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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
 
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
Filed by the Registrant þ
 
Filed by a Party other than the Registrant o
 
Check the appropriate box:
 
o  Preliminary Proxy Statement
o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ  Definitive Proxy Statement
o  Definitive Additional Materials
o  Soliciting Material Pursuant to 240.14a-12
 
NATIONAL FUEL GAS COMPANY
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
þ   No fee required.
 
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
 
  (1)   Title of each class of securities to which transaction applies:
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
 
  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
  (4)   Proposed maximum aggregate value of transaction:
 
 
  (5)   Total fee paid:
 
 
o   Fee paid previously with preliminary materials.
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
  (1)   Amount Previously Paid:
 
 
  (2)   Form, Schedule or Registration Statement No.:
 
 
  (3)   Filing Party:
 
 
  (4)   Date Filed:
 


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NATIONAL FUEL GAS COMPANY
 
Notice of Annual Meeting
 
and
 
Proxy Statement
 
Annual Meeting of Stockholders
 
to be held on
 
March 10, 2011


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NATIONAL FUEL GAS COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NEW YORK 14221
 
January 21, 2011
 
Dear Stockholders of National Fuel Gas Company:
 
We are pleased to invite you to join us at the Annual Meeting of Stockholders of National Fuel Gas Company. The meeting will be held at 10:00 a.m. local time on March 10, 2011, at The Ritz Carlton Naples, 280 Vanderbilt Beach Road, Naples, Florida, 34108. The matters on the agenda for the meeting are outlined in the enclosed Notice of Annual Meeting and Proxy Statement.
 
So that you may elect Company directors and secure the representation of your interests at the Annual Meeting, we urge you to vote your shares. The preferred methods of voting are either by telephone or by Internet as described on the proxy card. These methods are both convenient for you and reduce the expense of soliciting proxies for the Company. If you prefer not to vote by telephone or the Internet, please complete, sign and date your proxy card and mail it in the envelope provided. The Proxies are committed by law to vote your shares as you designate on the proxy card, by telephone or by Internet.
 
If you plan to be present at the Annual Meeting, you may so indicate when you vote by telephone or the Internet, or you can check the “WILL ATTEND MEETING” box on the proxy card. Even if you plan to be present, we encourage you to promptly vote your shares either by telephone or the Internet, or to complete, sign, date and return your proxy card in advance of the meeting. If you later wish to vote in person at the Annual Meeting, you can revoke your proxy by giving written notice to the Secretary of the Annual Meeting and/or the Trustee (as described on the first page of this proxy statement), and/or by casting your ballot at the Annual Meeting.
 
Coffee will be served at 9:30 a.m. and I look forward to meeting with you at that time.
 
Please review the proxy statement and take advantage of your right to vote.
 
Sincerely yours,
 
David F. Smith
Chairman of the Board of Directors and
Chief Executive Officer


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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS to be held on March 10, 2011
PROXY STATEMENT GENERAL INFORMATION
PROPOSAL 1. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
DIRECTOR COMPENSATION TABLE -- FISCAL 2010
AUDIT FEES
AUDIT COMMITTEE REPORT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
EQUITY COMPENSATION PLAN INFORMATION
EXECUTIVE COMPENSATION
PROPOSAL 2. APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS APPOINTMENT.
PROPOSAL 3. NON-BINDING ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION
PROPOSAL 4. NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF THE “SAY ON PAY” VOTE
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CODE OF ETHICS
IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
PROPOSALS OF SECURITY HOLDERS
OTHER BUSINESS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
APPENDIX A TO PROXY STATEMENT
APPENDIX B TO PROXY STATEMENT
EXHIBIT A
EXHIBIT B


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NATIONAL FUEL GAS COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NEW YORK 14221
 
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on March 10, 2011
 
To the Stockholders of National Fuel Gas Company:
 
Notice is hereby given that the Annual Meeting of Stockholders of National Fuel Gas Company (the “Company”) will be held at 10:00 a.m. local time on March 10, 2011 at The Ritz Carlton Naples, 280 Vanderbilt Beach Rd., Naples, Florida 34108. The doors to the meeting will open at 9:30 a.m. local time. At the meeting, action will be taken with respect to:
 
(1) the election of three directors to hold office for three-year terms as provided in the attached proxy statement and until their respective successors have been elected and qualified;
 
(2) the approval of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm;
 
(3) a non-binding advisory vote to approve the compensation of the Company’s executives;
 
(4) an advisory vote on the frequency of future non-binding advisory votes to approve the compensation of the Company’s executives;
 
and such other business as may properly come before the meeting or any adjournment or postponement thereof.
 
Stockholders of record at the close of business on January 10, 2011, will be entitled to vote at the meeting.
 
By Order of the Board of Directors
 
Paula M. Ciprich
General Counsel and Secretary
 
January 21, 2011
 
Important Notice Regarding The Availability Of Proxy Materials For The Stockholder
Meeting To Be Held On March 10, 2011

The proxy statement and annual report to security holders are available at
proxy.nationalfuelgas.com
 
 
YOUR VOTE IS IMPORTANT
 
Whether or not you plan to attend the meeting, and whatever the number of shares you own, please vote your shares either by telephone or the Internet as described in the proxy/voting instruction card and reduce National Fuel Gas Company’s expense in soliciting proxies.
Alternatively, you may complete, sign, date and promptly return the enclosed proxy/voting instruction card in the accompanying envelope, which requires no postage if mailed in the United States.
 


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NATIONAL FUEL GAS COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NEW YORK 14221
 
PROXY STATEMENT
 
GENERAL INFORMATION
 
Introduction
 
This proxy statement is furnished to the holders of National Fuel Gas Company (the “Company”) common stock (the “Common Stock”), in connection with the solicitation of proxies on behalf of the Board of Directors of the Company (the “Board of Directors” or the “Board”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on March 10, 2011, or any adjournment or postponement thereof. This proxy statement and the accompanying proxy/voting instruction card are first being mailed to stockholders on or about January 21, 2011.
 
Solicitation of Proxies
 
All costs of soliciting proxies will be borne by the Company. MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016, has been retained to assist in the solicitation of proxies by mail, telephone, and electronic communication and will be compensated in the estimated amount of $12,500 plus reasonable out-of-pocket expenses.
 
Record Date, Outstanding Voting Securities and Voting Rights
 
Only stockholders of record at the close of business on January 10, 2011, will be eligible to vote at the Annual Meeting or any adjournment or postponement thereof. As of that date, 82,343,355 shares of Common Stock were issued and outstanding. The holders of 41,171,678 shares will constitute a quorum at the meeting.
 
Each share of Common Stock entitles the holder thereof to one vote with respect to each matter that is subject to a vote at the Annual Meeting. Shares may not be voted unless the owner is present or represented by a Proxy. To be represented by proxy, a stockholder can return a signed proxy card or use the telephone or Internet voting procedures. All shares that are represented by effective proxies received by the Company in time to be voted shall be voted by the authorized Proxy at the Annual Meeting or any adjournment or postponement thereof. Where stockholders direct how their votes shall be cast, shares will be voted in accordance with such directions. Proxies submitted with abstentions and broker non-votes will be included in determining whether or not a quorum is present. Abstentions and broker non-votes will not be counted in tabulating the number of votes cast on proposals submitted to stockholders and therefore will have no effect on the outcome of the votes. If you hold your shares in a broker or other street name account but do not instruct your broker how to vote, your broker will not vote your shares for Proposals 1, 3 and 4, which is called a broker non-vote. Please note in particular that broker non-votes will not be counted with regard to the election of directors, so your vote is important.
 
The proxy also confers discretionary authority to vote on all matters that may properly come before the Annual Meeting, or any adjournment or postponement thereof, respecting (i) matters of which the Company did not have timely notice but that may be presented at the meeting; (ii) approval of the minutes of the prior meeting; (iii) the election of any person as a director if a nominee is unable to serve or for good cause will not serve; (iv) any stockholder proposal omitted from this proxy statement pursuant to Rule 14a-8 or 14a-9 of the Securities and Exchange Commission’s (the “SEC”) proxy rules; and (v) all matters incident to the conduct of the meeting.
 
Revoking a Proxy
 
Any stockholder giving a proxy may revoke it at any time prior to the voting thereof by mailing a revocation or a subsequent proxy to Paula M. Ciprich, General Counsel and Secretary of the Company, at the above address, by voting a subsequent proxy by internet or phone, or by filing written revocation at the meeting with Ms. Ciprich, Secretary of the meeting, or by casting a ballot at the meeting. If you are an employee stockholder or retired employee stockholder, you may revoke voting instructions given to the Trustee by following the instructions under “Employee and Retiree Stockholders” in this proxy statement.
 
Employee and Retiree Stockholders
 
If you are a participant in at least one of the Company’s Employee Stock Ownership Plan or Tax-Deferred Savings Plans, the proxy card will also serve as a voting instruction form to instruct the Trustee


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as to how to vote your shares. All shares of Common Stock for which the Trustee has not received timely directions shall be voted by the Trustee in the same proportion as the shares of Common Stock for which the Trustee received timely directions, except in the case where to do so would be inconsistent with the provisions of Title I of ERISA. If the voting instruction form is returned signed but without directions marked for one or more items, regarding the unmarked items you are instructing the Trustee and the Proxies to vote FOR Proposals 1, 2 and 3, and for the three-year option on Proposal 4. Participants in the Plan(s) may also provide those voting instructions by telephone or the Internet. Those instructions may be revoked by re-voting or by written notice to Vanguard Fiduciary Trust Company, Trustee for the Company’s Tax-Deferred Savings Plans and the Employee Stock Ownership Plan, on or before March 7, 2011 at the following address:
 
National Fuel Gas Company
Attn: Legal Department
6363 Main Street
Williamsville, NY 14221
 
Multiple Copies of Proxy Statement
 
The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name may receive only one copy of the proxy statement and the Company’s annual report. However, if any stockholder wishes to revoke consent for householding and receive a separate annual report or proxy statement in 2011 or in the future, he or she may telephone, toll-free, 1-800-542-1061. The stockholder will need their 12-digit Investor ID number and should simply follow the prompts. Stockholders may also write Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Stockholders sharing an address who wish to receive a single set of reports may do so by contacting their banks or brokers, if they are the beneficial holders or be contacting Broadridge at the address provided above if they are the record holders. This procedure will reduce our printing costs and postage fees, and reduce the quantity of paper arriving at your address.
 
Stockholders who participate in householding will continue to receive separate proxy cards. Householding will not affect your dividend check mailings.
 
For additional information on householding, please see “IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS” in this proxy statement.
 
Other Matters
 
The Board of Directors does not know of any other matter that will be presented for consideration at the Annual Meeting. If any other matter does properly come before the Annual Meeting, the Proxies will vote in their discretion on such matter.
 
Annual Report
 
Mailed herewith is a copy of the Company’s Annual Report for the fiscal year ended September 30, 2010, which includes financial statements. The Company will furnish any exhibit to the Form 10-K upon request to the Secretary at the Company’s principal office, and upon payment of $5 per exhibit.


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PROPOSAL 1. ELECTION OF DIRECTORS
 
Three directors are to be elected at this Annual Meeting. The nominees for the three directorships are: Robert T. Brady, Rolland E. Kidder and Frederic V. Salerno. Messrs. Brady, Kidder and Salerno are currently directors of the Company.
 
The Company’s Certificate of Incorporation provides that the Board of Directors shall be divided into three classes, and that these three classes shall be as nearly equal in number as possible. (A class of directors is the group of directors whose terms expire at the same annual meeting of stockholders.) As well, the Company’s Certificate of Incorporation provides that any elected director shall hold office until their successors are elected and qualify, subject to prior death, resignation, retirement, disqualification or removal from office. Accordingly, Messrs. Brady, Kidder and Salerno have been nominated for terms of three years and until their respective successors shall be elected and shall qualify.
 
It is intended that the Proxies will vote for the election of Messrs. Brady, Kidder and Salerno as directors, unless they are otherwise directed by the stockholders. Although the Board of Directors has no reason to believe that any of the nominees will be unavailable for election or service, stockholders’ proxies confer discretionary authority upon the Proxies to vote for the election of another nominee for director in the event any nominee is unable to serve, or for good cause will not serve. Messrs. Brady, Kidder and Salerno have consented to being named in this proxy statement and to serve if elected.
 
The affirmative vote of a plurality of the votes cast by the holders of shares of Common Stock entitled to vote is required to elect each of the nominees for director.
 
