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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
EL PASO CORPORATION
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NEWS [LOGO - EL PASO]
EL PASO CORPORATION SENDS LETTER TO SHAREHOLDERS
Urges Stockholders To Vote WHITE in Favor of Board's Nominees
HOUSTON, TEXAS, MAY 27, 2003--El Paso Corporation (NYSE: EP) today sent the
following letter urging El Paso shareholders to vote "FOR" El Paso's slate
of 12 highly qualified directors, who are committed to restoring the value
inherent in the company's strong asset base, and to reject the Zilkha/Wyatt
proposals:
Dear Fellow El Paso Shareholder:
I would like to give you the latest update on the initiatives your Board of
Directors and management are pursuing to position El Paso for the future.
LOOKING BEYOND OUR 2003 OPERATIONAL AND FINANCIAL PLANS
We have made significant progress with our 2003 operational and financial
plan, as described in my previous letters. We are already implementing a
further series of initiatives that build upon the momentum we have
generated.
Clean Slate Initiative
o On April 16, 2003, we announced our Clean Slate Initiative, a top
to bottom analysis of El Paso to achieve significant cost
reductions and business efficiencies designed to create the most
cost-efficient structure possible for our businesses.
o We are targeting a minimum of $400 million of annual pre-tax cost
savings and business efficiencies by the end of 2004, which
includes the pre-tax target of at least $150 million that we will
achieve in 2003.
o Our recent action to eliminate four of our 10 senior executive
positions underscores our commitment to this process.
Long Range Planning
El Paso's Board-level Long Range Planning Committee is focused on taking
further steps to position El Paso to pursue the solid growth opportunities
that we believe exist for our natural gas businesses. To that end, at the
direction of the Committee, we provided additional detail on May 13, 2003
about our plan to reduce debt by $7.5 billion, more than $12 per share, by
mid-2005.
Key areas of future focus for the Long Range Planning Committee include:
o Reviewing options to reduce our indebtedness to a level
appropriate for an investment grade company and sustainable by
our current businesses. The Committee expects to raise our debt
reduction target by at least $2.5 billion--for a total of at
least $10 billion.
o Selling additional assets.
o Achieving further capital expenditure reductions, while
generating substantial free cash flow from our core businesses.
The Committee is targeting reductions that will bring us to a
level of annual capital expenditures below $2 billion, a
significant reduction in capital expenditures.
As a direct result of the actions we are proposing, we believe that El Paso
will have the financial flexibility to take advantage of strategic business
opportunities in the North American natural gas market and to achieve
future growth.
Future Earnings Impact
Completing our 2003 plan and meeting our additional cost reduction and debt
reduction targets are important steps in repositioning El Paso for the
future. The cost and debt reduction initiatives described above should
generate significant improvements in El Paso's earnings and materially
reduce the risks associated with higher leverage. We expect that El Paso
will benefit in the future from:
o Strong earnings power of our core businesses
o After-tax effects of annual cost reductions and business
efficiencies
o Net after-tax interest savings from debt reduction
Leadership and Corporate Governance
The process of positioning El Paso for the future includes leadership
change and maintaining best practices in corporate governance.
o WE ARE CONDUCTING A THOROUGH PROCESS TO SELECT THE BEST CANDIDATE
FOR THE POSITION OF CHIEF EXECUTIVE OFFICER OF EL PASO. We are in
discussions with a number of outstanding candidates who are
currently senior executives (including Chief Executive Officers
and Chief Operating Officers) of large energy companies. We
expect to complete this process promptly once the Zilkha/Wyatt
proxy contest is behind us.
o WE HAVE TAKEN A SERIES OF ACTIONS TO PROVIDE CONTINUITY AND
MEASURED CHANGE IN THE COMPOSITION OF OUR BOARD OF
DIRECTORS--adding to our Board four directors with outstanding
backgrounds and substantial management expertise in the energy
industry--and having three directors not standing for
re-election.
o WE HAVE ADOPTED CORPORATE GOVERNANCE STANDARDS that we believe
place us in the vanguard of corporate governance best practices.
