<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EL PASO NATURAL GAS COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
Not Applicable
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
Not Applicable
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
Not Applicable
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not Applicable
- --------------------------------------------------------------------------------
/ / 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:
Not Applicable
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
Not Applicable
- --------------------------------------------------------------------------------
(3) Filing party:
Not Applicable
- --------------------------------------------------------------------------------
(4) Date filed:
Not Applicable
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
Dear Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
of El Paso Natural Gas Company (the "Company"), which will be held on Thursday,
March 17, 1994, at 9:00 a.m. (mountain standard time), in the Crescent III
meeting room, The Crescent Hotel, 2620 West Dunlap Avenue, Phoenix, Arizona. The
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe the business to be transacted at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please complete,
date, sign and return the enclosed proxy card in the accompanying envelope as
promptly as possible to ensure that your shares are represented and voted in
accordance with your wishes. You can help the Company avoid the necessity and
expense of sending follow-up letters to ensure a quorum is represented by
promptly returning the enclosed proxy card in the accompanying envelope.
Sincerely,
/s/ WILLIAM A. WISE
William A. Wise
Chairman of the Board, President
and Chief Executive Officer
El Paso, Texas
February 15, 1994
<PAGE> 3
EL PASO NATURAL GAS COMPANY
304 TEXAS AVENUE
EL PASO, TEXAS 79901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 17, 1994
The Annual Meeting of Stockholders of El Paso Natural Gas Company (the
"Company") will be held on Thursday, March 17, 1994, at 9:00 a.m. (mountain
standard time), in the Crescent III meeting room, The Crescent Hotel, 2620 West
Dunlap Avenue, Phoenix, Arizona, for the following purposes:
1. To elect seven Directors, each to hold office for a term of one year;
2. To ratify the appointment of Coopers & Lybrand as independent certified
public accountants to audit the Company's financial statements for the
fiscal year ending December 31, 1994; and
3. To transact any other business which may be properly brought before the
Annual Meeting.
Only stockholders of record at the close of business on February 1, 1994,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or postponement thereof. Whether or not you plan to attend the
Annual Meeting, please complete, date, sign and return the enclosed proxy card
in the accompanying envelope as promptly as possible to ensure that your shares
are represented and voted in accordance with your wishes.
By Order of the Board of Directors
/s/ STACY J. JAMES
Stacy J. James
Corporate Secretary
El Paso, Texas
February 15, 1994
<PAGE> 4
EL PASO NATURAL GAS COMPANY
304 TEXAS AVENUE
EL PASO, TEXAS 79901
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS -- MARCH 17, 1994
This Proxy Statement with the accompanying Notice of Annual Meeting of
Stockholders and proxy card are being mailed to stockholders beginning on or
about February 15, 1994. The proxy is solicited by the Board of Directors of El
Paso Natural Gas Company (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") on Thursday, March 17, 1994. Shares of the
Company's common stock, par value $3.00 per share (the "Common Stock"),
represented by a properly executed proxy in the accompanying form, will be voted
at the Annual Meeting. The proxy may be revoked at any time before its exercise
by sending written notice of revocation to Ms. Stacy J. James, Corporate
Secretary, El Paso Natural Gas Company, 304 Texas Avenue, El Paso, Texas 79901,
by signing and delivering a subsequently dated proxy or by attending the Annual
Meeting in person and giving notice of revocation to the Inspectors of Election.
February 1, 1994, was the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. On that date there
were outstanding and entitled to vote 36,885,530 shares of Common Stock, which
is the Company's only class of voting securities. For a period of at least ten
days prior to the Annual Meeting, a complete list of stockholders entitled to
vote at the Annual Meeting will be available for examination by any stockholder
during the Company's ordinary business hours at The Crescent Hotel, 2620 West
Dunlap Avenue, Phoenix, Arizona.
Each stockholder is entitled to one vote on each proposal for each share of
Common Stock held as of the record date. Two Inspectors of Election, each from
The First National Bank of Boston and appointed by the Board of Directors, shall
have authority to receive, inspect, electronically tally and determine the
validity of the proxies which are received. In accordance with the Company's
By-laws, an abstention by a stockholder will be a vote of abstention with
respect to the proposal voted upon and will not be a vote "for" or "against" the
proposal; however, an abstention and a broker non-vote will be included when
determining whether a quorum is present. The Company's By-laws also provide that
a non-vote by a broker will be treated as if the broker never voted and a
non-vote by a stockholder will be tallied as a vote "for" management.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held five meetings during the fiscal
year ended December 31, 1993. The standing committees of the Board of Directors
are the Audit Committee and the Compensation Committee. The Board of Directors
does not have a nominating committee or any committee performing similar
functions, and all matters which would be considered by such committee are acted
upon by the full Board of Directors. Since becoming a Director, each Director
has attended at least 80% of the meetings of the Board of Directors and the
committees on which he served during the fiscal year 1993.
THE AUDIT COMMITTEE
The Audit Committee currently consists of Kenneth L. Smalley (Chairman),
Byron Allumbaugh, Eugenio Garza Laguera, James F. Gibbons and Ben F. Love, each
a non-employee Director. All members except for Dr. Gibbons were members of the
Audit Committee during the fiscal year 1993. Dr. Gibbons became a member of the
Audit Committee in January 1994. Three meetings were held by the Audit Committee
during the fiscal year 1993. The Audit Committee makes a recommendation to the
Board of Directors for a firm of independent certified public accountants to
audit the Company's annual financial statements. In addition, the Audit
Committee reviews with management and the certified public accountants
<PAGE> 5
the financial statements, the adequacy of internal accounting controls, and the
basic accounting and financial policies and practices of the Company.
THE COMPENSATION COMMITTEE
The Compensation Committee currently consists of Ben F. Love (Chairman),
Byron Allumbaugh, Eugenio Garza Laguera, James F. Gibbons and Kenneth L.
Smalley, each a non-employee Director. All members except for Dr. Gibbons were
members of the Compensation Committee during the fiscal year 1993. Dr. Gibbons
became a member of the Compensation Committee in January 1994. Three meetings
were held by the Compensation Committee during the fiscal year 1993. The
Compensation Committee administers the Company's executive stock option plan,
long-term incentive compensation plan, annual incentive compensation plans and
other executive compensation plans. In addition, the Compensation Committee
reviews appropriate criteria for establishing performance targets and
determining annual corporate and executive performance ratings. The policies and
mission of the Compensation Committee are set forth in the "Compensation
Committee Report" which begins on page 9 of this Proxy Statement.