Refer to the following pages for information concerning the three nominees for director, as well as concerning the seven incumbent directors of the Company whose current terms will continue after the 2011 Annual Meeting, including information with respect to their principal occupations and certain other positions held by them.
 
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
 
Last year all directors attended the Annual Meeting of Stockholders, and they are expected to do so this year. A meeting of the Board of Directors will take place on the same day and at the same place as the Annual Meeting of Stockholders this year (and probably future years), and directors are expected to attend all meetings. If a director is unable to attend a Board meeting in person, participation by telephone is permitted and in that event the director may not be physically present at the Annual Meeting of Stockholders.


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PROPOSAL NO. 1 — ELECTION OF DIRECTORS
 
The Board of Directors of National Fuel Gas Company currently has ten members, who are divided into three classes. The classes are as equal in number as is possible depending on the total number of directors at any time. Generally, directors are elected for three-year terms. Each director’s term expires upon the end of such term and when their respective successors shall be elected and shall qualify. The classes are arranged so that the terms of the directors in each class expire at successive annual meetings. This means that the stockholders elect approximately one-third of the members of the Board of Directors annually. With respect to directors elected by the Board, it has been the Company’s practice to put those directors up for election at the next annual meeting of shareholders. The terms of three directors expire at this annual meeting. All three of those directors, Robert T. Brady, Rolland E. Kidder and Frederic V. Salerno, will stand for election at the annual meeting.
 
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ALL NOMINEES FOR THE BOARD OF DIRECTORS.
 
Nominees for Election as Directors for Three-Year Terms to Expire in 2014
 
Robert T. Brady has been Chairman of Moog Inc. since February 1996. Moog is a worldwide designer, manufacturer and integrator of precision control components and systems. He has been Chief Executive Officer of Moog Inc. since 1988 and a Moog Board member since 1984. He was President from 1988 until December 2, 2010. He is also a Director of Astronics Corporation, M&T Bank Corporation and Seneca Foods Corporation and was named to the UB Council (State University of New York at Buffalo) in January of 2008. Mr. Brady holds a B.S. in Mechanical Engineering from the Massachusetts Institute of Technology and an M.B.A. from the Harvard University School of Business Administration. He also served as an officer in the U.S. Navy. He is the Lead Independent Director and, as such, chairs the regular executive sessions of non-management directors and is the designated contact for stockholders and other interested parties to communicate with the non-management directors on the Board. Mr. Brady, 70, has been a Company director since 1995.
 
Mr. Brady brings to the Board strong business and leadership experiences; from his experience at a publicly-traded company, having been with Moog since 1966 in positions that have encompassed finance, production and operations management, and also from having served as an officer in the U.S. Navy. He is the Company’s only independent director who is currently an executive at a publicly-traded company, which brings a unique and important perspective to the Board.
 
Rolland E. Kidder was the founder of Kidder Exploration, Inc., an independent Appalachian oil and gas company, and was Chairman and President from 1984 to 1994. Mr. Kidder is also a former Director of the Independent Oil and Gas Association of New York and the Pennsylvania Natural Gas Association - both Appalachian-based energy associations. He was a Trustee of the New York Power Authority from 1982 to 1993, an investment advisor for P.B. Sullivan & Co., Inc. from 1994 to 2001 and Executive Director of the Robert H. Jackson Center, Inc., in Jamestown, New York, from 2002 to 2006. Mr. Kidder holds a B.A. from Houghton College, and a Juris Doctorate from the State University of New York at Buffalo School of Law. Mr. Kidder, 70, has been a Company director since 2002.
 
As the founder and former president of an Appalachian producer, Mr. Kidder brings to the Board his knowledge and experience of the exploration and production business in Appalachia. His past directorships of both Pennsylvania and New York based independent producer associations also contribute to that industry knowledge. Mr. Kidder has worked and lives in a small town, in a rural area of the Company’s utility service territory. His local knowledge helps the Board understand the perspective of the Company’s retail utility customer and the Company’s retail stockholders, many of whom are also utility customers and who represent a significant portion of the Company’s retail stockholder ownership.
 
Frederic V. Salerno has, since 2006, served as Senior Advisor to New Mountain Capital, L.L.C., and also currently serves as a director to, GGCP, Inc., one of the Gabelli companies noted in footnote 4 on p. 16, both of which are significant private equity institutional stockholders of the Company. Mr. Salerno retired as Vice Chairman and Chief Financial Officer of Verizon, Inc. in September 2002 after more than 37 years in the telecommunications industry. He was senior Vice Chairman and Chief Financial Officer of Verizon prior to the Bell Atlantic/GTE merger, which created Verizon. Mr. Salerno joined New York Telephone in 1965, became Vice President in 1983 and was appointed President and Chief Executive Officer in 1987 (NY Telephone became Bell Atlantic in 1997). He also served as President, and currently serves as Trustee, of the Inner City Scholarship Fund. In addition, he was Chairman of the Board of Trustees of the State University of New York from 1990 to 1996. Mr. Salerno is a Director of Akamai Technologies, Inc., Intercontinental Exchange, Inc., Popular, Inc., Viacom, Inc., and CBS Corporation and was a Director of Bear Stearns & Co., Inc., from 1993 to 2008, Consolidated Edison, Inc. from 2002 to 2006, and was Chairman of the Board of Orion Power Holdings from 2000 to 2002. Mr. Salerno holds a B.S. in Engineering


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from Manhattan College and an M.B.A. from Adelphi University. Mr. Salerno, 67, has been a Company director since 2008.
 
Mr. Salerno was nominated and elected to the Board in 2008 pursuant to a now-expired agreement with New Mountain. The Board chose to nominate Mr. Salerno for another term although it was under no obligation to do so. Mr. Salerno provides to the Board a particular perspective of an institutional stockholder, which is valuable. As the former Chief Financial Officer of Verizon and Bell Atlantic, Mr. Salerno brings extensive financial expertise to the Board. Further, Mr. Salerno’s years of experience in the telecommunications industry provide the Board with additional perspective from a regulated business outside the natural gas industry. In addition, Mr. Salerno’s experience serving on boards for a variety of major public companies provides the Company with a perspective from other industries.
 
Directors Whose Terms Expire in 2012
 
R. Don Cash has been Chairman Emeritus since May 2003, and a Board Director since May 1978, of Questar Corporation (Questar), an integrated natural gas company headquartered in Salt Lake City, Utah. He was Chairman of Questar from May 1985 to May 2003, Chief Executive Officer of Questar from May 1984 to May 2002 and President of Questar from May 1984 to February 1, 2001. Mr. Cash has been a Director of Zions Bancorporation since 1982, a Director of Associated Electric and Gas Insurance Services Limited since 1993, a Director, currently also Chairman, of Texas Tech Foundation since November 2003, and a Director of the Ranching Heritage Association. He was a Director of TODCO (The Offshore Drilling Company) from May 2004 to July 2007 and a former Trustee, until September 2002, of the Salt Lake Organizing Committee for the Olympic Winter Games of 2002. Mr. Cash holds a degree in Engineering from Texas Tech University. Mr. Cash, 68, has been a Company director since 2003.
 
Because of his nearly 18 years of experience at the helm of Questar Corporation and over 30 years of directorship experience on multiple oil and gas industry-related boards, Mr. Cash provides a broad perspective on the issues facing the Company. In particular, Mr. Cash’s depth of experience with Questar, a diversified natural gas company similarly situated to National Fuel, uniquely positions him to provide valuable insights and to inform Board discussions.
 
Stephen E. Ewing was Vice Chairman of DTE Energy (DTE), a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide, from November 1, 2005 to December 31, 2006. Two of DTE’s subsidiaries are Detroit Edison, the nation’s 10th largest electric utility, and Michigan Consolidated Gas Co. (MichCon), the nation’s 11th largest natural gas local distribution company. Mr. Ewing also had responsibility for DTE’s exploration and production subsidiary (DTE Gas Resources) with operations in the Antrim and Barnett Shale. He was also at various times Group President, Gas Division, DTE, President and Chief Operating Officer of MCN Energy Group, Inc. (the then parent of MichCon) and President and Chief Executive Officer of MichCon, until it was acquired by DTE. Mr. Ewing has been a Director of CMS Energy since July 2009. He was also Chairman of the Board of Directors of the American Gas Association for 2006, a member of the National Petroleum Council, and Chairman of the Midwest Gas Association and the Natural Gas Vehicle Coalition. He is currently a Trustee and immediate past Chairman of the Board of The Skillman Foundation, a not-for-profit foundation focused on providing education for low-income children, Chairman of the Auto Club of Michigan (AAA) and Vice Chairman of the Board of the Auto Club Group (AAA). Mr. Ewing holds a B.A. from DePauw University and an MBA from Michigan State University, and completed the Harvard Advanced Management Program. Mr. Ewing, 66, has been a Company director since 2007.
 
Mr. Ewing’s extensive executive management experience at regulated energy companies provides the Board with a valuable perspective on the Company’s regulated businesses. Also, his responsibility for DTE’s exploration and production subsidiary, with operations in the Antrim and Barnett Shale, enables Mr. Ewing to provide knowledgeable insights with regard to the Company’s exploration and production business.
 
George L. Mazanec is the former Vice Chairman, from 1989 to October 1996, of PanEnergy Corporation, Houston, Texas, a diversified energy company (now part of Spectra Energy), and the former President and Chief Executive Officer of Texas Eastern Transmission Corporation from 1991 to 1993. He has also been Executive Vice President and Chief Financial Officer of Texas Gas Transmission, Vice President and Chief Financial Officer of Duquesne Electric Co., President of Northern Natural Gas Liquids, Vice President and Treasurer of Northern Natural Gas Co., Advisor to the Chief Operating Officer of Duke Energy Corporation and Chairman of the Management Committee of Maritimes & Northeast Pipeline, L.L.C. Mr. Mazanec was a Director of TEPPCO, LP from 1992 to 1997, a Director of Northern Border Pipeline Company Partnership from 1993 to 1998, a Director of Westcoast Energy Inc. from 1998 to 2002 and a Director of the Northern Trust Bank of Texas, NA from 1998 to 2007. He was a Director of Dynegy Inc. from May 2004 to May 2010, a Director of Associated Electric and Gas Insurance Services Limited since 1995, and a member of the Board of Trustees of DePauw University since 1996. Mr. Mazanec holds a B.A. in


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Economics from DePauw University, and an M.B.A. from the Harvard University School of Business Administration. Mr. Mazanec, 74, has been a Company director since 1996.
 
Mr. Mazanec’s decades of executive experience in the natural gas interstate pipeline industry provide the Board with an important insight into that business. In addition, Mr. Mazanec’s role as the Chief Financial Officer of an interstate natural gas pipeline company, as well as of an electric company, provides the Board with a valuable financial perspective. As more fully described in the Audit Committee discussion on page 9, Mr. Mazanec qualifies as an “audit committee financial expert” under the Securities and Exchange Commission Rules.
 
Directors Whose Terms Expire in 2013
 
Philip C. Ackerman was Chief Executive Officer of the Company from October 2001 to February 21, 2008, Chairman of the Board of the Company from January 3, 2002 to March 11, 2010, President of the Company from July 1999 to February 2006, Senior Vice President of the Company from June 1989 to July 1999 and Vice President of the Company from 1980 to June 1989. He was also President of National Fuel Gas Distribution Corporation (1) from October 1995 to July 1999 and Executive Vice President from June 1989 to October 1995, Executive Vice President of National Fuel Gas Supply Corporation (1) from October 1994 to March 2002, President of Seneca Resources Corporation (1) from June 1989 to October 1996, President of Horizon Energy Development, Inc. (1) from September 1995 to March 2008 and President of certain other non-regulated subsidiaries of the Company from prior to 1992 to March 2008. Mr. Ackerman is currently a Director of Associated Electric and Gas Insurance Services Limited and is also the Chair of the Erie County (New York) Industrial Development Agency. Mr. Ackerman holds a B.S. in Accounting from the State University of New York at Buffalo and a Juris Doctorate from Harvard University. Mr. Ackerman, 67, has been a Company director since 1994.
 
Mr. Ackerman’s more than 40 years’ involvement with the Company, including his experience as President of all of the Company’s major segments, enables him to provide the Board with an in-depth perspective on the Company. During his tenure with the Company, National Fuel grew from a regional utility company with $300 million in assets to a fully integrated energy company with over $5.1 billion in assets. Also, Mr. Ackerman has deep ties to Western New York, the location of the Company’s corporate headquarters and significant business operations.
 
