<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
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Panhandle Eastern Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $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:
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(Set forth the amount on which the filing fee is calculated and state how it was
determined.)
<PAGE> 2
[PANHANDLE EASTERN LOGO]
March 13, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Panhandle Eastern Corporation, on Wednesday, April 26, 1995, at 10:00 a.m., at
the J. W. Marriott Hotel, 5150 Westheimer, Houston, Texas.
Information about the business of the meeting is set forth in the formal
meeting notice and the Proxy Statement on the following pages. In addition, I
will discuss the general operations of the Company, described in the Company's
1994 Annual Report to Stockholders, and stockholders will be offered an
opportunity to ask questions.
We encourage you to participate in this year's Annual Meeting in person or
by mailing your proxy. Regardless of the number of shares you hold, your
participation and representation in the Company's affairs is important.
Therefore, even if you cannot attend the meeting, please return your proxy to
the Company as soon as possible. To vote, simply place an "X" in the appropriate
box on the enclosed form of proxy, sign and date it, and mail it in the
self-addressed, postage-paid return envelope.
Sincerely,
/s/ DENNIS HENDRIX
---------------------------------
DENNIS HENDRIX
Chairman and
Chief Executive Officer
<PAGE> 3
[PANHANDLE EASTERN LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1995
To the Stockholders of Panhandle Eastern Corporation:
The 1995 Annual Meeting of Stockholders of Panhandle Eastern Corporation
will be held at the J. W. Marriott Hotel, 5150 Westheimer, Houston, Texas, on
Wednesday, April 26, 1995, at 10:00 a.m., for the purposes of:
1. Electing four Directors, constituting the 1995 Class of the
Company's Board of Directors, for terms of three years, each to hold office
until the 1998 Annual Meeting or until a successor shall have been elected
and shall have qualified; and,
2. Transacting such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Stockholders of record on February 28, 1995, are entitled to receive notice
of, and to vote at, the meeting or any adjournment or adjournments thereof. The
transfer books of the Company will not be closed. The list showing stockholders
entitled to vote at the meeting will be located in the office of the Secretary
at the Company's headquarters, 5400 Westheimer Court, Houston, Texas, for
examination for at least 10 days prior to the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ ROBERT W. REED
---------------------------------------
ROBERT W. REED
Secretary
Dated: March 13, 1995
Houston, Texas
<PAGE> 4
[PANHANDLE EASTERN LOGO]
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1995
------------------------
This statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Panhandle Eastern Corporation (the
"Company") of proxies for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Wednesday, April 26, 1995, at 10:00 a.m., at the J. W.
Marriott Hotel, 5150 Westheimer, Houston, Texas, for the purposes set forth in
the accompanying Notice of Annual Meeting. Business at the Annual Meeting is
limited to matters properly brought before the meeting.
Unless revoked prior to its exercise, any proxy given pursuant to this
solicitation will be voted at the Meeting. A stockholder may revoke a proxy at
any time prior to the Annual Meeting by giving written notice of such revocation
addressed to the Secretary of the Company, P.O. Box 1642, Houston, Texas
77251-1642. Also, a stockholder may attend the Annual Meeting and vote in
person, whether or not such stockholder has previously given a proxy. Proxy
material is being mailed to stockholders on or about March 13, 1995.
On February 28, 1995, the record date for the determination of stockholders
entitled to vote at the Annual Meeting, the Company had outstanding 149,181,970
shares of Common Stock, par value $1.00 per share (the "Common Stock"). Each of
such shares is entitled to one vote at the Annual Meeting. Votes cast by proxy
or in person at the Annual Meeting will be tabulated by the election inspectors
appointed for the Meeting. The holders of a majority of the shares entitled to
vote at the Annual Meeting, whether present in person or represented by proxy,
will constitute a quorum for the transaction of business at the Meeting. All
elections will be decided by a plurality of the votes cast in respect thereof.
If no voting direction is indicated on the proxy card, the shares will be
considered votes FOR the election of the nominees for Director. Proxy cards that
are not signed or that are not returned are treated as not voted for any
purposes. If a broker indicates on a proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
The cost of preparing, assembling, and mailing the material in connection
with the solicitation of proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited by officers and other employees of
the Company personally, by telephone, or other means. To assist in the
solicitation of proxies, the Company has engaged Corporate Investor
Communications, Inc., for approximately $9,500. The Company will also request
brokerage houses and other nominees or fiduciaries to forward copies of its
proxy material and Annual Report to beneficial owners of Common Stock held in
their names, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred in doing so.
STOCKHOLDER PROPOSALS
The Company knows of no proposals to be considered at the Annual Meeting
other than those set forth in the Notice of Annual Meeting. Stockholder
proposals will be eligible for consideration for inclusion in the Proxy
Statement for the 1996 Annual Meeting if they are received by the Secretary of
the Company no later than November 13, 1995 at the address set forth above.
1
<PAGE> 5
A. ELECTION OF DIRECTORS
Currently, the Board of Directors consists of 12 Directors (nine of whom
are not employed by the Company) and three Advisory Directors (none of whom is
employed by the Company). In accordance with the Company's By-Laws, the
Directors have been divided into three Classes of approximately equal size, with
staggered terms in office. At each Annual Meeting, Directors constituting one
Class are elected for three-year terms. Each Class is designated by the year in
which its current term ends. At this year's Meeting, the members of the 1995
Class of Directors, Charles W. Duncan, Jr., Harry E. Ekblom, Dennis R. Hendrix
and Ralph S. O'Connor, have been nominated for re-election. If re-elected, they
will hold office until the 1998 Annual Meeting or until successors shall have
been elected and shall have qualified. The terms of the Directors constituting
the other two Classes will continue as indicated below.
The proxy holders named on the proxy card will vote FOR the election of the
nominees listed below, unless otherwise instructed on proxy cards that have been
signed or returned. If you do not wish your shares to be voted for particular
nominees, please identify the exceptions on the proxy card. If any of these
nominees should be unable to serve, the proxies will be voted by the proxy
holders for the election of such other person as they shall determine, in
accordance with their judgment.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS (1995 CLASS)
NAME BUSINESS EXPERIENCE AND AGE IN 1995
---- -----------------------------------
Charles W. Duncan, Jr...... Age 69. Engaged in private investments in Houston,
Texas, since 1981. Deputy Secretary of the United
States Department of Defense, January 1977 to
August 1979; Secretary of the United States
Department of Energy, August 1979 until January
1981. Director of Texas Eastern Corporation
("TEC"), a subsidiary of the Company, from 1981
until 1989. Director of the Company since 1990.
Director of American Express Company, The Coca-Cola
Company, Chemical Banking Corporation, Newfield
Exploration Company, Texas Commerce Bancshares,
Inc., and United Technologies Corporation.
Harry E. Ekblom............ Age 67. Vice Chairman of A. T. Hudson & Co., Inc.,
Oradell, New Jersey, a management consulting firm,
since 1985, and, since January 1984, President of
Harry E. Ekblom & Co., Inc., Ridgewood, New Jersey,
a financial consulting firm. Director of the
Company since 1971. Director of Harris & Harris
Group, Inc., and The Commercial Bank of New York.
Dennis R. Hendrix.......... Age 55. Chairman of the Board and Chief Executive
Officer of the Company since November 1990.
President of the Company from November 1990 to
December 1993. President of TEC, November 1985
through December 1989, and Chief Executive Officer
from June 1987 to July 1989. Director since
November 1990, Chairman of the Board from November
1990 to January 1994 and Chief Executive Officer
from November 1990 to April 1991, of Panhandle
Eastern Pipe Line Company ("PEPL"). Director since
November 1990, Chairman of the Board and President
from November 1990 to January 1994 and Chief
Executive Officer from November 1990 to April 1991,
of Texas Eastern Transmission Corporation
("TETCO"). PEPL and TETCO are subsidiaries of the
Company. Director of Texas Commerce Bancshares,
Inc.
Ralph S. O'Connor.......... Age 69. For more than five years, principally
engaged in investments as Chairman and Chief
Executive Officer of Ralph S. O'Connor &
Associates, Houston, Texas. Member of the Board of
Directors of TEC from 1963 until 1989. Director of
the Company since 1991. Director of First City
Bancorporation of Texas, Inc.
2
<PAGE> 6
INFORMATION REGARDING DIRECTORS CONTINUING IN OFFICE
NAME BUSINESS EXPERIENCE AND AGE IN 1995
---- -----------------------------------
1996 CLASS
Milton Carroll............. Age 45. Chairman, President, and Chief Executive
Officer of Instrument Products, Inc., Houston,
Texas, a manufacturer of oilfield tools and other
precision products, since 1977. Director of the
Company since 1993. Director of the Federal Reserve
Bank of Dallas, Houston Industries, Inc., Houston
Lighting & Power Co., and Houston Endowment, Inc.
