<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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
EL PASO TENNESSEE PIPELINE CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
[El Paso Tennessee Pipeline Logo]
Dear Series A Preferred Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of El Paso Tennessee Pipeline Co. (the "Company"), which will be held on
Tuesday, May 12, 1998, at 11:00 a.m. (mountain standard time), at The Radisson
Hotel, 7171 North Scottsdale Road, 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
Houston, Texas
March 31, 1998
<PAGE> 3
EL PASO TENNESSEE PIPELINE CO.
1001 LOUISIANA
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
The Annual Meeting of Stockholders of El Paso Tennessee Pipeline Co. (the
"Company") will be held on Tuesday, May 12, 1998, at 11:00 a.m. (mountain
standard time), at The Radisson Hotel, 7171 North Scottsdale Road, Phoenix,
Arizona, for the following purposes:
1. To elect one director by holders of the Company's 8 1/4% Cumulative
Preferred Stock, Series A (the "Series A Preferred Stock");
2. To elect five directors by El Paso Energy Corporation, the sole holder
of the Company's Common Stock; and
3. To transact any other business which may be properly brought before the
Annual Meeting.
The holders of record of Series A Preferred Stock at the close of business
on March 16, 1998, are the only holders of Series A Preferred Stock 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/ David L. Siddall
DAVID L. SIDDALL
Corporate Secretary
Houston, Texas
March 31, 1998
<PAGE> 4
EL PASO TENNESSEE PIPELINE CO.
1001 LOUISIANA
HOUSTON, TEXAS 77002
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1998
This Proxy Statement with the accompanying Notice of Annual Meeting of
Stockholders and proxy card are being mailed to holders of El Paso Tennessee
Pipeline Co.'s (the "Company") 8 1/4% Cumulative Preferred Stock, Series A, no
par value (the "Series A Preferred Stock") beginning on or about March 31, 1998.
The proxy is solicited by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders (the "Annual Meeting") on Tuesday, May 12, 1998.
Shares of Series A Preferred 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 Mr. David L. Siddall, Corporate Secretary, El Paso Tennessee Pipeline Co.,
1001 Louisiana, Houston, Texas 77002, by signing and delivering a subsequently
dated proxy or by attending the Annual Meeting in person and giving notice of
revocation to the Inspector of Election.
The Company has two classes of voting securities. The close of business on
March 16, 1998 was the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. On such date, there
were 1,000 shares of the Company's common stock, $.01 par value (the "Common
Stock") outstanding, all of which are owned by El Paso Energy Corporation
("EPEC"), a wholly owned subsidiary of El Paso Natural Gas Company ("EPG"), and
6,000,000 shares of Series A Preferred Stock outstanding. Holders of record of
the Series A Preferred Stock have the right, voting as a single class, to elect
a number of directors of the Company equal to one-sixth of the directors of the
Company. EPEC, as the owner of all of the outstanding Common Stock has the right
to elect the remaining directors. For a period of at least 10 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 entitled to vote at
the Annual Meeting during ordinary business hours at The Radisson Hotel, 7171
North Scottsdale Road, Phoenix, Arizona.
Holders of Series A Preferred Stock will vote for directors on the basis of
one vote per share and not cumulatively, and the holder(s) of a majority of the
voting power of the outstanding shares of the Company entitled to vote, present
in person or by proxy, will constitute a quorum for the election of directors by
them, provided that where a separate vote by a class is required, a majority of
the outstanding shares of such class present in person or by proxy, will
constitute a quorum. The Company's Board of Directors has set the number of
directors at six. Accordingly, the number of directors to be elected at the
Annual Meeting by the holders of the Series A Preferred Stock is one. One
Inspector of Election, 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, in determining the number of votes cast
for or against a proposal, an abstention by a stockholder will be a vote of
abstention with respect to the proposal voted upon and will not be treated as 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, but a non-vote by a stockholder will be tallied as a
vote "for" the management proposal.
INFORMATION ABOUT THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors has
not met, but has taken actions by unanimous written consent in accordance with
procedures established by the Company's By-laws. The Board of Directors does not
have a nominating, compensation or audit committee or any other committees
performing similar functions, and all such matters which would be considered by
such committees are acted upon by the full Board of Directors.
<PAGE> 5
DIRECTOR COMPENSATION
Directors of the Company who are employees of EPG, or an affiliate of EPG,
receive no compensation for their services as directors of the Company apart
from the compensation they receive as employees of EPG.
Directors of the Company who are not employees of EPG, or an affiliate of
EPG, receive an annual retainer fee of $10,000, and are reimbursed for the usual
and ordinary expenses of meeting attendance.
