--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K/A
(AMENDMENT NO. 1)
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 1-14365
EL PASO CORPORATION
(FORMERLY EL PASO ENERGY CORPORATION)
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 76-0568816
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
EL PASO BUILDING
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
TELEPHONE NUMBER: (713) 420-2600
INTERNET WEBSITE: WWW.ELPASO.COM
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, par value $3 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ].
STATE THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY
HELD BY NON-AFFILIATES OF THE REGISTRANT.
Aggregate market value of the voting stock (which consists solely of shares
of common stock) held by non-affiliates of the registrant as of June 28, 2002,
computed by reference to the closing sale price of the registrant's common stock
on the New York Stock Exchange on such date: $12,055,450,292.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Common Stock, par value $3 per share. Shares outstanding on April 25, 2003:
599,116,973
DOCUMENTS INCORPORATED BY REFERENCE
None.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXPLANATORY NOTE
This Annual Report on Form 10-K/A for the fiscal year ended December 31,
2002 is being filed for the purpose of providing the disclosure required by
Items 10, 11, 12 and 13 of Part III of Form 10-K relating to (i) our directors
and executive officers, (ii) executive compensation, (iii) security ownership of
certain beneficial owners and management and related stockholder matters, and
(iv) certain relationships and related transactions.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
General Information about Directors who are the Nominees for Election, as
of April 7, 2003. The following sets forth information regarding the directors
of El Paso who have been nominated by El Paso's Board of Directors for
re-election at El Paso's 2003 Annual Meeting of Stockholders.
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING DIRECTOR
------------------------------
JOHN M. BISSELL Director since 2001
Chairman of the Board,
BISSELL Inc.,
Grand Rapids, Michigan -- Floor Care
Appliance and Detergent Manufacturer
Age -- 72
Lead Director
Member -- Audit Committee
Member -- Compensation Committee
Mr. Bissell served as a director of The Coastal Corporation from 1985 to January
2001. During the past five years, Mr. Bissell has been the Chairman of the Board
of BISSELL Inc. He has served in various executive capacities at BISSELL Inc.
since 1966. Mr. Bissell served as a director of American Natural Resources
Company, parent holding company of ANR Pipeline Company, from May 1983 to June
1996, at which time there was a reduction in the number of directors, and he did
not stand for re-election.
JUAN CARLOS BRANIFF Director since 1997
Vice Chairman,
Grupo Financiero BBVA Bancomer,
Mexico City, Mexico -- Commercial Banking Institution
Age -- 45
Chairman -- Audit Committee
Member -- Finance Committee
Mr. Braniff has served as Vice Chairman of Grupo Financiero BBVA Bancomer since
October 1999. He served as Deputy Chief Executive Officer of Retail Banking from
September 1994 to October 1999. He served as Executive Vice President of Capital
Investments and Mortgage Banking from December 1991 to September 1994. Mr.
Braniff is currently a member of the board of directors of Fomento Economico
Mexicano, S.A. de C.V. and Coca Cola FEMSA, S.A. de C.V.
1
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING DIRECTOR
------------------------------
JAMES L. DUNLAP Director since 2003
Business Consultant
Age -- 65
Member -- Compensation Committee
Member -- Governance Committee
Mr. Dunlap's primary occupation has been as a business consultant since 1999. He
served as Vice Chairman, President and Chief Operating Officer of Ocean
Energy/United Meridian Corporation from 1996 to 1999. He was responsible for
exploration and production and the development of the international exploration
business. For 33 years prior to that date, Mr. Dunlap served Texaco, Inc. in
various positions, including Senior Vice President, President of Texaco USA,
President and Chief Executive Officer of Texaco Canada Inc. and Vice Chairman of
Texaco Ltd., London. Mr. Dunlap is currently a member of the board of directors
of Massachusetts Mutual Life Insurance Company and a member of the corporation of
Woods Hole Oceanographic Institution.
ROBERT W. GOLDMAN Director since 2003
Business Consultant
Age -- 60
Chairman -- Finance Committee
Member -- Audit Committee
Mr. Goldman's primary occupation has been as a business consultant since October
2002. He served as Senior Vice President, Finance and Chief Financial Officer of
Conoco Inc. from 1998 to 2002 and Vice President, Finance from 1991 to 1998. For
more than five years prior to that date he held various executive positions with
Conoco Inc. and E.I. Du Pont de Nemours & Co., Inc. Mr. Goldman was also formerly
Vice President and Controller of Conoco Inc. and Chairman of the Accounting
Committee of the American Petroleum Institute.
ANTHONY W. HALL, JR. Director since 2001
City Attorney,
City of Houston, Texas
Age -- 58
Member -- Governance Committee
Member -- Finance Committee
Mr. Hall served as a director of The Coastal Corporation from August 1999 until
January 2001. Mr. Hall has been City Attorney of the City of Houston since March
1998 and prior to that was a partner in the Houston law firm of Jackson Walker,
LLP.
RONALD L. KUEHN, JR. Director since 1999
Chairman of the Board
and Chief Executive Officer,
El Paso Corporation,
Houston, Texas -- Diversified Energy Company
Age -- 68
Mr. Kuehn has been Chairman of the Board and Chief Executive Officer since March
2003. From September 2002 to March 2003, Mr. Kuehn was the Lead Director of El
Paso. From January 2001 to March 2003, he was a business consultant. Mr. Kuehn
served as non-executive Chairman of the Board of El Paso from October 25, 1999 to
December 31, 2000. Mr. Kuehn served as President and Chief Executive Officer of
Sonat Inc. from June 1984 until his retirement on October 25, 1999. He was
Chairman of the Board of Sonat Inc. from April 1986 until his retirement. He is a
member of the board of directors of AmSouth Bancorporation, Praxair, Inc. and The
Dun & Bradstreet Corporation.
2
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING DIRECTOR
------------------------------
J. CARLETON MACNEIL, JR. Director since 2001
Financial Consultant
Age -- 68
Member -- Audit Committee
Member -- Governance Committee
Mr. MacNeil served as a director of The Coastal Corporation from 1997 until
January 2001. During the past five years, Mr. MacNeil's occupation has been
securities brokerage and investments. Mr. MacNeil served as a director of
American Natural Resources Company, parent holding company of ANR Pipeline
Company from August 1993 until June 1996, at which time there was a reduction in
the number of directors, and he did not stand for re-election.
THOMAS R. MCDADE Director since 2001
Senior Partner,
McDade Fogler Maines, L.L.P.
Houston, Texas -- Law Firm
Age -- 70
Member -- Finance Committee
Mr. McDade served as a director of The Coastal Corporation from 1993 until
January 2001. During the past five years, Mr. McDade has been the Senior Partner
at the law firm of McDade Fogler Maines, L.L.P., Houston, Texas, which provides
legal services to El Paso (the fees paid to McDade Fogler Maines, L.L.P. by El
Paso in 2002 are set forth under "Certain Relationships and Related Transactions"
-- under Item 13, Certain Relationships and Related Transactions). He was with
the Fulbright & Jaworski law firm for 30 years and became a partner in 1971 and
Senior Partner and a member of the Senior Advisory Committee of that firm in
1989. Mr. McDade was a member of the board of directors of Equity Corporation
International, and served on its compensation committee until its merger into
Service Corporation International in January 1999.
J. MICHAEL TALBERT Director since 2003
Chairman of the Board,
Transocean Inc.
Houston, Texas -- Offshore Drilling Company
Age -- 56
Member -- Compensation Committee
Member -- Finance Committee
Mr. Talbert has been Chairman of the Board of Transocean Inc. since October 2002.
He served as Chief Executive Officer of Transocean Inc. and its predecessor
companies from 1994 until October 2002, and has been a member of its board of
directors since 1994. He served as President and Chief Executive Officer of Lone
Star Gas Company from 1990 to 1994. He served as President of Texas Oil & Gas
Company from 1987 to 1990, and served in various positions at Shell Oil Company
from 1970 to 1982. Mr. Talbert is a past Chairman of the National Ocean
Industries Association and a member of the University of Akron's College of
Engineering Advancement Council.
3
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING DIRECTOR
------------------------------
MALCOLM WALLOP Director since 1995
Chairman,
Western Strategy Group,
Arlington, Virginia -- Consulting Group,
President,
Frontiers of Freedom Foundation,
Arlington, Virginia -- Political Foundation,
Age -- 70
Chairman -- Governance Committee
Member -- Audit Committee
Mr. Wallop became Chairman of Western Strategy Group in January 1999, and has
been President of Frontiers of Freedom Foundation since January 1996. For
eighteen years prior to that date, Mr. Wallop was a member of the United States
Senate. He is a member of the board of directors of Hubbell Inc. and Sheridan
State Bank.
JOHN WHITMIRE Director since 2003
Chairman of the Board,
CONSOL Energy, Inc.,
Pittsburgh, Pennsylvania -- Multifuel Energy Provider and
Energy Service Provider
Age -- 62
Member -- Compensation Committee
Mr. Whitmire has been Chairman of CONSOL Energy, Inc. since March 1999. He has
served as Chairman and CEO of Union Texas Petroleum Holdings, Inc. from 1996 to
1998, and spent over 30 years serving Phillips Petroleum Company in various
positions including Executive Vice President of Worldwide Exploration and
Production from 1992 to 1996 and Vice President of North American Exploration and
Production from 1988 to 1992. He also served as a member of the board of
directors of Phillips Petroleum Company from 1994 to 1996. He is a member of the
board of directors of GlobalSantaFe.
