Sandell Objects to Southern Union's New Compensation Agreements

Believes Agreements are Entrenching and Further Evidence of the Need for

Shareholder Oversight on the Board

Sep 03, 2008, 01:00 ET from Sandell Asset Management Corp.

    NEW YORK, Sept. 3 /PRNewswire/ -- Sandell Asset Management Corp.
 ("Sandell"), the largest individual shareholder of Southern Union Company
 ("SUG" or the "Company") with ownership of 9.9% of the shares outstanding,
 noted an 8-K filing by the Company late Thursday afternoon before the Labor
 Day holiday weekend. This filing, without an accompanying press release,
 detailed generous new compensation agreements entered into with the top
 five executives and 20 other officers at the Company. These agreements
 provide for severance payments to the top officers regardless of whether a
 change of control occurs and even more generous payments in the event of a
 change of control at SUG. We strongly object to these agreements for the
 following reasons:
     1. This form of compensation is not tied to performance by the
 executives. In fact, we believe it is a disincentive since the executive is
 no longer required to perform in order to be lavishly compensated and can
 only be replaced at significant cost to shareholders
     2. In the event of a change-of-control, these contracts are a direct
 transfer of value from shareholders to already highly-paid executives at
 SUG who have received generous grants of equity which were supposed to
 align the interests of executives and shareholders
     3. In the case of Messrs. Lindemann, Herschmann and Ms. Gaudiosi, the
 bonus amounts are inflated by the outsized "special transaction bonuses"
 they received for completing the Sid Richardson acquisition, adding "insult
 to injury" for shareholders in our opinion
     4. Based on the limited disclosure in the 8-K filing, Sandell believes
 the total value of compensation payable to the executives covered by the
 new agreements could exceed $100 million with over $60 million payable to
 Mr. Lindemann and Mr. Herschmann in certain circumstances.
     Sandell believes this type of outsized, non-performance based
 compensation is a clear sign that SUG's Board of Directors does not possess
 the necessary level of independence from senior management to prevent what
 we believe is a clear misappropriation of shareholder value. These actions
 raise serious concerns with respect to the exercise of fiduciary duties by
 the board and we believe the board and compensation committee should be
 held accountable for their decisions by shareholders for this type of
 "rubber stamp" activity. This latest action firms our resolve that change
 is needed on the board of SUG. In this regard, Sandell continues the
 process of identifying potential candidates for nomination to the board of
 SUG in order to improve the composition and function of this board which we
 do not feel is acting in the best interest of shareholders.
     Tom Sandell, the CEO of Sandell stated: "Southern Union shareholders
 should be outraged at this clear entrenchment device designed to transfer
 value to SUG's already well-compensated management, especially during a
 time period where the Company's shares are underperforming its peers and
 management has done nothing to improve value for stakeholders other than
 themselves. The only positive effect may be that management is now more
 motivated to sell the Company, which we have already publicly asked them to
     Sandell Asset Management Corp. is a multi-billion dollar global
 investment management firm, founded by Thomas E. Sandell, which focuses on
 global corporate events and restructurings throughout North America,
 Continental Europe, the United Kingdom, Latin America and the Asia-Pacific
 theatres. Sandell frequently will take an "active involvement" in
 facilitating financial or organization improvements accruing to the benefit
 of investors.

SOURCE Sandell Asset Management Corp.