DIRECTORS ELECTED BY COMMON STOCKHOLDER
The following individuals are the nominees for directors of the Company to
be elected by EPEC, the sole holder of the Company's Common Stock. EPEC has
advised the Company that at the Annual Meeting it intends to elect the five
persons listed below as directors, to hold office for the term of one year and
until his successor has been duly elected and shall qualify:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William A. Wise............. 52 Chairman of the Board, President and Chief Executive
Officer; Director
H. Brent Austin............. 43 Executive Vice President and Chief Financial Officer;
Director
Joel Richards III........... 51 Executive Vice President; Director
Britton White, Jr........... 54 Executive Vice President and General Counsel; Director
Jeffrey I. Beason........... 49 Vice President and Controller; Director
</TABLE>
WILLIAM A. WISE -- Mr. Wise has been Chairman of the Board, President and
Chief Executive Officer ("CEO") and a Director of the Company since December 12,
1996. He has been Chairman of the Board of EPG since January 1994 and CEO of EPG
since January 1990. He is also Chairman of the Board, President and Chief
Executive Officer of EPEC. He was President of EPG from January 1990 until April
1996. He was President and Chief Operating Officer of EPG from April 1989 to
December 1989. From March 1987 until April 1989, Mr. Wise was an Executive Vice
President of EPG. From January 1984 to February 1987, he was a Senior Vice
President of EPG. He is a member of the Board of Directors of EPG and Battle
Mountain Gold Company.
H. BRENT AUSTIN -- Mr. Austin has held the positions identified above since
June 2, 1997. He has been Senior Vice President and Chief Financial Officer and
a Director of the Company from December 12, 1996 to June 1, 1997. He has been
Executive Vice President of EPG since May 1995 and Chief Financial Officer of
EPG since April 1992. He is also Executive Vice President and Chief Financial
Officer of EPEC. He was Senior Vice President of EPG from April 1992 to April
1995. He was Vice President, Planning and Treasurer of Burlington Resources Inc.
from November 1990 to March 1992 and Assistant Vice President, Planning of BR
from January 1989 to October 1990.
JOEL RICHARDS III -- Mr. Richards has held the positions identified above
since June 2, 1997. He has been Senior Vice President and a Director of the
Company from December 12, 1996 to June 1, 1997. He has been Executive Vice
President of EPG since December 1996. He is also Executive Vice President of
EPEC. From January 1991 until December 1996, he was Senior Vice President of
EPG. He was Vice President of EPG from June 1990 to December 1990. He was Senior
Vice President, Finance and Human Resources of Meridian Minerals Company from
October 1988 to June 1990.
BRITTON WHITE, JR. -- Mr. White has held the positions identified above
since June 2, 1997. He has been Senior Vice President and General Counsel and a
Director of the Company from December 12, 1996 to June 1 1997. He has been
Executive Vice President of EPG since December 1996 and General Counsel of EPG
since March 1991. He is also Executive Vice President and General Counsel of
EPEC. He was Senior Vice President and General Counsel of EPG from March 1991
until December 1996. From March 1991 to April 1992, he was also Corporate
Secretary of EPG. For more than five years prior to that time, Mr. White was a
partner in the law firm of Holland & Hart.
2
<PAGE> 6
JEFFREY I. BEASON -- Mr. Beason has been Vice President and Controller and
a Director of the Company since December 12, 1996. He has been Vice President
and Controller of EPG since April 1996 and also was Treasurer of EPG from April
1996 until December 1996. He is also Vice President and Controller of EPEC. He
was Senior Vice President of Administration for Mojave Pipeline Company, a
subsidiary of EPG, from September 1993 until April 1996. For more than five
years prior to September 1993, Mr. Beason was Director of Financial Reporting of
EPG.
PROPOSAL NO. 1 -- NOMINEE FOR ELECTION OF DIRECTOR
BY SERIES A PREFERRED STOCKHOLDERS
The number of directors to be elected by the holders of Series A Preferred
Stock is one. If elected, the nominee will hold office for the 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 holders of
Series A Preferred Stock, the persons named on the enclosed proxy card will vote
the shares of Series A Preferred Stock represented by such proxy for the
election of the one nominee named in this Proxy Statement. However, if the named
nominee should be unavailable for election, the Board of Directors may
substitute a nominee, in which event the shares of Series A Preferred Stock
represented by proxy will be voted for the substitute nominee unless an
instruction to the contrary is contained on the proxy card. No circumstances are
presently known which would render the nominee named herein unavailable to serve
as a member of the Company's Board of Directors. Pursuant to the Company's
Certificate of Incorporation and By-laws, the election of each director requires
an affirmative vote of a plurality of the shares of Series A Preferred Stock
represented at the Annual Meeting in person or by proxy and entitled to vote on
the proposal. Holders of Series A Preferred Stock may not cumulate their votes
for the election of the director. The following provides information about the
nominee:
KENNETH L. SMALLEY, age 68, has been retired since February 1992. For
more than five years prior to that date, Mr. Smalley was a Senior Vice
President of Phillips Petroleum Company and President of Phillips 66
Natural Gas Company, a Phillips Petroleum Company subsidiary. Mr.
Smalley has been a member of the Board of Directors of EPG since 1992.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE HOLDERS OF SERIES A PREFERRED STOCK
VOTE "FOR" THE ELECTION OF THE NOMINEE NAMED ABOVE.