DIRECTOR COMPENSATION
Each member of the Company's Board of Directors is reimbursed for the usual
and ordinary expenses of meeting attendance. Employee Directors receive no
additional compensation for serving on the Board of Directors or committees
thereof. Non-employee Directors receive an annual retainer of $50,000. No
additional fees are paid to non-employee Directors for serving on the Board of
Directors or committees thereof.
Each non-employee Director receives a stock option grant of 3,000 options
under the Company's Stock Option Plan for Non-employee Directors upon his
initial election to the Board of Directors and an annual stock option grant of
1,000 options upon each re-election to the Board of Directors. Non-employee
Directors are also eligible to participate in the Company's Compensation Plan
for Non-employee Directors (which provides for the deferral of a Director's
annual retainer and the subsequent payout thereof) and the Company's Retirement
Income Plan for Directors (which provides for retirement benefits based upon the
number of years of service as a Director).
As part of its overall program to support charitable organizations, the
Company has a Director Charitable Award Plan. The plan provides for the
designation of up to four charitable organizations to receive a maximum of
$1,000,000 in the aggregate upon the death of a Director participant. Pursuant
to the plan, each Director of the Company is entitled to participate upon the
completion of two consecutive years of service on the Board of Directors.
Currently, Mr. Wise is the only Director eligible to participate in the plan.
PROPOSALS
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
In accordance with the By-laws of the Company, the Board of Directors has
fixed at seven the number of Directors constituting the Board of Directors. The
Company proposes to elect seven Directors, each to hold office for a term of one
year and until his successor has been duly elected and shall qualify. With the
exception of broker non-votes and unless otherwise instructed by stockholders,
the persons named on the enclosed proxy card will vote the shares of Common
Stock represented by such proxy for the election of the seven nominees named in
this Proxy Statement. However, if any of the named nominees should be
unavailable for election, the Board of Directors may substitute nominees, in
which event the shares of Common Stock represented by proxy will be voted for
substitute nominees unless an instruction to the contrary is contained on the
proxy card. No circumstances are presently known which would render any nominee
named herein unavailable to serve as a member of the Board of Directors.
Pursuant to the Company's By-laws, the election of each Director requires an
affirmative vote of a plurality of the votes of the Company's Common Stock
represented at the Annual Meeting in person or by proxy and entitled to vote on
that proposal. Holders of Common Stock may not cumulate their votes for the
election of Directors.
2
<PAGE> 6
Each of the following nominees is currently a Director of the Company:
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION SERVED AS
AND SELECTED OTHER INFORMATION DIRECTOR
CONCERNING NOMINEES FOR DIRECTOR SINCE
-------------------------------- ---------
<S> <C>
BYRON ALLUMBAUGH 1992
Chairman and Chief Executive Officer,
Ralphs Grocery Company,
Los Angeles, California -- Supermarket Chain.
Age -- 62
Member -- Audit and Compensation Committees
Since February 1976, Mr. Allumbaugh's principal occupation has been as shown
above. Mr. Allumbaugh is a member of the Board of Directors of H. F.
Ahmanson & Company and Ultramar Inc.
LUINO DELL'OSSO, JR. 1993
Executive Vice President
and Chief Operating Officer,
El Paso Natural Gas Company,
El Paso, Texas -- Natural Gas Transmission.
Age -- 54
Since November 1990, Mr. Dell'Osso has been Executive Vice President and
Chief Operating Officer of the Company. Mr. Dell'Osso was Senior Vice
President and Chief Financial Officer of Burlington Resources Inc. ("BR")
from April 1989 until October 1990 and Senior Vice President, Finance and
Planning of BR from May 1988 until March 1989. From April 1984 until December
1988, he was Senior Vice President, Finance and Planning of Burlington
Northern Inc.
EUGENIO GARZA LAGUERA 1993
Chairman of the Board of Directors,
Valores Industriales, S.A. ("VISA"),
Monterrey, Mexico -- Mexican Holding Company
principally involved in beer and
soft drink bottling and distribution;
Chairman of the Board of Directors,
Fomento Economico Mexicano,
S.A. de C.V. ("FEMSA"),
Monterrey, Mexico -- Beer and
soft drink bottling and distribution;
Chairman of the Board of Directors,
Grupo Financiero Bancomer, S.A. de C.V.,
Mexico City, Mexico -- Mexican Holding Company
principally involved in commercial banking;
Chairman of the Board of Directors,
BANCOMER,
Mexico City, Mexico --
Commercial Banking Institution;
Chairman of the Board of Regents,
Instituto Tecnologico Y de
Estudios Superiores de Monterrey, A.C.,
Monterrey, Mexico -- Higher Education.
Age -- 70
Member -- Audit and Compensation Committees
Mr. Garza Laguera has been employed as the Chairman of the Board of Directors
of VISA and FEMSA and Chairman of the Board of Regents of Instituto
Tecnologico Y de Estudios Superiores de Monterrey for more than five years.
He has been the Chairman of the Board of Directors of Grupo Financiero
Bancomer and BANCOMER since 1991.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION SERVED AS
AND SELECTED OTHER INFORMATION DIRECTOR
CONCERNING NOMINEES FOR DIRECTOR SINCE
-------------------------------- ---------
<S> <C>
JAMES F. GIBBONS 1994
Dean of the School of Engineering,
Stanford University,
Stanford, California -- Higher Education.
Age -- 62
Member -- Audit and Compensation Committees
Dr. Gibbons has been on the faculty of Stanford University since 1957 and has
been the Dean of the School of Engineering since September 1984. He is a
member of the Board
of Directors of Centigram Communications Corp., Cisco Systems, Inc., Lockheed
Corporation and Raychem Inc.
BEN F. LOVE 1992
Retired.
Age -- 69
Chairman -- Compensation Committee
Member -- Audit Committee
Mr. Love has been retired since December 1989. For more than five years prior
to that date, Mr. Love was Chairman and Chief Executive Officer of Texas
Commerce Bancshares, Inc. He is a member of the Board of Directors of
Burlington Northern Inc., Eli Lilly and Company and Mitchell Energy &
Development Corp.
KENNETH L. SMALLEY 1992
Retired.
Age -- 63
Chairman -- Audit Committee
Member -- Compensation Committee
Mr. Smalley has been retired since February 1992. For more than five years
prior to that date, Mr. Smalley was Senior Vice President of Phillips
Petroleum Company and President of Phillips 66 Natural Gas Company, a
Phillips Petroleum Company subsidiary. He is a member of the Board of
Directors of First Bancshares Inc.