JOE B. WYATT Director since 1999
Chancellor Emeritus,
Vanderbilt University,
Nashville, Tennessee -- Higher Education
Age -- 67
Chairman -- Compensation Committee
Member -- Governance Committee
Mr. Wyatt has been Chancellor Emeritus of Vanderbilt University since August
2000. For more than eighteen years prior to that date, he served as Chancellor,
Chief Executive Officer and Trustee of Vanderbilt University. From 1984 until
October 1999, Mr. Wyatt was a director of Sonat Inc. He is a member of the board
of directors of Ingram Micro, Inc. and Hercules, Inc. and is a Principal of the
Washington Advisory Group, LLC of Washington, D.C. Mr. Wyatt is also Chairman of
the Board for the University Research Association, Inc. and New American Schools,
Inc. both of Washington, D.C.
4
General information about Directors who are not nominees for Elections, as
of April 7, 2003. The following sets forth information regarding the current
directors of El Paso who have not been nominated by El Paso's Board of Directors
for re-election at El Paso's 2003 Annual Meeting of Stockholders.
NAME, PRINCIPAL OCCUPATION
AND OTHER SELECTED INFORMATION
CONCERNING DIRECTOR
------------------------------
BYRON ALLUMBAUGH Director since 1992
Business Consultant
Age -- 71
Since February 1, 1997, Mr. Allumbaugh's principal occupation has been as a
business consultant. From February 1996 until his retirement in February 1997,
Mr. Allumbaugh was Chairman of the Board of Ralphs Grocery Company. He served as
Chief Executive Officer of Ralphs Grocery Company from June 1995 until February
1996. From 1976 to 1995, Mr. Allumbaugh served as Chairman of the Board and Chief
Executive Officer of Ralphs Grocery Company. Mr. Allumbaugh is a member of the
Board of Directors of CKE Restaurants, Inc., Galyan's Trading Company, Inc.
Pantry Inc. and Penn Traffic Co.
JAMES F. GIBBONS, PH.D. Director since 1994
Professor, Electrical Engineering,
Stanford University,
Stanford, California -- Higher Education
Age -- 71
Dr. Gibbons has been on the faculty of Stanford University since 1957 and was
Dean of the School of Engineering from September 1984 until June 1996. Currently,
he is Professor of Engineering. He is a member of the Board of Directors of Cisco
Systems, Inc.
WILLIAM A. WISE Director since 1984
Business Consultant
Age -- 57
Since March 2003, Mr. Wise's principal occupation has been as a business
consultant. Mr. Wise served as Chief Executive Officer of El Paso from January
1990 until March 2003. Mr. Wise served as President of El Paso from January 1990
to April 1996 and from July 1998 to October 2002. He served as Chairman of the
Board of El Paso from January 2001 until March 2003 and also served in this
position from January 1994 to October 1999. Mr. Wise served as President and
Chief Operating Officer of El Paso from April 1989 to December 1989. From
March 1987 to April 1989, Mr. Wise was an Executive Vice President of El Paso.
From January 1984 to February 1987, he was a Senior Vice President of El Paso.
EXECUTIVE OFFICERS
Information regarding our executive officers is presented in Part I, Item
1, Business, of our Form 10-K for the fiscal year ended December 31, 2002 under
the caption "Executive Officers of the Registrant."
FAMILY RELATIONSHIPS
No family relationship exists between any of the directors or executive
officers of El Paso.
RULE 10B5-1 TRADING PLANS
As a result of recent clarifications in the insider trading rules, and in
particular, the promulgation of Rule 10b5-1, we have revised our insider trading
policy to allow certain officers and directors to establish pre-established
trading plans. Rule 10b5-1 allows certain officers and directors to establish
written programs that permit an independent person who is not aware of inside
information at the time of the trade to execute pre-established trades of our
securities for the officer or director according to fixed parameters. As of
March 26, 2003, no officer or director has a current trading plan. However, we
intend to disclose the existence of any trading plan in compliance with Rule
10b5-1 in future filings with the Securities and Exchange Commission.
5
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires El Paso's
directors, certain officers and beneficial owners of more than 10% of a
registered class of El Paso's equity securities to file reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Directors, officers and beneficial
owners of more than 10% of El Paso's equity securities are also required by SEC
regulations to furnish El Paso with copies of all such reports that they file.
Based on El Paso's review of copies of such forms and amendments provided to it,
El Paso believes that all filing requirements were complied with during the
fiscal year ended December 31, 2002.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table and narrative text discuss the compensation earned by
or paid in 2002, 2001 and 2000 to our Chief Executive Officer and our four other
most highly compensated executive officers (collectively, the "Named
Executives"). They were compensated for their services provided in all
capacities to El Paso and its subsidiaries. The table also identifies the
principal capacity in which each of the Named Executives served El Paso at the
end of fiscal year 2002.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- ----------------------------------------
AWARDS PAYOUTS
----------------------- --------------
RESTRICTED SECURITIES LONG-TERM
OTHER ANNUAL STOCK UNDERLYING INCENTIVE PLAN
NAME AND PRINCIPAL BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
POSITION YEAR SALARY ($) ($)(1) ($)(2) ($)(3) (#) ($)(4)
------------------ ---- ---------- ---------- ------------ ---------- ---------- --------------
William A. Wise(6) 2002 $1,430,004 $ 0 $229,728 $ 0 -- --
Former Chairman & CEO 2001 $1,305,425 $3,432,000 $210,481 $1,715,997 768,250 --
2000 $1,108,338 $2,730,000 $191,142 $2,729,940 -- --
Ralph Eads(7) 2002 $ 700,008 $ 0 $ 3,185 $ 0 -- --
Former Executive 2001 $ 580,213 $1,400,000 $ 59,050 $ 699,980 248,000 --
Vice President 2000 $ 503,129 $ 920,000 $ 2,762 $ 919,907 -- --
H. Brent Austin 2002 $ 637,500 $ 0 $ 0 $ 0 15,151 --
President and Chief 2001 $ 552,091 $1,140,000 $ 0 $ 569,992 223,000 --
Operating Officer 2000 $ 454,167 $ 880,000 $ 0 $ 879,887 -- --
John W. Somerhalder II 2002 $ 600,000 $ 0 $ 0 $ 0 -- --
Executive Vice 2001 $ 552,091 $1,140,000 $ 0 $ 569,992 223,000 --
President 2000 $ 454,167 $ 880,000 $ 455 $ 879,887 -- --
Robert G. Phillips 2002 $ 400,008 $ 0 $ 43,773 $ 0 -- --
President, El Paso Field 2001 $ 376,042 $ 560,000 $ 0 $ 279,958 151,250 --
Services 2000 $ 327,091 $ 525,000 $ 58 $ 524,950 -- --
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)(5)
------------------ ------------
William A. Wise(6) $ 255,632
Former Chairman & CEO $ 3,771,994
$ 7,215,408
Ralph Eads(7) $ 94,663
Former Executive $ 977,384
Vice President $ 3,972,036
H. Brent Austin $ 85,087
President and Chief $ 950,530
Operating Officer $ 1,808,331
John W. Somerhalder II $ 81,926
Executive Vice $ 946,591
President $ 1,805,260
Robert G. Phillips $ 37,921
President, El Paso Field $ 912,039
Services $ 1,780,148
---------------
(1) For years 2000 and 2001, El Paso's incentive compensation plans required
executives to receive a substantial part of their annual bonus in shares of
restricted El Paso common stock. The amounts reflected in this column for
years 2000 and 2001 represent a combination of the market value of the
restricted common stock and cash at the time awarded under the applicable El
Paso incentive compensation plan. Specifically for fiscal year 2001, Messrs.
Wise, Eads, Austin, Somerhalder and Phillips received the following number
of shares of restricted common stock and cash for their bonus: 40,258 shares
and $1,716,023 cash; 16,422 shares and $700,020 cash; 13,372 shares and
$570,025 cash; 13,372 shares and $570,025 cash; and 6,568 shares and
$280,042 cash, respectively. For fiscal year 2000, Messrs. Wise, Eads,
Austin, Somerhalder and Phillips received the following number of shares of
restricted common stock and cash for their bonus: 40,735 shares and $32
cash; 13,727 shares and $47 cash; 13,130 shares and $57 cash; 13,130 shares
and $57 cash; and 7,833 shares and $50 cash, respectively. The value of the
shares of restricted stock issued has declined significantly since the date
of
6
grant. Dividends are paid directly to the holders of the restricted common
stock during the four-year vesting schedule.
(2) The amount reflected for Mr. Wise in fiscal year 2002 includes, among other
things, $90,000 for a perquisite and benefit allowance and $65,509 in value
attributed to use of El Paso's aircraft. The amount reflected for Mr. Wise
in 2001 includes, among other things, $90,000 for a perquisite and benefit
allowance and $62,692 in value attributed to use of El Paso's aircraft. The
amount reflected for Mr. Wise in fiscal year 2000 includes, among other
things, $90,000 for a perquisite and benefit allowance and $56,734 in value
attributed to use of El Paso's aircraft. The amount reflected for Mr.