SECURITY OWNERSHIP OF BENEFICIAL
OWNERS AND MANAGEMENT OF THE COMPANY
No Common Stock or Series A Preferred Stock is held by any director,
executive officer or nominee. No family relationship exists between any of the
directors, executive officers, and nominee of the Company. The following
information relates to the only persons or entities known to the Company to be
the beneficial owners, as of February 28, 1998, of more than five percent of any
class of the Company's voting securities.
<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF PERCENT
CLASS NAME BENEFICIAL OWNERSHIP OF CLASS
-------- ---- -------------------- --------
<S> <C> <C> <C>
Common Stock El Paso Energy Corporation(1).............. 1,000 shares 100%
1001 Louisiana
Houston, Texas 77002
8 1/4% Cumulative Preferred Travelers Group Inc.(2).................... 500,700 shares 8.3%
Stock, Series A 388 Greenwich Street
New York, New York 10013
</TABLE>
- ---------------
(1) EPEC is a wholly owned subsidiary of EPG.
(2) The information is based on a Schedule 13G dated February 6, 1998, with
respect to beneficial ownership of the 8 1/4% Cumulative Preferred Stock,
Series A, as of December 31, 1997. The indicated shares are held by
Travelers Group Inc. and subsidiaries thereof, which have shared voting and
dispositive power with respect to such shares.
3
<PAGE> 7
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT OF EPG
The following information sets forth certain information as of February 28,
1998, regarding the beneficial ownership of EPG's common stock by (i) each
director, (ii) each of the Company's named executives (as hereinafter defined),
(iii) the nominee, (iv) all directors, executive officers, and nominee of the
Company as a group, and (v) each person known to EPG to be the beneficial owner
of at least 5% of any class of EPG's voting securities.
<TABLE>
<CAPTION>
AMOUNT & NATURE OF
TITLE OF NAME OF BENEFICIAL OWNERSHIP STOCK
CLASS BENEFICIAL OWNER (EXCLUDING OPTIONS)(1) OPTIONS(3) TOTAL %
-------- ---------------- ----------------------- ---------- --------- ----
<S> <C> <C> <C> <C> <C>
Common Stock Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
38th Floor
New York, NY 10036.......... 3,452,971 0 3,452,971 5.68%
Common Stock Oppenheimer Capital
Oppenheimer Tower
World Financial Center
New York, NY 10281.......... 3,120,655 0 3,120,655 5.13%
Common Stock K. L. Smalley............... 12,367 6,000 18,367 *
Common Stock W. A. Wise.................. 568,573(2) 586,592 1,155,165 1.88%
Common Stock H. B. Austin................ 84,185 101,505 185,690 *
Common Stock B. White, Jr................ 86,357 86,400 172,757 *
Common Stock J. Richards III............. 84,161 86,400 170,561 *
Common Stock J. I. Beason................ 39,342 86,200 125,542 *
Total Directors and
Executive Officers(6)....... 874,985 953,097 1,828,082 2.96%
</TABLE>
- ---------------
* Less than 1%.
(1) Directors and executive officers have sole voting and investment power of
the shares of EPG common stock reflected in the table above, except that
each of Messrs. Wise, Austin and White shares with one or more other
individuals voting and investment power with respect to 5,400, 159 and 1,000
shares of EPG common stock, respectively. As of December 31, 1997, Morgan
Stanley, Dean Witter, Discover & Co. had shared voting power over 3,441,924
shares of EPG common stock and shared dispositive power over 3,452,971
shares of EPG common stock. Oppenheimer Capital has shared voting and
dispositive power over 3,120,655 shares of EPG common stock. All the shares
of EPG common stock reflected in the table above are on a pre-stock split
basis.
(2) Mr. Wise's beneficial ownership excludes 200 shares of EPG 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
EPG common stock reflected in this column within 60 days through the
exercise of stock options and/or tandem stock appreciation rights ("SARs").