WILLIAM A. WISE 1984
Chairman of the Board, President
and Chief Executive Officer,
El Paso Natural Gas Company,
El Paso, Texas -- Natural Gas Transmission.
Age -- 48
Mr. Wise became Chairman of the Board in January 1994. Mr. Wise has been the
President and Chief Executive Officer of the Company since January 1990. He
was President and Chief Operating Officer of the Company from April 1989 to
December 1989. From March 1987 until April 1989, Mr. Wise was an Executive
Vice President of the Company. From January 1984 to February 1987, he was a
Senior Vice President of the Company.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE NOMINEES NAMED ABOVE.
4
<PAGE> 8
PROPOSAL NO. 2 -- RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors desires to obtain stockholder ratification of the
resolution appointing Coopers & Lybrand, State National Plaza, Suite 1600, El
Paso, Texas 79901, as independent certified public accountants for the Company
for the fiscal year 1994. Coopers & Lybrand has served continuously in such
capacity for the Company since 1983.
If the appointment is not ratified, the adverse vote will be considered as
an indication to the Board of Directors that it should select other independent
certified public accountants for the following fiscal year. Given the difficulty
and expense of making any substitution of accountants after the beginning of the
current fiscal year, it is contemplated that the appointment for the fiscal year
1994 will be permitted to stand unless the Board of Directors finds other good
reason for making a change.
A representative from Coopers & Lybrand will attend the Annual Meeting to
respond to appropriate questions raised during the Annual Meeting or submitted
to Coopers & Lybrand in writing prior to the Annual Meeting, and to make a
statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR 1994.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
awarded to, earned by or paid to any person serving as the Company's President
and Chief Executive Officer or acting in a similar capacity during the last
completed fiscal year (the "CEO"), and the Company's four other most highly
compensated executive officers (collectively the "named executives") for
services rendered to the Company and its subsidiaries in all capacities during
each of the last three fiscal years. The table also identifies the principal
capacity in which each of the named executives served the Company at the end of
fiscal year 1993.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- --------------------------------------
AWARDS PAYOUTS
------------------------- ----------
LONG-TERM
OTHER SECURITIES INCENTIVE
ANNUAL RESTRICTED UNDERLYING PLAN ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (5) ($) (6) (#) (7) ($) (8) ($) (9)
- ------------------ ---- -------- -------- --------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Wise 1993 $400,000 $400,000 $24,187 -- 80,000 -- $ 64,369
President and Chief 1992 $357,500 $400,000 $70,176 $961,875 150,000 $1,423,977 $ 78,702
Executive Officer 1991 $275,000 $225,000
Luino Dell'Osso, Jr. 1993 $300,000 $300,000 $14,194 -- 40,000 -- $ 48,113
Executive Vice 1992 $277,750 $300,000 $ 2,891 $427,500 50,000 $1,209,750 $ 62,248
President and 1991 $240,000 $200,000
Chief Operating Officer
Richard Owen Baish 1993 $190,000 $152,000 $ 724 -- 15,000 -- $ 27,387
Senior Vice President 1992 $169,000 $135,200 -- $213,750 34,000 $ 403,250 $ 33,026
1991 $150,000 $108,580
H. Brent Austin 1993 $185,000 $148,000 $ 1,409 -- 15,000 -- $ 19,993
Senior Vice President 1992(2) $134,583 $136,000 $ 108 -- -- -- $ 16,236
and 1991
Chief Financial Officer
Britton White, Jr. 1993 $175,000 $140,000 $ 2,009 -- 15,000 -- $ 18,911
Senior Vice President 1992 $161,250 $129,000 $ 453 $213,750 34,000 -- $ 22,815
and 1991(3) $125,000 $190,000(4)
General Counsel
</TABLE>
5
<PAGE> 9
- ---------------
(1) The Company did not have any executive officer terminate employment during
fiscal year 1993 who would otherwise have been included as a named
executive in this table.
(2) Mr. Austin began his employment with the Company in March 1992.
(3) Mr. White began his employment with the Company in March 1991.
(4) Mr. White's 1991 bonus was $90,000. In addition, he received a special
one-time bonus of $100,000 in connection with his acceptance of employment
with the Company.
(5) In accordance with the transitional provisions of the Securities and
Exchange Commission (the "SEC") rules, the Company has not provided any
information in this column for fiscal year 1991. The aggregate value of the
perquisites and other personal benefits received by each named executive,
other than those received by the CEO in 1992, has not been reflected for
any fiscal year because the amount was below the reporting threshold. The
value of the perquisites and other personal benefits was calculated in
accordance with applicable Internal Revenue Service (the "IRS")
regulations. However, the value attributed to the use of the Company's
aircraft ($35,274 in 1992 for Mr. Wise) was based upon the period from
December 1991 through November 1992. All other compensation reflected is
based upon fiscal year amounts.
(6) The restricted stock awards made in 1992 were the result of a special
one-time incentive grant made in connection with the initial public
offering of the Company's Common Stock. On December 9, 1992 and January 15,
1994, 20% of each named executive's restricted stock vested. The remaining
restricted stock granted will vest on January 15, 1995 and January 15, 1996
at a rate of 20% and 40% of the original grant, respectively. Dividends are
paid directly to the holder of the restricted stock. The total number of
shares of restricted stock held on December 31, 1993, by Messrs. Wise,
Dell'Osso, Baish, Austin and White was 36,000, 16,000, 8,000, 837 and
8,000, respectively. The aggregate dollar value on December 31, 1993, of
all shares of restricted stock for Messrs. Wise, Dell'Osso, Baish, Austin
and White was $1,296,000, $576,000, $288,000, $30,132 and $288,000,
respectively. No named executive received a grant of restricted stock from
the Company during the fiscal years 1993 and 1991.
(7) The stock options granted in 1992 were the result of a special one-time
incentive grant made in connection with the initial public offering of the
Company's Common Stock. The stock options granted by BR (the Company's
former parent company) prior to 1992 have not been included in the "Summary
Compensation Table" since they do not provide a meaningful comparison to
the stock options granted by the Company during the fiscal years 1993 and
1992. See the "Aggregated Option/SAR Exercises in 1993 and Fiscal Year-End
Option/SAR Values" Table for the year-end holdings and value of all Company
stock options held by the named executives, including those converted from
BR stock options. No named executive received a grant of stock options from
the Company during the fiscal year 1991.