Robert Cizik............... Age 64. Chairman of the Board and Chief Executive
Officer of Cooper Industries, Inc. ("Cooper"),
Houston, Texas, a diversified, international
manufacturing company, since 1983. From 1975 to
1983, President and Chief Executive Officer of
Cooper. Director of TEC from April 1988 until July
1989. Director of the Company since 1991. Director
of Cooper, Temple-Inland, Inc., Harris Corporation,
and Air Products and Chemicals, Inc.
Harold S. Hook............. Age 64. Chairman and Chief Executive Officer of
American General Corporation ("American General"),
Houston, Texas, an insurance-based, diversified
financial services organization, for more than five
years. Member of the Board of Directors of TEC from
April 1989 through July 1989. Director of the
Company since 1978. Director of American General,
American General Finance, Inc., Chemical Banking
Corporation, Chemical Bank, Cooper, Sprint
Corporation, and Texas Commerce Bancshares, Inc.
Leo E. Linbeck, Jr......... Age 61. Since 1990, Chairman, President and Chief
Executive Officer of Linbeck Corporation, Houston,
Texas, a holding company of five construction
firms, and, since 1975, Chairman, President, and
Chief Executive Officer of Linbeck Construction
Corporation, Houston, Texas, a construction
management and general construction firm. Director
of the Company since 1986. Director of twenty-four
investment funds managed by John Hancock Advisers,
Inc., and of Daniel Industries, Inc.
1997 CLASS
Paul M. Anderson........... Age 50. President of the Company since December
1993 and Director of the Company since December
1992. Executive Vice President of the Company from
March 1991 to December 1993. President and Chief
Executive Officer from April 1991 to January 1994,
Director of PEPL since 1991, and Chairman of the
Board since January 1994. Director of TETCO since
April 1991 and Chairman of the Board since January
1994. Vice President, Finance and Chief Financial
Officer, Inland Steel Industries Inc., 1990-1991.
Senior Vice President, TEC, 1987-1989. Director of
Temple-Inland, Inc.
William T. Esrey........... Age 55. Chairman and Chief Executive Officer of
Sprint Corporation ("Sprint"), Westwood, Kansas, a
diversified telecommunications holding company,
since April 1990. President and Chief Executive
Officer of Sprint from April 1985 to April 1990.
Director of the Company since 1985. Director of
Sprint, Equitable Life Assurance Society of the
United States, Boettcher Venture Capital Partners,
L.P., and General Mills, Inc.
Ann Maynard Gray........... Age 50. Since 1991, President, Diversified
Publishing Group of Capital Cities/ABC, Inc., New
York, New York, involved in television, radio, and
publishing, and Corporate Vice President since
1986. Senior Vice
3
<PAGE> 7
NAME BUSINESS EXPERIENCE AND AGE IN 1995
---- -----------------------------------
President -- Finance, ABC Television Network from
1988 to 1991. Director of the Company since 1994.
Director of Cyprus Amax Minerals Company.
George L. Mazanec.......... Age 59. Vice Chairman of the Board of Directors of
the Company since December 1993 and a Director
since December 1992. Executive Vice President of
the Company from March 1991 to December 1993.
Director since January 1990, Vice Chairman of the
Board since January 1994, and President and Chief
Executive Officer from January 1991 to January
1994, of TETCO. Director of PEPL since January 1990
and Vice Chairman of the Board of PEPL since
January 1994. From 1989 to 1991, Group Vice
President of the Company. Director of Associated
Electric and Gas Insurance Services.
B. ADDITIONAL INFORMATION
INFORMATION REGARDING ADVISORY DIRECTORS
In January 1995, the Board elected three Advisory Directors to one-year
terms. Mr. Max R. Lents was elected to his eleventh term and Senator Lloyd M.
Bentsen and Mr. Cortland S. Dietler were elected to their initial terms. An
Advisory Director has no voting rights but attends meetings of the Board and
certain Board committees in an advisory capacity. Information regarding the
Advisory Directors is as follows:
NAME BUSINESS EXPERIENCE AND AGE IN 1995
---- -----------------------------------
Lloyd M. Bentsen........... Age 74. Shareholder of the law firm of Verner,
Liipfert, Bernhard, McPherson and Hand, Houston,
Texas. United States Senator from Texas from 1971
to 1993. Secretary of the Treasury of the United
States from January 1993 to December 1994. Advisory
Director of the Company since January 1995.
Director of AEA Investors, Inc., IVAX Corporation,
American International Group, and Mitchell Energy
and Development Corporation.
Cortland S. Dietler........ Age 74. Until the December 1994 merger with the
Company, Chairman of the Board of Associated
Natural Gas Corporation, Denver, Colorado, a
marketer, gatherer, and processor of natural gas,
for more than five years. Advisory Director of the
Company since January 1995.
Max R. Lents............... Age 80. Director and former Chairman of the Board
of Miller and Lents, Ltd., an independent oil and
gas consulting firm, Houston, Texas, for more than
five years. Director of the Company from May 1981
to July 1982 and from November 1983 to January 1985
and Advisory Director since January 1985. Director
of Petrolite Corporation.
MEETINGS OF THE BOARD AND ITS COMMITTEES
During 1994, the Board met seven times. Each Director attended at least 75
percent of the aggregate of the Board meetings and the meetings of Board
committees on which he or she served.
At its annual organization meeting in April 1994, the Board amended its
committee structure, reorganizing several committees, establishing certain new
committees, and reconstituting the membership of each committee. The Board's
committees now are the Audit Committee, the Compensation & Organization
Committee ("Compensation Committee"), the Committee on Directors, the Executive
Committee, the Finance Committee and the Public Responsibilities Committee. With
the exception of the Executive Committee, all Committees are composed solely of
Nonemployee Directors.
4
<PAGE> 8
Mr. Cizik is Chairman, and Ms. Gray and Messrs. Carroll, Hook, Lents,
O'Connor, and Dietler, are members, of the Audit Committee. The Audit Committee
recommends the appointment of independent auditors and reviews with them the
plan, scope, and results of their audit and monitors their fees for audit and
other services; reviews the recommendations resulting from such audit and
management responses thereto; and reviews the Company's accounting principles,
policies, internal accounting controls, and the internal auditing department
plans and procedures. The Audit Committee also reviews the Company's annual
financial statements and recommends accounting and internal auditing policies
which, in its judgment, should receive the attention of the Board. The Audit
Committee met two times in 1994.
Mr. Duncan is Chairman of the Compensation Committee (which prior to April
1994 was named the Compensation/Organization/Nomination Committee) and Messrs.
Cizik, Ekblom, Esrey, Linbeck and O'Connor are members. The Compensation
Committee establishes the compensation policies for the Chief Executive Officer
and other senior officers; approves the salaries and certain remuneration
arrangements of senior officers; recommends the adoption of compensation plans
in which officers and certain key employees are eligible to participate; and
recommends awards pursuant thereto, including bonuses, stock option grants, and
other awards. It acts on management recommendations for the election of
officers, recommends the election of a Chief Executive Officer when appropriate,
and reviews management succession plans. The Compensation Committee met four
times in 1994.
The Committee on Directors was established in April 1994. Mr. Esrey is
Chairman of the Committee and Messrs. Carroll, Cizik, Dietler, Duncan, Ekblom
and Hook are members. The Committee on Directors identifies and recommends
candidates to fill Board vacancies and considers nominees for election as
Directors at the Annual Meeting; considers the removal of Directors; reviews the
Board's retirement policy and policies pertaining to Board membership; advises
the Board on matters pertaining to Board tenure and compensation; and considers
and makes recommendations pertaining to corporate governance matters. In
addition, the Committee on Directors will consider stockholders' suggestions of
nominees for Director that are submitted in writing to it, in care of the
Secretary of the Company. The Committee on Directors met once in 1994.
The Finance Committee, the successor to the Pension and Benefits Plan
Committee, is chaired by Mr. Hook and the members are Ms. Gray, Senator Bentsen,
and Messrs. Duncan, Ekblom, Linbeck and Lents. The Finance Committee reviews the
Company's financial needs and approves its financing plans, represents the Board
in discharging its administrative responsibilities with respect to employee
benefit plans, reviews the performance of the investment managers of the
Retirement Income Plan of Panhandle Eastern Corporation and Participating
Affiliates ("Retirement Income Plan"), monitors the Company's risk management
activities, and reviews the Board's dividend policy. The Finance Committee met
once in 1994.
