
<PAGE>
Certain Business Relationships
During 1999 the Company purchased office furniture and carpeting from
HB/PZH Commercial Environments, Inc., in the approximate amount of $234,058.
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 1999 from C&R
Distributing, Inc. ("C&R") in the approximate amount of $416,218. James A.
Cardwell, a Class II Director, is owner and Vice President of C&R. On February
1, 2000, the Company entered into a two year Consulting Agreement with Ramiro
Guzman & Associates, under which the Company will pay $125,000 annually for
public affairs and marketing services. Ramiro Guzman, a Class I Director, is
the owner of Ramiro Guzman & Associates. 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.
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, 1999, its officers,
directors and 10% shareholders complied with all Section 16(a) filing
requirements, except James A. Cardwell, a Class II Director, who inadvertently
neglected to file a Form 4 concerning the acquisition of 50 shares of Common
Stock on December 8, 1997. On July 7, 1999, Mr. Cardwell filed a Form 4
reporting this acquisition of Common Stock.
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<PAGE>
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 1999, and each
of the other four most highly compensated executive officers other than the
chief executive officer who were serving as executive officers at December 31,
1999 (the "Named Executive Officers"), for the fiscal years ended December 31,
1999, December 31, 1998, and December 31, 1997, for service in the capacities
indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
------------------------------------------- ------------------------
Other Securities All
Base Annual Restricted Underlying Other
Name and Salary Bonus Compensation/(2)/ Stock/(3)/ Options/SARs Compensation/(4)/
Principal Position Year ($) ($) ($) ($) (#) ($)
- -------------------------------- --------- ------- ---------------- ----------------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
James Haines.................... 1999 425,000 0 0 0 50,000 4,800
Chief Executive Officer 1998/(1)/ 441,346 0 0 0 0 4,800
& President (since May 1,1996) 1997 425,000 0 24,519 0 0 4,750
Eduardo A. Rodriguez............ 1999 231,525 75,996/(5)/ 8,905 0 0 4,800
Senior Vice President- 1998/(1)/ 228,981 81,786 13,569 0 100,000 4,800
Energy Services 1997 210,000 32,010 2,423 0 0 3,998
Gary R. Hedrick................. 1999 176,164 57,828/(5)/ 13,551 0 0 949
Vice President-Treasurer 1998/(1)/ 163,340 57,892 6,050 0 100,000 847
& Chief Financial Officer 1997 147,000 22,415 6,785 0 0 317
Julius F. Bates................. 1999 158,427 52,023/(5)/ 9,140 0 0 4,800
Vice President- 1998/(1)/ 155,209 55,039 8,623 0 100,000 4,800
Transmission & Distribution 1997 141,000 21,499 5,748 0 0 4,253
Michael L. Blough............... 1999 158,427 52,023/(5)/ 6,093 0 0 4,800
Vice President- 1998/(1)/ 155,209 55,039 4,599 0 100,000 4,800
Administration 1997 141,000 21,499 6,833 0 0 4,444
</TABLE>
(1) Base salary information reflects 27 biweekly payroll amounts compared to a
typical 26 biweekly payroll year because of timing.
(2) Represents payments for accrued and unused vacation and personal holiday
time pursuant to Company policy. Excludes perquisites representing less
than 10% of annual salary.
(3) As of 12/31/99 Messrs, Haines, Rodriguez, Hedrick, Bates and Blough owned
40,000, 13,560, 9,438, 9,075 and 9,075 shares of restricted Common Stock,
respectively. The value of these shares at 12/31/99 was $392,000,
$133,057, $92,610, $89,048 and $89,048, respectively.
(4) Includes matching contributions made by the Company under the Company's
401(k) Plan.
(5) Messrs. Rodriguez, Hedrick, Bates, and Blough received 8,575, 6,525, 5,870
and 5,870 shares of restricted Common Stock respectively, in February 2000
under the 1999 Bonus Plan. Such shares vest over 4 years with 20% vesting
on the day of the grant and 20% vesting on each annual anniversary of the
grant. Each individual will receive cash dividends if and when declared on
vested shares; dividends on unvested shares will be used to acquire
additional shares.