Craig G. Matthews was President, Chief Executive Officer and Director of NUI Corporation, a diversified energy company acquired by AGL Resources Inc. on November 30, 2004, from February 2004 to December 2004. In addition, he was Vice Chairman, Chief Operating Officer and Director of KeySpan Corporation (previously Brooklyn Union Gas Co.) from March 2001 to March 2002, and held various positions over a 36 year career at KeySpan, including Executive Vice President, Chief Financial Officer and a Director of KeySpan Corporation as well as its exploration and production subsidiary Houston Natural Gas Co. He has been a Director of Hess Corporation (formerly Amerada Hess Corporation) since 2002, and a Board member of Republic Financial Corporation since May 2007. Mr. Matthews is a Member and Former Chairman of the Board of Trustees, Polytechnic Institute of New York University, and is a member of the National Advisory Board for the Salvation Army as well as the founding Chairman of the New Jersey Salvation Army Board. He received his B.S. in Civil Engineering from Rutgers in 1965, and completed his M.S. in Industrial Management at Brooklyn Polytechnic University. He also holds a Doctor of Engineering (Honorary) from NYU/POLY received in 2009. Mr. Matthews, 68, has been a Company director since 2005.
 
Mr. Matthew’s substantial experience in the energy industry, having acquired executive, managerial and financial experience with KeySpan and NUI Corporation over 37 years, particularly in applying accounting principles and financial strategy to issues affecting energy companies, make him highly qualified for his service as Chairman of the Company’s Audit Committee. As more fully described in the Audit Committee discussion on page 9, Mr. Matthews qualifies as an “audit committee financial expert” under the Securities and Exchange Commission Rules. During his career, Mr. Matthews has had responsibilities in the areas of marketing, information systems, engineering, finance, and strategic planning functions.
 
Richard G. Reiten was Chairman from September 2000 through February 2005 and also from May 2006 through May 2008, and a Director from March 1996 to May 2008, of Northwest Natural Gas Company, a natural gas local distribution company headquartered in Portland, Oregon. He was Chief Executive Officer of Northwest Natural Gas Company from January 1997 to December 2002 and President from January 1996 to May 2001. Mr. Reiten has been a Director of Associated Electric and Gas Insurance Services Limited since 1997, a Director of US Bancorp since 1998, and a Director of IDACORP Inc. since January 2004. He previously served as President of Portland General Electric Company from 1992 to 1995
 
 
(1)  Wholly owned subsidiary of the Company


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and of Portland General Corporation from 1989 to 1992. Mr. Reiten was Chairman of the American Gas Association (AGA) from 2002 to 2003 and a Director of the AGA from 1996 to 2003. Mr. Reiten also served 25 years in the wood products industry including in leadership positions at the DiGiorgio Corporation (President, Building Materials Group, 1974 to 1980) and the Nicolai Company (President and Chief Executive Officer, 1980 to 1987). He was a Director of Building Materials Holding Corporation from 2001 through 2009. Mr. Reiten holds a B.A. in Business Administration from the University of Washington and completed the Executive and Board of Directors programs at Stanford School of Business. Mr. Reiten, 71, has been a Company director since 2004.
 
Mr. Reiten’s extensive executive managerial experience at utility companies provides the Board with important insights with respect to the utility segment of the Company’s business. His experience at other public companies, including his directorships, provides a breadth of knowledge that makes him a valued member of the Board.
 
David F. Smith has been Chairman of the Board of the Company since March 11, 2010, and Chief Executive Officer of the Company since February 2008. Mr. Smith has been Chairman of National Fuel Gas Distribution Corporation (1), and National Fuel Gas Supply Corporation (1) since March of 2008, and Chairman of Empire Pipeline, Inc. (1) and Seneca Resources Corporation (1) since April 2008. He was previously President of the Company from February 2006 to June 30, 2010 and Vice President from April 2005 to February 2006, President of National Fuel Gas Supply Corporation (1) from April 2005 to July 1, 2008 and Senior Vice President from June 2000 to April 2005, and was President of National Fuel Gas Distribution Corporation (1) from July 1999 to April 2005 and Senior Vice President from January 1993 to July 1999. Mr. Smith was also President of Empire State Pipeline (1) from April 2005 through July 2008, and President or Chairman of various non-regulated subsidiaries of the Company. He is a Board member of the American Gas Association (Executive Committee), American Gas Foundation, Gas Technology Institute (Executive Committee) the Business Council of New York State (Executive Committee), the Buffalo Niagara Enterprise (Chairman), the Buffalo Niagara Partnership (Executive Committee) and the State University of New York at Buffalo Law School Dean’s Advisory Council. Mr. Smith holds a Bachelor of Arts in Political Science from the State University of New York at Fredonia, as well as a Juris Doctorate from the State University of New York at Buffalo School of Law. Mr. Smith, 57, has been a Company director since 2007.
 
Mr. Smith has been employed by the Company since 1978, and during his tenure has served as President of both our Supply and Distribution companies, as well as President of Empire State Pipeline and Chairman of Seneca Resources. He has a long and active participation in industry groups that tackle most of the important issues facing our industry. These experiences provide the foundation for his role as the strategic leader of the Company. Also, Mr. Smith has deep ties to Western New York, the location of the Company’s corporate headquarters and significant business operations.
 
Director Independence
 
The Board of Directors has determined that directors Brady, Cash, Ewing, Kidder, Matthews, Mazanec, Reiten and Salerno are independent, and that Mr. Smith, Chairman of the Board and Chief Executive Officer of the Company, and Mr. Ackerman are not independent due to their employment relationship with the Company, which for Mr. Ackerman ceased June 1, 2008. The Board’s determinations of director independence were made in accordance with the listing standards of the New York Stock Exchange (NYSE) and SEC regulations. In making its independence determinations, the Board considered that Mr. Brady is Chairman and Chief Executive Officer of Moog Inc., which maintains its headquarters in the Company’s utility service territory and that payments made by Moog to Company affiliates for natural gas service in each of Moog’s last three fiscal years were not in excess of the greater of (i) $1,000,000, or (ii) 2% of Moog’s consolidated gross revenues for the applicable fiscal year. The Board also considered that a son of Mr. Kidder is employed by an affiliate of the Company (since before Mr. Kidder became a Company director) in a non-executive supervisory position, at a rate of total compensation that does not implicate the SEC’s regulations regarding related person transactions.
 
Board Leadership Structure
 
The Board of Directors has decided that the appropriate leadership structure at the present time is a combined CEO/Chairman. The Board believes that the combination of the roles provides an efficient and effective leadership model of clear accountability and promotes unified leadership and direction for the Company and also allow for a clear focus for management to execute business plans. It is the Board’s opinion that the shareholders’ interests are best served by allowing the Board to retain flexibility to determine the optimal organizational structure for the Company at a given time, including whether the
 
 
(1)  Wholly owned subsidiary of the Company


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Chairman role should be filled by the CEO who serves on the Board. The members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company faces, and are in the best position to evaluate its needs and how best to organize the capabilities of the directors and management to meet those needs.
 
The independent directors met once during the Company’s fiscal year ended September 30, 2010 (“fiscal 2010”) as required by the New York Stock Exchange rules. In addition, non-management directors meet at regularly scheduled executive sessions without management. The sessions are chaired by the Lead Independent Director, Robert T. Brady. The Board of Directors provides a process for stockholders and other interested parties to send communications to the Board or to certain directors. Communications to Mr. Brady, to the non-management directors as a group, or to the entire Board should be addressed as follows: Robert T. Brady, Moog Inc., P.O. Box 18, East Aurora, New York 14052. For the present, all stockholder and interested parties’ communications addressed in such manner will go directly to the indicated directors. If the volume of communication becomes such that the Board adopts a process for determining which communications will be relayed to Board members, that process will appear on the Company’s website at www.nationalfuelgas.com.
 
Diversity
 
Under the Company’s Corporate Governance Guidelines, the Board of Directors is required, when selecting candidates for re-election and candidates for Board membership, to consider factors that include a diversity of experience related to the business segments in which the Company operates, as well as a diversity of perspectives to be brought to the Board by the individual members.
 
Meetings of the Board of Directors and Standing Committees
 
In fiscal 2010, there were five meetings of the Board of Directors. In addition, directors attended meetings of standing or pro tempore committees. The Audit Committee held nine meetings, the Compensation Committee held six meetings, the Executive Committee held one meeting, and the Nominating/Corporate Governance Committee held three meetings. During fiscal 2010, all directors attended at least 75% of the aggregate of meetings of the Board and of the committees of the Board on which they served.
 
The table below shows the number of meetings conducted in fiscal 2010 and the directors who serve on these committees.
 
                 
    BOARD COMMITTEES
                Nominating/
DIRECTOR
  Audit   Compensation   Executive   Corporate Governance
 
Philip C. Ackerman
          X    
Robert T. Brady
      X   X   X (Chair)
R. Don Cash
  X   X       X
Stephen E. Ewing
  X   X        
Rolland E. Kidder
  X           X
Craig G. Matthews
  X (Chair)       X    
George L. Mazanec
  X   X (Chair)   X    
Richard G. Reiten
      X       X
Frederic V. Salerno
      X       X
David F. Smith
          X (Chair)    
                 
Number of Meetings in Fiscal 2010
  9   6   1   3
 
Audit
 
The Audit Committee is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). The Audit Committee held nine meetings during fiscal 2010 in order to review the scope and results of the annual audit, to receive reports of the Company’s independent registered public accounting firm and chief internal auditor, to monitor compliance with the Company’s Reporting Procedures for Accounting and Auditing Matters (included in this proxy statement as Appendix A) and to prepare a report of the committee’s findings and recommendations to the Board of Directors. The members of the committee are independent as independence for audit committee members is defined in the NYSE’s listing standards applicable to the Company, and in SEC regulations. No Audit Committee member simultaneously serves on the audit committees of more than three public companies. The Board limits the number of audit committees on which an Audit Committee member can serve to three, unless the Board has determined that such simultaneous service would not impair the ability of such members to serve effectively. The


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Company’s Board of Directors has determined that the Company has at least two audit committee financial experts (as defined by SEC regulations) serving on its Audit Committee, namely Messrs. Matthews and Mazanec, both of whom are independent directors.
 
In connection with its review of the Company’s internal audit function, the Audit Committee in 2006 had a Quality Assessment performed by a consulting firm that concluded that the Company’s Audit Services Department conducts its audits in accordance with the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing (the “Standards”). Under the Standards, external Quality Assessments should be conducted at least once every five years.
 
Further information relating to the Audit Committee appears in this proxy statement under the headings “Audit Fees” and “Audit Committee Report.” A current copy of the charter is available to security holders on the Company’s website at www.nationalfuelgas.com.
 
Compensation
 
As described in the Compensation Discussion and Analysis in this proxy statement, the Compensation Committee held six meetings during fiscal 2010, in order to review and determine the compensation of Company executive officers, to review reports and to grant awards under the Company’s 2010 Equity Compensation Plan, the 1997 Award and Option Plan, the Performance Incentive Program, the Annual At Risk Compensation Incentive Program (“AARCIP” or the “At Risk Plan”), and the Executive Annual Cash Incentive Program (“EACIP”). The members of the committee are independent as independence is defined in the NYSE listing standards applicable to the Company, and in SEC regulations. A current copy of the charter of the committee is available to security holders on the Company’s website at www.nationalfuelgas.com.
 
The Compensation Committee is responsible for various aspects of executive compensation, including approval of the base salaries and bonuses of the Company’s executive officers. The committee is authorized to evaluate director compensation and make recommendations to the full Board regarding director compensation. The committee may form subcommittees and delegate to those subcommittees such authority as the committee deems appropriate, other than authority required to be exercised by the committee as a whole. The committee also administers the Company’s 2010 Equity Compensation Plan, the 1997 Award and Option Plan, the At Risk Plan, and the National Fuel Gas Company Performance Incentive Program, and approves performance conditions and target incentives of executive officers under the EACIP. As described more fully in the Compensation Discussion and Analysis, the Company retained The Hay Group, and Hewitt Consulting (now Meridian Compensation Partners, LLC), both independent compensation consulting firms, to assist in approving executive compensation. In addition, as set forth in the Compensation Committee’s charter, the Chief Executive Officer may and does make, and the committee may and does consider, recommendations regarding the Company’s compensation and employee benefit plans and practices. The committee then approves executive compensation as it deems appropriate.
 
Executive
 
There was one meeting of the Executive Committee during fiscal 2010. The committee has and may exercise the authority of the full Board, except as may be prohibited by New Jersey corporate law (N.J.S.A.§ 14A:6-9).
 