4
<PAGE> 8
RELATIONSHIPS WITH EL PASO ENERGY CORPORATION AND
EL PASO NATURAL GAS COMPANY
The Company is a direct subsidiary of EPEC, and an indirect subsidiary of
EPG. EPEC owns 100% of the Company's outstanding Common Stock and has the right
to elect five-sixths of the Company's directors. Until December 12, 1996, the
Company's Common Stock was publicly held. The Company has no formal business
relationships with either EPEC or EPG; however, the Company, EPEC and EPG share
certain office space, personnel and other administrative services. The costs of
such services are allocated by EPG to the respective companies.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid by
EPG to the person serving as the Company's CEO or acting in a similar capacity
during the last completed fiscal year, and the Company's three other most highly
compensated executive officers (collectively the "named executives") for
services rendered to EPG and its subsidiaries in all capacities during each of
the last three fiscal years. The Company does not have any executive officers
other than the named executives. The table also identifies the principal
capacity in which each of the named executives served the Company at the end of
fiscal year 1997. None of these persons received any compensation from the
Company for their services as executive officers of the Company.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ ----------------------------------------
AWARDS PAYOUTS
------------------------- ------------
OTHER SECURITIES LONG-TERM
ANNUAL RESTRICTED UNDERLYING INCENTIVE ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PLAN PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(3) ($)(4) ($)(5) (#) ($)(7) ($)(8)
------------------ ---- -------- ---------- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Wise 1997 -- $1,105,000 $203,182 $1,104,971 -- -- $106,209
Chairman, 1996 -- (2) $1,275,000 $124,967 $3,537,481(6) 395,000 $740,000 $ 69,731
President & CEO, 1995 $535,417 $ 412,500 $229,943 $ 412,487 62,000 -- $ 93,457
EPEC
H. Brent Austin 1997 $300,000 $ 330,000 $ 93,435 $ 329,970 -- -- $ 36,150
Executive Vice 1996 $228,125 $ 450,000 $ 178 $ 149,987 60,000 $176,658 $ 22,855
President & Chief 1995 $213,750 $ 168,750 $ 80,738 $ 168,735 15,000 -- $ 24,059
Financial Officer,
EPEC
Britton White, Jr. 1997 $275,000 $ 302,500 $ 34,899 $ 302,472 -- -- $ 35,219
Executive Vice 1996 $203,125 $ 412,500 $ 223 $ 137,472 60,000 $133,145 $ 20,550
President & 1995 $185,417 $ 120,000 $ 80,841 $ 119,978 15,000 -- $ 25,405
General Counsel,
EPEC
Joel Richards III 1997 $275,000 $ 302,500 $ 27,514 $ 302,472 -- -- $ 35,088
Executive Vice 1996 $183,958 $ 412,500 $ 223 $ 137,472 60,000 $133,145 $ 21,361
President, EPEC 1995 $168,333 $ 108,000 $ 80,841 $ 107,993 15,000 -- $ 27,313
</TABLE>
- ---------------
(1) The Company did not have any executive officer terminate employment during
fiscal year 1997 who would otherwise have been included as a named
executive in this table.
(2) Mr. Wise's base salary was eliminated in 1996 and replaced with long-term
awards of EPG stock options and EPG restricted stock, the majority of which
vest only after the expiration of specified time periods and only if
certain performance targets are met within those periods. This change was
consistent with EPG's cost reduction initiatives and was intended to align
Mr. Wise's compensation more directly with stockholder value.
5
<PAGE> 9
(3) Pursuant to EPG's 1995 Incentive Compensation Plan, the named executives
are required to receive a substantial part of their annual bonus in
restricted EPG common stock. The amounts reflected in this column represent
a combination of the market value of the restricted common stock and cash
awarded under that plan. Dividends are paid directly to the holder of the
restricted EPG common stock during the four-year vesting schedule. The
amounts reflected for 1996 include an additional one-time cash bonus
awarded under EPG's 1995 Incentive Compensation Plan in recognition of the
extraordinary accomplishments achieved during 1996.
(4) The amount reflected for Mr. Wise in fiscal year 1997 includes, among other
things, a tax gross-up associated with his relocation to Houston and
$85,167 for a perquisite and benefit allowance. The amount reflected for
Mr. Wise for fiscal year 1996 includes a $48,000 perquisite and benefit
allowance and a one-time living allowance in the amount of $45,833 paid
prior to the compensation changes discussed in Note 2 above. The amounts
reflected in this column for fiscal year 1995 include a one-time automobile
transfer to compensate the named executive for the termination of
EPG-provided automobile program and an allowance compensating for the
discontinuation of other perquisites and benefits previously provided. For
fiscal year 1995 these amounts were $40,999 (representing termination of
the automobile program) and $36,000 (representing termination of other
executive perquisites and benefits) for Messrs. Austin, White and Richards.
For Mr. Wise, the value representing the termination of the automobile
program was $105,000 in fiscal year 1995. The amounts reflected for fiscal
year 1997 for the other named executives are tax gross-ups associated with
their relocation to Houston. The aggregate value of the perquisites and
other personal benefits received by the other named executives in fiscal
years 1997 and 1996 have not been reflected because the amount was below
the Securities and Exchange Commission's (the "SEC") required reporting
threshold.
(5) EPG's 1995 Incentive Compensation Plan provides for and encourages
participants to elect to take the cash portion of their annual bonus award
in shares of EPG restricted common stock. The amounts reflected in this
column include the market value of EPG restricted common stock on the date
of grant, subject to a four-year vesting schedule, received by each of the
named executives pursuant to such election. The total shares of EPG
restricted common stock plus all other EPG restricted stock held on
December 31, 1997 by Messrs. Wise, Austin, White and Richards was 473,272,
76,748, 73,140 and 72,376, respectively. The aggregate dollar value on
December 31, 1997, of all shares of EPG restricted common stock held by
Messrs. Wise, Austin, White and Richards was $31,472,588, $5,103,742,
$4,863,810 and $4,813,004, respectively. Dividends are paid directly to the
holder of the EPG restricted common stock. Most of the foregoing values can
be realized by the named executives if, and only if, they remain in the
employ of EPG for the specified time period and EPG's stockholders realize
the required total stockholder value during the specified time period.