(8) The amounts reflected in this column are payouts made under BR's
performance share unit plan. These payouts were made early as a result of
the Company's spin-off from BR. The amounts represent compensation earned
as a result of the achievement of performance targets established by BR
while the Company was a subsidiary of BR and not for services rendered to
the Company after the spin-off. No named executive received a long-term
incentive plan award or payout from the Company during the fiscal years
1993 and 1991.
(9) In accordance with the transitional provisions of the SEC rules, the
Company has not provided any information in this column for fiscal year
1991. The compensation reflected in this column is comprised of Company
contributions to the Company's Retirement Savings Plan, supplemental
Company contributions under the Supplemental Benefits Plan and the
above-market interest earned on deferred compensation. Specifically,
these amounts for fiscal year 1993 were $15,000, $49,000 and $369 for
Mr. Wise; $15,000, $33,000 and $113 for Mr. Dell'Osso; $15,000, $12,360
and $27 for Mr. Baish; $13,923, $6,057 and $13 for Mr. Austin; and
$13,906, $4,994 and $11 for Mr. White, respectively.
6
<PAGE> 10
The following table sets forth the number of stock options granted at fair
market value to each of the named executives during the fiscal year 1993. In
satisfaction of applicable SEC regulations, the table further sets forth the
potential realizable value of such stock options in the year 2003 (the
expiration date of the stock options) at arbitrarily assumed annualized rates of
stock price appreciation of five and ten percent over the full ten-year term of
the stock options. As the table indicates, the annualized stock price
appreciation of five and ten percent will result in stock prices in the year
2003 of approximately $50.19 and $79.92, respectively. The amounts shown in the
table as potential realizable values for all shareholders' stock (approximately
$700 million and $1.8 billion) represent the corresponding increases in the
market value of 36,863,764 outstanding shares of the Company's Common Stock held
by all shareholders (other than the Company) as of December 31, 1993. No gain to
the named executives is possible without an increase in stock price which will
benefit all shareholders proportionately. Actual gains, if any, on stock option
exercises and Common Stock holdings are dependent on the future performance of
the Company's Common Stock and overall stock market conditions. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
TERM
INDIVIDUAL GRANTS(1) ------------------------------
-----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS IF STOCK PRICE IF STOCK PRICE
UNDERLYING GRANTED TO AT $50.19 AT $79.92
OPTIONS EMPLOYEES EXERCISE EXPIRATION IN 2003 IN 2003
NAME GRANTED(#) IN 1993 PRICE ($/SH) DATE 5% ($) 10% ($)
---- ---------- ---------- ------------ --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ALL SHAREHOLDERS' STOCK
APPRECIATION......... N/A N/A N/A N/A $714,339,224 $1,810,275,846
William A. Wise........ 80,000 14.06% $30.8125 01/12/03 $ 1,550,225 $ 3,928,575
Luino Dell'Osso, Jr.... 40,000 7.03% $30.8125 01/12/03 $ 775,113 $ 1,964,288
Richard Owen Baish..... 15,000 2.64% $30.8125 01/12/03 $ 290,667 $ 736,608
H. Brent Austin........ 15,000 2.64% $30.8125 01/12/03 $ 290,667 $ 736,608
Britton White, Jr...... 15,000 2.64% $30.8125 01/12/03 $ 290,667 $ 736,608
</TABLE>
- ---------------
(1) The stock options were granted on January 12, 1993 at the fair market value
on that date, and became exercisable on January 12, 1994. There were no
stock appreciation rights ("SARs") granted in 1993. Any unvested stock
options become fully exercisable in the event of a "change in control" (see
page 12 of this Proxy Statement for a description of the Company's Omnibus
Compensation Plan and the term "change in control"). Under the terms of the
Omnibus Compensation Plan, the Compensation Committee has the authority to
change the vesting of the stock options. Further, stock options are subject
to forfeiture and/or time limitations in the event of a termination of
employment.
N/A -- Not Applicable
The following table sets forth information concerning each stock option (or
tandem SAR) which was exercised during the fiscal year 1993 by each of the named
executives and the fiscal year-end value of the unexercised stock options (and
tandem SARs), provided on an aggregate basis.
AGGREGATED OPTION/SAR EXERCISES IN 1993
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) (2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Wise........ 0 $ 0 103,592 180,000 $1,804,862 $2,148,750
Luino Dell'Osso, Jr.... 30,000 $ 582,698 58,546 73,333 $1,019,441 $ 787,911
Richard Owen Baish..... 0 $ 0 20,774 37,667 $ 365,178 $ 470,214
H. Brent Austin........ 25,049 $ 373,806 45,317 30,105 $ 791,886 $ 340,242
Britton White, Jr...... 0 $ 0 0 37,667 $ 0 $ 470,214
</TABLE>
7
<PAGE> 11
---------------
(1) The figures presented in this column have been calculated based upon the
difference between the fair market value of each stock option/SAR on the
date of exercise and its exercise price.
(2) The figures presented in this column have been calculated based upon the
difference between a fair market value on December 31, 1993 of $36.1875 for
each stock option/SAR and its exercise price. Messrs. Wise and Dell'Osso
have tandem SARs attached to some of their stock options. If their stock
options are exercised, the tandem SARs expire and vice versa. The exercise
of a tandem SAR would have the equivalent market value as the exercise of a
stock option.
PENSION PLAN
Set forth below is a table describing the Pension Plan of the Company and
its subsidiaries in which the named executives, as well as other Company
employees, may be entitled to participate. The following table lists current
annual retirement benefits under the Pension Plan for the average annual
earnings and years of credited service shown for a participant retiring at the
normal retirement age of 65. Under the Pension Plan and applicable Internal
Revenue Code (the "IRC") provisions, compensation in excess of $150,000 cannot
be taken into account under the Pension Plan. Any excess benefits otherwise
accruing under the Pension Plan are payable under the Company's Supplemental
Benefits Plan.