Nominating/Corporate Governance
 
All the members of the Nominating/Corporate Governance Committee are independent, as independence for nominating committee members is defined in the NYSE listing standards applicable to the Company, and in SEC regulations. The committee makes recommendations to the full Board on nominees for the position of director. The committee also has duties regarding corporate governance matters as required by law, regulation or NYSE rules. The committee held three meetings during fiscal 2010. Stockholders may recommend individuals to the committee to consider as potential nominees. Procedures by which stockholders may make such recommendations are set forth in Exhibit B to the Company’s Corporate Governance Guidelines, described in the following paragraph.
 
The committee’s charter provides for the committee to develop and recommend to the Board criteria for selecting new director nominees and evaluating unsolicited nominations, which criteria are included in this proxy statement as part of the Company’s Corporate Governance Guidelines. A current copy of the charter of the committee is available to stockholders on the Company’s website at www.nationalfuelgas.com and in print to stockholders who request a copy from the Company’s Secretary at its principal office. A current copy of the Corporate Governance Guidelines is included in this proxy statement as Appendix B, and is available to stockholders on the Company’s website at www.nationalfuelgas.com. Appendix B also addresses the qualifications and skills the committee believes are necessary in a director, and the committee’s


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consideration of stockholder recommendations for director. Stockholder recommendations identifying a proposed nominee and setting out his or her qualifications should be delivered to the Company’s Secretary at its principal office no later than September 23, 2011 in order to be eligible for consideration at the 2012 Annual Meeting of Stockholders.
 
Charitable Contributions by Company
 
Within the preceding three years, the Company did not make any charitable contributions to any charitable organization in which a director served as an executive officer which exceeded the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues in a single fiscal year.
 
Compensation Committee Interlocks and Insider Participation
 
There are no “Compensation Committee interlocks” or “insider participation” which SEC regulations or NYSE listing standards require to be disclosed in this proxy statement.
 
Code of Business Conduct and Ethics
 
The Company’s Code of Business Conduct and Ethics is available on the Company’s website at www.nationalfuelgas.com and in print to stockholders who request it from the Company’s Secretary at its principal office.
 
Risk Oversight
 
The Company has an enterprise risk management program developed by senior management and the Board and overseen by the CEO. Under this program, major enterprise-wide risks have been identified, along with the mitigative measures to address and manage such risk. At each quarterly meeting of the Audit Committee, to which all Directors are invited and typically attend, the major risks and associated mitigative measures are reviewed. At each Board meeting, a specific presentation is made regarding one or two specific areas of risk. Additional review or reporting on enterprise risks is conducted as needed or as requested by the Board.
 
Related Person Transactions
 
The Company had no related person transactions in fiscal 2010. The Company’s Code of Business Conduct and Ethics (which is in writing and available to stockholders as described above) identifies the avoidance of any actual or perceived conflicts between personal interests and Company interests as an essential part of the responsibility of the Company’s directors, officers and employees. The Code provides that a conflict of interest may arise when a director, officer or employee receives improper personal benefits as a result of his or her position in the Company, or when personal situations tend to influence or compromise a director’s, officer’s or employee’s ability to render impartial business decisions in the best interest of the Company. Potential conflicts of interest under the Code would include but not be limited to related person transactions. The Audit Committee administers the Code as it relates to the Company’s directors and executive officers.
 
The Company’s policies and procedures for the review, approval or ratification of related person transactions are set forth in writing in the charter of the Audit Committee. The charter provides that the Audit Committee will review and, if appropriate, approve or ratify any transaction between the Company and a related person which is required to be disclosed under SEC rules. In the course of its review of a transaction, the Audit Committee will consider the nature of the related person’s interest in the transaction, the material terms of the transaction, the significance of the transaction to the related person and to the Company, whether the transaction would affect the independence of a director, and any other matters the Audit Committee deems appropriate. The Audit Committee will approve or ratify only those transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders, as the Audit Committee determines in good faith. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction.
 
Directors’ Compensation
 
The 2009 Non-Employee Director Equity Compensation Plan (“Director Compensation Plan”) was approved at the 2009 Annual Meeting. The Retainer Policy for Non-Employee Directors (the “Retainer Policy”), which was approved at the 1997 Annual Meeting of Stockholders and amended at the 2009 Annual Meeting, currently remains in place as well. Directors who are not Company employees or retired employees do not participate in any of the Company’s employee benefit or compensation plans. Directors who are current employees receive no compensation for serving as directors. Only non-employee directors may participate in the Director Compensation Plan and the Retainer Policy, under which


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directors are paid in cash plus an amount of common stock adjusted from time to time. Since April 11, 2009, the annual retainer has been $36,000 plus 1,600 shares of Common Stock.
 
In fiscal 2010, the Directors were paid pursuant to the Retainer Policy and Director Compensation Plan, with the exception of Mr. Ackerman prior to March 11, 2010. For the period October 1, 2009 through March 11, 2010, in place of payments under the Retainer Policy and Director Compensation Plan, Mr. Ackerman received payments under an agreement described below. The other non-employee directors received four quarterly payments of $9,000 and 400 shares of stock. Common Stock issued to non-employee directors under director compensation plans is nontransferable until the later of two years from issuance or six months after the recipient’s cessation of service as a director of the Company except that transferability restrictions lapse upon the death of the recipient.
 
With the exception of Mr. Ackerman prior to March 11, 2010, non-employee directors were each paid a fee of $2,000 for each Board meeting and $2,000 for each Committee meeting attended in person or by telephone. Non-employee directors were each paid an additional annual retainer of $10,000 if appointed as Chairman of any committee; accordingly, Messrs. Brady, Matthews and Mazanec each received an additional annual retainer of $10,000 during fiscal 2010.
 
In place of the above-described director compensation for the period through the 2010 Annual Meeting (March 10, 2010), Philip C. Ackerman, as Chairman of the Board of Directors for that period, received director compensation under a Director Services Agreement (“Agreement”). The Agreement provided that, effective as of June 1, 2008, after Mr. Ackerman’s retirement from the Company, he would perform the duties and responsibilities of Chairman of the Board of Directors as established under the Company’s By-Laws and Corporate Governance Guidelines, and consult with the Chief Executive Officer on matters pertaining to the administration and operation of the Company that Mr. Ackerman or the Chief Executive Officer deemed appropriate. The Agreement was initially for a term of one year and, by approval of the Board in June of 2009, was extended through the conclusion of the 2010 Annual Meeting. Under the Agreement, Mr. Ackerman was not eligible for any other compensation for his services (except for the insurance provided by the Company for all directors), or to accrue any additional benefits under any Company employee benefit plans. Also under the Agreement, the Company reimbursed Mr. Ackerman for reasonable travel, lodging, meals and other appropriate expenses incurred by him in performance of the Agreement and provided him with suitable office space on its premises and appropriate secretarial services on an as-needed basis. The Agreement was not renewed after the conclusion of the 2010 Annual Meeting and since then Mr. Ackerman has been paid under the Director Compensation Plan and Retainer Policy.
 
Benefit accruals under the Directors’ Retirement Plan ceased for each current non-employee director on December 31, 1996. Mr. Brady is the only current director eligible for benefits under the Directors’ Retirement Plan benefits, and after he leaves the Board he will receive his accrued Directors’ Retirement Plan benefits of $1,800 per year for up to ten years. Individuals who become directors after February 1997 are not eligible to receive benefits under the Directors’ Retirement Plan. The Directors’ Retirement Plan pays an annual retirement benefit equal to 10% of the annual retainer in effect on December 31, 1996 ($18,000 per year), multiplied by the number of full years of service prior to January 1, 1997, but not to exceed 100% of that annual retainer. The retirement benefit begins upon the later of the date of the director’s retirement from the board or the date the director turns age 70, and continues until the earlier of the expiration of ten years or the death of the director.
 
The Company requires that each director, in order to receive compensation for service as a director, must beneficially own at least 500 shares of Common Stock at the end of the first year of service as a director, at least 1,000 shares at the end of the second year of service and at least 2,500 shares at the end of the third year of service.


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The following table sets forth the compensation paid to each non-employee director for service during fiscal 2010:
 
DIRECTOR COMPENSATION TABLE — FISCAL 2010
 
                                                         
                            Change in
             
                            Pension Value
             
    Fees
                      and Nonqualified
             
    Earned or
                Non-Equity
    Deferred
             
    Paid in
    Stock
    Option
    Incentive Plan
    Compensation
    All Other
       
    Cash ($)
    Awards
    Awards
    Compensation
    Earnings
    Compensation
    Total
 
Name
  (1)     ($)(2)     ($)     ($)     ($) (3)     ($) (4)     ($)  
 
Philip C. Ackerman
    201,778       43,007       None       None       N/A       3       244,788  
Robert T. Brady
    76,000       76,664       None       None       N/A       3       152,667  
R. Don Cash
    82,000       76,664       None       None       N/A       3       158,667  
Stephen E. Ewing
    76,000       76,664       None       None       N/A       3       152,667  
Rolland E. Kidder
    70,000       76,664       None       None       N/A       3       146,667  
Craig G. Matthews
    76,000       76,664       None       None       N/A       3       152,667  
George L. Mazanec
    88,000       76,664       None       None       N/A       3       164,667  
Richard G. Reiten
    60,000       76,664       None       None       N/A       3       136,667  
Frederic V. Salerno
    64,000       76,664       None       None       N/A       3       140,667  
 
 
(1) Represents the portion of the annual retainer paid in cash, plus meeting fees. For Mr. Ackerman it includes the payment under the Agreement and a pro rata payment of the retainer fee for services beginning March 12, 2010.
 
(2) Represents the fair value on the date of issuance, of the Common Stock issued pursuant to the current Retainer Policy, as required by the Financial Accounting Standards Board’s (FASB’s) authoritative guidance for stock compensation. The average of the high and low stock price on each date of issuance was used to compute the fair value. The average prices (and resultant quarterly values of the Stock Awards) generally were as follows: $45.14 for October 1, 2009 (stock in total valued at $18,054), $50.59 for January 4, 2010 (stock in total valued at $20,236), $50.89 for April 1, 2010 (stock in total valued at $20,354) and $45.05 for July 1, 2010 (stock in total valued at $18,020). As noted above, Mr. Ackerman was paid under the Retainer Policy and Director Compensation Plan beginning March 12, 2010 and his first quarterly stock payment had a value of $4,633 based upon the March 12, 2010 average of $52.06. As of September 30, 2010, the aggregate number of shares paid under the Retainer Policy and/or the Director Compensation Plan to Messrs. Ackerman, Brady, Cash, Ewing, Kidder, Matthews, Mazanec, Reiten and Salerno are 800, 13,100, 9,733, 4,946, 10,190, 7,341, 13,100, 7,576 and 1,665 respectively.
 
(3) Mr. Brady is the only active director who has an accrued pension benefit under the Directors’ Retirement Plan, as described above. The Company expensed the present value of this future benefit in a prior fiscal year and continues to expense only the interest associated with this benefit. The fiscal 2010 interest expense to the Company was $2,178. The directors do not have a non-qualified deferred compensation plan or any other pension plan.
 
(4) Represents premiums paid on a Blanket-Travel Insurance Policy, which covers each director up to a maximum benefit of $500,000. This insurance provides coverage in case of death or injury while on a trip for Company business.


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AUDIT FEES
 
In addition to retaining PricewaterhouseCoopers LLP to report on the annual consolidated financial statements of the Company for fiscal 2010, the Company retained PricewaterhouseCoopers LLP to provide various non-audit services in fiscal 2010. The aggregate fees billed for professional services by PricewaterhouseCoopers LLP for each of the last two fiscal years were as follows:
 
                 
    2009     2010  
 
Audit Fees(1)
  $ 1,428,376     $ 1,185,536  
Audit-Related Fees(2)
  $ 18,000     $ 0  
Tax Fees
               
Tax advice and planning(3)
  $ 42,000     $ 21,700  
Tax compliance(4)
  $ 377,000     $ 63,300  
All Other Fees(5)
  $ 2,610     $ 2,610  
                 
TOTAL
  $ 1,867,986     $ 1,273,146  
                 
 
 
(1) Audit Fees include audits of consolidated financial statements and internal control over financial reporting, reviews of financial statements included in quarterly Forms 10-Q, comfort letters and consents, and audits of certain of the Company’s wholly-owned subsidiaries to meet statutory or regulatory requirements.
 
(2) Audit-Related Fees include audits of certain of the Company’s wholly-owned subsidiaries not required by statute or regulation, and consultations concerning technical financial accounting and reporting standards.
 