Phillips in fiscal year 2002 includes, among other things, $42,000 for a
perquisite and benefit allowance. The amount reflected for Mr. Eads in
fiscal year 2001 includes, among other things, $42,000 for a perquisite and
benefit allowance and $10,136 in value attributed to use of El Paso's
aircraft. Except as noted, the total value of the perquisites and other
personal benefits received by the other Named Executives in fiscal years
2002, 2001 and 2000 are not included in this column since they were below
the Securities and Exchange Commission's reporting threshold.
(3) For years 2000 and 2001, El Paso's incentive compensation plans provided for
and encouraged participants to elect to take all or some of their cash
portion of their annual bonus award in shares of restricted common stock.
The amounts reflected in this column for years 2000 and 2001 include the
market value of restricted common stock on the date of grant. Specifically
for fiscal year 2001, Messrs. Wise, Eads, Austin, Somerhalder and Phillips
received the following number of shares of restricted common stock in lieu
of a cash bonus: 40,258; 16,422; 13,372; 13,372; and 6,568, respectively.
For fiscal year 2000, Messrs. Wise, Eads, Austin, Somerhalder and Phillips
received the following number of shares of restricted common stock in lieu
of a cash bonus: 40,735; 13,727; 13,130; 13,130; and 7,833, respectively.
The value of the shares of restricted stock issued has declined
significantly since the date of grant.
The number of shares of performance and time vesting restricted stock, the
number of shares of time vesting restricted stock, the total number of
shares of restricted stock, and value of restricted common stock (including
the amount in this column) held on December 31, 2002, is as follows:
PERFORMANCE & TIME VESTING
NAME TIME VESTING ONLY TOTAL VALUE($)
---- ------------- ------------ ------- ----------
William A. Wise....................... 350,000 281,248 631,248 $4,393,486
Ralph Eads............................ 110,000 78,594 188,594 $1,312,614
H. Brent Austin....................... 88,300 89,596 177,896 $1,238,156
John W. Somerhalder II................ 65,000 89,596 154,596 $1,075,988
Robert G. Phillips.................... 60,000 51,706 111,706 $ 777,474
Shares of restricted common stock that are subject to a time-vesting
schedule generally vest four years from the date of grant (including the
shares awarded as part of the annual bonus in years 2000 and 2001 described
above). With respect to performance vesting, if the required El Paso
performance targets are not met within a four-year time period, all
unvested shares are forfeited. Any dividends awarded on the restricted
common stock are paid directly to the holder of the El Paso common stock.
These total values can be realized if, and only if, the restricted common
stock granted to the Named Executives vests with respect to both time and
performance.
Of the 350,000 shares of performance and time vesting restricted stock held
by Mr. Wise as of his date of termination, 80,000 were forfeited because
the performance targets had not been met. The remaining 270,000 of these
shares, for which performance targets had been met, vested as of Mr. Wise's
termination date in accordance with El Paso policy. Of the 281,248 shares
of time vesting restricted stock held by Mr. Wise, in accordance with the
terms applicable to the grants, 59,609 were forfeited as of his date of
termination and 221,639 became vested as of that date. Of the 110,000
shares of performance and time vesting restricted stock held by Mr. Eads as
of his date of termination, 14,000 were forfeited because the performance
targets had not been met. The remaining 96,000 of these shares, for which
performance targets had been met, vested as of Mr. Eads' termination date
in accordance with El Paso policy. Of the
7
78,594 shares of time vesting restricted stock held by Mr. Eads, in
accordance with the terms applicable to the grants, 21,466 were forfeited
as of his date of termination and 57,128 became vested as of that date.
(4) No long-term incentive payouts were made in fiscal years 2002, 2001 and
2000.
(5) The compensation reflected in this column for fiscal year 2002 includes El
Paso's contributions to the El Paso Retirement Savings Plan, a supplemental
company match for the Retirement Savings Plan under the Supplemental
Benefits Plan, and the above-market interest earned on deferred
compensation. Specifically, these amounts for fiscal year 2002 were $9,000,
$209,789 and $36,843 for Mr. Wise; $9,000, $51,393 and $34,270 for Mr. Eads;
$9,000, $70,987 and $5,100 for Mr. Austin; $9,000, $69,299 and $3,627 for
Mr. Somerhalder; and $7,500, $28,499 and $1,922 for Mr. Phillips,
respectively.
(6) Mr. Wise ceased to be Chairman and CEO on March 12, 2003.
(7) Mr. Eads ceased to be an employee on December 31, 2002.
STOCK OPTION GRANTS
This table sets forth the number of stock options granted at fair market
value to the executive named in this table during the fiscal year 2002. In
satisfaction of applicable SEC regulations, the table further sets forth the
potential realizable value of such stock options in the year 2012 (the
expiration date of the stock options) at an assumed annualized rate of stock
price appreciation of 5% and 10% over the full ten-year term of the stock
options. As the table indicates, annualized stock price appreciation of 5% and
10% would result in stock prices in the year 2012 of approximately $14.83 and
$23.62, respectively. The amounts shown in the table as potential values for all
shares of common stock outstanding on December 31, 2002 (approximately $3.4
billion and $8.7 billion), represent the corresponding increases in the market
value of 601,307,688 shares of the common stock outstanding as of December 31,
2002. No gain to the executive named in this table is possible without an
increase in stock price, which would benefit all stockholders. Actual gains, if
any, on stock option exercises and common stock holdings are dependent on the
future performance of the common stock and overall stock market conditions.
There can be no assurances that the potential realizable values shown in this
table will be achieved.
OPTION GRANTS IN 2002
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS(1) APPRECIATION FOR OPTION TERM
------------------------------------------------ -------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED IF STOCK PRICE AT IF STOCK PRICE AT
UNDERLYING TO ALL EXERCISE $14.83109 IN 2012 $23.61603 IN 2012
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------- -----------------
NAME GRANTED(#) IN 2002 ($/SHARE) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ----------------- -----------------
POTENTIAL VALUE OF ALL
COMMON STOCK OUTSTANDING
ON DECEMBER 31, 2002..... N/A N/A N/A N/A $3,443,139,280 $8,725,590,953
H. Brent Austin............ 15,151 0.59% $9.1050 11/6/12 $ 86,756 $ 219,857
---------------
(1) The stock options granted in 2002 by El Paso to the executive named above
vest one-half on each of the first two anniversaries of the grant. No stock
options were granted to any other of the Named Executives. There were no
stock appreciation rights granted in 2002. Any unvested stock options become
fully exercisable in the event of a "change in control" (see below under
"Employment Contracts, Termination of Employment, Change in Control
Arrangements and Director Indemnification Agreements -- 2001 Omnibus
Incentive Compensation Plan" for a description of El Paso's 2001 Omnibus
Incentive Compensation Plan and the definition of the term "change in
control.") Under the terms of El Paso's 2001 Omnibus Incentive Compensation
Plan, the Compensation Committee may, in its sole discretion and at any
time, change the vesting of the stock options. Certain non-qualified stock
options may be transferred to immediate family members, directly or
indirectly or by means of a trust, corporate entity or partnership. Further,
stock options are subject to forfeiture and/or time limitations in the event
of a termination of employment.
8
OPTION EXERCISES AND YEAR-END VALUE TABLE
This table sets forth information concerning stock option exercises and the
fiscal year-end values of the unexercised stock options, provided on an
aggregate basis, for each of the Named Executives.
AGGREGATED OPTION EXERCISES IN 2002
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE YEAR-END(#) FISCAL YEAR-END($)(1)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
William A. Wise............. 0 $ 0 1,864,584(2) 441,666(3) $ 0 $ 0
Ralph Eads.................. 0 $ 0 504,668 393,332(3) $ 0 $ 0
H. Brent Austin............. 0 $ 0 406,217 135,984 $ 0 $ 0
John W. Somerhalder II...... 0 $ 0 376,217 120,833 $ 0 $ 0
Robert G. Phillips.......... 0 $ 0 245,584 82,916 $ 0 $ 0
---------------
(1) The figures presented in these columns have been calculated based upon the
difference between $7.00, the fair market value of the common stock on
December 31, 2002, for each in-the-money stock option, and its exercise
price. No cash is realized until the shares received upon exercise of an
option are sold. No Named Executives had stock appreciation rights that were
outstanding on December 31, 2002.
(2) Includes 98,000 stock options held by the William & Marie Wise Family Ltd.
Partnership.
(3) Of the 441,666 stock options listed for Mr. Wise, 258,333 were forfeited
when he ceased to be an employee on March 12, 2003. All 393,332 of the stock
options listed for Mr. Eads were forfeited when he ceased to be an employee
on December 31, 2002.