THE ZILKHA/WYATT PROXY CONTEST
As you know, Selim Zilkha and Oscar Wyatt, who collectively own only 2 per
cent of our common stock, are seeking to take control of the entire El Paso
Board at our Annual Meeting by replacing your Board of Directors with their
own slate of nine nominees. WE BELIEVE THAT ELECTING THE ZILKHA/WYATT SLATE
IS NOT IN THE BEST INTERESTS OF OUR stockholders and our Board strongly
recommends that you reject Zilkha/Wyatt. We ask you to carefully consider
the following:
o Mr. Zilkha served as a director of El Paso from October 1999
until January 2001 and as an advisory director of El Paso from
January 2001 until June 2002, when he resigned in order to be
free from limitations on his personal sales of El Paso stock. MR.
ZILKHA VOTED TO APPROVE ALL DECISIONS MADE BY OUR BOARD WHEN HE
WAS A DIRECTOR OF EL PASO AND DID NOT DISSENT FROM A SINGLE
DECISION MADE BY OUR BOARD WHEN HE WAS AN ADVISORY DIRECTOR.
o Remarkably, while criticizing the El Paso Board for these
decisions, Mr. Zilkha has entirely ignored the fact that he sat
in the same Board meetings and made the same decisions.
o We sought to avoid this proxy contest, by engaging Mr. Zilkha in
dialogues and meetings to address his concerns. We even offered
Mr. Zilkha an opportunity to submit candidates for nomination to
our Board.
o Messrs. Zilkha and Wyatt have not presented a detailed business
plan. Instead, they have offered a series of general statements
about their ideas for El Paso, WHICH THE HOUSTON CHRONICLE
DESCRIBED AS "STRIKINGLY SIMILAR" TO EL PASO'S PLAN.
o We believe Stephen D. Chesebro', the CEO candidate proposed by
Messrs. Zilkha and Wyatt, is the WRONG CHOICE for CEO of El Paso.
Mr. Chesebro's ONLY experience as a public company CEO consists
of LESS THAN EIGHT MONTHS AS CEO OF PENNZENERGY IN 1999, since
which time Mr. Chesebro' has been unemployed. Mr. Chesebro' was
Chairman and CEO of Tenneco Energy, a subsidiary of Tenneco Inc.,
for only approximately one year. We are in discussions with a
number of outstanding CEO candidates, all of whom we believe have
superior qualifications to those of Mr. Chesebro'.
o Messrs. Zilkha and Wyatt say their nominees are a "world-class
group with a vast wealth of industry-specific experience and
expertise." A CLOSER LOOK REVEALS THAT, AS A GROUP, THE
ZILKHA/WYATT NOMINEES HAVE LIMITED KNOWLEDGE OF EL PASO, LIMITED
OR NO PUBLIC COMPANY BOARD EXPERIENCE, AND LIMITED RECENT WORK
EXPERIENCE RELEVANT TO EL PASO'S CORE BUSINESSES.
We think you should be concerned about Oscar Wyatt's leading role in
orchestrating this proxy contest and statements he has made to El Paso
representatives about his plans AFTER HE TAKES CONTROL OF EL PASO, because
we believe there are significant conflicts of interest between El Paso and
Mr. Wyatt:
o Mr. Wyatt is the lead plaintiff in a shareholder suit against El
Paso and the defendant in a lawsuit brought by El Paso resulting
from his default on payment of a company loan guarantee in the
amount of $2.5 million plus interest. Mr. Wyatt made an
unsuccessful attempt to delay his deposition in this lawsuit
suggesting to the court that, if the Zilkha/Wyatt slate is
elected, the Board may not pursue collection of Wyatt's
obligation.
o Mr. Wyatt formed an energy company in 2002 that has attempted to
acquire assets that compete with El Paso.
o Other concerns we have about Mr. Wyatt include his criminal
guilty plea relating to violations of federal crude oil pricing
regulations and the 1979 permanent injunction against him arising
from the failure to supply natural gas to Texas municipalities.
In addition, Mr. Wyatt has a history of greenmail and other
actions adverse to stockholder interests.
WE URGE YOU TO REJECT THE ZILKHA/WYATT SLATE
YOUR VOTE IS IMPORTANT IN DETERMINING THE FUTURE DIRECTION OF EL PASO. Our
Board of Directors recommends that El Paso shareholders vote "FOR" El
Paso's slate of 12 highly qualified directors, WHO ARE COMMITTED TO
RESTORING THE VALUE INHERENT IN THE COMPANY'S STRONG ASSET BASE, and
against the Zilkha/Wyatt proposals.
We also urge you NOT to sign the BLUE proxy card sent to you by Messrs.