(3) Tax advice and planning includes consultations on various federal, state and foreign tax matters.
 
(4) Tax compliance includes tax return preparation and tax audit assistance.
 
(5) All Other Fees relate to permissible fees other than those described above and include the software-licensing fee for an accounting and financial reporting research tool.
 
The Audit Committee’s charter (available on the Company’s website at www.nationalfuelgas.com and in print to stockholders who request a copy from the Company’s Secretary at its principal office) references its pre-approval policies and procedures. The committee has pre-approved the use of PricewaterhouseCoopers LLP for specific types of services, including various audit and audit-related services and certain tax services, among others. The chair of the committee and, in his absence, another specified member of the committee, are authorized to pre-approve any audit or non-audit service on behalf of the committee. Each pre-approval is to be reported to the full committee at the first regularly scheduled committee meeting following such pre-approval.
 
For fiscal 2010, none of the services provided by PricewaterhouseCoopers LLP were approved by the Audit Committee in reliance upon the “de minimus exception” contained in Section 202 of Sarbanes-Oxley and codified in Section 10A(i)(1)(B) of the Securities Exchange Act and in 17 CFR 210.2-01(c)(7)(i)(C).


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AUDIT COMMITTEE REPORT
 
The Company’s Board of Directors has adopted a written charter for the Audit Committee of the Board of Directors, a copy of which is available on the Company’s website at www.nationalfuelgas.com and in print to stockholders who request a copy from the Company’s Secretary at its principal office.
 
The Audit Committee has reviewed and discussed the Company’s audited financial statements for fiscal 2010 with management. The Audit Committee has also reviewed with management its evaluation of the Company’s internal control over financial reporting and reviewed management’s assessment about the effectiveness of the Company’s internal control over financial reporting, including any significant deficiencies in such internal control over financial reporting. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, Communication With Audit Committees, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by Rule 3526, Communication with Audit Committees Concerning Independence, of the PCAOB and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. The Audit Committee also has considered whether the independent registered public accounting firm’s provision of non-audit services to the Company and its affiliates is compatible with the independent registered public accounting firm’s independence.
 
Based on the review, discussions and considerations referred to in the preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K (17 CFR 249.310) for the last fiscal year for filing with the SEC.
 
AUDIT COMMITTEE
 
Craig G. Matthews, Chairman
R. Don Cash
Stephen E. Ewing
Rolland E. Kidder
George L. Mazanec


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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
 
The following table sets forth for each current director, each nominee for director, each of the executive officers named in the Summary Compensation Table, and for all directors and officers as a group, information concerning beneficial ownership of Common Stock. The Common Stock is the only class of Company equity securities outstanding. Unless otherwise stated, to the best of the Company’s knowledge, each person has sole voting and investment power with respect to the shares listed, including shares which the individual has the right to acquire through exercise of stock options or SARs but has not done so. All information is as of November 30, 2010.
 
                                                 
            Shares Held in
           
Name of Beneficial
  Exercisable Stock
  Shares Held
  401(k)
  Restricted
  Shares Otherwise
  Percent of
Owner
  Options/SARs(1)   in ESOP(2)   Plan(3)   Stock(4)   Beneficially Owned(5)   Class(6)
 
Philip C. Ackerman
    690,918       22,795       18,878       0       966,288 (7)     2.05 %
David P. Bauer
    36,785       0       3,173       0       2,000       *  
Robert T. Brady
    0       0       0       0       15,700       *  
Matthew D. Cabell
    126,234       0       949       60,000       13,033       *  
R. Don Cash
    0       0       0       0       20,133 (8)     *  
Anna Marie Cellino
    144,967       1,071       23,337       0       104,144       *  
Stephen E. Ewing
    0       0       0       0       6,846       *  
Rolland E. Kidder
    0       0       0       0       26,090 (9)     *  
Craig G. Matthews
    0       0       0       0       12,626       *  
George L. Mazanec
    0       0       0       0       16,500 (10)     *  
John R. Pustulka
    74,978       3,703       15,087       0       30,392       *  
Richard G. Reiten
    0       0       0       0       8,976       *  
Frederic V. Salerno
    0       0       0       0       2,365       *  
David F. Smith
    340,488       1,799       14,516       0       137,752 (11)     *  
Ronald J. Tanski
    229,999       2,874       18,113       0       133,884 (12)     *  
Directors and Executive Officers as a Group (20 individuals)
    2,109,450       36,353       145,802       60,000       1,624,583       4.71 %
 
 
Represents beneficial ownership of less than 1% of issued and outstanding Common Stock on November 30, 2010.
 
(1) This column lists shares with respect to which each of the named individuals, and all current directors and executive officers as a group (20 individuals), have the right to acquire beneficial ownership within 60 days of November 30, 2010, through the exercise of stock options/SARs granted under the 1997 Award and Option Plan and the 2010 Equity Compensation Plan. The shares included in this column for exercisable stock-settled SARs equal the number of shares the officer would have received by exercising those SARs on November 30, 2010, when the Fair Market Value was $62.95 per share. Stock options and SARs, until exercised, have no voting power.
 
(2) This column lists shares held in the Company and Subsidiaries Employee Stock Ownership Plan (“ESOP”). The beneficial owners of these shares have sole voting power with respect to shares held in the ESOP, but do not have investment power respecting most of those shares until they are distributed.
 
(3) This column lists shares held in the Company Tax-Deferred Savings Plan for Non-Union Employees (“TDSP”), a 401(k) plan. The beneficial owners of these shares have sole voting and investment power with respect to shares held in the TDSP.
 
(4) This column lists shares of restricted stock, certain restrictions on which had not lapsed as of November 30, 2010. Owners of restricted stock have power to vote the shares, but have no investment power with respect to the shares until the restrictions lapse.
 
(5) This column includes shares held of record and any shares beneficially owned through a bank, broker or other nominee.
 
(6) This column lists the sum of the individual’s (or individuals’) stock options, SARs and shares shown on this table, expressed as a percent of the Company’s outstanding shares and that individual’s (or individuals’) exercisable stock options and SARs at November 30, 2010.


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(7) Includes 1,000 shares held by Mr. Ackerman’s wife in a trust originally established for the benefit of her mother, and 76,250 shares also held in trust, as to which shares Mr. Ackerman disclaims beneficial ownership, 460,000 shares also held in two Grantor Retained Annuity Trusts (half in each trust), as to which shares Mr. Ackerman disclaims beneficial ownership and 220 shares with respect to which Mr. Ackerman shares voting and investment power with his wife.
 
(8) Includes 5,000 shares held by the Don Kay Clay Cash Foundation, a Utah not-for-profit corporation, of which Mr. Cash, his wife, son and daughter-in-law are directors and also includes 5,000 shares held by Triple C Securities & Investment, Ltd. a limited partnership in which Mr. Cash has an interest. Mr. Cash disclaims beneficial ownership of all 10,000 shares.
 
(9) Includes 10,000 shares owned by Mr. Kidder’s wife, as to which Mr. Kidder shares voting and investment power.
 
(10) Includes 600 shares owned by Mr. Mazanec’s wife, as to which Mr. Mazanec shares voting and investment power.
 
(11) Includes 51,902 shares owned by Mr. Smith’s wife, as to which Mr. Smith shares voting and investment power.
 
(12) Includes 614 shares owned jointly with Mr. Tanski’s wife, as to which Mr. Tanski shares voting and investment power.
 
As of January 10, 2011, the Company knows of no one who beneficially owns in excess of 5% of the Company’s Common Stock, which is the only class of Company stock outstanding, except as set forth in the table below.
 
                         
    Shares Held as
       
    Trustee for Company
  Shares
  Percent
    Employee Benefit
  Otherwise
  of
Name and Address of Beneficial Owner
  Plans(1)   Beneficially Held   Class(2)
 
Vanguard Fiduciary Trust Company
Company 100 Vanguard Boulevard
Malvern, PA 19355
    4,247,727       2,835,163 (3)     8.60 %
Mario J. Gabelli
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
    N/A       5,822,238 (4)     7.07 %
 
 
(1) This column lists the shares held by Vanguard Fiduciary Trust Company in its capacity as trustee for certain employee benefit plans. Vanguard Fiduciary Trust Company held 4,247,727 shares on behalf of the plans as of January 10, 2011, all of which have been allocated to plan participants. The plan trustee votes the shares allocated to participant accounts as directed by those participants. Shares held by the Trustee on behalf of the plans as to which participants have made no timely voting directions are voted by the Trustee in the same proportion as the shares of Common Stock for which the Trustee received timely directions, except in the case where to do so would be inconsistent with provisions of Title I of ERISA. Vanguard Fiduciary Trust Company disclaims beneficial ownership of all shares held in trust by the Trustee that have been allocated to the individual accounts of participants in the plans for which directions have been received, pursuant to Rule 13d-4 under the Securities Exchange Act.
 
(2) This column lists the sum of the shares shown on this table, expressed as a percent of the Company’s outstanding shares at January 10, 2011.
 
(3) The Vanguard Group, which is affiliated with Vanguard Fiduciary Trust Company, has sole investment discretion and no voting authority with respect to 2,782,178 shares of Company common stock, and defined investment discretion and sole voting authority with respect to 52,985 shares of Company common stock, according to its Form 13F for the period ended September 30, 2010.
 
(4) This number of shares is derived from Amendment No. 2 to Schedule 13D filed on December 28, 2010 by Gabelli Funds, LLC, GAMCO Asset Management Inc., Gabelli Securities, Inc., MJG Associates, Inc., Gabelli Foundation, Inc., GGCP, Inc., GAMCO Investors, Inc., and Mario J. Gabelli.


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EQUITY COMPENSATION PLAN INFORMATION
As of September 30, 2010
 
                         
                Number of securities
 
                remaining available for
 
    Number of securities to be
    Weighted-average exercise
    future issuance under
 
    issued upon exercise of
    price of outstanding
    equity compensation plans
 
    outstanding options,
    options, warrants and
    (excluding securities
 
    warrants and rights
    rights
    reflected in column (a))
 
Plan category
  (a)     (b)     (c)  
 
Equity compensation plans approved by security holders
    4,277,740     $ 33.28       2,747,405 (1)
Equity compensation plans not approved by security holders
    0       0       0  
                         
Total
    4,277,740     $ 33.28       2,747,405  
                         
 
 
(1) Of the securities listed in column (c), 2,101 were available at September 30, 2010 for issuance pursuant to the Company’s Retainer Policy for Non-Employee Directors, and 100,000 were available for issuance pursuant to the Company’s 2009 Non-Employee Director Equity Compensation Plan. Of the remaining 2,645,304 shares, 165,804 were available for future issuance under the 1997 Award and Option Plan and 2,479,500 were available for future issuance under the 2010 Equity Compensation Plan.


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EXECUTIVE COMPENSATION
 
Compensation Committee Report
 
The Compensation Committee of the Board of Directors (the “Committee”) has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based upon this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
 
COMPENSATION COMMITTEE
 
G. L. Mazanec, Chairman
R. T. Brady
R. D. Cash
S. E. Ewing
R. G. Reiten
F. V. Salerno
 
Compensation Discussion and Analysis
 
OVERVIEW
 
The Company’s record of performance is superior. Despite the recent years’ volatile and uncertain business environment, the Company’s stock has done exceedingly well compared to the Standard and Poors 500 Composite Stock Price Index, the S&P Midcap Utility Index and the SIG Oil Exploration & Production Index. In addition, the Company has ranked in the top 10 of the Fortnightly 40 Report for 5 of the past 6 years and is a leader in the industry’s development of the Marcellus Shale. The Compensation Committee works to motivate creation of shareholder value through the compensation program.
 
(PERFORMANCE GRAPH)


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The Compensation Discussion and Analysis (“CD&A”) provides a detailed review of the Company’s executive compensation program, including the goals of the program. In addition to the cash compensation, the Committee grants long-term incentives, most often with a 3-year time horizon, to focus management’s attention on creating shareholder value from a long-term investor’s perspective. The CD&A describes in detail the components of the program and the fiscal 2010 compensation paid to or earned by each named executive officer (as defined herein).
 
OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
 
The Company’s executive compensation program is designed to:
 
  •  Attract, motivate, reward and retain the management talent required to achieve Company objectives and contribute to its long-term success. Retention is encouraged by making a portion of the compensation package in the form of awards that either increase in value, or only have value, if the executive officer remains with the Company for specified periods of time.
 
  •  Focus management efforts on both short-term and long-term drivers of stockholder value.
 
  •  Tie a significant portion of executive compensation to Company long-term stock-price performance and thus stockholder returns by making a part of each executive officer’s potential compensation depend on the market price of the Company’s Common Stock.
 