(6) The amount reflected for Mr. Wise also includes the market value of a
one-time retention oriented EPG restricted common stock grant of 100,000
shares, which began vesting on January 19, 1997 at the rate of 20% per year
for five years.
(7) The amounts in this column for fiscal year 1996 represent the market value
for EPG common stock and/or cash paid as an interim payout of performance
units under EPG's 1995 Omnibus Compensation Plan. The interim payment was
made in recognition of EPG's total stockholder return in relation to that
of its peer group of companies during the first two years of the
performance period. No named executive received a long-term incentive plan
payout from EPG during fiscal years 1997 and 1995.
(8) The compensation reflected in this column for fiscal year 1997 is comprised
of EPG contributions to EPG's Retirement Savings Plan, supplemental EPG
contributions under the Supplemental Benefits Plan and the above-market
interest earned on deferred compensation. Specifically, these amounts for
fiscal year 1997 were $7,200, $88,425 and $10,584 for Mr. Wise; $7,200,
$26,550 and $2,400 for Mr. Austin; $7,200, $23,737 and $4,282 for Mr.
White; and $7,200, $23,737 and $4,151 for Mr. Richards, respectively.
STOCK OPTION GRANTS
No stock options were granted by the Company or EPG to Messrs. Wise,
Austin, Richards and White during the fiscal year 1997. The Company has no stock
option plan or program, and there are no options outstanding in respect of any
class of the Company's equity securities, including the Series A Preferred
Stock.
6
<PAGE> 10
EPG OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the number of shares
of EPG's common stock that were acquired through option exercises of EPG common
stock options and the fiscal year-end values of the unexercised EPG stock
options (and tandem SARs), provided on an aggregate basis, for each of the named
executives. The options held by the named executives were granted pursuant to
EPG benefit plans, and are not options to acquire any stock of the Company. The
Company has no stock option plan or program.
AGGREGATED EPG OPTION/SAR EXERCISES IN 1997
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS
SHARES ACQUIRED VALUE YEAR-END(#) AT FISCAL YEAR-END($)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Wise........ 0 $ 0 507,592 316,000 $20,140,370 $10,870,625
H. Brent Austin........ 30,211 $1,186,727 81,504 40,001 $ 2,995,072 $ 1,373,783
Britton White, Jr...... 0 $ 0 66,399 40,001 $ 2,272,392 $ 1,373,783
Joel Richards III...... 6,333 $ 259,653 66,399 40,001 $ 2,272,392 $ 1,373,783
</TABLE>
- ---------------
(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 these columns have been calculated based upon the
difference between $66.84375, the fair market value of the Common Stock on
December 31, 1997 for each in-the-money stock option/SAR, and its exercise
price. Mr. Wise has tandem SARs attached to some of his stock options. If
his stock options are exercised, the tandem SARs expire and vice versa. The
exercise of a tandem SAR would have a value equivalent to the exercise of a
stock option.
EPG PENSION PLAN
Set forth below is a table describing EPG's Pension Plan in which the named
executives, as well as other employees of EPG and its subsidiaries may be
entitled to participate. The following table lists current annual retirement
benefits under the Pension Plan and EPG's Supplemental Benefits Plan
(collectively, the "Plans") 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 IRC provisions, compensation in
excess of $160,000 cannot be taken into account and the maximum payable benefit
in 1997 is $125,000. Any excess benefits otherwise accruing under the Pension
Plan are payable under the Supplemental Benefits Plan.
Estimated annual benefit levels under the Plans, based on earnings and
years of credited service at the normal retirement age, are reflected on the
following table:
EPG PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE AT NORMAL RETIREMENT AGE
FINAL AVERAGE --------------------------------------------
PENSION EARNINGS 15 20 25 30
- ---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000....................................... 46,290 61,720 77,150 92,580
$ 400,000........................................ 94,290 125,720 157,150 188,580
$ 600,000........................................ 142,290 189,720 237,150 284,580
$ 800,000........................................ 190,290 253,720 317,150 380,580
$1,000,000....................................... 238,290 317,720 397,150 476,580
$1,200,000....................................... 286,290 381,720 477,150 572,580
$1,400,000....................................... 334,290 445,720 557,150 668,580
$1,600,000....................................... 382,290 509,720 637,150 764,580
$1,800,000....................................... 430,290 573,720 717,150 860,580
</TABLE>
7
<PAGE> 11
Benefits which accrue under the Plans are based upon the gross salary
amount, including base incentive bonus amounts, but excluding all commissions
and other compensation or benefits of any kind (including risk premium
restricted stock, as described on page 11 of this Proxy Statement). For the
named executives, the amounts reflected in the Salary and Bonus columns of the
"Summary Compensation Table" are considered to calculate benefits under the
Plans. 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, Austin, White and Richards are 30, 30,
25 (including 7 years of credited service pursuant to Mr. White's employment
agreement, which is described on page 10 of this Proxy Statement), and 30,
respectively.