Mr. Linbeck is Chairman, and Senator Bentsen, Messrs. Carroll, Esrey,
Lents, and O'Connor and Ms. Gray are members, of the Public Responsibilities
Committee, which was established in April 1994. This Committee reviews and
considers the Company's policies and practices related to public issues
important to the Company and the industry, including: safety; environmental
affairs; governmental relations; community relations; employee participation in
civic and charitable affairs; civic, charitable, and philanthropic
contributions; and equal opportunity policies and programs. The Public
Responsibilities Committee met twice in 1994.
Mr. Hendrix is Chairman, and Senator Bentsen and Messrs. Anderson, Carroll,
Cizik, Duncan, Hook, Lents, Linbeck, Mazanec and O'Connor are members, of the
Executive Committee, which reviews and, where appropriate, authorizes corporate
action with respect to, the conduct of the business of the Company between Board
meetings. Actions taken by the Executive Committee are regularly submitted to
the Board for review and ratification at the next meeting. The Executive
Committee did not meet in 1994.
5
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
As of December 31, 1994, all Directors and executive officers of the
Company as a group owned beneficially, or had the right to acquire within 60
days of December 31, 1994, under the 1982 Key Employee Stock Option Plan, as
amended (the "1982 Plan"), the 1989 Nonemployee Directors Stock Option Plan (the
"1989 Plan"), the 1990 Long Term Incentive Plan (the "1990 LTIP"), and the 1994
Long Term Incentive Plan (the "1994 LTIP"), less than 1 percent of the presently
issued and outstanding Common Stock.
The following table shows the number of shares of Common Stock beneficially
owned as of December 31, 1994, or as to which there was a right to acquire
beneficial ownership within 60 days of such date, by each Director or nominee
for Director, each executive officer of the Company named in the Summary
Compensation Table on page 10 ("Named Executive Officers"), and all Directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER
NUMBER OF
OF SHARES
SHARES WHICH
BENEFICIALLY MAY BE
OWNED(1) ACQUIRED(2)
------------ -----------
<S> <C> <C>
Paul M. Anderson.................................... 25,109 110,133
Milton Carroll...................................... 500 5,000
Robert Cizik........................................ 1,322 7,000
Charles W. Duncan, Jr............................... 7,767(3) 8,000
Harry E. Ekblom..................................... 7,276(4) 9,000
William T. Esrey.................................... 2,500 9,000
Ann Maynard Gray.................................... 500 --
Dennis R. Hendrix................................... 389,000 --
James B. Hipple..................................... 11,293(5) 17,924
Harold S. Hook...................................... 5,600 9,000
Carl B. King........................................ 30,268 21,667
Leo E. Linbeck, Jr.................................. 1,208 9,000
George L. Mazanec................................... 31,199 110,219
Ralph S. O'Connor................................... 34,502(6) 7,000
All Directors, nominees for Director, and twelve
executive officers as a group, including those
named above....................................... 626,846 442,495
</TABLE>
- ---------------
(1) Included are beneficially owned and undistributed shares of Common Stock
held as of December 31, 1994, in the Panhandle Eastern Corporation Dividend
Reinvestment and Stock Purchase Plan and shares held as of December 31,
1994, in, and allocable to the individual under, the Employees' Savings Plan
of Panhandle Eastern Corporation and Participating Affiliates.
(2) Shares of Common Stock which the Directors or executive officers of the
Company have the right to acquire, within 60 days of December 31, 1994,
pursuant to options outstanding under the 1982 Plan, the 1989 Plan, the 1990
LTIP, and the 1994 LTIP. Nonemployee Directors do not participate in the
1982 Plan, the 1990 LTIP, or the 1994 LTIP and Employee Directors do not
participate in the 1989 Plan.
(3) Includes 4,531 shares held by Duncan Investors, Ltd., a partnership in which
Mr. Duncan is a limited and general partner.
(4) Includes 3,000 shares held by Mrs. Ekblom.
(5) Includes 48 shares held by Mrs. Hipple.
(6) Includes 4,502 shares of Common Stock held by three trusts of which Mr.
O'Connor is co-trustee. Mr. O'Connor disclaims beneficial ownership of all
such shares.
6
<PAGE> 10
Texas Eastern Products Pipeline Company, a wholly owned subsidiary of the
Company, is the general partner of TEPPCO Partners, L.P. ("TEPPCO"), a publicly
traded master limited partnership. The following table shows the number of units
of limited partnership interests in TEPPCO beneficially owned as of December 31,
1994, or as to which there was a right to acquire beneficial ownership within 60
days of such date, by each Director or nominee for Director, each of the Named
Executive Officers, and all Directors and executive officers of the Company as a
group. As of December 31, 1994, the percentage of units beneficially owned by
all Directors and executive officers as a group does not exceed 1 percent of the
presently issued and outstanding units.
<TABLE>
<CAPTION>
NUMBER
OF
NUMBER UNITS
OF WHICH
UNITS MAY
BENEFICIALLY BE
OWNED ACQUIRED
------ --------
<S> <C> <C>
Paul M. Anderson........................................ 1,000 --
Milton Carroll.......................................... -- --
Robert Cizik............................................ -- --
Charles W. Duncan, Jr. ................................. -- --
Harry E. Ekblom......................................... -- --
William T. Esrey........................................ -- --
Ann Maynard Gray........................................ -- --
Dennis R. Hendrix....................................... 10,000 --
James B. Hipple......................................... 1,000 --
Harold S. Hook.......................................... 2,000 --
Carl B. King............................................ -- --
Leo E. Linbeck, Jr. .................................... -- --
George L. Mazanec....................................... 1,000 --
Ralph S. O'Connor....................................... 1,000 --
All Directors, nominees for Director, and twelve
executive officers as a group, including those named
above................................................. 18,000 --
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of Common Stock held by
beneficial owners of more than 5 percent of the Common Stock as of December 31,
1994, and the percentage of the total outstanding shares of Common Stock as of
that date.
<TABLE>
<CAPTION>
NUMBER PERCENT
OF OF
SHARES OUTSTANDING
NAME AND ADDRESS BENEFICIALLY SHARES
OF BENEFICIAL OWNER OWNED OWNED
---------------------------------------------------- -------- -------
<S> <C> <C>
Sonatrach Petroleum Investment Corp., B.V.
Sloterkade 138D
1058 HM Amsterdam, The Netherlands.................. 7,700,000 5.16
Employees' Savings Plan of
Panhandle Eastern Corporation and Participating
Affiliates
5400 Westheimer Ct.,
Houston, Texas 77056................................ 9,665,691 6.48
</TABLE>
Sonatrach Petroleum Investment Corp., B.V., is a Dutch corporation owned by
two shareholders: Sonatrach (the national oil and gas company of Algeria), which
owns a 99.9 percent interest, and Banque Algerienne du Commerce Exterieur
("BACE"), a Swiss bank, which owns a 0.1 percent interest. The principal
executive offices of Sonatrach are located at 10, Rue du Sahara, Hydra, Algiers
(Algeria), and the principal executive offices of BACE are located at
Schutzengasse 4, Postfach, 8023 Zurich, Switzerland. Sonatrach and BACE are
wholly owned by the government of Algeria.
7
<PAGE> 11
The Company and Sonatrach, directly and through subsidiaries, are parties
to agreements entered into in 1987 providing for the importation of liquefied
natural gas ("LNG") over a period of up to 20 years at volumes and prices and
upon other terms to be agreed upon from time to time. The agreements provide
that if LNG is purchased by the Company from Sonatrach, Sonatrach will receive
an f.o.b. payment equal to approximately 63 percent of the average gross selling
price of an equivalent quantity of regasified LNG, with the Company receiving
the balance. For the year ended December 31, 1994, payments to Sonatrach under
this program for LNG and shipping were approximately $30.6 million.
Employees' Savings Plan of Panhandle Eastern Corporation and Participating
Affiliates("ESP"), holds shares of Common Stock for the account of participants,
who are employees of the Company and participating affiliates. Generally, the
ESP passes through to participants the right to direct the voting of shares of
Common Stock allocable to their accounts and to direct the tender of such shares
in response to a tender or exchange offer for Common Stock. The ESP is
administered by an administrative committee whose members are H. D. Church,
Senior Vice President of TETCO; Paul F. Ferguson, Jr., Vice President, Finance
and Accounting, and Treasurer of the Company; D. R. Hennig, Vice President of
PEPL, TETCO, and Trunkline; James B. Hipple, Senior Vice President and Chief
Financial Officer of the Company; Theopolis Holeman, Vice President of PEPL;
Sandra P. Meyer, Vice President and Controller of the Company; Michael J.
Bradley, Vice President of Centana Energy Corporation, a subsidiary of the
Company; and J. F. Rogers, General Manager, Administration, of Algonquin.