As is more fully described below, the Company achieves these objectives by providing its executive officers a total compensation program, established and administered by the Committee based on its business judgment following review of the analysis prepared by its compensation consultants of the compensation practices at companies in the energy industry, in general industry and in the exploration and production segment, as appropriate. Total compensation for executive officers is comprised of the following components, each of which is addressed in greater detail below:
 
  •  Base salary;
 
  •  Annual cash incentive compensation;
 
  •  Long term cash incentive compensation;
 
  •  Equity compensation — Restricted stock and/or grants of stock-settled stock appreciation rights; and
 
  •  Employee benefits, including retirement, health and welfare benefits.
 
Role of the Compensation Committee
 
The Compensation Committee administers the Company’s compensation program for its executive officers. It sets the base salaries and available bonus ranges of the Company’s executive officers and exercises the authority delegated to it by the stockholders or the Board under the Company’s cash and equity incentive compensation plans, which include the National Fuel Gas Company 1997 Award and Option Plan, as amended (the “1997 Award and Option Plan”), the 2010 Equity Compensation Plan, the 2007 Annual At Risk Compensation Incentive Plan (the “AARCIP” or “At Risk Plan”) the National Fuel Gas Company Performance Incentive Program (the “Performance Incentive Program”) and the Executive Annual Cash Incentive Program (the “EACIP”). In addition, the Committee makes recommendations to the Board with respect to the development of incentive compensation plans and equity-based plans. The Committee is also responsible for recommending to the Board changes in compensation for non-employee directors. The Committee is comprised of the six directors named above, all of whom have been determined by the Board to be independent.
 
Role of Executive Officers
 
In making its subjective determinations with respect to executive officers other than Mr. Smith, the Committee discusses the information it receives from its compensation consultants with Mr. Smith and seeks his recommendation as to the appropriate base salaries, target bonuses and target long-term incentive awards for each of these other officers, based on his assessment of their performance, contributions and abilities. Mr. Smith also provides input to the Committee’s compensation consultants with regard to the functions of the Company’s officers, to facilitate their recommendations and comparisons of such officers’ and their positions to other positions in the marketplace.
 
Compensation Consultants
 
In 2009 the Committee retained the services of two independent compensation consultants, The Hay Group (Hay) and Hewitt Consulting (now Meridian Compensation Partners, LLC) (Hewitt), to evaluate


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executive compensation. Hay assists the Committee in evaluating and setting officer compensation in the regulated subsidiaries. Generally, for supervisory positions in the regulated subsidiaries, Hay provides job evaluation to a wide range of companies through detailed position analysis based on proprietary information from multiple parent organizations and business units. Hay’s job evaluation and benchmarking methodology allows for customizable job descriptions and organizational rankings that are specific to the Company but relative to industry benchmarks.
 
In 2009 for Company officers, and officers employed by affiliate companies other than Seneca Resources, Hay provided an analysis of compensation practices with respect to base salary, total cash compensation (base salary plus short-term incentive) and total direct compensation (base salary plus short-term incentive plus long-term incentive) compared to similar jobs in general industry and, where appropriate, in the energy industry based on Hay’s proprietary databases. Hay also made recommendations to the Committee on incentive compensation target amounts for both a short-term incentive (cash bonuses as discussed below) and long-term incentive (stock appreciation rights, restricted stock and the Performance Incentive Program target awards also discussed below), and provided a “tally sheet” summary, which provided an overall summary of the compensation that could be received upon a termination of employment, for a representative sample of officers. Additionally, Hay provided a proxy analysis of base salary, bonus, total cash compensation (salary plus bonus), long-term incentive and total direct compensation (salary plus bonus plus long-term incentive) for the three named executive officers (Messrs. Smith and Tanski and Mrs. Cellino) for whom adequate comparative information was available based on 2009 proxy data for the Company and energy companies in an eleven-member peer group of companies that engage in one or more of the businesses in which the Company engages. The members of the peer group ranged in size from $7.2 billion in revenues to $1.0 billion in revenues. The median size of the peer group is $3.07 billion in revenues. The peer group is:
 
AGL Resources Inc.
Atmos Energy Corporation
Energen Corporation
EQT Corporation
MDU Resources Group Inc.
New Jersey Resources Corporation
Northwest Natural Gas Company
Questar Corporation
Southern Union Company
Southwest Gas Corporation
UGI Corporation
 
These companies were selected as members of the peer group because each participates in one or more businesses that are deemed similar to those of the Company. The Committee reviews the members of the peer group from time to time, and makes adjustments, as it believes warranted.
 
Commencing in 2008, the Committee also retained Hewitt to assist in evaluating and setting compensation for employees, including that of Mr. Cabell, at Seneca Resources Corporation. The Committee selected Hewitt for this purpose due to that entity’s expertise in the exploration and production industry. The compensation consulting portion of Hewitt became Meridian Compensation Partners, LLC in September 2010.
 
In 2009, Hewitt provided a proxy analysis of Mr. Cabell’s base salary, target short-term incentive (bonus), target cash compensation (salary plus bonus), long-term incentive and total target compensation (salary plus bonus plus long-term incentive). The Hewitt proxy analysis was based on proxy data from Hewitt’s E&P Compensation Database, supplemented by published survey data, from twenty-one (21) exploration and production companies chosen by the Committee based on certain criteria, such as revenues, assets, standardized measure and the nature of each company’s operations in the exploration and production segment of the energy industry, that made them relatively comparable to the operations at Seneca. The companies in the twenty-one member peer group range in size from $3.1 billion to $314 million in E&P revenues, (with a median of $953 million), from $10.3 billion to $670 million in E&P asset size (with a median of $2.7 billion) and from $3.7 billion to $315 million in standardized measure (with a median of $1.6 billion). The peer group is:
 
Berry Petroleum
Cabot Oil & Gas Corporation
Carrizo Oil & Gas, Inc.
Continental Resources Inc.
El Paso Corporation
Energen Corporation
EQT Corporation
Kinder Morgan Oil & Gas


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Mariner Energy, Inc.
Penn Virginia Corporation
Petroleum Development Corporation
Petroquest Energy, Inc.
Questar Corporation
Quicksilver Resources, Inc.
Range Resources Corporation
Southwestern Energy Company
St. Mary Land & Exploration Company
Swift Energy Company
Ultra Petroleum Corporation
Whiting Petroleum Corporation
Williams Companies, Inc.
 
In 2009, Hewitt also provided a similar analysis for Messrs. Smith and Tanski relative to the 21 member peer group. The Committee requested this analysis for its use in supplementing the comparisons provided by Hay due to the increasing importance of the Company’s exploration and production segment and Messrs. Smith and Tanski’s management of that segment.
 
The Committee utilizes recommendations of the consultant in exercising its business judgment as to compensation matters.
 
TOTAL COMPENSATION
 
Base Salary
 
Base salaries provide a predictable base compensation for day-to-day job performance. The Committee reviews base salaries at calendar year-end for the Company’s executive officers and adjusts them, if it deems appropriate in its subjective business judgment, following review of its compensation consultants’ competitive analysis and, upon consideration of the recommendations of the Chief Executive Officer. In addition, base salary may be adjusted during the calendar year when changes in responsibility occur. Base salary is not adjusted based on specific objective financial results, although overall corporate performance is reviewed by the Committee in its decision making process. The Committee does not use formulas; rather, it exercises its business judgment.
 
In establishing the base salary amount, the Committee generally targets a range of the 50th percentile to the 75th percentile of the survey data provided by Hay and Hewitt. In the subjective business judgment of the Compensation Committee, payment at the median and up to the 75th percentile is necessary to attract, retain and motivate the individuals responsible for the success of the business enterprise. The Committee also considers overall corporate performance and an individual’s specific responsibilities, experience (including time in position), and effectiveness and makes adjustments based on the Committee members’ business judgment and the CEO’s recommendations. The specific elements of individual performance reviewed by the Committee with respect to fiscal 2009 are described below.
 
For calendar year 2010, the Committee increased Mr. Smith’s base salary to an amount that is within the target range of the 2009 proxy group survey data (which reports on fiscal 2008 compensation) and well below the market median for general industry. For 2010, based on its subjective business judgment, the Committee determined to move Mr. Smith’s base salary toward the general industry median to retain him as CEO. The Committee determined that this action was particularly important given the competition for talent in the exploration and production industry, which is a primary business focus of the Company. In determining Mr. Smith’s base salary increase, the Committee also considered the Company’s overall performance, financially and operationally, particularly with respect to improved performance in the Company’s exploration and production segment.
 
The Committee also increased Mr. Tanski’s base salary for calendar year 2010 to an amount that was above the target range of the 2009 proxy group survey data and was slightly below the market median for general industry. Setting the salary level above the target range of the proxy group reflected his dual role at the time of chief financial officer and president of a major subsidiary. Effective July 1, 2010, Mr. Tanski was promoted to President and COO of the Company, at which time the Committee increased Mr. Tanski’s base salary by an additional five percent.
 
In December 2009, based on its and Mr. Smith’s assessment of Mr. Cabell’s responsibilities, experience and effectiveness in the past year, the Committee increased Mr. Cabell’s base salary for calendar 2010 to an amount that was higher than the 75th percentile of the Hewitt data. This increase was awarded in recognition of his performance in the management of the exploration and production segment, including, in particular, development of the Company’s Marcellus Shale assets, and to retain him in his position given the competition for talent in the industry. Effective July 1, 2010 Mr. Cabell was made a Senior Vice

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President in the Company in recognition of his contributions to the Company’s success and growth strategy, at which time the Committee increased Mr. Cabell’s base salary by an additional five percent. Based primarily on Mr. Smith’s recommendation, the Committee increased Mrs. Cellino’s base salary to an amount that approximates the 75th percentile of the 2009 proxy group survey data and that is well below the market median for the general industry to reflect her attention to customer service and oversight of budget and cost control at the utility segment.
 
In making annual base salary increases in 2010 for officers below the level of these four individuals, including Messrs. Bauer and Pustulka, the Committee relied heavily on Mr. Smith’s recommendations. In making such recommendations, Mr. Smith referenced Hay’s compensation report and made recommendations based on his opinion, with input from Mr. Tanski, of an individual’s specific responsibilities, experience and effectiveness. Mr. Bauer received a base salary increase for calendar 2010 based on his performance managing the Company’s financial strategy and his depth of knowledge of and experience with finance, ratemaking and accounting. The merit increase to base salary placed him within the recommended salary range for the energy sector based on the Hay system. Effective July 1, 2010, Mr. Bauer was promoted to Treasurer and Principal Financial Officer of the Company in recognition of his knowledge and skill with respect to the Company’s financial matters. In the exercise of its subjective business judgment, the Committee increased Mr. Bauer’s base salary by fifteen percent as a result of this promotion.
 
As described above, Mr. Smith recommended, and the Committee accepted, a base salary increase for Mr. Pustulka for calendar year 2010 due to his managing the complex interstate pipeline in a safe and efficient manner and his oversight of the associated capital and operating budgets. The merit increase to base salary placed him within the recommended salary range for the energy industry sector based on the Hay System. Effective July 1, 2010, Mr. Pustulka was promoted to President of National Fuel Gas Supply Corporation as a result of his in-depth understanding of the interstate natural gas industry, and of the Company’s complex system of pipelines, storage fields and related facilities. In the exercise of its subjective business judgment, the Committee increased Mr. Pustulka’s base salary by five percent as a result of this promotion.
 
The fiscal 2010 base salaries of the named executive officers are shown on the Summary Compensation Table under “Salary” column within this proxy statement.
 
Annual Cash Incentive
 
We pay an annual cash incentive to our executives to motivate their performance over a short-term (which we generally consider to be no longer than two years). Early in the fiscal year, the Committee establishes a target amount for the annual cash incentive, stated as a percentage of base salary. Executives can earn up to 200% of target, based on performance on written goals.
 