Effective January 1, 1997, EPG amended its noncontributory defined benefit
Pension Plan to determine benefits by a cash balance formula in which the named
executives, as well as other employees of EPG and its subsidiaries, may be
entitled to participate. During a five-year transition period, ending December
31, 2001, eligible participants will continue to accrue a minimum benefit under
the previous formula, as described above. On December 31, 2001, this benefit
will be frozen. The actual benefit paid to participants with a minimum benefit
will be the greater of the minimum benefit or the cash balance benefit. Under
the cash balance formula, participants each have a cash account which is
credited quarterly with a percentage of earnings. The annual percentage is based
on a combination of age and service as shown below:
<TABLE>
<CAPTION>
IF AGE PLUS PAY CREDIT SERVICE ON THE APPLICABLE ANNUAL %
THE PRECEDING DECEMBER 31 IS: OF EARNINGS IS:
--------------------------------- -----------------------
<S> <C>
Under 35............................................ 4%
35 through 49....................................... 5%
50 through 64....................................... 6%
65 or over.......................................... 7%
</TABLE>
At the end of each quarter, accounts are also credited with interest
applied to the beginning quarter balance. Participants who were participants on
December 31, 1996 and eligible employees on January 1, 1997, were credited with
an initial cash balance equivalent to accrued benefits on December 31, 1996.
Estimated annual benefits payable upon retirement at the normal retirement
age for each of the named executives is reflected below (based on assumptions
that each named executive receives no pay increases, receives maximum bonuses
and cash balances are credited with interest at a rate of 3% per annum):
<TABLE>
<CAPTION>
ESTIMATED
ANNUAL
BENEFIT
---------
<S> <C>
William A. Wise............................................. $812,580
H. Brent Austin............................................. $159,561
Britton White, Jr........................................... $158,520
Joel Richards III........................................... $155,624
</TABLE>
BOARD REPORT ON EXECUTIVE COMPENSATION
Because the Company does not have a compensation committee or another
committee performing similar functions, this report is presented by the full
Board of Directors.
8
<PAGE> 12
All of the executive officers of the Company are employees of EPG and EPG
determines the compensation of all of its employees in accordance with its own
policies and plans. The Company does not have any role in setting those policies
and plans or in determining compensation levels for EPG employees. The
Compensation Committee of the Board of Directors of EPG establishes compensation
policies, programs and plans for EPG and its subsidiaries, which are designed to
attract, motivate and retain competent executive personnel for EPG and its
subsidiaries.
In making its decision with respect to executive compensation, the
Compensation Committee of EPG considers the provisions of Section 162(m) of the
IRC which generally affects EPG's federal income tax deduction for compensation
paid to its chief executive officer and four other highest paid executive
officers.
The Compensation Committee of EPG has neither interlocks nor insider
participation. The Board of Directors of the Company believes that all
stockholders of the Company have an opportunity to benefit from the application
of the policies and plans of EPG.
Members of the Board of Directors of the Company
H. Brent Austin
Jeffrey I. Beason
Joel Richards III
Kenneth L. Smalley
Britton White, Jr.
William A. Wise
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
EPG 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. Mr. Wise's compensation and
benefits are determined under EPG plans and programs in effect from time to
time. If Mr. Wise's employment is terminated involuntarily, without cause, or is
voluntarily terminated by Mr. Wise for "good reason" (as defined in the EPG
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" of EPG (as defined in the EPG
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 EPG's applicable plans. Mr. Wise
will also be entitled to pension benefits under the terms of EPG'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 EPG
or his voluntary termination of the agreement for "good reason" pursuant to six
months prior written notice to EPG 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. EPG entered into a
letter agreement with Mr. Wise dated January 13, 1995, which provides that in
the event of termination of Mr. Wise's employment due to death, retirement,
permanent disability, any other involuntary termination without cause or any
other voluntary termination for good reason, the restriction period for EPG
restricted common stock held by Mr. Wise shall lapse and all restrictions
thereon shall end (but only to the extent the performance targets have been
achieved on the performance based EPG restricted common stock), and unvested EPG
stock options shall become immediately exercisable, subject to applicable law,
for a period
9
<PAGE> 13
of thirty-six months, unless such EPG stock options expire sooner in accordance
with their terms. In order to squarely align Mr. Wise's compensation with the
interests of EPG's stockholders, the Compensation Committee of EPG replaced his
salary with a long-term incentive in the form of EPG restricted common stock
(the majority of which will not vest unless certain performance measures are
attained by EPG and, in that event, only after a certain specified time) and a
grant of EPG stock options. As a result, Mr. Wise's employment agreement was
amended to establish an illustrative base salary for certain of EPG's benefits
and welfare plans during 1996. During 1997, EPG loaned Mr. Wise $1,564,000 for
the purchase of his home in Houston in connection with EPG's relocation. The
loan and interest (at 6.8%) thereon is payable at the end of ten years, or at
the time of Mr. Wise's retirement from EPG, whichever is earlier. The loan is
secured by Mr. Wise's Houston residence. In the event of a "change in control"
(as defined in the Severance Plan) and Mr. Wise meets all the requirements for a
severance benefit under the Severance Plan, he will not be required to repay the
loan and accrued interest and he may be entitled to a payment to cover any
adverse tax consequences (as provided in the Severance Plan).