Estimated annual benefit levels under the Pension Plan, based on earnings
and years of credited service at the normal retirement age, are as follows:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AT NORMAL RETIREMENT AGE
FINAL AVERAGE --------------------------------------------------
PENSION EARNINGS 15 20 25 30
- ---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 100,000............................................ $ 22,560 $ 30,080 $ 37,600 $ 45,120
$ 300,000............................................ $ 70,560 $ 94,080 $117,600 $141,120
$ 500,000............................................ $118,560 $158,080 $197,600 $237,120
$ 700,000............................................ $166,560 $222,080 $277,600 $333,120
$ 900,000............................................ $214,560 $286,080 $357,600 $429,120
$1,100,000........................................... $262,560 $350,080 $437,600 $525,120
</TABLE>
Benefits which accrue under the Pension Plan are based upon the gross
salary amount, including incentive bonuses, but excluding all commissions and
other compensation or benefits of any kind. The Pension Plan formula for
retirement at age 65 is 1.1% of the highest five-year average earnings, plus .5%
of the highest five-year average earnings in excess of one-third of the FICA
taxable wage base in effect during the year of termination, times the number of
years of credited service up to a maximum of 30 years. There is no deduction for
Social Security amounts paid; however, an early retirement supplement equal to
1% of the highest five-year average earnings up to one-third of the FICA taxable
wage base in effect in the year of termination, times the number of years of
credited service up to a maximum of 30 years, is payable from retirement until
age 62. Both the basic benefit and the early retirement supplement are reduced
by 2% for each year the participant's actual retirement date precedes the date
the participant would have attained age 65, or the date the participant could
have retired after attaining age 60 with 30 years of credited service, if
earlier. Years of credited service under the Pension Plan at age 65 for Messrs.
Wise, Dell'Osso, Baish, Austin and White are 39, 30, 38, 33 and 18,
respectively.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The graph on the following page shows the changes in the value of $100
invested since March 12, 1992 (the Company's initial public offering date for
its Common Stock) for the Company's Common Stock and since February 29, 1992
(the month-end date closest to the March 12, 1992 initial public offering date
of the Company's Common Stock) for the Standard & Poor's Natural Gas Index and
the Standard & Poor's 500 Stock Index.
8
<PAGE> 12
COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURNS IN 1992 AND 1993
THE COMPANY, S&P NATURAL GAS INDEX AND S&P 500 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P NATURAL S&P 500
(FISCAL YEAR COVERED) THE COMPANY GAS INDEX STOCK INDEX
--------------------- ----------- ----------- -------------
<S> <C> <C> <C>
2/29/92 100.0 100.0
3/12/92 100.0 100.0 100.0
3/92 119.1 101.4 98.1
6/92 129.0 112.9 99.9
9/92 153.6 128.2 103.1
12/92 167.6 123.7 108.3
3/93 202.2 148.9 113.0
6/93 214.0 159.9 113.5
9/93 217.5 167.2 116.1
12/93 200.4 146.9 119.2
</TABLE>
<TABLE>
<CAPTION>
QUARTERLY CUMULATIVE TOTAL RETURNS ($)
-------------------------------------------------------------
QUARTER-END THE COMPANY S&P NATURAL GAS INDEX S&P 500 STOCK INDEX
---------- ----------- --------------------- -------------------
<S> <C> <C> <C>
1992:
March $ 119.1 $ 101.4 $ 98.1
June 129.0 112.9 99.9
September 153.6 128.2 103.1
December 167.6 123.7 108.3
1993:
March $ 202.2 $ 148.9 $ 113.0
June 214.0 159.9 113.5
September 217.5 167.2 116.5
December 200.4 146.9 119.2
</TABLE>
The quarter-end values of each investment are based on the share price
appreciation and assumes cash dividend reinvestment. The calculations exclude
any applicable brokerage commissions and taxes. Total shareholder return from
each investment can be calculated from the quarter-end values given above.
COMPENSATION COMMITTEE REPORT
The Company's executive officer compensation program is administered and
reviewed by the Compensation Committee. For 1993, the Committee consisted of
four independent, non-employee Directors of the Company. No compensation
committee interlocks nor insider participation exists on the Compensation
Committee.
POLICIES AND MISSION
The Compensation Committee has determined that the compensation program of
executive officers should not only be adequate to attract, motivate and retain
competent executive personnel, but should also be directly and materially
related to the short-term and long-term operating performance and objectives of
the Company. To achieve these ends, executive compensation (including base
salary, year-end bonus, restricted stock awards, stock option grants and other
long-term incentive awards) is, to a significant extent, dependent upon the
Company's financial performance and the return on its Common Stock. However, to
ensure that the Company is strategically and competitively positioned for the
future, the Compensation Committee also
9
<PAGE> 13
attributes significant weight to other factors in determining executive
compensation, such as maintaining competitiveness, implementing capital
improvements, expanding markets and achieving other long-range business and
operating objectives.
In order to determine appropriate levels of executive compensation, the
Compensation Committee periodically conducts a thorough competitive evaluation,
reviews proprietary and proxy information, and consults with and receives advice
from an independent compensation consulting firm. The Compensation Committee
also considers relevant industry and market changes when evaluating the
Company's performance and each individual executive's performance. The
independent consulting firm provides data and information that compares the
Company with a peer group of companies. Such peer group consists of most of
those companies included in the S&P Natural Gas Index (reflected in the
Performance Graph found on page 9 of this Proxy Statement) and certain
additional companies in the energy industry which the consulting firm and the
Compensation Committee believe represent the Company's most direct competition
for executive talent.
A primary mission of the Compensation Committee is to ensure that each
executive officer's compensation is directly related to the performance of the
Company and its Common Stock and the performance of the individual executive
officer. Toward that end, the Compensation Committee has established an
executive compensation program with a strong performance-based orientation. In
particular, the Compensation Committee has determined, in consultation with the
independent consulting firm, that the long-term incentive awards for executive
officers, including the CEO, should be targeted in the top one-half of the peer
group and tied directly to Common Stock share value, consisting of approximately
50% in stock options and 50% in performance share units. With respect to cash
compensation, the base salary of executive officers is targeted at or near the
50th percentile of the peer group (described above). Total cash compensation can
reach approximately the 90th percentile of such peer group with year-end
incentive bonuses ranging from 0% to 100% of base salary for the CEO and Chief
Operating Officer (the "COO"), and from 0% to 80% of base salary for the other
executive officers. The Compensation Committee determines what percentage bonus
will be awarded based upon both the Company's and the individual executive's
performance vis-a-vis objectives established each year. The Company and the
Compensation Committee will review the executive compensation policies to
determine whether Section 162(m) of the IRC (pertaining to the deductibility of
executive compensation for certain executive officers) will have any material
impact.
COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee reviewed the Company's 1993 financial
performance targets (consisting of income, earnings, return and cash flow
objectives) and the Company's 1993 non-financial goals (consisting of
regulatory, marketing and operating matters) and has determined that the
Company's 1993 performance has met or exceeded each objective in all significant
respects. Accordingly, the Company was awarded the highest rating available. The
Compensation Committee does not assign relative weights to each of the factors
and criteria used in determining executive compensation. Moreover, publication
of sensitive and proprietary quantifiable targets and other specific goals for
the Company and CEO established and applied each year could adversely affect the
Company.