Target Award Levels
 
In setting target award levels for the annual cash incentive for 2010, the Committee exercised its business judgment and, upon consideration of the recommendations of Hay and Hewitt and, other than with respect to his target incentive, those made by Mr. Smith, set target awards as follows:
 
         
    Target
Executive
  (As a Percentage of Base Salary)
 
Mr. Smith
    100 %
Mr. Tanski
    80 %
Mr. Cabell
    70 %
Mrs. Cellino
    70 %
Mr. Pustulka
    45 %
Mr. Bauer
    30 %
 
Performance Goals
 
Based upon discussions with Mr. Smith and Mr. Tanski and upon review of forecasted financial data, the Committee approved for each named executive who participated in the At Risk Plan (Messrs. Smith, Tanski and Cabell and Mrs. Cellino), a set of particular performance goals for the 2010 fiscal year. Certain goals overlapped among named executives; for example, each named executive had a goal tied to consolidated earnings per share. For those officers who participated in the At Risk Plan, the entire bonus is based upon performance against the stated objectives. For those officers under the EACIP, including Mr. Pustulka, 75% of the target incentive was made dependent on objective performance criteria, and 25% was discretionary, with any discretionary amount for executive officers subject to Committee approval. Mr. Bauer was not an executive officer at the beginning of the fiscal year and was not a participant in either


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the At Risk Plan or the EACIP. Rather, Mr. Smith set goals for him where 50% of his target incentive was based on earnings per share performance as reflected in the following table, with the remaining 50% of his target incentive being discretionary.
 
To determine the annual cash incentive bonus award based on a stated performance objective, the weight assigned to each goal is multiplied by the percentage of the goal achieved to calculate a weighted percentage for each goal. Once the weighted percentage for each goal is determined, the percentages are totaled. That total weighted percentage is multiplied by the target award to arrive at the bonus amount. The target award is a percentage of the named executive’s base salary for the fiscal year, and the maximum possible award is two times the target amount. The fiscal 2010 annual cash incentives of the named executive officers are shown on the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. For Messrs. Smith, Tanski, and Cabell and Mrs. Cellino the amounts awarded were entirely based on the pre-established objective performance criteria. For Mr. Pustulka, Mr. Smith recommended an additional discretionary amount under the EACIP and an additional $1,577 outside of the EACIP based on his role in advancing capital projects in the pipeline and storage segment and his role since July 1 as President of National Fuel Gas Supply Corporation. For Mr. Bauer, Mr. Smith recommended an additional discretionary amount of $14,330 based on his performance in overseeing preparation and control of the financial statements, communications with investors and his role since July 1 as Treasurer and Principal Financial Officer of the Company. Both recommendations were approved by the Compensation Committee.
 
The following chart identifies the goals assigned to each of the named executive officers for the 2010 fiscal year, the percentage of each goal achieved, the weight assigned to each goal, and the weighted percentage achieved for each goal. Also noted is each named executive’s total weighted percentage, target and bonus. Following the chart, numbered sequentially to match the appearance of the performance objective in the chart is a summary of what the objective was at the target level of performance, and where appropriate, a summary of how achievement of the objective was measured. With regard to the earnings per share goals, a two-year average was used to calculate performance levels for the consolidated earnings per share goal, regulated companies’ earnings per share goal and Seneca Resources earnings per share goal, as a mechanism to incent individuals to consider more than a one-year earnings impact.


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Annual Cash Incentive
Executive     David F. Smith     Ronald J. Tanski     David P. Bauer     Matthew D. Cabell     Anna Marie Cellino     John R. Pustulka
          %
          Wghtd %
    %
          Wghtd %
    %
          Wghtd %
    %
          Wghtd %
    %
          Wghtd %
    %
          Wghtd %
Fiscal 2010 Goals     Achvd     Wght     Achvd     Achvd     Wght     Achvd     Achvd     Wght     Achvd     Achvd     Wght     Achvd     Achvd     Wght     Achvd     Achvd     Wght     Achvd
  1.     Consolidated EPS       200%         0.25         50.00%         200%         0.25         50.00%         200%         0.25         50.00%         200%         0.15         30.00%         200%         0.25         50.00%         200%         0.25         50.00%  
  2.     Regulated EPS       150%         0.25         37.50%         150%         0.25         37.50%         150%         0.25         37.50%                                       150%         0.25         37.50%         150%         0.25         37.50%  
  3.     Seneca EPS                                                                                                 175%         0.15         26.25%                                                              
  4.     Production Volume       193%         0.20         38.60%         193%         0.15         28.95%                                       193%         0.20         38.60%                                                              
  5.     Marcellus Production       110%         0.15         16.50%                                                                     110%         0.20         22.00%                                                              
  6.     Safety       159%         0.05         7.95%         159%         0.10         15.90%                                                                     159%         0.10         15.90%         159%         0.10         15.90%  
  7.     Operational Safety                                                                                                                               200%         0.10         20.00%                                
  8.     Segment Growth                                     200%         0.15         30.00%                                                                                                                          
  9.     Total Seneca Reserve Replmt                                                                                                 200%         0.10         20.00%                                                              
  10.     PSC Customer Service                                                                                                                               200%         0.15         30.00%                                
  11.     Meter Reading                                                                                                                               200%         0.10         20.00%                                
  12.     F&D Cost                                                                                                 200%         0.10         20.00%                                                              
  13.     LOE/G&A                                                                                                 200%         0.10         20.00%                                                              
  14.     Regulated Cos’ Capital Budget                                                                                                                                                             160%         0.05         8.00%  
  15.     Investor Relations       200%         0.05         10.00%         200%         0.05         10.00%                                                                                                                          
  16.     Investor Relations/PE Ratio       200%         0.05         10.00%         200%         0.05         10.00%                                                                                                                          
  17.     Commission Relations                                                                                                                               200%         0.05         10.00%                                
  18.     Fuel Consumption/LAUF                                                                                                                                                             200%         0.10         20.00%  
  19.     CEO Discretion                                                                   200%         0.50         100.00%                                                                     200%         0.25         50.00%  
                                                                                                                                                                                             
        Total Weighted % Achieved     170.55%     182.35%     187.50%     176.85%     183.40%     181.40%
                                                                                                                                                                                             
        Target     $772,500     $481,000     $67,024     $352,625     $301,000     $150,740
                                                                                                                                                                                             
        Bonus     $1,317,499     $877,104     $125,670*     $623,617     $552,034     $273,443*
                                                                                                                                                                                             
 
 
* Mr. Smith recommended an additional $14,330 for Mr. Bauer and $1,557 for Mr. Pustulka which was approved by the Compensation Committee.


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Performance Measure
 
Target Performance Level
 
1. Consolidated earnings per share. In
determining final performance level, the results of this goal are averaged with the prior year results on the same goal
  $2.44 up to but not including $2.50 diluted earnings per share, excluding period-end impairment charges
Actual Performance: 2010 EPS excluding period-end impairment charges and income from the reversal of certain project reserves =$2.71; performance level of 200%; 2-year average of performance levels =(200%+200%)/2=200%
2. Regulated companies earnings per share. In
determining final performance level, the results of this goal are averaged with the prior year results on the same goal
  $1.11 up to but not including $1.16 diluted earnings per share, excluding period-end impairment charges
Actual Performance: 2010 Regulated EPS excluding period-end impairment charges and income from the reversal of certain project reserves=$1.18; performance level of 150%; 2-year average of performance levels =(150%+150%)/2=150%
3. Seneca Resources earnings per share. In
determining final performance level, the results of this goal are averaged with the prior year results on the same goal
  $1.27 up to but not including $1.32, excluding period-end impairment charges
Actual Performance: 2010 Seneca EPS excluding period-end impairment charges=$1.36; performance level of 150% 2-year average of performance levels=(150%+200%)/2=175%
4. Production volume.
  46 Billion cubic feet equivalent
Actual Performance: 49.7 Bcfe; performance level of 193%
5. Marcellus Production. Measured based on
average net daily shale production achieved in the last month of the fiscal year
  40 MMcf/day
Actual Performance: 41 MMcf/day; performance level of 110%
6. Safety. Measured by the number of OSHA
recordable injuries in the utility and pipeline and storage segments
  5.94 OSHA recordable injuries
Actual Performance: 5.59 OSHA recordable injuries; performance level of 159%.
7. Operational safety. Measured by the utility
segment’s operational safety performance standards in New York
  Complete two operational safety measures
Actual Performance: Three operational safety measures completed; performance level of 200%
8. Segment growth in Pipeline and Storage.
  Complete three FERC 7(c) applications or precedent agreements (or a combination) for specified expansion projects
Actual Performance: Completion of target performance level plus achieved revenue goal and compressor station in-service goal; performance level of 200%
9. Total Reserve Replacement for Seneca.
  Replace 130% of fiscal 2010 production
Actual Performance: Replaced 445.1%; performance level of 200%
10. Customer service. Measured by the utility
segment’s quality performance standards in New York
  0 penalty units assessed based on customer service satisfaction measures or penalty units in one category and at least 84% of calls answered within 30 seconds
Actual Performance: 0 penalty units and telephone response of 88.7%; performance level of 200%


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Performance Measure
 
Target Performance Level
 
11. Meter reading at the utility.
  Reduce the number of estimated meter reads and active meters with no Company read in New York or Pennsylvania
Actual Performance: Accomplished all performance levels in both states; performance level of 200%
12. Finding and development costs.
  $3.25 per million cubic feet equivalent
Actual Performance: $1.40/Mcfe; performance level of 200%
13. Lease operating expense plus general and
administrative expense, per Mcfe
.
  $2.08 per million cubic feet equivalent
Actual Performance: $1.88/Mcfe; performance level of 200%
14. Regulated Companies Capital
Expenditures Budget
.
  80% of specified projects completed at or below the approved budget
Actual Performance: 89% of specified projects completed at or below the approved budget; performance level of 160%
15. Investor relations. Measured by
one-on-one meetings.
  Meetings with 35 or 70 (as applicable) different analysts or money managers
Actual Performance: For Mr. Smith, 53 meetings, performance level of 200%, for Mr. Tanski, 90 meetings, performance level of 200%
16. Investor relations. PE ratio as compared
to those Reported in Edward Jones Natural Gas Industry Summary of September 30, 2010 for Diversified Natural Gas Companies.
  Top one-half
Actual Performance: 2nd; performance level of 200%
17. Commission relations. Measured by the
percentage of Commissioners at the state level with whom meetings were held.
  Meetings with 70% of Commissioners
Actual Performance: Meetings with 80%; performance level of 200%
18. Pipeline and Storage Fuel Consumption
and Lost and Unaccounted for Gas
.
  Fuel consumed and LAUF between 65% and 100% of fuel received by customers
Actual Performance: Fuel consumption and LAUF of 56.5%; performance level of 200%
 
Long Term Incentive Compensation
 
Stock options, restricted stock, restricted stock units, stock-settled stock appreciation rights (“SARs”) and the Performance Incentive Program represent the long-term incentive and retention component of the executive compensation package. Such awards are intended to focus attention on managing the Company from a long-term investor’s perspective. In addition, we wish to encourage officers and other managers to have a significant, personal investment in the Company through stock ownership. The Committee typically makes equity awards on an annual basis, but has not established a policy to make grants at a specific meeting, to allow flexibility to review and evaluate appropriate equity grant practices.
 
With respect to long-term incentive compensation, the Committee uses its business judgment to establish target awards based on the recommendations provided by its compensation consultant and the Chief Executive Officer. The Committee allocates approximately one-half of the long-term incentive opportunity to the cash-based Performance Incentive Program and one-half to equity based awards, with the actual awards determined based on the value of each such awards derived using a Black-Scholes formula. The Committee follows this practice as a means of limiting the dilutive effect of equity grants, while at the same time achieving the objective of having a meaningful percentage of the compensation of the executive officers linked to the value of the Company’s stock.

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Stock Appreciation Rights, Stock Options and Restricted Stock
 
In 2010, the Committee awarded one-half of each executive officer’s target awards in the form of performance-based SARs rather than stock options, as they are less dilutive to stockholder equity. The Committee anticipates that it will continue utilizing SARS instead of options in the future. Vesting of these stock-settled SARs occurs in three annual installments and each installment is conditioned on achieving a five percent increase in the aggregate production for the then current year in certain of Seneca’s oil and natural gas production levels in the prior fiscal year. This performance condition is used to reflect the significance of these production levels to the long-term growth of the Company, and to link the compensation of all recipients of such awards to this important criteria (in addition to the inherent link in the award to the objective of increasing the Company’s stock price). The fiscal 2010 SARs granted to the named executive officers are set out in the Grants of Plan-Based Awards in Fiscal 2010 Table within this proxy statement.
 
Performance Incentive Program
 
The Performance Incentive Program is the Company’s cash based, long-term incentive program. This program was adopted to complement the equity based programs, under which future awards have been limited due to their dilutive nature.
 