EPG entered into a letter agreement with Mr. White dated February 22, 1991,
which provides that Mr. White is entitled to additional years of credited
service with respect to pension benefits which are payable under EPG's
Supplemental Benefits Plan if he remains employed with EPG until the specified
age set forth in his letter agreement.
EPG has a Key Executive Severance Protection Plan (the "EPG Severance
Plan") which provides severance benefits following a "change in control" (as
defined below) of EPG for all officers of EPG and certain of its subsidiaries
(including the named executives of the Company) in an amount equal to three
times annual salary, including maximum bonus amounts as specified in the plan.
The EPG 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 EPG, as well as a supplemental
pension payable under EPG's Supplemental Benefits Plan calculated by adding
three years of additional credited pension service and certain other benefits.
Benefits are payable under the EPG Severance Plan for any termination of
employment within two years of the date of a "change in control" of EPG, except
where termination is by reason of death, disability, for cause or instituted by
the employee for other than "good reason." The EPG Severance Plan provides that
certain additional payments will be made to terminated participants following a
"change in control" of EPG if the participant's payments are subjected to a
specified adverse excise tax. The EPG Severance Plan also provides that EPG will
pay legal fees and expenses incurred by a participant to enforce rights or
benefits under the plan. For purposes of the plan, a "change in control" of EPG
is deemed to occur if (a) any person or entity becomes the beneficial owner of
20% or more of EPG's outstanding voting securities, (b) any person or entity
purchases EPG's common stock pursuant to a tender offer or exchange offer, other
than a tender offer or exchange offer made by EPG, (c) the stockholders of EPG
approve a merger or consolidation, a sale or disposition of all or substantially
all of EPG's assets or a plan of liquidation or dissolution of EPG, or (d) there
occurs an unapproved change in the constitution of the majority of the Board of
Directors of EPG within a two-year period. Notwithstanding the foregoing, a
"change in control" of EPG will not be deemed to have occurred if EPG is
involved in a merger, consolidation or sale of assets which is in connection
with a corporate restructuring wherein stockholders of EPG immediately before
such transaction own at least 80% of the combined voting power of all
outstanding classes of securities of the company resulting from such transaction
in substantially the same proportion as their ownership in EPG immediately prior
to such transaction.
EPG's 1995 Omnibus Compensation Plan provides that EPG stock options, EPG
SARs, limited stock appreciation rights ("LSARs"), PUs and EPG restricted stock
may be granted to officers and key employees of EPG and its subsidiaries
(including the named executives of the Company). The Plan 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 EPG occurs, all outstanding stock options
become fully exercisable, EPG SARs and LSARs become immediately exercisable,
designated amounts of PUs become fully vested and all restrictions placed on
awards of restricted stock automatically lapse. For purposes of the plan, the
term "change in control" of EPG has the same meaning given such term in the EPG
Severance Plan.
10
<PAGE> 14
EPG's Omnibus Compensation Plan, which is the predecessor plan to EPG's
1995 Omnibus Compensation Plan, provided for the grant of EPG stock options, EPG
SARs and LSARs, performance share units and EPG restricted stock to officers and
key employees of EPG and its subsidiaries (including the named executives of the
Company). Although this plan has been terminated with respect to any new grants,
certain EPG stock options and SARs remain outstanding thereunder. Pursuant to
the terms of the plan, if a "change in control" of EPG occurs, all outstanding
stock options become fully exercisable and SARs become immediately exercisable.
For purposes of the plan, the term "change in control" of EPG has the same
meaning given such term in the EPG Severance Plan, except that the definition
does not include the exclusion dealing with mergers, consolidations or sales of
assets of EPG in connection with a corporate restructuring of EPG.
Under EPG's 1995 Incentive Compensation Plan, awards of cash and/or shares
of EPG restricted common stock may be granted to eligible officers of EPG and
its subsidiaries (including the named executives of the Company). The amount of
awards available (subject to a plan maximum and as established by the Plan
Administrator (as defined in the plan) per participant annually) and the
performance goals upon which the awards are contingent are determined by the
Plan Administrator. Depending upon the participant's position and the terms of
the grant, each participant is required to take between 25% and 100% of the
incentive award in shares of EPG restricted common stock, but may elect to
receive the entire incentive award in shares of EPG restricted common stock. A
participant who receives any shares of EPG restricted common stock shall receive
additional shares of EPG restricted common stock of an equal amount because the
participant bears the risk of forfeiture, price fluctuation and other attendant
risks during the period in which the restrictions apply ("risk premium
restricted stock"). Pursuant to the terms of the plan, if a "change in control"
of EPG occurs, the current year's maximum incentive award for each officer (with
a maximum of 100% of the participant's annual salary) becomes fully payable
within 30 days following such "change in control." For purposes of the plan, the
term "change in control" of EPG has the same meaning given such term in the EPG
Severance Plan.