The Compensation Committee, in consultation with the independent consulting
firm, applied the information and performance factors for 1993 to determine the
appropriate compensation for the CEO. The Committee also recognized the
significant leadership, planning and business execution role performed by the
CEO during the fiscal year 1993, and the CEO's role in building strong markets
for the Company's natural gas transportation, gathering and other services and
in maintaining efficient operations to remain competitive in the future. In
addition, the CEO displayed exceptional foresight by directing certain of the
Company's businesses into areas of potential financial growth and opportunity.
Having reviewed the contribution that the CEO made to the Company's performance
in 1993, the Compensation Committee believed that he continues to demonstrate
the motivational, planning and leadership qualities that the executive
compensation program was designed to foster and reward.
In recognition of the CEO's overall performance and his responsibility for
the Company's success during 1993, the Compensation Committee determined that he
should receive the highest rating available, and awarded him the maximum
incentive bonus available (100% of base salary). The Committee also vested 15%
10
<PAGE> 14
of the performance share units granted to the CEO in 1992 (100% of the
performance share units eligible for vesting in 1993) as a result of the
Company's 1993 performance in comparison to the performance of other companies
in the peer group. In support of the Compensation Committee's long-term
compensation mission to provide competitive compensation incentives to retain
and motivate executive officers, the CEO was granted 80,000 stock options in
January 1993.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Compensation Committee, in consultation with the independent consulting
firm, applied the information and performance factors outlined above in
reviewing and approving the compensation of the Company's other executive
officers. This process resulted in a determination that, based upon individual
performance and their contributions to overall Company performance during the
fiscal year 1993, each executive officer should be awarded the maximum incentive
bonus available (100% of base salary for the COO and 80% of base salary for the
other executive officers). In addition, 15% of performance share units granted
to executive officers in 1992 were vested, and stock options were granted to
provide continuing incentives for future performance.
THE 1993 COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Byron Allumbaugh Eugenio Garza Laguera Ben F. Love Kenneth L. Smalley
(Member) (Member) (Chairman) (Member)
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Mr. Wise. The term of
the agreement is three years from its initial effective date (July 31, 1992) and
is automatically renewed at the end of every month (re-establishing a three-year
term on the first of each month), unless either party notifies the other that it
elects not to extend the term of the agreement. If Mr. Wise's employment is
terminated involuntarily, without cause, or is voluntarily terminated by Mr.
Wise for "good reason" (as defined in the Severance Plan, which is discussed
below), Mr. Wise will receive his salary, bonus (equal to fifty percent of the
maximum bonus opportunity in effect at the time of termination, but not less
than fifty percent of annual salary) and benefits through the end of the term of
the employment agreement. Unless termination follows a "change in control" (as
defined in the Severance Plan), any continued salary, bonus or benefits (not
including defined benefit pension plan payments) will be reduced by comparable
compensation from subsequent employment. If Mr. Wise's employment is terminated
because of death, involuntary termination for cause or is voluntarily terminated
by Mr. Wise other than for "good reason," Mr. Wise's right to receive his salary
shall terminate on the date of termination of his employment and his right to
receive benefits will be determined according to the terms of the Company's
applicable plans. Mr. Wise will also be entitled to pension benefits under the
terms of the Company's Supplemental Benefits Plan, but based on one additional
year of "age" and "service" credit for each year of the term. Upon termination
of his employment, this benefit will be funded through a trust. If Mr. Wise's
employment is terminated prior to the end of the term, other than as a result of
either a "change in control" of the Company or his voluntary termination of the
agreement for "good reason" pursuant to six months prior written notice to the
Company of such termination, Mr. Wise will be subject to a non-competition
provision through the end of the term. Any compensation and benefits received by
Mr. Wise under the Severance Plan will offset obligations of a similar nature
under Mr. Wise's employment agreement.
The Company entered into a letter agreement with Mr. Dell'Osso dated
October 22, 1990, which provides for the purchase of Mr. Dell'Osso's residence
if his employment is terminated with the Company for any reason other than for
cause. Pursuant to his letter agreement, Mr. Dell'Osso is also entitled to
additional years of credited service with respect to pension benefits which are
payable under the Company's Supplemental Benefits Plan if he remains employed
with the Company until the specified age set forth in his letter agreement, or
if his employment is terminated before he reaches the specified age for any
reason other than for cause.
11
<PAGE> 15
The Company entered into a letter agreement with Mr. White dated February
22, 1991, which provides for the payment of a special one-time bonus. In
addition, the letter agreement also provides that Mr. White is entitled to
additional years of credited service with respect to pension benefits which are
payable under the Company's Supplemental Benefits Plan if he remains employed
with the Company until the specified age set forth in his letter agreement.
The Company has a Key Executive Severance Protection Plan (the "Severance
Plan") which provides severance benefits following a "change in control" of the
Company for all officers of the Company and its subsidiaries in an amount equal
to three times annual salary, including maximum bonus amounts. The Severance
Plan also provides for the continuation of life and health insurance for a
period of 18 months subsequent to a participant's termination of employment
following a "change in control" of the Company, as well as a supplemental
pension payable under the Company's Supplemental Benefits Plan calculated by
adding three years of additional credited pension service and certain other
benefits. Benefits are payable under the Severance Plan for any termination of
employment within two years of the date of a "change in control" of the Company,
except where termination is by reason of death, disability, for cause or
instituted by the employee for other than "good reason." The Severance Plan
provides that certain additional payments will be made to terminated
participants following a "change in control" of the Company if the participant's
payments are subjected to a specified adverse excise tax. The Severance Plan
also provides that the Company will pay legal fees and expenses incurred by a
participant to enforce rights or benefits under the plan. Under the Severance
Plan, a "change in control" of the Company is deemed to occur if (a) any person
or entity becomes the beneficial owner of 20% or more of the Company's
outstanding securities, (b) any person or entity purchases the Company's Common
Stock pursuant to a tender offer or exchange offer, other than a tender offer or
exchange offer made by the Company, (c) the stockholders of the Company approve
a merger or consolidation, a sale or disposition of all or substantially all of
the Company's assets or a plan of liquidation or dissolution of the Company or
(d) there occurs an unapproved change in the constitution of the majority of the
Board of Directors of the Company within a two-year period.