COMPENSATION OF DIRECTORS
Directors who also are employees of the Company (Messrs. Anderson, Hendrix,
and Mazanec) receive no fees for their service as Directors or for attendance at
Board and Committee meetings. Nonemployee Directors and Advisory Directors
receive an annual retainer fee of $30,000, and $1,000 for each Board meeting and
each Committee meeting attended. Nonemployee Committee Chairmen receive an
additional annual retainer of $4,000. Nonemployee Directors and Advisory
Directors are reimbursed for expenses incurred in attending Board and Committee
meetings.
In addition to the foregoing, the Company maintains, or formerly
maintained, the following plans for Nonemployee Directors:
1. The 1982 Directors' Deferred Compensation Plan permits Nonemployee
Directors to elect, on a year-to-year basis, to defer either 50 percent or
100 percent of their Directors' fees. As amended in January 1995, the
annual interest rate applicable to deferred amounts is equal to Moody's
seasoned Baa Corporate Bond Yield Index for the week ending with the final
Friday of the previous November, as reported in the Federal Reserve
statistical release No. 15 or its successor. Amounts accrued are payable
either in a lump sum or over a period of five or 10 years, as elected by
the Nonemployee Director, commencing on January 15th of the year next
succeeding the year in which the Nonemployee Director either ceases to be a
Director or upon the attainment of the age the Nonemployee Director
previously elected. For the year ended December 31, 1994, amounts deferred
under this Plan and interest accrued relative to such deferrals were
$184,194.98 for the five participating Nonemployee Directors as a group.
2. The 1989 Nonemployee Directors' Stock Option Plan ("1989 Plan")
provides for the granting of non-qualified options for the purchase of
shares of Common Stock to each Nonemployee Director, other than an Advisory
Director. Stock appreciation rights ("SARs") are not permitted. All options
are granted at the fair market value of the Common Stock on the date of
grant. On May 1, 1989, each Nonemployee Director was granted an option to
purchase 5,000 shares of Common Stock, and any new Nonemployee Director is
granted an option to purchase 5,000 shares of Common Stock effective on the
May 1 next following election to the Board. Additional options to purchase
1,000 shares of Common Stock are granted to each Nonemployee Director on
May 1 of each year, through and including May 1, 1998. On May 1, 1994,
options to purchase a total of 13,000 shares of Common Stock were granted
under the 1989 Plan at an exercise price of $20.00 per share. Options
granted under the 1989 Plan become exercisable one year from the date of
grant and expire on the tenth anniversary of the date of grant.
8
<PAGE> 12
Accordingly, the options granted on May 1, 1994, are not reflected in the
table on page 6 hereof. No options were exercised during 1994 under the
1989 Plan.
3. The Nonemployee Directors' Retirement Plan provides an annual
unfunded retirement benefit for each Nonemployee Director of the Company
upon the later to occur of the Director's retirement date or the attainment
of age 65. A retired Nonemployee Director with 10 years or more of service
on the Board will receive annually for life (a guaranteed minimum of 10
years) an amount equal to 60 percent of the annual retainer fee in effect
on the Director's retirement date. For a Nonemployee Director retiring with
less than 10 years of service, the annual benefit accrues at a rate of 6
percent of the annual retainer fee in effect on the Director's retirement
date for each year of service, not to exceed a total of 60 percent of such
annual retainer fee. In the event of a "change of control" (as defined), a
Nonemployee Director shall be deemed to have served as such until the
earlier of the tenth anniversary of the Director's service on the Board or
attainment of age 70. There are also certain pre-retirement supplemental
death benefits provided under this plan.
4. At the time it was acquired by the Company in 1989, TEC maintained
an unfunded plan, the TEC Directors' Retirement Plan, which provided an
annual benefit payable for 10 years following a Nonemployee Director's
retirement from active service on the TEC Board of Directors. Upon the
Nonemployee Director's death following retirement, any unpaid installments
will be paid to the named beneficiary. Under this plan, Messrs. Duncan and
O'Connor have vested rights to annual benefits of $18,000 commencing
January 1, 1999.
5. The Directors' Deferred Compensation Plan of Panhandle Eastern
Corporation ("Nonemployee Directors' Plan") was available until December
31, 1986, to Nonemployee Directors and permitted deferral of up to 100
percent of each participating Nonemployee Director's annual retainer fee.
Benefit payment amounts related to retainer fees deferred, to interest
accrued at seniority-based rates, and to age at the time of deferral. For
the year ended December 31, 1994, interest accrued relative to amounts
deferred under the Nonemployee Directors Plan was $54,788.
9
<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table and notes present the cash and certain other
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company ("Named Executive Officers"), as of December
31, 1994, for the years ended December 31, 1992, 1993, and 1994:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -------------------------------------------------
AWARDS
---------------------
SECURITIES PAYOUTS ALL OTHER
OTHER ANNUAL RESTRICTED UNDERLYING ------- COMPEN-
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/SARS LTIP SATION
POSITION(1) YEAR ($) ($) ($)(2) AWARD(S)($)(3) (#)(4) PAYOUTS($) ($)(5)
(A) (B) (C) (D) (E) (F) (G) (H) (I)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Dennis R. Hendrix. 1994 -- -- 19,411 -- -- -- 49,451
1993 -- -- 23,578 6,525,000(6) -- -- 55,532
1992 -- -- 23,087 -- -- -- 60,560
Paul M. Anderson.. 1994 340,000 191,964 -- -- -- -- 69,424
1993 337,917 160,153 -- -- 250,000 -- 61,066
1992 315,000 160,000 53,909 -- -- -- 35,712
George L. Mazanec. 1994 340,000 189,414 -- -- -- 198,413 97,111
1993 336,667 177,710 -- -- 250,000 203,644 76,851
1992 297,917 175,000 -- -- -- 99,388 41,162
James B. Hipple... 1994 277,917 125,910 -- -- -- 64,998 71,682
1993 253,750 113,016 -- -- -- 66,644 63,104
1992 238,333 112,500 -- -- -- 53,786 49,064
Carl B. King...... 1994 255,000 135,333 -- -- 15,000 64,998 33,714
1993 253,833 103,709 -- -- -- 67,744 31,485
1992 241,000 103,630 -- -- -- 53,786 13,008
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) The principal positions of Messrs. Hendrix, Anderson, and Mazanec are
described on pages 2, 3 and 4. Mr. King is Senior Vice President and General
Counsel of the Company and TEC. Mr. Hipple is Senior Vice President and
Chief Financial Officer of the Company, Associated, PEPL, TEC, TETCO, and
Trunkline Gas Company.
(2) Pursuant to rules on executive and director compensation disclosure adopted
by the SEC, Other Annual Compensation is reportable if, in the aggregate,
the components thereof exceed the lesser of $50,000 or 10 percent of the sum
of the Named Executive Officer's salary and bonus. Each component thereof
that exceeds 25 percent of the total for each Named Executive Officer for
whom disclosure is required must be identified. Accordingly, the amounts
reported in column (e) include:
<TABLE>
<CAPTION>
USE OF COMPANY AIRCRAFT REIMBURSED MOVING EXPENSES
--------------------------- ---------------------------
1992 1993 1994 1992 1993 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Mr. Hendrix.................... $18,300 $19,203 $15,980 -- -- --
Mr. Anderson................... -- -- -- $43,452 -- --
</TABLE>
(3) In March 1991, Mr. Anderson was awarded 40,000 shares of restricted Common
Stock under the terms of the 1990 LTIP. These shares were initially
restricted as to the transfer of ownership, with such restriction being
removed on 10,000 shares on March 1 of each year, beginning on March 1,
1992, and continuing through March 1, 1995. At December 31, 1994, Mr.
Anderson's aggregate restricted stock holdings were 10,000 shares, which,
based on the fair market value at that date, would be valued at
10
<PAGE> 14
$196,875. Mr. Anderson received dividends payable to holders of record of
Common Stock on the restricted shares.
(4) In December 1991, the Compensation Committee granted 126 executives and
management employees, including Messrs. Anderson, Mazanec, King, and Hipple,
options to purchase 778,500 shares of Common Stock, together with an
equivalent amount of EPS Performance Units. Stock options for 40,500 shares
of Common Stock, together with an equivalent number of EPS Performance
Units, were also granted in April 1992 to seven executives and management
employees; 12,000 options and EPS Performance Units were granted to one
executive in July 1992; 41,000 options and EPS Performance Units were
granted to eight management employees in January 1993; in December 1993,
Messrs. Anderson and Mazanec each were granted options to purchase 250,000
shares of Common Stock, together with an equivalent number of EPS
Performance Units; in January 1994, 129 executive and management employees
were granted options to purchase 324,300 shares, together with an equivalent
number of EPS Performance Units; and in January 1995, 847,000 options and
EPS Performance Units were granted to 178 executives and management
employees. Each EPS Performance Unit creates a credit to an employee's EPS
Performance Unit account when earnings per share exceed a threshold, which
was $0.80 per share for awards made in 1991 and 1992, $1.10 for awards made
in January 1993, $1.50 for awards made in December 1993 and January 1994,
and $1.61 for awards made in January 1995. When earnings for a calendar year
(exclusive of certain special items) exceed the threshold, the excess amount
is credited to the employee's EPS Performance Unit account. The balance in
the account may be used to exercise stock options granted in connection with
the EPS Performance Units or shall be paid two years after the underlying
options expire, usually 10 years from the date of grant. Under the
agreements for such stock options, the options become exercisable in equal
installments over periods of one, two, and three years from the date of
grant. Options may also be exercised by normal means once vesting
requirements are met.