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<PAGE>
Aggregate Options Outstanding Under the 1996 Long-Term Incentive Plan
Set forth below is information with respect to the aggregate options granted
pursuant to the Company's 1996 Long-Term Incentive Plan that were outstanding at
December 31, 1999, for each of the Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARS at Options-SARS at
Fiscal Year-end Fiscal Year-end
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------ ------------------------------------- -------------------------------------
<S> <C> <C>
James Haines 690,000/160,000 2,996,115/718,560
Eduardo A. Rodriguez 80,000/120,000 301,400/355,100
Gary R. Hedrick 80,000/120,000 301,400/355,100
Julius F. Bates 80,000/120,000 301,400/355,100
Michael L. Blough 80,000/120,000 301,400/355,100
</TABLE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------------------------------------------
Number of Alternative
Common Grant Date
Shares Percent of Total Value
Underlying Options Granted Exercise or Grant Date
Options To Employees Base Price Expiration Present Value
Name Granted In Fiscal Year ($/Share) Date $/(1)/
- ---------------------- ---------------- ----------------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
James Haines 50,000/(2)/ 20.00% 7.3750 03-17-09 147,975
Eduardo A. Rodriguez 0 0 N/A N/A N/A
Gary R. Hedrick 0 0 N/A N/A N/A
Julius F. Bates 0 0 N/A N/A N/A
Michael L. Blough 0 0 N/A N/A N/A
</TABLE>
(1) The value of options is based on the Black Scholes Option Pricing Model
using the following assumptions: (a) risk-free rate of return is 5.23%
(yield on the 10-year Treasury Note) based on an award date of March 18,
1999; (b) volatility is 33.84%, calculated using the standard deviation of
the Company's Common Stock from January 3, 1997, to the award date; (c)
exercise price is the market price on date of award, which is $7.3750; (d)
time of exercise is assumed to be ten years from date of grant; and (e)
discounted actuarially to account for death, disability, retirement or
termination.
(2) This option vested immediately on the date of the grant.
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<PAGE>
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.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
---------------------------------------------------------------
Compensation 15 20 25 30 35
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$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
350,000 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
</TABLE>
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, and Blough at December 31,
1999, was 4, 19, 23, 27 and 18, 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 Haines became the Company's Chief Executive Officer and President on
May 1, 1996. The Company 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 Common 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 Common 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.
The Company had a four-year employment contract with Mr. Rodriguez, which
expired on February 12, 2000, and provided for certain minimum base salary
levels, which escalated to not less than $220,000 in the final year of the
agreement.
Each Named Executive Officer and certain other officers of the Company have
entered into a Change of Control Agreement requiring such person to remain in
the employ of the
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<PAGE>
Company for two years following a change in control. In the event the Named
Executive Officer is terminated during such period, other than for cause or
certain other reasons, the Agreement provides that such person would receive
2.99 times annual base salary plus bonuses, the actuarial equivalent of vested
benefits under the Company's retirement plan calculated with three additional
years of service, continuation of welfare benefits for two years and
outplacement services for one year.
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, and the 1999 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 of Directors 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 of Directors 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
-15-
<PAGE>
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.
Short-Term Incentives. Each executive officer other than the Chief
Executive Officer may earn an incentive bonus of up to 55% of his or her base
compensation if the Company achieves specific annual goals that are established
in advance by the Committee and the Board of Directors. All short-term
incentive awards are paid in Restricted 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
1999 the performance goals included safety, customer satisfaction and cash flow.
Executive officers earned a 1999 short-term incentive award of 32.8% of base
salary for partial achievement of the cash flow, safety and customer
satisfaction performance goals. For the 2000 incentive plan, goals have been
established for safety, customer satisfaction and earnings per share. No short-
term incentive awards will be granted, however, unless the earnings per share
goal is met.