The Company has an Omnibus Compensation Plan which provides that stock
options, SARs, limited stock appreciation rights ("LSARs"), PSUs and restricted
stock may be granted to officers and key employees of the Company and its
subsidiaries. The Plan Administrator (as defined in the plan) determines which
employees are eligible to participate, the amount of any grant and the terms and
conditions (not otherwise specified in the plan) of such grant. Pursuant to the
terms of the plan, if a "change in control" of the Company occurs, all
outstanding stock options become fully exercisable, SARs and LSARs become
immediately exercisable, designated amounts of PSUs become fully vested and all
restrictions placed on awards of restricted stock automatically lapse. For
purposes of the plan, the term "change in control" has the same meaning given
such term in the Severance Plan.
Under the Company's Incentive Compensation Plan, awards of cash or Common
Stock may be granted to eligible officers of the Company and its subsidiaries.
The amount of awards available and the performance goals upon which the awards
are contingent are determined by the Compensation Committee for the CEO and
certain other officers, and by the Management Committee (as defined in the plan)
for all other officers. Pursuant to the terms of the plan, if a "change in
control" of the Company occurs, the current year's maximum incentive award for
each officer becomes fully payable within 30 days following such "change in
control." For purposes of the plan, the term "change in control" has the same
meaning given such term in the Severance Plan.
The Company's Supplemental Benefits Plan provides benefits to officers and
key employees of the Company and its subsidiaries. The benefits equal the amount
that a participant failed to receive under the Company's Pension Plan because
the Pension Plan does not consider deferred compensation for purposes of
calculating benefits and is subject to IRS limitations on the amount of
compensation to be considered when calculating benefits and on the amount of
benefits that can be paid to a participant. The plan also provides an additional
benefit equal to the amount of the Company's matching contribution to the
Company's Retirement Savings Plan that cannot be made because of deferred
compensation and IRS limitations. The plan may not be terminated so long as the
Pension Plan and/or Retirement Savings Plan remain in effect. The Management
Committee (as defined in the plan) designates who may participate and
administers the plan. Benefits under
12
<PAGE> 16
the Company's Supplemental Benefits Plan are paid upon termination of employment
in a lump-sum payment. In the event of a "change in control," the supplemental
pension benefits become fully vested and nonforfeitable. For purposes of the
plan, the term "change in control" has the same meaning given such term in the
Severance Plan.
The Company's Deferred Compensation Plan allows eligible executives of the
Company and its subsidiaries to defer all or a portion of their base salaries.
The Management Committee (as defined in the plan) designates the executives who
may participate. Amounts deferred are payable upon termination of employment in
a lump-sum payment or in periodic installments, except that the Management
Committee may, in its discretion, accelerate payments. Any amounts deferred bear
interest at a rate based on an index specified by the Management Committee.
The Company has a Senior Executive Survivor Benefits Plan which provides
certain senior executives of the Company and its subsidiaries, who are
designated by the Management Committee (as defined in the plan), with survivor
benefit coverage in lieu of the coverage provided generally for employees under
the Company's group life insurance plan. The amount of benefits provided, on an
after-tax basis, is two and one-half times the executive's annual salary.
Benefits are payable in installments over 30 months beginning within 31 days
after the executive's death, except that the Management Committee may, in its
discretion, accelerate payments.
SECURITY OWNERSHIP OF A CERTAIN BENEFICIAL OWNER AND MANAGEMENT
The following table sets forth certain information as of January 21, 1994,
regarding the beneficial ownership of the Company's Common Stock by (i) each
Director, (ii) each of the named executives and (iii) all Directors and
executive officers as a group. In addition, the table identifies each person or
entity known by the Company to own beneficially more than 5% of its outstanding
shares of Common Stock as of December 31, 1993. No family relationship exists
between any of the Directors and executive officers of the Company.
<TABLE>
<CAPTION>
TITLE OF BENEFICIAL OWNERSHIP STOCK PERCENT
CLASS NAME (EXCLUDING OPTIONS) (1) OPTIONS (3) TOTAL OF CLASS
- ------------- ---- ----------------------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Common Stock Financial Industrial Income
Fund, Inc. d/b/a INVESCO
Industrial Income Fund, Inc. 2,275,000 -- 2,275,000 6.17%
7800 East Union Avenue,
Suite 800
P.O. Box 2040, Denver, CO 80201
Common Stock Byron Allumbaugh 2,000 4,000 6,000 *
Common Stock Luino Dell'Osso, Jr. 22,940 115,212 138,152 *
Common Stock Eugenio Garza Laguera 0 3,000 3,000 *
Common Stock James F. Gibbons 1,000 3,000 4,000 *
Common Stock Ben F. Love 11,000 1,000 12,000 *
Common Stock Kenneth L. Smalley 2,000 4,000 6,000 *
Common Stock William A. Wise 78,006(2) 233,592 311,598 *
Common Stock Richard Owen Baish 10,192 47,108 57,300 *
Common Stock H. Brent Austin 5,553 60,317 65,870 *
Common Stock Britton White, Jr. 16,000 26,334 42,334 *
Common Stock Directors and executive
officers as a Group (13 persons 172,695 561,564 734,259 1.96%
in total, including those
individuals listed above)
</TABLE>
13
<PAGE> 17
- ---------------
* Less than 1%.
(1) Due to the unavailability of more current data, the figures presented in
this column for the individuals may include shares of Common Stock held
under the Company's Retirement Savings Plan as of December 31, 1993.
Directors and executive officers have sole voting and investment power of
the shares of Common Stock reflected in the table above, except that each
of Messrs. Allumbaugh, Love, Wise, Dell'Osso and Austin shares with one or
more other individuals voting and investment power with respect to 2,000,
2,000, 2,000, 2,940 and 159 shares of Common Stock, respectively. Some
shares of Common Stock reflected in this column for certain individuals are
subject to restrictions.
(2) Mr. Wise's beneficial ownership excludes 200 shares of Common Stock owned
by his children under the Uniform Gifts to Minors Act, of which Mr. Wise
disclaims beneficial ownership.
(3) The Directors and executive officers have the right to acquire the shares
of Common Stock reflected in this column within 60 days through the
exercise of stock options and/or SARs.