(5) Pursuant to rules on executive and director compensation disclosure adopted
by the SEC, amounts reported for the last completed fiscal year shall be
identified and quantified in a footnote. Accordingly, amounts reported for
1994 include (a) amounts credited by the Company for the Named Executive
Officers under the ESP and under the Panhandle Eastern Corporation Key
Employees Deferred Compensation Plan ("KED"), an unfunded, defined
contribution plan that allows eligible employees, including Messrs.
Anderson, Mazanac, Hipple and King, to elect deferral of base salary and
bonus, and receive matching company contributions and interest credits,
whenever, and to the extent that, their participation in the ESP is limited
by provisions of the Internal Revenue Code, (b) that portion of interest
credits on deferred compensation amounts that are considered, pursuant to
rules promulgated by the SEC, to be at above-market rates, (c) the value of
EPS Performance Units credited to EPS Performance Unit accounts of the Named
Executive Officers in 1994, and (d) the imputed value of premiums paid by
the Company for insurance on the Named Executive Officers' lives (none of
the Named Executive Officers has any cash value rights related to such
insurance).
<TABLE>
<CAPTION>
INTEREST VALUE OF
AT ABOVE VALUE OF EPS LIFE INSURANCE
ESP/KED MARKET RATES PERFORMANCE UNITS PREMIUMS
-------- ------------ ----------------- --------------
<S> <C> <C> <C> <C>
Mr. Hendrix............................. $ 0 $ 35,166 $ 0 $ 14,285
Mr. Anderson............................ 33,010 12,605 22,800 1,009
Mr. Mazanec............................. 28,474 37,113 22,794 8,730
Mr. Hipple.............................. 25,802 21,660 15,196 9,024
Mr. King................................ 15,783 81 15,200 2,650
</TABLE>
(6) In November 1990, Mr. Hendrix and the Company entered into an agreement
whereby he would receive no salary for 1991, 1992, and 1993. Instead, Mr.
Hendrix was awarded 300,000 shares of restricted Common Stock under the
terms of the 1990 LTIP as compensation for that period. Mr. Hendrix received
dividends payable to holders of record of Common Stock on the restricted
shares. These shares were initially restricted as to the transfer of
ownership, with such restrictions being removed on 25,000 shares every three
months, beginning in February 1991 and continuing through November 1993. The
value of the 300,000 restricted shares, based on the fair market value of
the Company's Common Stock as reported on The New York Stock Exchange
Composite Reporting System on November 12, 1990, which
11
<PAGE> 15
was $11.00 per share, was $3,300,000. Based on the December 30, 1994, fair
market value of $19.6875 per share, the 300,000 restricted shares would be
valued at $5,906,250. Effective February 24, 1993, the agreement with Mr.
Hendrix was amended to extend the term through November 1996 and to award
him an additional 300,000 shares of restricted Common Stock in lieu of
salary for the period November 1993 through November 1996. The restrictions,
and the removal thereof, were the same as for the 1990 award, and Mr.
Hendrix receives dividends payable to holders of record of Common Stock on
these restricted shares. In December 1993 this award was amended to provide
for the accelerated removal of restrictions in that month on 200,000 shares.
It was provided that the restrictions on the remaining 100,000 shares would
be removed as follows: 36,000 shares in quarterly installments of 9,000
shares each in 1994, 34,000 shares in quarterly installments of 8,500 shares
each in 1995, and 30,000 shares in quarterly installments of 7,500 shares
each in 1996. The full amount reported in the table for 1993 represents the
value of the 300,000 restricted shares based on the fair market value of the
Company's Common Stock on February 24, 1993, which was $21.75. Based on the
December 30, 1994, fair market value, these 300,000 shares also would be
valued at $5,906,250. At December 31, 1994, Mr. Hendrix's aggregate
remaining ownership of restricted stock was 64,000 shares, with a fair
market value of $1,260,000.
STOCK OPTION/SAR GRANTS IN 1994
The following table shows all grants of stock options to the Named
Executive Officers in 1994. No SARs were granted to any Named Executive Officer
in 1994 nor were the exercise prices on stock options previously awarded to any
of them amended or adjusted.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
GRANT DATE
INDIVIDUAL GRANTS VALUE
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS GRANTED GRANT DATE
UNDERLYING TO EMPLOYEES EXERCISE OR PRESENT
OPTIONS/SARS IN BASE PRICE EXPIRATION VALUE(2)
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE $
(A) (B) (C) (D) (E) (F)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Hendrix.................... 0 0 0 N/A 0
Mr. Anderson................... 0 0 0 N/A 0
Mr. Mazanec.................... 0 0 0 N/A 0
Mr. Hipple..................... 0 0 0 N/A 0
Mr. King....................... 15,000(1) 5 $24.25 1-25-04 97,485
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) On January 26, 1994, the Board of Directors granted stock options to
purchase 324,300 shares to 129 management employees, including Mr. King, at
an exercise price of $24.25, which was the fair market value of the Common
Stock on the date of grant. Options for 66,000 of such shares were incentive
stock options vesting in one-third increments commencing one year from the
date of grant. The remainder, including those granted to Mr. King, were
nonqualified stock options vesting one year from the date of grant. The
options have a ten year term. The grants include the award of an equivalent
number of EPS Performance Units, but do not include SARs. Each EPS
Performance Unit creates a credit to the grantee's EPS Performance Unit
account when the Company's earnings per share, exclusive of certain special
items, exceed a threshold. For the January 26, 1994 grant, the threshold is
$1.50. When earnings for a calendar year, beginning with 1994, exceed the
threshold, the excess amount is credited to the grantee's EPS Performance
Unit account. The balance of the account may be used to exercise the stock
options or it shall be paid two years after the expiration of the options.
The options may also be exercised by normal means once vesting requirements
are met.
(2) Grant date present values are based on the Black-Scholes option valuation
model. The key input variables used in valuing the options were: risk-free
interest rate - 6.25 percent; dividend yield - 4.96 percent; stock
12
<PAGE> 16
price volatility - .33; option term - ten years. The Standard and Poor's
Compustat Database was used and the volatility variable reflected 36 months
of stock price trading data. No adjustments for non-transferability or risk
of forfeiture were made. The actual value, if any, a grantee may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised, so that there is no assurance the value
realized will be at or near the value estimated by the Black-Scholes model.
EXERCISES OF STOCK OPTIONS IN 1994 AND YEAR-END OPTION VALUES
The following table provides information concerning the stock options
exercised by each of the Named Executive Officers during 1994 and the value of
unexercised stock options to the Named Executive Officers as of December 31,
1994. The value assigned to each unexercised, "in the money" stock option is
based on the positive spread between the exercise price of such stock option and
the fair market value of the Common Stock on December 31, 1994. The fair market
value is the average of the high and low prices of a share of Common Stock on
that date as reported on The New York Stock Exchange, Inc., Composite
Transactions Reporting System. In assessing the value, it should be kept in mind
that no matter what theoretical value is placed on a stock option on a
particular date, its ultimate value will be dependent on the market value of the
Company's Common Stock at a future date. That future value will depend in part
on the efforts of the Named Executive Officers to foster the future success of
the Company for the benefit of all stockholders.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE* UNEXERCISABLE
(A) (B) (C) (D) (E)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Hendrix...................... 0 0 0/0 0/0
Mr. Anderson..................... 1,478 13,210 108,633/166,667 88,775/0
Mr. Mazanec...................... 1,392 12,441 110,219/166,667 89,060/0
Mr. Hipple....................... 928 8,178 17,924/0 22,084/0
Mr. King......................... 6,667 58,753 6,667/15,000 59,373/0
- -----------------------------------------------------------------------------------------------
</TABLE>
* Future exercisability of currently unexercisable stock options depends on the
grantee remaining employed by the Company throughout the vesting period of the
options, subject to provisions applicable at retirement, death, or total
disability. The unexercisable options vest and become exercisable on the
following schedule:
<TABLE>
<CAPTION>
JANUARY 26, DECEMBER 1, DECEMBER 1,
1995 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Mr. Anderson..................................... -- 83,333 83,334
Mr. Mazanec...................................... -- 83,333 83,334
Mr. Hipple....................................... -- -- --
Mr. King......................................... 15,000 -- --
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
ARRANGEMENTS
In November 1990, Mr. Hendrix and the Company entered into a five-year
employment agreement pursuant to which he received no salary for the first three
years of his employment. Instead, he was awarded 300,000 shares of Common Stock
under the terms of the 1990 LTIP, which shares were initially restricted as to
the transfer of ownership. Such restriction was removed on 25,000 shares every
three months, beginning in February 1991 and continuing through November 1993.