LONG-TERM INCENTIVE AWARDS
RESTRICTED STOCK
This table provides information concerning incentive awards of restricted
common stock made under El Paso's 2001 Omnibus Incentive Compensation Plan. The
number of shares of restricted common stock will vest if, and only if, the
executive named below remains an employee of El Paso for the specified time
period and the required increase in total stockholder return is achieved during
such time period. No other Named Executive received an incentive award during
2002.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 2002
RESTRICTED STOCK
ESTIMATED NUMBER OF SHARES TO BE VESTED UNDER
RESTRICTED STOCK GRANTS(1)
PERFORMANCE ------------------------------------------------
OR OTHER BELOW
NUMBER PERIOD UNTIL THRESHOLD THRESHOLD TARGET MAXIMUM
NAME OF SHARES MATURATION (#) (#) (#) (#)
---- --------- ------------ ----------- ----------- -------- ---------
H. Brent Austin.................. 23,300 3 years 0 6,990 13,980 23,300
---------------
(1) The indicated number of shares of restricted common stock vest at the
Threshold, Target and Maximum levels only if total stockholder return equals
or exceeds 40%, 65% and 90%, respectively within the indicated performance
period. Total stockholder return equals stock price
appreciation/depreciation, plus any dividends and distributions declared on
El Paso's common stock during the relevant period.
9
PERFORMANCE UNITS
This table provides information concerning long-term incentive awards of
performance units under El Paso's 2001 Omnibus Incentive Compensation Plan. The
grant reflected vests over the indicated maturation performance period, at the
end of which El Paso's total stockholder return is compared to that of its peer
group. With respect to the grant, if El Paso's total stockholder return ranks in
the first, second, third or fourth quartiles of its peer group, the value of
each unit is $150, $100, $50 and $0, respectively. The same performance
thresholds are applicable to other outstanding awards of performance units under
El Paso's 2001 Omnibus Incentive Compensation Plan and 1999 Omnibus Incentive
Compensation Plan. The payout, if any, will be made in cash. All the amounts
shown are potential assumed amounts. There can be no assurance that El Paso will
achieve the results that would lead to final payments under the plan. No other
Named Executive received any performance units during 2002.
LONG-TERM INCENTIVE PLAN -- AWARDS IN 2002
PERFORMANCE UNITS
ESTIMATED PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
------------------------------------------
NUMBER PERIOD UNTIL BELOW
OF UNITS MATURATION THRESHOLD THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT ($) ($) ($) ($)
---- -------- ------------ --------- --------- ------- --------
H. Brent Austin.................. 931 1 year $ 0 $46,500 $93,100 $139,650
PENSION PLAN
Effective January 1, 1997, El Paso amended its pension plan to provide
pension benefits under a cash balance plan formula that defines participant
benefits in terms of a hypothetical account balance. Prior to adopting a cash
balance plan, El Paso provided pension benefits under a plan (the "Prior Plan")
that defined monthly benefits based on final average earnings and years of
service. Under the cash balance plan, an initial account balance was established
for each El Paso employee who was a participant in the Prior Plan on December
31, 1996. The initial account balance was equal to the present value of Prior
Plan benefits as of December 31, 1996. At the end of each calendar quarter,
participant account balances are increased by an interest credit based on 5-Year
Treasury bond yields, subject to a minimum interest credit of 4% per year, plus
a pay credit equal to a percentage of salary and bonus. The pay credit
percentage is based on the sum of age plus service at the end of the prior
calendar year according to the following schedule:
PAY CREDIT
AGE PLUS SERVICE PERCENTAGE
---------------- ----------
Less than 35................................................ 4%
35 to 49.................................................... 5%
50 to 64.................................................... 6%
65 and over................................................. 7%
Under El Paso's pension plan and applicable Internal Revenue Code
provisions, compensation in excess of $200,000 cannot be taken into account and
the maximum payable benefit in 2002 was $160,000. Any excess benefits otherwise
accruing under El Paso's pension plan are payable under El Paso's Supplemental
Benefits Plan. Participants may elect to receive benefits in the form of either
a lump sum payment or actuarial equivalent monthly payments over a period of
time not less than five years and not more than the participant's remaining
life.
Participants with an initial account balance on January 1, 1997 (including
each of the Named Executives, except Mr. Eads) are provided minimum benefits
equal to the Prior Plan benefit accrued as of the end of 2001. The Prior Plan
benefit is computed as follows: for each year of credited service up to a total
of 30 years, 1.1% of the first $26,800, plus 1.6% of the excess over $26,800, of
the participant's average annual earnings during his five years of highest
earnings. Upon retirement, the pension benefit equals the greater of the cash
balance formula benefit or the Prior Plan benefit accrued as of the end of 2001.
Credited service as of
10
December 31, 2001, for each Named Executive is shown in the table below. Amounts
reported under Salary and Bonus for each Named Executive in the Summary
Compensation Table approximate earnings as defined under the pension plan.
Estimated annual benefits payable from the pension plan and Supplemental
Benefits Plan upon retirement at the normal retirement age (age 65) for each
Named Executive is reflected below (based on assumptions that each Named
Executive receives base salary shown in the Summary Compensation Table with no
pay increases, receives 75% of maximum annual bonuses beginning with bonuses
earned for fiscal year 2003, and cash balances are credited with interest at a
rate of 4% per annum):
CREDITED SERVICE PAY CREDIT ESTIMATED
AS OF DECEMBER PERCENTAGE ANNUAL
NAMED EXECUTIVE 31, 2001 DURING 2003 BENEFITS(1)
-------------------------------------------- --- --- --------
William A. Wise(2).......................... 30 7% $881,725
Ralph Eads(3)............................... N/A N/A $ 0
H. Brent Austin............................. 15 7% $270,415
John W. Somerhalder II...................... 24 7% $398,400
Robert G. Phillips.......................... 6 6% $180,870
---------------
(1) For Messrs. Wise and Austin, the amounts reflected have been reduced as a
result of their participation in the Alternative Benefits Program, as
described below under "-- Employment Contracts, Termination of Employment,
Change in Control Arrangements and Director Indemnification
Agreements -- Benefit Plans -- Alternative Benefits Program (ABP)". Prior
Plan minimum benefits for Wise and Somerhalder are greater than their
projected cash balance benefits at age 65.
(2) The amount reflected for Mr. Wise is his vested pension benefit amount under
both the Supplemental Benefits Plan and the tax-qualified pension plan as of
his termination date of March 12, 2003, payable commencing at age 65. Mr.
Wise has elected to receive his Supplemental Benefits Plan benefit in a lump
sum of $15,326,532, minus amounts withheld for taxes. Mr. Wise has the right
to elect to receive a single life annuity benefit under the tax-qualified
pension plan. If he makes this election, his actual annual benefit under the
tax-qualified plan will be $97,533.
(3) Mr. Eads was not vested in his pension benefits upon his termination of
employment with El Paso on December 31, 2002.
DIRECTORS' COMPENSATION
Employee directors of El Paso do not receive any additional compensation
for serving on the Board of Directors. Pursuant to El Paso's 1995 Compensation
Plan for Non-Employee Directors, non-employee directors receive an annual
retainer of $80,000, $20,000 of which is required to be paid in deferred shares
of El Paso common stock and the remaining $60,000 of which is paid at the
election of the director in any combination of cash, deferred cash or deferred
shares of common stock. To the extent a director receives deferred shares rather
than cash, he is credited with shares with a value representing a 25% premium to
the cash retainer he would otherwise have received. Accordingly, an individual
director would receive $60,000 in cash and $25,000 in mandatory deferred common
stock (assuming he elects not to take additional deferred common stock) and
would receive $100,000 in deferred common stock (assuming he elects to take his
entire retainer in deferred common stock). In the event there are not enough
shares of stock available under the plan, then the deferred common stock will be
in the form of deferred stock units. Each non-employee director who chairs a
Committee of the Board of Directors receives an additional retainer fee of
$15,000, which may be paid in the same manner as the annual retainer (with a
total up to $18,750 if he elects to take his entire retainer in deferred common
stock). In addition, effective in March 2003, if any Committee of the Board of
Directors holds a meeting other than in connection with a regularly scheduled
board meeting, then each non-management Committee member (other than the Lead
Director) who attends in person will receive a meeting fee of $2,500 payable in
cash. Each non-employee director also receives a retirement benefit credit in
the form of deferred shares of El Paso common stock (which does not include any
premium) equal to the
11
amount of his annual retainer ($80,000). Pursuant to El Paso's 2001 Stock Option
Plan for Non-Employee Directors, non-employee directors receive a grant of 5,000
stock options upon initial election to the Board of Directors, and 3,000 stock
options upon each annual reelection by the stockholders.
In addition to the compensation described above, when Mr. Kuehn was
appointed Lead Director, he received a retainer fee of $12,500 per month and, on
November 7, 2002, he received a one-time grant of 100,000 non-qualified stock
options which were to vest 50% per year over the next two years. When Mr. Kuehn
was appointed Chairman and CEO in March 2003, he forfeited his stock option
grant and he no longer receives any non-employee director compensation.
In March 2003, the Board appointed Mr. Bissell as Lead Director to, among
other things, preside over non-management director executive sessions of the
Board. As Lead Director, Mr. Bissell will receive an additional $25,000 per
quarter in the form of deferred common stock.