COST OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card, and the cost of solicitation of proxies on behalf of
the Company's Board of Directors will be borne by the Company. The Company has
retained Georgeson & Company Inc. to assist in the solicitation of proxies from
stockholders at an estimated fee of $7,500, plus reimbursement of out-of-pocket
expenses. In addition to the use of the mail, proxies may be solicited
personally or by telephone by regular employees of the Company without
additional compensation, as well as by Georgeson & Company Inc. Brokerage houses
and other custodians and nominees will be asked whether other persons are
beneficial owners of the shares of Common Stock which they hold of record and,
if so, they will be supplied with additional copies of the proxy materials for
distribution to such beneficial owners. The Company will reimburse banks,
nominees, fiduciaries, brokers and other custodians for their costs of sending
the proxy materials to the beneficial owners of the Company's Common Stock.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. However, if any other matters should come before the
Annual Meeting, all proxies (with the exception of broker non-votes) which have
been signed and returned without further instruction will give the persons
designated thereon discretionary authority to vote according to their best
judgment.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, certain officers and persons holding more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and reports of changes in ownership with the SEC and the New York Stock
Exchange. Directors, certain officers and greater than 10% stockholders are also
required by SEC regulations to furnish the Company with copies of all such
reports that they file. Based on the Company's review of copies of such forms
filed, the Company believes that all filing requirements were complied with
during the fiscal year ended December 31, 1993.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the Company's 1995 Annual Meeting of Stockholders must be mailed
to the Corporate Secretary, El Paso Natural Gas Company, 304 Texas Avenue, El
Paso, Texas 79901, and must be received by the Corporate Secretary on or before
October 18, 1994. The Company will consider only proposals meeting the
requirements of applicable SEC rules.
14
<PAGE> 18
ANNUAL REPORT
A copy of the Company's 1993 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders not receiving a copy of such Annual Report may obtain one
by writing or calling Ms. Stacy J. James, Corporate Secretary, El Paso Natural
Gas Company, 304 Texas Avenue, El Paso, Texas 79901, telephone (915) 541-2600.
By Order of the Board of Directors
/s/ STACY J. JAMES
Stacy J. James
Corporate Secretary
El Paso, Texas
February 15, 1994
15
<PAGE> 19
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
EL PASO NATURAL GAS COMPANY
ANNUAL MEETING OF STOCKHOLDERS
MARCH 17, 1994
The undersigned herby appoints Willian A. Wise and Britton White, Jr., and
each or any of them, with power of substitution, proxies for the undersigned
and authorizes them to represent and vote, as designated, all of the shares of
stock of El Paso Natural Gas Company held of record by the undersigned on
February 1, 1994, at the Annual Meeting of Stockholders to be held at the
Crescent III meeting room, The Crescent Hotel, 2620 West Dunlap Avenue,
Phoenix, Arizona on March 17, 1994, and at any adjournment or postponement of
such meeting for the purposes identified on the reverse side of this proxy and
with discretionary authority as to any other matters that may properly come
before the Annual Meeting, including substitute nominees if any of the named
nominees should be unavailable to serve for election, in accordance with and as
described in the Notice of Annual Meeting of Stockholders and Proxy Statement.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If this proxy is returned without direction
being given, this proxy will be voted FOR proposals 1 and 2.
SEE REVERSE
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERESE SIDE) SIDE
<PAGE> 20
{X} Please mark votes
as in this example
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors.
<TABLE>
<S> <C> <C> <C> <C>
Nominees: Byron Allumbaugh, Luino Dell'Osso, Jr., 2. Ratification of the appointment FOR AGAINST ABSTAIN
Eugenio Garza Laguera, James F. Gibbons, of Coopers & Lybrand as
Ben F. Love, Kenneth L. Smalley, Independent Certified Public { } { } { }
William A. Wise. Accountants of the Company
for fiscal year 1994.
FOR WITHHOLD
ALL NOMINEES { } { } AUTHORITY TO VOTE
LISTED ABOVE FOR ALL NOMINEES
LISTED ABOVE
{ }
------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS MARK
CHANGE AND { } HERE FOR { }
NOTE AT LEFT COMMENTS
Please sign exactly as your name appears. If acting as attorney,
executor, trustee or in other representative capacity, sign name
and title. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please
sign in partnership name by authorized person. If held jointly,
both parties must sign and date.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY Signature Date
CARD PROMPTLY USING THE ENCLOSED ENVELOPE. ------------------------ ------------------
Signature Date
------------------------ -------------------
</TABLE>
<PAGE> 21
CONFIDENTIAL VOTING INSTRUCTIONS
EL PASO NATURAL GAS COMPANY
ANNUAL MEETING OF STOCKHOLDERS -- MARCH 17, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: BANKERS TRUST COMPANY, TRUSTEE UNDER EL PASO NATURAL GAS
COMPANY RETIREMENT SAVINGS PLAN
The undersigned hereby directs the Trustee to vote, in person or by proxy,
the full and fractional shares of Common Stock of El Paso Natural Gas Company
credited to my account under the referenced Plan at the close of business on
February 1, 1994, the record date, at the Annual Meeting of Stockholders to
be held at the Crescent III meeting room, The Crescent Hotel, 2620 West
Dunlap Avenue, Phoenix, Arizona on March 17, 1994, and at any adjournment or
postponement of such meeting for the purposes identified on the reverse side of
this proxy and with discretionary authority as to any other matters that may
properly come before the meeting, including substitute nominees if any of the
named nominees should be unavailable to serve, in accordance with and as
described in the Notice of Annual Meeting of Stockholders and Proxy Statement.
If this proxy is completed, dated, signed and returned in the accompanying
envelope to the trustee by March 10, 1994, the shares of stock represented by
this proxy will be voted in the manner directed herein by the undersigned. If
this proxy is returned to the trustee without direction being given, this
proxy will be voted FOR Proposals 1 and 2.
<PAGE> 22
1. Election of Directors
PLEASE MARK YOUR CHOICE LIKE THIS {X}
IN DARK INK AND SIGN AND DATE BELOW
{ } VOTE FOR ALL { } WITHHOLD FROM
(except as marked {X} to VOTING FOR ALL
the contrary below)
{ } Byron Allumbaugh { } James F. Gibbons { } Kenneth L. Smalley
{ } Luino Dell'Osso, Jr. { } Ben F. Love { } William A. Wise
{ } Eugenio Garza Laguera
<TABLE>
<S> <C> <C> <C> <C>
For Against Abstain
2. Ratification of the If acting as attorney, executor,
appointment of Coopers & { } { } { } trustee or in other representative
Lybrand as Independent capacity, sign name and title. If
Certified Public Accountants a corporation, please sign in full
of the Company for fiscal corporate name by President or
year 1994. other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
IMPORTANT: Please mark, sign,
date, and return this proxy card
promptly using the enclosed envelope.
Shares held as of December 31, 1993
------------------------------ ---------------
SIGNATURE DATE
</TABLE>