Mr. Hendrix received dividends on the restricted shares. The restriction would
have terminated early as to all of the restricted shares in the event of death
or disability, involuntary termination by the Company for any reason other than
cause (as defined), or change in control of the Company.
13
<PAGE> 17
Effective February 24, 1993, the employment agreement with Mr. Hendrix was
amended to extend the term through November 1996. The amendment provides that
Mr. Hendrix will continue to receive no salary for the three years from November
1993 through November 1996. Instead, he was awarded an additional 300,000 shares
of Common Stock on the same terms and subject to the same restrictions as those
described above, with restrictions being removed at the rate of 25,000 shares
every three months, beginning in February 1994. Mr. Hendrix began receiving
dividends on the additional shares in December 1993.
On January 1, 1994, the Omnibus Budget Reconciliation Act of 1993 (the
"Budget Act") became effective. Certain provisions of the Budget Act would have
denied to the Company a tax deduction for a substantial portion of compensation
expenses related to Mr. Hendrix in 1994, 1995, and 1996. In order to preserve
the deduction, on December 20, 1993, the agreement was amended again to provide
for the restrictions on 200,000 shares to be removed immediately and for the
restrictions on the remaining shares to be removed over the next 36 months.
Based on certain assumptions as to stock price, preserving the deduction was
estimated to result in tax savings to the Company of approximately $1.8 million.
In addition to the restricted shares, Mr. Hendrix participates in the
welfare plans available to employees generally; however, to the extent permitted
by law, he has waived and relinquished his right to participate in the ESP, the
Retirement Income Plan, and certain other plans available to Company employees
and executives.
The Company and Mr. Mazanec entered into a five-year employment agreement
in November 1989 which set a minimum base salary of $250,000 per year. In
addition to maintaining certain non-qualified retirement benefits to which he
was entitled as an executive of TEC, the agreement provides Mr. Mazanec a
supplemental lump sum cash benefit of $750,000 plus 8 percent interest
compounded semi-annually from November 1, 1989, payable within 30 days of his
termination from the Company for any reason. If Mr. Mazanec terminates
employment due to a material breach of the agreement by the Company which is not
remedied within 30 days after written notice by Mr. Mazanec, or if the Company
terminates the agreement without cause, the Company also will pay him, in a lump
sum, base pay and incentive compensation projected through the employment
period, as well as providing him an extension of welfare plan benefits through
the employment period. Effective November 1, 1992, the Company and Mr. Mazanec
entered into an amendment to the employment agreement, extending the period of
employment covered by the agreement through October 31, 1996.
On March 1, 1991, the Company and Mr. Anderson entered into an employment
agreement, the primary term of which originally was to expire on December 31,
1993. Unless either party serves notice of termination, on December 31 of each
year, the term is automatically extended for an additional one-year period. On
December 31, 1991, 1992, 1993 and 1994, the primary term was automatically
extended through December 31, 1994, 1995, 1996 and then 1997, respectively. The
Company may terminate the agreement for cause, death, or disability. Under such
circumstances, or if Mr. Anderson terminates the agreement for other than good
reason (as defined), Mr. Anderson or his estate will be paid base pay and
incentive compensation earned for that fraction of the year which he was
actually employed. If the agreement is terminated by Mr. Anderson for good
reason, or by the Company for reasons other than cause, death, or disability,
Mr. Anderson will receive in a lump sum the present value of his base pay and
incentive compensation projected through the employment period, as well as an
extension of welfare plan benefits through the employment period.
Effective March 1, 1991, Mr. Anderson was awarded 40,000 shares of
restricted Common Stock under the terms of the 1990 LTIP. These shares were
initially restricted as to the transfer of ownership, with such restriction
being removed on 10,000 shares on March 1 of each year, beginning on March 1,
1992, and continuing through March 1, 1995, provided Mr. Anderson remained in
the employ of the Company during that period. The restriction would have
terminated early as to all of the restricted shares in the event of death or
disability, involuntary termination by the Company for any reason other than
cause (as defined), or change in control of the Company. Mr. Anderson received
dividends payable to holders of record of Common Stock on the restricted shares.
The Company's Executive Severance Program ("Program") provides that in the
event of a "change in control," as defined in the agreements entered into
between the Company and the participants in the Program,
14
<PAGE> 18
such participants will have certain benefits provided to them in the event of
the termination of their employment within three years of the effective date of
such change in control. Such benefits are provided unless such termination of
employment is (i) because of the death or retirement of the executive, (ii) by
the Company or its subsidiaries for "cause" (as defined) or disability, or (iii)
by the executive other than for "good reason" (as defined). Generally, benefits
include a lump-sum cash payment equal to two and one-half times the average of
the participant's annual compensation for the five years preceding the change in
control (including deferred amounts, bonuses, and employer contributions to the
ESP); cash payment for the participant's account in the ESP; a continuation of
various medical, insurance, and certain other benefits for a period of two and
one-half years; and a lump-sum cash payment, at termination, equal to the
present value of the additional retirement benefits the participant would have
received as a result of two and one-half years additional service. The aggregate
of each participant's benefits, when combined, will not exceed three times the
"base amount" (as defined in the Internal Revenue Code). In consideration of
these benefits, the participant agrees, in the event a person seeks to effect a
change in control, not to leave the employ of the Company, and to continue to
render services commensurate with the participant's position, until such person
has abandoned or terminated efforts or the change in control has occurred. The
participant also agrees to retain in confidence all of the confidential business
information of the Company or its subsidiaries known to the participant. The
Program presently covers four executive officers of the Company, including
Messrs. Hipple and King.
The Company's Change in Control Severance Pay Plan ("Severance Plan") is
available for all employees of the Company and certain of its subsidiaries,
except those employees covered by an agreement under the Executive Severance
Program or a collective bargaining agreement. The Severance Plan provides a
number of severance benefits for eligible employees, which would be triggered by
certain specific events occurring subsequent to a "change in control" (as
defined) of the Company. In addition to the variable cash payments provided for
in the Severance Plan, eligible employees and dependents would receive, at no
cost to the employee, six months' continuation of medical and dental benefits at
the current benefit level, or at the benefit level immediately prior to the
change in control, whichever is greater. As of December 31, 1994, no benefits
had been provided under the Severance Plan.
PENSION PLAN
The Company's qualified retirement plan provides benefits, expressed in the
form of a single life annuity commencing at normal retirement date (age 65, or,
if later, the fifth anniversary of participation in the retirement plan) based
on a benefit formula that, in part, uses final five-year average pay, which
considers the regular compensation of the participant, including overtime
payments, bonus payments, and some forms of deferred compensation.
Qualified retirement plan benefits may be subject to statutory limitations
if the participant receives compensation in excess of a maximum, is covered by
other qualified plans, if benefits are paid before social security retirement
age, if the participant has less than 10 years of plan participation, or if
benefits are paid in a more valuable form than a single life annuity. Benefits
are not reduced by the amount of any social security payments received by the
participant. When qualified plan benefits are limited by statute, non-qualified
plans restore certain benefits for participants covered by the non-qualified
plans to a level which would have been available if such statutory limits did
not exist.
15
<PAGE> 19
The table below shows the estimated annual benefits payable at age 65 under
the qualified and non-qualified retirement plans at various levels of final
average compensation and assuming various years of benefit accrual service
(dollars in thousands):
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------
REMUNERATION 15 20 25 30 35
-------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$200...................................... $ 46 $ 62 $ 77 $ 93 $108
300...................................... 70 94 117 141 164
400...................................... 94 126 157 189 220
500...................................... 118 158 197 237 276
600...................................... 142 190 237 285 332
</TABLE>
The years of benefit accrual service for each Named Executive Officer,
except Mr. Hendrix, who does not participate in the plan, are as follows: Paul
M. Anderson, 16; Carl B. King, 4; James B. Hipple, 37; and George L. Mazanec, 7.
The covered compensation is the sum of the salary and bonus reported in the
Summary Compensation Table on page 10.
In connection with the 1989 acquisition of TEC by the Company, the TEC
Retirement Plan was amended to offer enhanced early retirement benefits to
active employees age 50 or older whose primary work location was in the
headquarters office. Mr. Hipple was among those employees eligible for these
enhanced retirement benefits. The Company entered into a contract with Mr.