Zilkha and Wyatt and to DISCARD any proxy card they may send to you. Even
if you have previously signed a proxy card sent to you by Messrs. Zilkha
and Wyatt, you can revoke it by signing, dating and mailing the enclosed
WHITE proxy card in the envelope provided.
We urge you to return the enclosed WHITE proxy card to support your Board
of Directors and management by voting "FOR" the election of our 12
directors. Your vote is critical, no matter how many shares you own.
If you have any questions about voting your proxy or need additional
information about El Paso or the stockholders meeting, please contact
MacKenzie Partners, Inc. at (800) 322-2885 or visit El Paso's Web site at
www.elpaso.com.
On behalf of the entire El Paso Board of Directors, I thank you for your
continued support and promise that we will continue to act in the best
interests of all our shareholders.
Sincerely,
/s/
Ronald L. Kuehn, Jr.
Chairman and Chief Executive Officer
El Paso Corporation
El Paso Corporation is the leading provider of natural gas services and the
largest pipeline company in North America. The company has core businesses
in pipelines, production, and midstream services. Rich in assets, El Paso
is committed to developing and delivering new energy supplies and to
meeting the growing demand for new energy infrastructure. For more
information, visit www.elpaso.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The company has made every reasonable effort to ensure
that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete. However, a
variety of factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in this
release, including, without limitation, our ability to attract and retain
qualified members of the Board of Directors; the successful recruitment and
retention of a qualified CEO; the successful implementation of the 2003
operational and financial plan; the successful implementation of the
settlement related to the Western Energy Crisis; material and adverse
impacts from our proxy contest with Selim Zilkha/Oscar Wyatt; actions by
the credit rating agencies; the successful close of financing transactions;
our ability to successfully exit the energy trading business; our ability
to divest of certain non-core assets; changes in commodity prices for oil,
natural gas, and power; general economic and weather conditions in
geographic regions or markets served by El Paso Corporation and its
affiliates, or where operations of the company and its affiliates are
located; the uncertainties associated with governmental regulation;
political and currency risks associated with international operations of
the company and its affiliates; inability to realize anticipated synergies
and cost savings associated with restructurings and divestitures on a
timely basis; difficulty in integration of the operations of previously
acquired companies, competition, and other factors described in the
company's (and its affiliates') Securities and Exchange Commission filings.
While the company makes these statements and projections in good faith,
neither the company nor its management can guarantee that anticipated
future results will be achieved. Reference must be made to those filings
for additional important factors that may affect actual results. The
company assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking
statements made by the company, whether as a result of new information,
future events, or otherwise.
Additional Important Information
To the extent that individual customers, independent industry researchers,
financial analysts, or El Paso commissioned research are quoted in this
document, it is El Paso's policy to use reasonable efforts to verify the
source and accuracy of the quote. El Paso has not, however, sought or
obtained the consent of the quoted source to the use of such quote as proxy
soliciting material. This document may contain expressions of opinion and
belief. Except as otherwise expressly attributed to another individual or
entity, these opinions and beliefs are the opinions and beliefs of El Paso.
The quote from the Houston Chronicle was excerpted from an article written
by Laura Goldberg on May 7, 2003.
On May 12, 2003, El Paso Corporation began the process of mailing its
definitive proxy statement, together with a WHITE proxy card. Shareholders
are strongly advised to read El Paso's proxy statement as it contains
important information.
Shareholders may obtain an additional copy of El Paso's definitive proxy
statement and any other documents filed by El Paso with the Securities and
Exchange Commission for free at the Internet Web site maintained by the
Securities and Exchange Commission at www.sec.gov. Copies of the definitive
proxy statement are available for free at El Paso's Internet Web site at
www.elpaso.com or by writing to El Paso Corporation, Investor Relations,
P.O. Box 2511, Houston, TX 77252. In addition, copies of El Paso's proxy
materials may be requested by contacting El Paso's proxy solicitor,
MacKenzie Partners, Inc. at (800) 322-2885 Toll-Free or by email at
proxy@mackenziepartners.com.
Information regarding the names, affiliation and interests of individuals
who may be deemed participants in the solicitation of proxies of El Paso's
shareholders is contained in El Paso's definitive proxy statement.
CONTACTS
Communications and Government Affairs
Norma F. Dunn, Senior Vice President
Office: (713) 420-3750
Fax: (713) 420-3632
Investor Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Alternate Contacts
Joele Frank/Dan Katcher
Joele Frank, Wilkinson Brimmer Katcher
Office: (212) 355-4449
Fax: (212) 355-4554