As part of El Paso's overall support to charitable organizations, the
Director Charitable Award Plan was adopted in January 1992 to provide for each
eligible director to designate up to four charitable organizations to receive a
maximum of $1,000,000 in the aggregate upon the death of each director
participant. A director can participate after two consecutive years of service
on the Board of Directors. The cost of this plan to El Paso from April 1, 2002
to April 1, 2003 was $214,141, including the administrative fees. Currently, all
of the directors are eligible to participate in the plan except for Messrs.
Dunlap, Goldman, Talbert and Whitmire.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE IN CONTROL ARRANGEMENTS
AND DIRECTOR INDEMNIFICATION AGREEMENTS
EMPLOYMENT AGREEMENTS
William A. Wise. El Paso terminated the employment of William A. Wise as
Chief Executive Officer and Chairman of the Board of Directors effective as of
March 12, 2003, and appointed Ronald L. Kuehn, Jr. as his successor pending
selection of a permanent Chief Executive Officer. Under the terms of his
pre-existing employment agreement, Mr. Wise will receive severance benefits for
the remaining three-year term of his agreement consisting of his annual salary
of $1,430,004, an annual bonus in the amount of $1,716,004, service credit and
age credit for pension benefits and continued medical, dental and vision
insurance. Mr. Wise's legal counsel has indicated that Mr. Wise may assert that
he is entitled to additional perquisites under the terms of his pre-existing
employment agreement. Mr. Wise will not be entitled to receive benefits under
his employment agreement that otherwise would arise in connection with any
future change in control of El Paso. Any salary, bonus, or benefits received by
Mr. Wise in connection with any full-time employment during the remaining
three-year term will reduce the salary, bonus, or benefits payable to Mr. Wise
under the terms of his agreement. In connection with his termination, El Paso
will transfer ownership of Mr. Wise's company-owned automobile to Mr. Wise and
purchase his Houston residence, if requested to do so within two years of his
termination, at the greater of its appraised value or the amount of Mr. Wise's
investment. In 1997, El Paso loaned Mr. Wise $1,564,000 with interest at 6.8%
for the purchase of his Houston residence. On March 19, 2003, Mr. Wise repaid
this loan in full with accrued interest, consisting of $1,564,000 in principal
and $617,436 in interest. In 2001, El Paso loaned Mr. Wise $7,332,195 with
interest at 4.99% to fund Mr. Wise's exercise of options to purchase El Paso
common stock. This outstanding loan obligation became payable by Mr. Wise in
full upon his termination. On April 23, 2003, Mr. Wise repaid this loan in full
with accrued interest, consisting of $7,332,195 in principal and $594,549 in
interest. In addition, Mr. Wise held 1,887,917 vested stock options as of his
date of termination. These options are exercisable by Mr. Wise through March 12,
2006, unless they expire earlier in accordance with their terms. Any portion of
these options not exercised by March 12, 2006 or any earlier applicable
expiration date will be forfeited on that date. Of these 1,887,917 stock
options, 100,000 will be converted automatically into shares of El Paso common
stock on October 25, 2003, unless exercised earlier by Mr. Wise, with the value
per option equal to the fair market value of El Paso common stock on October 25,
2003. Mr. Wise forfeited 258,333 unvested stock options when he ceased to be an
employee of El Paso on March 12, 2003. In addition, as described in footnote (3)
to the Summary Compensation Table, 491,639 shares of restricted stock held by
Mr. Wise as of his date of termination became vested as of that date, and
139,609 shares of restricted stock were forfeited as of that date.
12
Mr. Wise also became vested in 33,281 performance units, the value of which, if
any, is payable at the end of the performance cycle in June 2003, and forfeited
2,219 performance units.
Ronald L. Kuehn, Jr. As part of the merger with Sonat, El Paso entered into
a termination and consulting agreement with Ronald L. Kuehn, Jr., dated October
25, 1999. Under this agreement, Mr. Kuehn served as the non-executive Chairman
of El Paso's Board of Directors through December 31, 2000, and received a fee of
$20,833 per month from October 25, 1999 through December 31, 2000. In addition,
Mr. Kuehn received the perquisites that were available to him prior to the
merger with Sonat pursuant to this agreement, as well as non-cash compensation
available to other non-employee directors. Starting on October 25, 1999, and for
the remainder of his life, Mr. Kuehn will receive certain ancillary benefits
made available to him prior to the merger with Sonat, including the provision of
office space and related services, and payment of life insurance premiums
sufficient to provide a death benefit equal to four times his base pay as in
effect immediately prior to October 25, 1999. Mr. Kuehn and his eligible
dependents will also receive retiree medical coverage. El Paso maintained a
collateral assignment split-dollar life insurance policy to provide for the
death benefit for Mr. Kuehn to satisfy its obligation to provide the life
insurance referenced above. In January 2003, El Paso released the collateral
assignment on the policy. El Paso recovered $1,116,303 from the policy's cash
surrender value for premiums paid by El Paso and its predecessors for Mr. Kuehn
under the policy and gave up the right to recoup $881,588, which was left in the
policy to provide coverage under the policy until age 95. The release of the
collateral assignment and the right to recoup $881,588 was treated as a transfer
of property to Mr. Kuehn subject to ordinary income tax. El Paso paid Mr. Kuehn
$619,723 to satisfy the tax liabilities related to the transfer of the policy.
In March 2003, Mr. Kuehn replaced Mr. Wise as Chief Executive Officer of El
Paso. At that time, El Paso entered into an employment agreement with Mr. Kuehn
effective upon his appointment as Chief Executive Officer of El Paso. Mr. Kuehn
also serves as Chairman of the Board of El Paso. Compensation and benefits for
Mr. Kuehn are determined under El Paso's benefit plans and programs in effect
from time to time, with exceptions as specified in the employment agreement. Mr.
Kuehn will receive a monthly salary of $100,000 and he is eligible to earn a
target bonus amount equal to 100% of his annual salary based on El Paso's and
his performance as determined by the Compensation Committee. Mr. Kuehn's bonus,
if any, will be paid on the earlier of (i) the first anniversary of the
agreement, (ii) the date El Paso pays its annual bonus to the named executive
officers or (iii) the date a permanent Chief Executive Officer's appointment
with El Paso begins, in which latter case Mr. Kuehn will receive a pro-rated
portion of his bonus based on the number of months he served as the interim
Chief Executive Officer. Mr. Kuehn's employment agreement also provides for an
award of 125,000 nonqualified stock options to purchase shares of common stock
and 50,000 shares of restricted stock of El Paso under the 2001 Omnibus
Incentive Compensation Plan. These awards vest on the earlier of (i) the first
anniversary of the agreement, or (ii) the date a permanent Chief Executive
Officer's appointment with El Paso begins; otherwise, all other terms of the
awards are governed under the plan from which the awards were granted. Mr. Kuehn
is not eligible to participate in the Key Executive Severance Protection Plan
under his employment agreement. Mr. Kuehn's employment agreement also provides
that El Paso will maintain a corporate apartment for him in Houston, Texas on a
tax-neutral basis. If Mr. Kuehn's employment is terminated involuntarily without
"cause," or is voluntarily terminated by Mr. Kuehn for "good reason," Mr. Kuehn
will receive one month's salary in addition to any earned but unpaid salary and
benefits. If such termination occurs prior to the appointment of a permanent
Chief Executive Officer, Mr. Kuehn will receive a pro rated portion of his bonus
assuming all performance objectives were fully met, his stock options will vest
and any restrictions on his restricted stock will lapse. If Mr. Kuehn's
employment is terminated because of death, disability, involuntarily termination
for "cause" or is voluntarily terminated by Mr. Kuehn for other than "good
reason," Mr. Kuehn's right to receive his salary shall cease on the date of
termination of his employment and his right to receive benefits will be
determined according to the terms of El Paso's applicable plans.
Ralph Eads. Ralph Eads left El Paso pursuant to an agreement entered into
with El Paso effective December 31, 2002. Mr. Eads received a severance payment
in the amount of $700,008 under the agreement. In addition, the agreement
provides that Mr. Eads is entitled to receive a payment of $233,333 for each of
three predetermined performance targets achieved by El Paso in connection with
its success in exiting its energy trading business during 2003. The performance
targets measure, respectively, the general and administrative costs for the El
Paso Merchant Energy Group, the value at risk for the El Paso Merchant
13
Energy Group, and the gross value of liabilities for the El Paso Merchant Energy
Group. If Mr. Eads is entitled to receive any payment(s) by reason of El Paso's
achievement of one or more of these performance targets, such payment(s) will be
made within 90 days of the end of the calendar quarter within which the
particular target was achieved. In addition, Mr. Eads held 504,668 vested stock
options as of his date of termination. These options are exercisable by Mr. Eads
through December 31, 2003. Any portion of these options not exercised by
December 31, 2003 will be forfeited on that date. Of these 504,668 stock
options, 25,000 will be converted automatically into shares of El Paso common
stock on October 25, 2003, unless exercised earlier by Mr. Eads, and Mr. Eads
will receive the cash value of this conversion in a lump sum on or before
November 30, 2003, with the value per option equal to the fair market value of
El Paso common stock on October 25, 2003. In addition, as described in footnote
(3) to the Summary Compensation Table, 153,128 shares of restricted stock held
by Mr. Eads on his date of termination became vested as of that date, and 35,466
shares of restricted stock were forfeited as of that date. Mr. Eads also became
vested in 13,125 performance units, the value of which, if any, is payable at
the end of the performance cycle in June 2003, and forfeited 1,875 performance
units. In March 2003, $67,938, representing Mr. Eads' total retirement benefit
under El Paso's Retirement Savings Plan and Supplemental Benefits Plan, was
distributed to Mr. Eads. In addition, El Paso permitted Mr. Eads to retain two
personal computers and related equipment provided to him during his employment.