Hipple in 1989 under which, in consideration of his agreement to remain in the
employ of the Company through December 1992, the Company agreed to pay him the
actuarial equivalent of the enhanced retirement benefits which he lost by not
exercising his option to retire early. During 1992, the Board of Directors
extended the effectiveness of this contract until Mr. Hipple retires.
C. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed exclusively of Nonemployee
Directors, is responsible for, among other things, the Company's executive
compensation programs. The following is the report of the Compensation Committee
on compensation policies regarding executive officers and the basis of
compensation actions it has taken.
The objectives of the Company's executive compensation programs remain (i)
to attract and retain executive officers and key employees who provide valuable
experience and skills to the Company and who contribute materially on a
consistent basis to its long term success, and (ii) to support and reward
individual and team performance that increases stockholder value. With those
objectives in mind, the executive compensation programs are administered to
provide compensation based on these principles:
1. Competitive Compensation Opportunities. The executive compensation
programs are intended to provide total compensation (consisting of base
salaries, annual cash incentive opportunities, and long-term incentive
opportunities) that is competitive with the average total compensation
offered other executives employed by companies of similar size, complexity,
and line of business. Therefore, each year the Compensation Committee
considers data from surveys, proxy statements, independent compensation
consultants, and those peer group companies listed in the Stockholder
Return graphs in Section D, below.
2. Performance-Based Pay. Payouts from the short- and long-term
compensation programs in which executive officers and key employees
participate are designed to reflect and be contingent on the achievement of
both group and individual annual performance goals.
DESCRIPTION OF THE CURRENT EXECUTIVE COMPENSATION PROGRAM
Base Salaries. The base salaries of the Company's executive officers,
other than the Chief Executive Officer, are consistent with average comparable
base salaries determined from the data described above.
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Executive officer base salaries are reviewed annually by the Compensation
Committee and revised, if appropriate, based on factors which include individual
performance and general levels of comparable salary increases. At its most
recent meeting in January 1995, the Compensation Committee approved increases to
the base salaries of most executive officers and key employees, in order to keep
total compensation opportunities at competitive levels and to reflect individual
performance.
Annual Cash Incentive Opportunities. The Compensation Committee
administers the Annual Cash Bonus Plan ("ACBP") which permits the granting of
cash incentive compensation awards. The ACBP requires the Compensation Committee
annually to establish administrative guidelines to define who may earn an
incentive award, what performance is required to earn it, and how much may be
earned. Guidelines effective for 1994 called for the Chief Executive Officer to
recommend, and the Compensation Committee to approve, an annual bonus
opportunity for each participant. This opportunity, or "target," is expressed as
a percentage of base salary and is determined by the Compensation Committee's
judgment of the direct or indirect impact each individual could have on the
Company's performance, as measured by operating income. Depending on
performance, executive officers could receive up to 125 percent of the bonus
target. Of the twelve executive officers of the Company in 1994, eleven were
participants in the ACBP. Mr. Hendrix is not a participant.
In 1994, each of the executive officers, in consultation with the Chief
Executive Officer, established six to ten specific personal objectives. These
personal objectives were primarily directed toward development of new services,
market expansion, cost control and increasing returns on the Company's rate
base. Fifty percent of each executive officer's 1994 bonus was determined by the
degree to which, in the opinion of the Chief Executive Officer and the
Compensation Committee, the executive officer achieved his or her personal
objectives. Further, each business unit established operating income objectives
approved by the Compensation Committee, and fifty percent of each executive
officer's bonus was contingent upon achievement of those objectives. If any one
business unit failed to reach a minimum level of income established in the
guidelines, the executive officer would receive no compensation for the
proportion of the bonus contingent upon that business unit's results. In 1994,
five business units met or exceeded their target operating income objectives and
two did not. All of the eleven participating executive officers exceeded 100
percent of their personal objectives.
Long Term Incentive Opportunities. Through the 1990 LTIP and 1994 LTIP,
which were approved by the stockholders in April 1990 and 1994, respectively,
the Compensation Committee has the flexibility to structure long-term awards to
meet particular business needs. To date, four types of awards have been made
under the 1990 LTIP and two types of awards have been made under the 1994 LTIP:
A. 1990 LTIP
1. Restricted Stock. Since 1990, the Compensation Committee has
awarded 640,000 shares of stock that is restricted as to transferability to
two executive officers. Mr. Hendrix received grants of 300,000 shares of
restricted stock in both 1990 and 1993 in lieu of salary, bonus, and
certain employee benefits. Mr. Anderson received a grant of 40,000 shares
of restricted stock in 1991. Restrictions were removed as vesting
requirements were met. The purpose of these awards was to make the
recipients' compensation substantially contingent on stock price and
dividend yield and to ensure significant share ownership.
2. Conditional Stock. This form of award was employed in November
1990 and January and April 1991 when the Company's management team was
being assembled following the merger of the Company and TEC and in
conjunction with the Company's reorganization into distinct business units.
The awards, made to grantees that included Messrs. Mazanec, Hipple, and
King, as well as other officers of the Company, were for the purpose of
focusing the recipients' attention on long-term objectives by adding,
through the ownership of Common Stock, a meaningful long-term incentive
opportunity that previously did not exist. Conditional stock awards vested
and were distributed in scheduled annual installments within four to six
years of grant. Recipients were paid dividend equivalents in cash on
unvested, undistributed shares. These awards were designed for a unique
purpose and time, and the Compensation Committee has no plans to make
additional conditional stock awards.
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3. Stock Options. Stock options have been granted to executive
officers and others by the Compensation Committee at various times since
the inception of the 1990 LTIP, as the primary vehicle for providing
long-term incentive opportunities to executive officers. Under the 1990
LTIP, options were granted to individuals no more than every three years,
except where promotions or changes in responsibility, in the opinion of the
Compensation Committee, called for an exception. The number of stock
options granted was determined through a process which, first, utilized
survey data to determine the annualized value of long term incentive grants
made to other executives and management employees in the Company's
compensation data base ("target value"). Next, the Black-Scholes stock
option pricing model was used to calculate a ratio which, when multiplied
by the exercise price of the option, produced an expected present value of
the option. Finally, the number of options required to make a competitive
long-term grant was calculated by dividing the target value by the expected
present value of a single option. The result of this equation, expressed as
a number of options, could be adjusted by the Compensation Committee
depending upon the grant recipient's qualitative and quantitative
performance, the size of stock option grants awarded the recipient in the
past, and expectations of future performance. In January 1994, 129
executive and management employees, including Mr. King, were granted
options under the 1990 LTIP to purchase 324,300 shares.
4. EPS Performance Units. Although stock options are the primary
vehicle for long-term incentive opportunities for executive officers, the
Compensation Committee considers them insufficient for the purpose of
rewarding specific management actions that enhance earnings and stockholder
return. Therefore, the Compensation Committee has granted EPS Performance
Units in conjunction with stock options to further encourage stock
ownership by executive officers and key employees and to strengthen the
linkage among financial performance, stockholder return, and long-term
incentives. One EPS Performance Unit was granted in conjunction with each
stock option awarded in January 1994. Each EPS Performance Unit creates a
credit to the grantee's EPS Performance Unit account when the Company's
earnings per share has exceeded a threshold, which, for grants made in
January 1994, was $1.50. When earnings for a calendar year, exclusive of
certain special items, exceed the threshold, the excess amount is credited
to the grantee's EPS Performance Unit account. The balance in the account
may be used to exercise stock options granted in connection with the EPS
Performance Units or it will be paid two years after the underlying options
expire, usually ten years from the date of grant. Options may also be
exercised by normal means once vesting requirements are met.
B. 1994 LTIP
1. Stock Options. In January 1995, the Compensation Committee granted
stock options to executive officers and others under the 1994 LTIP. While
in recent years the general rule has been to grant stock options to
individuals no more than every three years, the Compensation Committee in
1995 has changed to an annual grant frequency in order to reflect
competitive trends toward annual grants. The method used to determine the
number of stock options granted and the present value of the options is the
same as described for stock option grants under the 1990 LTIP. In January
1995, 178 executive and management employees were granted options under the
1994 LTIP to purchase 847,000 shares.
2. EPS Performance Units. As with the 1990 LTIP, in January 1995, the
Compensation Committee granted to each participant in the January 1995
stock option grant, a number of EPS Performance Units equal to the number
of stock options granted. The threshold for calculating credit to the
grantee's EPS Performance Unit account was $1.61 per share for these
grants.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee took no action in 1994 regarding the Chief
Executive Officer's compensation. However, in February 1993 the employment
agreement between the Company and Mr. Hendrix was amended to extend its term for
one additional year through November 1996 and to establish an appropriate amount
of compensation for the final three years of the agreement, the compensation for
which had not
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previously been established. The amendment provided that Mr. Hendrix would
continue to receive no salary or bonus for the three years from November 1993
through November 1996. Instead, as in the first three years of the employment
agreement, his compensation would be in the form of restricted Common Stock.