Long-Term Incentives. During 1998 each current Named Executive Officer
other than the Chief Executive Officer was awarded a stock option grant to
acquire 100,000 shares of Common Stock at a price 7% greater than the market
price on the date of grant. The stock options vest in equal 20% increments over
five years. Each Named Executive Officer other than the Chief Executive Officer
was also awarded stock options, covering 100,000 shares in 1996. The 1996
options have a exercise price equal to 100% of the market value of the Common
Stock on the date of grant and vest in equal increments over 5 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 in 1996 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
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<PAGE>
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
Stock.
The philosophy described above guided the Board of Directors in
establishing Mr. Haines' compensation in 1996 after he was selected, following
an extensive search, with the assistance of a prominent executive search firm,
as 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. Mr. Haines is compensated
for the achievement of short and medium-term goals through increases in the
value of 100,000 shares of restricted Common Stock, 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 Stock on the
date he began his service as the Company's chief executive officer. The number
of restricted Common Stock and options awarded to Mr. Haines was arrived at
through negotiation and is consistent with utility industry norms for overall
compensation. In both 1999 and 2000 Mr. Haines was awarded a bonus of a stock
option grant to acquire 50,000 shares of Common Stock at the market price on the
date of the grants. The options vested immediately. The option grant was
intended to reflect both the Committee's and the Board of Director's recognition
of Mr. Haines on-going performance and the Company's continuing performance
improvement since he joined the Company. 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:
Wilson K. Cadman
James W. Cicconi
Kenneth R. Heitz - Chairman
Charles A. Yamarone
-17-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the performance of the American Exchange U.S. Total Return Index (AMEX U.S.)
and the Edison Electric Institute's Index of 100 investor-owned electric
utilities (EEI 100). The graph sets 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 AMEX U.S. on February 16, 1996, to a base of 100 and the value
of the EEI 100 on January 1, 1996, to a base of 100. The EEI 100 is not
published daily. The common stock of the Company prior to February 12, 1996 (the
effective date of the plan of reorganization), were cancelled as part of the
bankruptcy and their performance is not comparable to that of the Common Stock
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
AMEX U.S. and the EEI 100, as reflected in the graph.
TOTAL RETURN COMPARISON
El Paso Electric, AMEX Stock Market, EEI 100 Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Base 12/31/96 12/31/97 12/31/98 12/31/99
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
El Paso Electric 100.000 136.84 153.95 184.21 206.58
AMEX 100.000 100.21 125.33 134.52 171.85
EEI 100 100.000 101.20 128.57 142.46 123.86
</TABLE>
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 2001 Annual Meeting of Shareholders, a shareholder proposal
must be received at the Company's principal executive offices on or prior to
December 1, 2000. The Company will consider only proposals meeting the
requirements of applicable SEC rules. Under the Company's Bylaws, in order for
a shareholder proposal that is not included in the proxy statement to be
properly brought before the annual meeting of shareholders, notice of the
proposal must be received at the Company's principal executive offices at least
80 days prior to the scheduled date of the annual meeting. 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
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<PAGE>
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 the election of
Class I Directors, which 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 represented thereby on such matters in accordance with
their discretion and judgment as to the best interests of the Company.
INDEPENDENT AUDITORS
Representatives of KPMG LLP, the independent auditors of the Company's
financial statements, 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.
ANNUAL REPORT
The Company's 1999 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: March 27, 2000
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<PAGE>
[FORM OF PROXY CARD]
EL PASO ELECTRIC COMPANY
For the Annual Meeting of Shareholders
to be held May 4, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominate(s), constitute(s) and appoint(s) James
Haines, Terry 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 Thursday, May 4, 2000 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 I 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 I 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]
-1-
<PAGE>
<TABLE>
<CAPTION>
------------
------------
1. Election of Directors Listed Below (to FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] *EXCEPTIONS [X]
serve for a term of three years to expire Listed below for all nominees listed below
at the annual meeting in 2003)
Nominees: GEORGE W. EDWARDS RAMIRO GUZMAN STEPHEN WERTHEIMER CHARLES YAMARONE
INSTRUCTIONS: To withhold authority to vote for any nominee, mark the "Exceptions" box and write that nominee's name on the space
provided below.
<S> <C> <C> <C>
*Exceptions _______________________________________________________________________________________________________________________
Address Changes [X]
and/or Comments
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]
---------
</TABLE>
Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
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