Mr. Eads was also paid $64,423 for his unused Paid Time Off credits. Mr. Eads
also is entitled to elect COBRA continuation coverage as provided under
applicable law.
BENEFIT PLANS
Severance Pay Plan. The Severance Pay Plan is a broad-based employee plan
providing severance benefits following a "qualifying termination" for all
salaried employees of El Paso and certain of its subsidiaries. The plan also
includes an executive supplement, which provides enhanced severance benefits for
certain executive officers of El Paso and certain of its subsidiaries, including
Messrs. Austin, Phillips and Somerhalder. The enhanced severance benefits
available under the supplement include an amount equal to two times the sum of
the officer's annual salary, including annual target bonus amounts as specified
in the plan. A qualifying termination includes an involuntary termination of the
officer as a result of the elimination of the officer's position or a reduction
in force and a termination for "good reason" (as defined under the plan). In the
event the Severance Pay Plan is terminated, the executive supplement will
continue as a separate plan unless the action terminating the Severance Pay Plan
explicitly terminates the supplement. The executive supplement of the Severance
Pay Plan terminates on January 1, 2005, unless extended. In the event of a
"change in control" (as defined in the Key Executive Severance Protection Plan
described below), participants whose termination of employment entitles them to
severance pay under the executive supplement and the Key Executive Severance
Protection Plan will receive severance pay under the Key Executive Severance
Protection Plan, rather than under the executive supplement.
Key Executive Severance Protection Plan. This plan, initially adopted in
1992, provides severance benefits following a "change in control" of El Paso for
certain officers of El Paso and certain of its subsidiaries, including each of
the Named Executives (except for Messrs. Wise and Eads who are no longer
employees). The benefits of the plan include: (1) an amount equal to three times
the participant's annual salary, including maximum bonus amounts as specified in
the plan; (2) continuation of life and health insurance for an 18-month period
following termination; (3) a supplemental pension payment calculated by adding
three years of additional credited pension service; (4) additional payments to
the terminated employee to cover excise taxes if the payments made under the
plan are subject to excise taxes on golden parachute payments; and (5) payment
of legal fees and expenses incurred by the employee to enforce any rights or
benefits under the plan. Benefits are payable for any termination of employment
for a participant in the plan within two years of the date of a change in
control, except where termination is by reason of death, disability, for cause
or instituted by the employee for other than "good reason." A change in control
occurs if: (i) any person or entity becomes the beneficial owner of 20% or more
of El Paso's common stock; (ii) any person or entity (other than El Paso)
purchases the common stock by way of a tender or exchange offer; (iii) El Paso
stockholders approve a merger or consolidation, sale or disposition or a plan of
liquidation or dissolution of all or substantially all of El Paso's assets; or
(iv) if over a two-year period a majority of the members of the Board
14
of Directors at the beginning of the period cease to be directors. A change in
control has not occurred if El Paso is involved in a merger, consolidation or
sale of assets in which the same stockholders of El Paso before the transaction
own 80% of the outstanding common stock after the transaction is complete. This
plan generally may be amended or terminated at any time, provided that no
amendment or termination may impair participants' rights under the plan or be
made following the occurrence of a change in control. This plan has been closed
to new participants, unless the Board determines otherwise. Approximately 40
current El Paso officers participate in this plan.
Employee Severance Protection Plan. This plan, initially adopted in 1992,
provides severance benefits following a "change in control" (as defined above in
the Key Executive Severance Protection Plan) of El Paso for certain salaried,
non-executive employees of El Paso and certain of its subsidiaries. The benefits
of the plan include: (1) severance pay based on the formula described below, up
to a maximum of two times the participant's annual salary, including maximum
bonus amounts as specified in the plan; (2) continuation of life and health
insurance for an 18-month period following termination (plus an additional
payment, if necessary, equal to any additional income tax imposed on the
participant by reason of his or her continued health and life insurance
coverage); and (3) payment of legal fees and expenses incurred by the employee
to enforce any rights or benefits under the plan. The formula by which severance
pay is calculated under the plan consists of the sum of: (i) one-twelfth of a
participant's annual salary and maximum bonus for every $7,000 of his or her
annual salary and maximum bonus, but no less than five-twelfths nor more than
the entire salary and bonus amount, and (ii) one-twelfth of a participant's
annual salary and maximum bonus for every year of service performed immediately
prior to a change in control. Benefits are payable for any termination of
employment for a participant in the plan within two years of the date of a
change in control, except where termination is by reason of death, disability,
for cause or instituted by the employee for other than "good reason" (as defined
in the plan). This plan generally may be amended or terminated at any time,
provided that no amendment or termination may impair participants' rights under
the plan or be made following the occurrence of a change in control. This plan
has been closed to new participants, unless the Board determines otherwise.
Approximately 1,000 current El Paso employees participate in this plan.
Supplemental Benefits Plan. This plan provides for certain benefits to
officers and key management employees of El Paso and its subsidiaries. The
benefits include: (1) a credit equal to the amount that a participant did not
receive under El Paso's pension plan because the pension plan does not consider
deferred compensation (whether in deferred cash or deferred restricted common
stock) for purposes of calculating benefits and eligible compensation is subject
to certain Internal Revenue Code limitations; and (2) a credit equal to the
amount of El Paso's matching contribution to El Paso's Retirement Savings Plan
that cannot be made because of a participant's deferred compensation and
Internal Revenue Code limitations. The plan may not be terminated so long as the
pension plan and/or Retirement Savings Plan remain in effect. The management
committee of this plan designates who may participate and also administers the
plan. Benefits under El Paso'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 (as defined under the Key
Executive Severance Protection Plan), the supplemental pension benefits become
fully vested and nonforfeitable.
Deferred Compensation Plan. This plan allowed eligible executives and key
management employees of El Paso and its subsidiaries to defer all or a portion
of their base salaries and any other deferrals (including certain equity awards)
made in accordance with certain of El Paso's compensation plans. The management
committee of this plan designated the executives and key management employees
who participated. Amounts deferred were payable upon termination of employment
in a lump-sum payment or in periodic installments, except that the management
committee could, in its discretion, accelerate payments. Any amounts deferred
were credited with interest, gains/losses based on investments or other indices
specified by the management committee. This plan was terminated effective as of
November 15, 2002, and all deferred amounts (net of applicable withholdings)
were distributed to the participants.
Senior Executive Survivor Benefits Plan. This plan provides certain senior
executives (including each of the Named Executives, except for Messrs. Wise and
Eads) of El Paso and its subsidiaries who are designated by the plan
administrator with survivor benefit coverage in lieu of the coverage provided
generally for
15
employees under El Paso'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 plan administrator
may, in its discretion, accelerate payments.
Domestic Relocation Plan. El Paso had a Domestic Relocation Plan, under
which El Paso was obligated, upon the termination of employment of the Named
Executives (except Messrs. Eads and Phillips), as a result of death, retirement,
permanent disability or as otherwise determined by the senior functional officer
of Human Resources and Administration, or in the event of a "change in control,"
as defined earlier under the Key Executive Severance Protection Plan, to
purchase their residences in Houston which they acquired during El Paso's
relocation from El Paso to Houston in 1997.
Alternative Benefits Program (ABP). In 2001, Messrs. Wise and Austin
reduced the balance of certain compensation payable to them under the
Supplemental Benefits Plan by $5,000,000 and $600,000 respectively, in exchange
for the right to participate in the ABP. In 2002, Mr. Allumbaugh reduced the
balance of certain compensation payable to him under the 1995 Compensation Plan
for Non-Employee Directors by $1,820,000 in exchange for the right to
participate in the ABP. The program provides for a loan to purchase a life
insurance policy under a family trust. The amount of the loans to Messrs. Wise,
Austin and Allumbaugh were $9,000,000, $1,080,000 and $3,276,000, respectively.
The trust is the named beneficiary under the life insurance policy, and the loan
with accrued interest will be repaid, on an after-tax basis, with proceeds of
the policy after the participant's, or his spouse's death, whichever is later.
The compensation that was reduced had been awarded in prior years and was
disclosed as required in proxy statements of El Paso for prior years. The cost
of this program will not exceed the cost El Paso would have paid as compensation
with respect to the reduced amounts. In 2002, the annual value of the policy to
Mr. Allumbaugh of $2,874 was imputed as income. Amounts of $2,523 and $67,
respectively, were imputed as income in 2002 for Messrs. Wise and Austin and are
included, to the extent required under the rules of the SEC, in the "Other
Annual Compensation" column of the Summary Compensation Table. This program is
now closed to new participants.