The El Paso Energy Corporation Strategic Stock Plan provides that EPG stock
options, EPG SARs, LSARs and EPG restricted stock may be granted to officers and
key employees of EPG and its subsidiaries (including the named executives of the
Company) in connection with EPG's strategic acquisitions. 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 EPG occurs, all outstanding EPG stock options become fully
exercisable, EPG SARs and LSARs become immediately exercisable and all
restrictions placed on awards of restricted stock automatically lapse. For
purposes of the plan, the term "change in control" of EPG has the same meaning
given such term in the EPG Severance Plan.
EPG's Supplemental Benefits Plan provides benefits to officers and key
employees of EPG and its subsidiaries (including the named executives of the
Company). The benefits equal the amount that a participant failed to receive
under EPG's Pension Plan because the Pension Plan does not consider deferred
compensation (whether in deferred cash or deferred EPG restricted common stock)
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 EPG's matching contribution to EPG'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 EPG Pension Plan
and/or EPG Retirement Savings Plan remain in effect. The Management Committee
(as defined in the plan) designates who may participate and administers the
plan. Benefits under EPG's Supplemental Benefits Plan are paid upon termination
of employment in a lump-sum payment, in annuity or in periodic installments. In
the event of a "change in control" of EPG, the supplemental pension benefits
become fully vested and nonforfeitable. For purposes of the plan, the term
"change in control" of EPG has the same meaning given such term in the EPG
Severance Plan.
EPG's Deferred Compensation Plan allows eligible executives and key
management employees of EPG and its subsidiaries (including the named executives
of the Company) to defer all or a portion of their base salaries and any other
deferrals made in accordance with certain of EPG's compensation plans. The
11
<PAGE> 15
Management Committee (as defined in the plan) designates the executives and key
management employees 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.
EPG has a Senior Executive Survivor Benefits Plan which provides certain
senior executives of EPG and its subsidiaries (including the named executives of
the Company), 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 EPG'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.
EPG had a Domestic Relocation Plan, under which EPG is obligated, upon the
termination of employment (as a result of death, retirement, permanent
disability or in the event of a change in control) of the named executives, to
purchase their residences in Houston which they acquired during EPG's relocation
from El Paso to Houston in 1997.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P., 1100 Louisiana, Suite 4100, Houston, Texas 77002,
has served as independent certified public accountants of EPG since 1983 and has
been designated to serve as the Company's independent certified public
accountants for fiscal year 1998. 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.
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 $6,000, 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 Series A Preferred 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 Series A Preferred
Stock.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. If, however, any other matters should come before the
Annual Meeting all proxies 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) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, certain officers and beneficial owners of 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, officers and beneficial owners of more than 10% of
the Company's equity securities are
12
<PAGE> 16
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
and amendments provided to it, the Company believes that all filing requirements
were complied with during the fiscal year ended December 31, 1997.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals submitted by holders of Series A Preferred Stock for inclusion in
the Proxy Statement to be issued in connection with the Company's 1998 Annual
Meeting of Stockholders must be mailed to the Corporate Secretary, El Paso
Tennessee Pipeline Co., 1001 Louisiana, Houston, Texas 77002, and must be
received by the Corporate Secretary on or before November 30, 1998. The Company
will consider only proposals meeting the requirements of applicable SEC rules.
ANNUAL REPORT
A copy of the Company's 1997 Annual Report on Form 10-K is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Holders of Series A Preferred Stock not receiving a copy of such Annual
Report on Form 10-K may obtain one by writing or calling Mr. David L. Siddall,
Corporate Secretary, El Paso Tennessee Pipeline Co., 1001 Louisiana, Houston,
Texas 77002, telephone (713) 757-6195.
By Order of the Board of Directors
/s/ David L. Siddall
DAVID L. SIDDALL
Corporate Secretary
Houston, Texas
March 31, 1998
13
<PAGE> 17
1107-EPTPS-98
<PAGE> 18
DETACH HERE
SOLICITED BY THE BOARD OF DIRECTORS
EL PASO TENNESSEE PIPELINE CO.
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
The undersigned hereby appoints William 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 8 1/4% Cumulative Preferred Stock, Series A, of El Paso Tennessee
Pipeline Co., held of record by the undersigned on March 16, 1998 at the Annual
Meeting of Stockholders to be held at The Radisson Hotel, 7171 North Scottsdale
Road, Phoenix, Arizona on May 12, 1998, 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 the named nominee
for Director 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 proposal 1.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
[SEE REVERSE SIDE]
<PAGE> 19
DETACH HERE
<TABLE>
<S> <C>
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR proposal 1.
1. Election of Director.
Nominee: Kenneth L. Smalley
WITHHOLD
FOR AUTHORITY TO VOTE
THE NOMINEE [ ] [ ] FOR THE NOMINEE
LISTED ABOVE LISTED ABOVE
[ ] MARK HERE FOR COMMENTS [ ]
------------------------------
For nominee written above MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
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.
Signature: Date: Signature: Date:
------------------------- ----- -------------------------- -----
</TABLE>