Considering the market price of the Common Stock on the date of amendment of the
agreement, and the total compensation of other chief executive officers in the
natural gas pipeline industry (including those peer group companies used in the
Stockholder Return Comparisons in Section D hereof), the Compensation Committee,
with the aid of an independent compensation consultant, concluded that the
appropriate grant should be 300,000 shares, with restrictions on transferability
being removed on 25,000 shares every three months, beginning in February 1994.
Mr. Hendrix receives dividends payable to stockholders of record of Common Stock
on the restricted shares. The Compensation Committee believes that the value of
Mr. Hendrix's compensation is approximately at the average of that for the chief
executive officers of the peer group companies.
Provisions of the Budget Act enacted after the amendment date, generally
remove the Company's ability to deduct compensation expense in excess of $1
million paid to any of the five highest paid executives, including the Chief
Executive Officer, in any year beginning in 1994 unless such compensation is
"performance-based" as defined by the Budget Act. Although the award to Mr.
Hendrix was set at a competitive level and by its nature achieves the ultimate
goal of aligning management and stockholder interests, the terms of the award
did not meet the legal definition of "performance-based" compensation under the
Budget Act. In the Company's opinion, compensation in excess of $1 million paid
to Mr. Hendrix under the terms of the agreement would not have been deductible
beginning in 1994 and could have resulted in increased tax cost to the Company
of approximately $1.8 million during the period 1994 through 1996.
In light of these changes in tax treatment of executive compensation, at
its December 20, 1993 meeting, the Compensation Committee reaffirmed its
decision to compensate Mr. Hendrix solely with restricted stock. However, due to
the significant potential tax cost of the original agreement, the Compensation
Committee elected to accelerate the removal of restrictions on 200,000 shares
into 1993 when the compensation realized by Mr. Hendrix remained fully
deductible by the Company. Restrictions on 36,000 shares were removed in
quarterly installments of 9,000 shares each during 1994. Restrictions on the
remaining 64,000 shares of the award will be removed as follows: 34,000 shares
in quarterly installments of 8,500 shares each in 1995, and 30,000 shares in
quarterly installments of 7,500 shares each in 1996.
The Compensation Committee intends to continue to structure compensation
programs that reward performance while preserving maximum deductibility of all
compensation awards. It is not anticipated that compensation realized by any
officer under programs now in effect will, in the immediate future, result in
any material loss of tax deductions under the Budget Act.
THE COMPENSATION & ORGANIZATION COMMITTEE:
CHARLES W. DUNCAN, JR., CHAIRMAN WILLIAM T. ESREY
ROBERT CIZIK LEO E. LINBECK, JR.
HARRY E. EKBLOM RALPH S. O'CONNOR
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D. STOCKHOLDER RETURN COMPARISON
SEC rules require that the Company include in this Proxy Statement a line
graph presentation comparing cumulative, five-year stockholder returns on an
indexed basis with the S&P 500 Stock Index and either a nationally recognized
industry standard or an index of peer companies selected by the Company. This
information is set forth on the graph below, which covers the period from
year-end 1989 through year-end 1994. The Company has chosen the Dow Jones
Pipeline Group for its peer comparison. The Dow Jones Pipeline Group includes
Coastal Corp., El Paso Natural Gas Company, Enron Corp., Enserch Corp., Sonat,
Inc., Transco Energy Co., Williams Companies, and the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN* AMONG PANHANDLE EASTERN CORPORATION,
S&P 500 STOCK INDEX, AND DOW JONES PIPELINE GROUP
(* Total return assumes quarterly reinvestment of dividends)
<TABLE>
<CAPTION>
Measurement Period Panhandle Dow Jones
(Fiscal Year Covered) Eastern Pipelines S&P 500
<S> <C> <C> <C>
12/89 $100.0 $100.0 $100.0
12/90 $ 42.9 $ 81.6 $ 96.9
12/91 $ 58.0 $ 79.6 $126.4
12/92 $ 66.8 $ 98.4 $136.1
12/93 $ 98.2 $123.9 $149.8
12/94 $ 84.8 $123.1 $151.7
</TABLE>
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The next graph compares the cumulative stockholder return of the Company
with the same indexes, but over a four-year period from year-end 1990 through
year-end 1994, the period roughly coinciding with the tenure of the Company's
current senior management team.
COMPARISON OF FOUR YEAR CUMULATIVE TOTAL RETURN* AMONG
PANHANDLE EASTERN CORP., S&P 500 STOCK INDEX, AND DOW JONES PIPELINE GROUP
(* Total return assumes quarterly reinvestment of dividends)
<TABLE>
<CAPTION>
Measurement Period Panhandle Dow Jones
(Fiscal Year Covered) Eastern Pipelines S&P 500
<S> <C> <C> <C>
12/90 $100.0 $100.0 $100.0
12/91 $135.0 $ 97.5 $130.5
12/92 $155.7 $120.5 $140.4
12/93 $228.7 $151.7 $154.6
12/94 $197.4 $150.8 $156.6
</TABLE>
There can be no assurance that the Company's cumulative total return will
continue into the future with the same or similar trends depicted in the graphs
above.
E. COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
To the Company's knowledge, based on information furnished to it and
contained in the reports filed pursuant to Rule 16a-3 of the Securities Exchange
Act of 1934, as well as written representations that no other reports were
required, all applicable Section 16(a) filing requirements were complied with
during the year ended December 31, 1994.
F. OTHER MATTERS
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("Peat Marwick") served as the Company's independent
auditor during 1994, and was again appointed by the Board to serve in that
capacity for 1995. Representatives of Peat Marwick will be present at the Annual
Meeting to respond to appropriate questions from stockholders and to make a
statement if they desire to do so.
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OTHER MATTERS BEFORE THE MEETING
It is not expected that any other matters will come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the persons named in the accompanying form of proxy to
vote such proxy in accordance with their judgment on such matters.
It is important that the proxies be returned promptly. All stockholders,
whether or not they expect to attend the Annual Meeting in person, are urged to
mark, sign, date, and return the accompanying form of proxy in the enclosed
pre-addressed envelope, which requires no postage if mailed in the United
States.
BY ORDERS OF THE BOARD OF DIRECTORS,
/s/ ROBERT W. REED
------------------------------------
Robert W. Reed
Secretary
Dated: March 13, 1995
Houston, Texas
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[Recycled Paper Logo]
<PAGE> 27
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[PANHANDLE EASTERN LOGO]
<TABLE>
<S> <C> <C>
PROXY PLEASE MARK
P.O. Box 1642 VOTE / / OR /X/
Houston, Texas
77251-1642
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 26, 1995
As evidenced by the signature(s) on the reverse side hereof, the
undersigned hereby appoints James B. Hipple, Carl B. King, and
Robert W. Reed, and any one of them, as Proxies, each with full
power of substitution, to represent and vote all shares of the
Common Stock of Panhandle Eastern Corporation (the "Company") which
the undersigned would be entitled to vote if personally present at
the Annual Meeting of Stockholders of the Company to be held at the
J.W. Marriott Hotel, 5150 Westheimer, Houston, Texas, on April 26,
1995, at 10:00 A.M., and at any adjournments thereof, with all
powers the undersigned would possess if personally present. This
card also provides voting instructions for shares, if any, held in
the Company's Dividend Reinvestment and Stock Purchase Plan and, if
applicable, shares held in the various employee benefit plans.
ITEM 1--ELECTION OF DULY NOMINATED DIRECTORS (THREE YEAR TERMS)
<TABLE>
<S> <C> <C> <C>
Nominees: Charles W. Duncan, Jr., FOR ALL NOMINEES WITHHELD
Harry E. Ekblom, (EXCEPT AS MARKED (AS TO ALL
Dennis R. Hendrix, and TO THE CONTRARY NOMINEES)
Ralph S. O'Connor AS PROVIDED)
/ / / /
</TABLE>
(To withhold authority to vote for any individual nomi-
nee write that nominee's name in the space provided
below)
-------------------------------------------------------
ITEM 2--ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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THIS PROXY WILL BE VOTED AS DIRECTED,
OR IF NO DIRECTION IS INDICATED
WILL BE VOTED "FOR" ITEM 1.
Dated , 1995
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-------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
-------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
<TABLE>
<S> <C>
When signing as attorney, executor,
administrator, trustee, or guardian, or in
other representative capacities, please give
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE, MARK your full title as such. A Proxy for shares
ANY ADDRESS CORRECTION, DATE, AND RETURN THIS PROXY held in joint ownership should be signed by
USING THE ENCLOSED ENVELOPE. EACH owner.
</TABLE>
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