Equity Compensation Plan Information
The information set forth in Part II, Item 5, Market for Registrant's
Common Equity and Related Stockholder Matters, under the heading "Equity
Compensation Plan Information" of our Form 10-K for the fiscal year ended
December 31, 2002 is incorporated by reference into this Item 12.
2001 Omnibus Incentive Compensation Plan. This plan provides for the grant
to officers and key employees of El Paso and its subsidiaries of stock options,
stock appreciation rights, limited stock appreciation rights, performance units
and restricted stock. A maximum of 6,000,000 shares in the aggregate may be
subject to awards under this plan. The plan administrator designates 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. If a "change in
control" (defined in substantially the same manner as under the Key Executive
Severance Protection Plan described above) occurs: (1) all outstanding stock
options become fully exercisable; (2) stock appreciation rights and limited
stock appreciation rights become immediately exercisable; (3) designated amounts
of performance units become fully vested; (4) all restrictions placed on awards
of restricted common stock automatically lapse; and (5) the current year's
maximum incentive award for each officer participating in the plan becomes fully
payable within 30 days. The plan generally may be amended or terminated at any
time. Any amendment following a change in control that impairs participants'
rights requires participant consent.
1999 Omnibus Incentive Compensation Plan. This plan provided for the grant
to officers and key employees of El Paso and its subsidiaries of stock options,
stock appreciation rights, limited stock appreciation rights, performance units
and restricted stock. This plan was replaced by the 2001 Omnibus Incentive
Compensation Plan. Although this plan has been terminated with respect to new
grants, certain shares of restricted common stock and performance units remain
outstanding under it. If a "change in control" of El Paso occurs, all
restrictions placed on restricted common stock lapse and designated amounts of
16
performance units become fully vested. For purposes of the plan, the term
"change in control" has the same meaning given such term in the Key Executive
Severance Protection Plan described above.
1995 Incentive Compensation Plan. This plan provided that awards of cash
and/or shares of restricted common stock could be granted to eligible officers
of El Paso and its subsidiaries. This plan was replaced by the 1999 Omnibus
Incentive Compensation Plan. Although this plan has been terminated with respect
to new grants, certain shares of restricted common stock remain outstanding
under it. If a "change in control" of El Paso occurs, all restrictions placed on
restricted common stock lapse. For purposes of the plan, the term "change in
control" has the same meaning given such term in the Key Executive Severance
Protection Plan described above.
1995 Omnibus Compensation Plan. This plan provided that stock options,
stock appreciation rights, limited stock appreciation rights, performance units
and restricted stock could be granted to officers and key employees of El Paso
and its subsidiaries. This plan was replaced by the 1999 Omnibus Incentive
Compensation Plan. Although this plan has been terminated with respect to any
new grants, certain stock options remain outstanding under it. If a "change in
control" of El Paso under this plan occurs, all outstanding stock options become
fully exercisable. For purposes of this plan, the term "change in control" is
defined in the Key Executive Severance Protection Plan described above.
Omnibus Compensation Plan. This plan provided for the grant of stock
options, stock appreciation rights, limited stock appreciation rights,
performance share units and restricted common stock to officers and key
employees of El Paso and its subsidiaries. This plan was replaced by the 1995
Omnibus Compensation Plan. Although this plan has been terminated with respect
to any new grants, certain stock options remain outstanding under it. Pursuant
to the terms of the plan, if a "change in control" of El Paso occurs, all
outstanding stock options become fully exercisable. For purposes of the plan,
the term "change in control" has the same meaning given such term in the Key
Executive Severance Protection Plan, except that the definition does not contain
the exclusion dealing with mergers, consolidations or sales of assets of El Paso
in connection with a corporate restructuring of El Paso.
Strategic Stock Plan. This plan is an equity compensation plan that has
not been approved by the stockholders. This plan provides for the grant of stock
options, stock appreciation rights, limited stock appreciation rights and shares
of restricted common stock to non-employee members of the Board of Directors,
officers and key employees of El Paso and its subsidiaries primarily in
connection with El Paso's strategic acquisitions. A maximum of 4,000,000 shares
in the aggregate may be subject to awards under this plan. The plan
administrator 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. If a change in control, as defined earlier under the Key
Executive Severance Protection Plan, occurs: (1) all outstanding stock options
become fully exercisable; (2) stock appreciation rights and limited stock
appreciation rights become immediately exercisable; and (3) all restrictions
placed on awards of restricted common stock automatically lapse. The plan
generally may be amended or terminated at any time. Any amendment following a
change in control that impairs participants' rights requires participant
consent.
DIRECTOR INDEMNIFICATION AGREEMENTS
El Paso has entered into indemnification agreements with each member of the
Board of Directors as part of El Paso's indemnification program and in order to
enable El Paso to attract and retain qualified directors. The indemnification
agreements provide for payment of reasonable expenses (including attorneys'
fees) incurred by each of the directors in defending a proceeding related to
their service as a director in advance of its final disposition. El Paso may
maintain insurance, enter into contracts, create a trust fund or use other means
available to ensure payment of any indemnity payments and expense advances. In
the event of a change in control, El Paso is obligated to pay the costs of
independent legal counsel who will be selected to provide legal advice with
respect to all matters concerning the rights of each director to indemnity
payments and expense advances after any such change in control.
17
BENEFITS PROTECTION TRUST AGREEMENT
El Paso maintains a trust for the purpose of funding certain of its
employee benefit plans (including the Key Executive Severance Protection Plan).
The trust consists of a trustee expense account, which is used to pay the fees
and expenses of the trustee, and a benefit account, which is used to make
payments to participants and beneficiaries in the participating plans. The trust
is revocable by El Paso at any time before a "threatened change in control"
(which is generally defined to include the commencement of actions that would
lead to a "change in control" (as defined under the Key Executive Severance
Protection Plan)) as to assets held in the trustee expense account, but is not
revocable as to assets held in the benefit account at any time. The trust
generally becomes fully irrevocable upon a threatened change in control. The
trust is a grantor trust for federal tax purposes, and assets of the trust are
subject to claims by El Paso's general creditors in preference to the claims of
plan participants and beneficiaries. Upon a threatened change in control, El
Paso must deliver $1.5 million in cash to the trustee expense account and must
generally maintain the funding level of the trustee expense account at $2
million. In addition, if a change in control occurs, El Paso must deliver to the
benefit account assets sufficient to pay all benefits payable (whether currently
or on a deferred basis) under the plans participating in the trust. It is
presently estimated, based on certain assumptions and data available as of a
recent date, that if a change in control occurs on the date of El Paso's 2003
Annual Meeting of Stockholders, the amount required to be delivered to the trust
would be more than $165 million. The trust generally may be amended or
terminated at any time, provided that no amendment or termination may have a
material adverse effect on the amount of benefits payable under the trust or
result, directly or indirectly, in the return of any assets of the benefit
account to El Paso prior to the satisfaction of all liabilities under the
participating plans. In addition, no amendment may be made after the occurrence
of a change in control which would (i) permit El Paso to withdraw any assets
from the trustee expense account, (ii) directly or indirectly reduce or restrict
the trustee's rights and duties under the trust, or (iii) permit El Paso to
remove the trustee following the date of the change in control.
18
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 1, 2003 (unless
otherwise noted) regarding beneficial ownership of common stock by each
director, our Chief Executive Officer and the other four most highly compensated
executive officers in the last fiscal year, our directors and executive officers
as a group and each person or entity known by El Paso to own beneficially more
than 5% of its outstanding shares of common stock.
BENEFICIAL
OWNERSHIP
(EXCLUDING STOCK PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER OPTIONS)(1) OPTIONS(2) TOTAL OF CLASS
-------------- ------------------------ ----------- ---------- ---------- --------
Common Stock Pacific Financial Research
Inc.(3)
9601 Wilshire Boulevard,
Suite 800
Beverly Hills, CA 90210......... 65,450,000(3) --(3) 65,450,000(3) 10.9%
Common Stock Capital Research and Management
Company(3)
333 South Hope Street
Los Angeles, CA 90071........... 55,473,020(3) --(3) 55,473,020(3) 9.3%
Common Stock Brandes Investment Partners,
L.L.C.(3)
11988 El Camino Real
Suite 500
San Diego, CA 92130............. 32,719,428(3) --(3) 32,719,428(3) 5.5%
Common Stock B. Allumbaugh................... 42,910 16,000 58,910 *
Common Stock J.M. Bissell.................... 33,005 9,000 42,005 *
Common Stock J.C. Braniff.................... 36,639(4) 18,000 54,639 *
Common Stock J.L. Dunlap(5).................. -- 5,000 5,000 *
Common Stock J.F. Gibbons.................... 51,749 26,000 77,749 *
Common Stock R.W. Goldman.................... 5,912 5,000 10,912 *
Common Stock A.W. Hall, Jr. ................. 25,856 9,000 34,856 *
Common Stock R.L. Kuehn, Jr. ................ 329,982(6) 599,300 929,282 *
Common Stock J.C. MacNeil, Jr. .............. 33,607 9,000 42,607 *
Common Stock T.R. McDade..................... 77,081 9,000 86,081 *
Common Stock J.M. Talbert.................... 5,000 5,000 10,000 *
Common Stock M. Wallop....................... 38,099 8,000 46,099 *
Common Stock W.A. Wise....................... 2,076,139(7) 1,887,917(8) 3,964,056 *
Common Stock J.L. Whitmire................... 4,356 5,000 9,356 *
Common Stock J.B. Wyatt...................... 29,863 11,000 40,863 *
Common Stock R. Eads......................... 199,679(9) 504,667 704,346 *
Common Stock H.B. Austin..................... 321,429 417,883 739,312 *
Common Stock J.W. Somerhalder II............. 330,651 417,883 748,534 *
Common Stock R.G. Phillips................... 606,802 278,917 885,719 *
Common Stock Directors and executive officers
as a group (25) persons total
(including those individuals
listed above)................... 4,787,792 5,018,856 9,806,648 1.622%
---------------
* Less than 1%
(1) The individuals named in the table have sole voting and investment power
with respect to shares of El Paso common stock beneficially owned, except
that Messrs. Allumbaugh, Gibbons, Talbert, Wise, and Austin share with one
or more other individuals voting and investment power with respect to
18,224, 2,000, 5,000, 11,694 and 140,042 shares of common stock,
respectively. This column also includes shares
19
of common stock held in the El Paso Benefits Protection Trust as a result of
deferral elections made in accordance with El Paso benefit plans. These
individuals share voting power with the trustee under that plan and receive
dividends on such shares, but do not have the power to dispose of, or direct
the disposition of, such shares until such shares are distributed. In
addition, some shares of common stock reflected in this column for certain
individuals are subject to restrictions. According to a Schedule 13G filed
on February 14, 2003, as of December 31, 2002, Pacific Financial Research
Inc. had shared voting power over 65,450,000 shares of common stock and
shared dispositive power over 3,225,500 shares of common stock. According to
a Schedule 13G filed on February 14, 2003, as of December 31, 2002, Capital
Research and Management Company had sole dispositive power over 55,473,020
shares of common stock. According to a Schedule 13G filed on February 14,
2003, as of December 31, 2002, Brandes Investment Partners, L.L.C. had
shared voting power over 25,798,409 shares of common stock and dispositive
power over 32,719,428 shares of common stock.
(2) The directors and executive officers have the right to acquire the shares of
common stock reflected in this column within 60 days of April 1, 2003,
through the exercise of stock options.
(3) Stock ownership as of December 31, 2002, for Pacific Financial Research
Inc., Capital Research and Management Company, and Brandes Investment
Partners, L.L.C. were reported on separate Schedules 13G filed on February
14, 2003.
(4) Mr. Braniff's beneficial ownership excludes 3,500 shares of El Paso common
stock owned by his wife, of which Mr. Braniff disclaims any beneficial
ownership.
(5) Mr. Dunlap's holdings are as of April 7, 2003, the effective date of his
election to the Board of Directors.
(6) Mr. Kuehn's beneficial ownership excludes 22,500 shares of El Paso common
stock owned by his wife, 20 shares owned by his children, and 4,200 shares
held in trust for his children, of which Mr. Kuehn disclaims any beneficial
ownership.
(7) Mr. Wise's beneficial ownership excludes 400 shares of El Paso common stock
owned by his children under the Uniform Gifts to Minors Act, of which Mr.
Wise disclaims any beneficial ownership.
(8) Includes 98,000 stock options held in the William & Marie Wise Family Ltd.
Partnership.
(9) As of December 31, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of McDade Fogler Maines, L.L.P. provided legal services to El
Paso in fiscal year 2002. Thomas R. McDade, a director of El Paso, is a senior
partner of that law firm. In fiscal year 2002, El Paso paid McDade Fogler
Maines, L.L.P. approximately $156,757 for legal services rendered by that law
firm to El Paso. The Board has determined that the engagement of Mr. McDade's
firm to represent El Paso and its subsidiaries will be limited to existing legal
matters only and his firm will not receive additional work from El Paso or its
subsidiaries.
Mr. Wise's two sons-in-law and a sister-in-law were employed by El Paso or
its subsidiaries during fiscal year 2002 and earned and/or received compensation
in the amount of $74,174, $170,531 and $62,779, respectively.
Mr. Phillips's brother was employed by El Paso or its subsidiaries during
fiscal year 2002 and earned and/or received compensation in the amount of
$147,504.
See "Employment Contracts, Termination of Employment and Change in Control
Arrangements and Director Indemnification Agreements" under Item 11, Executive
Compensation, above for information related to loans to certain executives
officers. El Paso does not have any continuing lines of credit for loans to its
executive officers.
We own a one percent general partner interest in El Paso Energy Partners, a
publicly traded master limited partnership and 26.5 percent of the partnership's
common units. In addition, we own preferred units with $158 million liquidation
value as of December 31, 2002, and all of its outstanding Series C units
acquired for $350 million in November 2002. Some of our directors, officers and
other personnel who provide services
20
for El Paso also provide services for El Paso Energy Partners. These shared
personnel own and are awarded units, or options to purchase units, in El Paso
Energy Partners from time to time, and their personal financial interests may
not always be completely aligned with ours.
A discussion of agreements, arrangements and transactions between El Paso
and El Paso Energy Partners is contained in Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the heading "Field Services" of our Form 10-K for the fiscal year ended December
31, 2002. This discussion is incorporated by reference into this Item 13. Also
see Part II, Item 8, Financial Statements and Supplementary Data, Note 26 of our
Form 10-K for the fiscal year ended December 31, 2002. The information contained
therein is incorporated by reference into this Item 13.
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, El Paso Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized
on the 30th day of April 2003.
EL PASO CORPORATION
Registrant
By /s/ RONALD L. KUEHN, JR.
-----------------------------------
Ronald L. Kuehn, Jr.
Chairman of the Board
and Chief Executive Officer
Each person whose individual signature appears below hereby authorizes D.
Dwight Scott and Peggy A. Heeg, and each of them, as attorneys-in-fact with full
power of substitution, to execute in the name and on behalf of such person,
individually and in each capacity stated below, and to file, any and all
amendments to this Form 10-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
El Paso Corporation and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RONALD L. KUEHN, JR. Chairman of the Board, Chief April 30, 2003
----------------------------------------------------- Executive Officer and Director
(Ronald L. Kuehn, Jr.) (Principal Executive Officer)
/s/ H. BRENT AUSTIN President and Chief Operating April 30, 2003
----------------------------------------------------- Officer
(H. Brent Austin)
/s/ D. DWIGHT SCOTT Executive Vice President and April 30, 2003
----------------------------------------------------- Chief Financial Officer
(D. Dwight Scott) (Principal Financial Officer)
/s/ JEFFREY I. BEASON Senior Vice President and April 30, 2003
----------------------------------------------------- Controller (Principal
(Jeffrey I. Beason) Accounting Officer)
/s/ BYRON ALLUMBAUGH Director April 30, 2003
-----------------------------------------------------
(Byron Allumbaugh)
/s/ JOHN M. BISSELL Director April 30, 2003
-----------------------------------------------------
(John M. Bissell)
/s/ JUAN CARLOS BRANIFF Director April 30, 2003
-----------------------------------------------------
(Juan Carlos Braniff)
/s/ JAMES L. DUNLAP Director April 30, 2003
-----------------------------------------------------
(James L. Dunlap)
/s/ JAMES F. GIBBONS Director April 30, 2003
-----------------------------------------------------
(James F. Gibbons)
22
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT W. GOLDMAN Director April 30, 2003
-----------------------------------------------------
(Robert W. Goldman)
/s/ ANTHONY W. HALL JR. Director April 30, 2003
-----------------------------------------------------
(Anthony W. Hall Jr.)
/s/ J. CARLETON MACNEIL JR. Director April 30, 2003
-----------------------------------------------------
(J. Carleton MacNeil Jr.)
/s/ THOMAS R. MCDADE Director April 30, 2003
-----------------------------------------------------
(Thomas R. McDade)
/s/ J. MICHAEL TALBERT Director April 30, 2003
-----------------------------------------------------
(J. Michael Talbert)
/s/ MALCOLM WALLOP Director April 30, 2003
-----------------------------------------------------
(Malcolm Wallop)
/s/ JOHN L. WHITMIRE Director April 30, 2003
-----------------------------------------------------
(John L. Whitmire)
/s/ WILLIAM A. WISE Director April 30, 2003
-----------------------------------------------------
(William A. Wise)
/s/ JOE B. WYATT Director April 30, 2003
-----------------------------------------------------
(Joe B. Wyatt)
23
CERTIFICATION
I, Ronald L. Kuehn, Jr., certify that:
1. I have reviewed this annual report on Form 10-K/A of El Paso
Corporation; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
/s/ RONALD L. KUEHN, JR.
--------------------------------------
Ronald L. Kuehn, Jr.
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
El Paso Corporation
Date: April 30, 2003
24
CERTIFICATION
I, D. Dwight Scott, certify that:
1. I have reviewed this annual report on Form 10-K/A of El Paso
Corporation; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
/s/ D. DWIGHT SCOTT
--------------------------------------
D. Dwight Scott
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
El Paso Corporation
Date: April 30, 2003
25
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
99.A Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.B Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.