The Committee has granted awards under the Performance Incentive Program based on three-year performance periods, with the performance condition being the Company’s total return on capital as compared to the same metric for peer companies in the Natural Gas Distribution and Integrated Natural Gas Companies group as calculated and reported in the Monthly Utility Reports (each, a “Monthly Utility Report”) of AUS, Inc., a leading industry consultant (“AUS”). The natural gas distribution and integrated natural gas companies reported in the December 2010 Monthly Utility Report are:
 
AGL Resources Inc.
Atmos Energy Corporation
Chesapeake Utilities Corporation
Delta Natural Gas Company
El Paso Corporation
Energen Corporation
EQT Corporation
Gas Natural, Inc.
Laclede Group, Inc.
National Fuel Gas Company
New Jersey Resources Corp.
NICOR Inc.
Northwest Natural Gas Co.
ONEOK, Inc.
Piedmont Natural Gas Co., Inc.
Questar Corporation
RGC Resources, Inc.
South Jersey Industries, Inc.
Southern Union Company
Southwest Gas Corporation
UGI Corporation
WGL Holdings, Inc.
Williams Companies, Inc.
 
The Committee selected this financial metric because it reflects how profitably management is able to allocate capital to its operations and also because it provides a performance metric of relevance to all participants, regardless of the business segment(s) for which they provide services. Based on the level of performance at the end of the applicable three-year performance period a cash bonus may be paid, ranging from 0% to 200% of the portion of each executive officers’ target incentives allocated to the Performance Incentive Program awards.


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The target awards established for the current named executive officers for the October 1, 2009 through September 30, 2012 performance period are:
 
         
Mr. Smith
  $ 700,000  
Mr. Tanski
  $ 400,000  
Mr. Bauer
  $ 40,000  
Mr. Cabell
  $ 300,000  
Mrs. Cellino
  $ 225,000  
Mr. Pustulka
  $ 120,000  
 
Payment on awards made under the Performance Incentive Program will be made at the levels specified below, if the Company achieves performance as detailed below over the applicable three-year performance period:
 
         
National Fuel Rank as a Percentile
  Percentage of Target
of Peer Group
  Incentive Payable
 
Less than 45.01%
    0 %
45.01%
    50 %
60%
    100 %
75%
    150 %
100%
    200 %
 
For threshold levels of performance between two established performance levels, the amount of target incentive payable will be determined by mathematical interpolation. Ranking of the companies in the Monthly Utility Reports is determined by calculating the average return on capital for each company for the three-year performance period and sorting the companies from highest to lowest.
 
AUS does not include in its calculations gains realized on the sale of operations that are reported under Generally Accepted Accounting Principles as discontinued operations. The Committee previously determined, however, that payouts under the Program may take into account the results of the Company’s discontinued operations, if any. For the three-year performance period of October 1, 2007 through September 30, 2010, the Company engaged in one transaction that resulted in discontinued operations: the sale of the Company’s landfill gas operations in September 2010. The Committee believes that the sale was a significant achievement on the part of management at very favorable prices and should be included in any award. Therefore, consistent with its prior treatment of sales, the Committee intends to adjust the AUS calculation to include that gain.
 
Previously, the Committee had approved target incentives for the current named executive officers under this Program associated with the three-year performance period of October 1, 2007 through September 30, 2010. The performance metric for this period was the same as noted above, and the target incentives were as follows:
 
         
Mr. Smith
  $ 585,000  
Mr. Tanski
  $ 350,000  
Mr. Bauer
  $ 27,000  
Mr. Cabell
  $ 225,000  
Mrs. Cellino
  $ 100,000  
Mr. Pustulka
  $ 100,000  
 
Because the Monthly Utility Report with the necessary data for fiscal 2010 will not be available until February of 2011, the actual award amounts earned for this performance period of October 1, 2007 through September 30, 2010 are currently unknown. The amounts shown in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation Column” as explained in footnote (3) within this proxy statement were accrued by the Company in fiscal 2010 as estimates of the amount which will be calculated and paid, in the second quarter of fiscal 2011. The estimated percentile of the Company’s total return on capital as compared with the Company’s peer group for the performance period of October 1, 2007 through September 30, 2010 is 182.6%.


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EMPLOYEE BENEFITS
 
Retirement Benefits
 
The Company maintains a qualified defined contribution retirement plan which includes a traditional 401(k) benefit as well as a Retirement Savings Account (“RSA”) benefit for eligible employees (i.e., those hired at various points in 2003 and thereafter, depending on employee type), a qualified defined benefit retirement plan, a non-qualified executive retirement plan and a non-qualified tophat plan. These plans help the Company attract and retain high caliber employees in high-level management positions, and, in the case of the non-qualified plans, restore retirement benefits lost to employees under the qualified retirement plans as a result of the effect of the Internal Revenue Code limits and the qualified plans’ limits on compensation considered and benefits provided under such qualified plans. The employee benefits for executive officers employed prior to 2003 differ from those made available to those employed during or after that year. The Company made changes to its programs that reflected a shift in competitive practices away from certain types of retirement benefits, but generally grandfathered existing employees (including executive officers) who were then in service in the benefits programs that are commensurate with those in the regulated energy industry.
 
Messrs. Smith, Tanski and Pustulka and Mrs. Cellino are eligible to participate in the qualified defined contribution retirement plan (traditional 401(k)), the qualified defined benefit retirement plan, and both of the non-qualified plans. Mr. Cabell is eligible to participate in the qualified defined contribution plan (including the RSA benefit) and the non-qualified tophat plan. Mr. Bauer is eligible to participate in the qualified defined contribution retirement plan (traditional 401(k) plan), the qualified defined benefit retirement plan and the non-qualified tophat plan. These benefits are described in more detail in the section entitled “Pension Benefits” within this proxy statement.
 
Executive Life Insurance
 
In 2004, the Committee authorized an insurance program known as the “ExecutiveLife Insurance Plan.” Under this plan, upon specific direction of the Company’s Chief Executive Officer, when an executive officer reaches age 50, the Company would pay the cost of a life insurance policy or policies, to be owned by the executive officer, in an amount up to $15,000 per year. The payment is taxable income to the executive officer and ceases when the executive officer’s employment ceases. The Committee authorized this plan as a replacement for its prior practice of providing split dollar life insurance agreements to designated executive officers. The Committee replaced the split dollar arrangement with the current plan because it was prohibited by the Sarbanes-Oxley Act from making premium payments on certain split dollar policies due to their nature as loans. Mr. Tanski, Mr. Cabell, Mrs. Cellino, and Mr. Pustulka are covered by the ExecutiveLife Insurance Plan.
 
Mr. Smith is not a participant in the ExecutiveLife Insurance Plan referenced above. In September 2009, the Company entered into an agreement with Mr. Smith (the Life Insurance Premium Agreement) whereby the Company pays to Mr. Smith up to $33,000 per year to be used for life insurance. The Committee recommended the agreement because the Company has been prohibited by the Sarbanes-Oxley Act from making premium payments on split dollar arrangements, as noted above. The payment is taxable income to Mr. Smith. Pursuant to the agreement, this agreement terminates on the earliest of: (1) Mr. Smith’s death, (2) October 31, 2017, or (3) the date Mr. Smith’s employment is terminated if for cause.
 
CHANGE IN CONTROL ARRANGEMENTS
 
If an executive officer’s employment is terminated without cause within a specific time following a Change in Control of the Company, many of the components of total compensation described above become immediately vested or paid out in a lump sum. More detail about these items and calculations as of September 30, 2010, are set forth in the section entitled “Potential Payments Upon Termination or Change in Control” within this proxy statement.
 
In December of 1998, upon recommendation by the Committee, the Company adopted an amended and restated Change in Control agreement, known as the “Employment Continuation and Noncompetition Agreement” (“ECNA”). In September of 2007, and again in September of 2008, the ECNA was amended and restated in order to be in compliance with Internal Revenue Code Section 409A and the final regulations


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promulgated thereunder. No enhancement to the benefit provided under the original agreement was added either time. Each of the named executive officers is a party to an ECNA.
 
The Company and the Committee believe that these agreements are required for the attraction and retention of the executive talent needed to achieve corporate objectives and to assure that executive officers direct their attention to their duties, acting in the best interests of the stockholders, notwithstanding the potential for loss of employment in connection with a Change in Control.
 
The agreement contains a “double-trigger” provision that provides payment only if employment terminates within three years following a Change in Control, as defined in the agreement, either by the Company other than for cause or by the executive officer for good reason. The Committee believes this structure strikes a balance between the incentive and the executive attraction and retention efforts described above, without providing Change in Control benefits to executive officers who continue to enjoy employment with the Company in the event of a Change in Control transaction.
 
The payment is generally calculated by multiplying 1.99 by the sum of the executive officer’s current base salary plus the average of the annual cash bonus for the previous two fiscal years. The 1.99 multiplier is reduced on a pro-rata basis if termination occurs between age 62 and 65. There is no gross-up for taxes. If payment is triggered, certain health benefits are continued for the earlier of 18 months following termination or the date other similar coverage becomes available.
 
The ECNA contains a restrictive covenant whereby the executive officer may, upon termination following a Change in Control, choose to refrain from being employed by or otherwise serving as an agent, consultant, partner or major stockholder of a business engaged in activity that is competitive with that of the Company or its subsidiaries. If the executive officer so chooses to be bound by this restrictive covenant, an additional payment is made in the amount of one times the sum of current base salary plus the average of the annual cash bonus for the previous two fiscal years. The Committee and the Company believe this is an appropriate payment in exchange for the non-compete covenant agreed to by the executive officer.
 
OWNERSHIP GUIDELINES
 
In fiscal 2002, in an effort to emphasize the importance of stock ownership and after consultation with the Compensation Committee, Company Common Stock ownership guidelines were established for officers. These guidelines range from one times base salary for junior officers to four times base salary at the Chief Executive Officer level. Other employees receiving options and SARs are encouraged to retain their Common Stock for long-term investment. We believe that employees who are stockholders perform their jobs in a manner that considers the long-term interests of the stockholders.
 
TAX AND ACCOUNTING CONSIDERATIONS
 
In designing the Company’s compensation program, consideration is given to the accounting treatment of the awards made to our executive officers and pertinent tax law provisions. In granting stock settled SAR in lieu of options, the Company took into account that such SARs result in the same financial accounting cost as would have applied to a comparable award of options, but resulted in less dilution to shareholders. Section 162(m) of the Internal Revenue Code prohibits the Company from deducting compensation paid in excess of $1 million per year to any executive officer listed in the Compensation Summary Table unless such compensation qualifies as “performance-based compensation” within the meaning of Section 162(m). The Committee has generally designed the At Risk Plan and the short-term cash incentive compensation payable thereunder, the Performance Incentive Program and long-term equity awards to qualify for this performance based exception. However, the Committee may elect to award compensation that is not fully deductible, if the Committee determines that such award is consistent with its philosophy and is in the best interests of the Company and its stockholders. The Company has also designed its compensation program with the intent that any awards granted thereunder will either be exempt from, or comply with the applicable requirements under Section 409A of the Internal Revenue Code.
 
Summary Compensation Table
 
The following table sets forth a summary of the compensation paid to or earned by each person who served as the Chief Executive Officer, the Principal Financial Officers and each of the three other most


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highly compensated executive officers (the “named executive officers”) of the Company in fiscal 2010. The compensation reflected for each officer was for the officer’s services provided in all capacities to the Company and its subsidiaries.
 
                                                                         
                            Change in
       
                            Pension Value
       
                            and
       
                            Nonqualified
       
                        Non-Equity
  Deferred
       
                Stock
  Equity
  Incentive Plan
  Compensation
  All Other
   
    Fiscal
  Salary
  Bonus
  Awards
  Awards
  Compensation
  Earnings
  Compensation
  Total
Name and Principal Position
  Year   ($)   ($)   ($)(2)   ($)(2)   ($)(3)   ($)(4)   ($)(5)   ($)
 
David F. Smith
    2010       772,500       N/A       0       1,507,675       2,385,709       2,230,428       159,235       7,055,547  
Chairman and Chief
    2009       707,000       N/A       0       614,115       1,956,875       1,575,731       118,161       4,971,882  
Executive Officer of the
    2008       625,000       N/A       0       611,625       1,745,125       431,116       116,467       3,529,333  
Company
                                                                       
Ronald J. Tanski
    2010       601,250       N/A       0       844,298       1,516,204       1,693,463       105,304       4,760,519  
President and Chief
    2009       567,000       N/A       0       307,058       1,303,373       1,318,840       94,700       3,590,971  
Operating Officer of the
    2008       512,500       N/A       0       393,188       1,143,313       656,006       91,100       2,796,107  
Company(1)
                                                                       
David P. Bauer
    2010       223,413       14,330       0       48,246       174,972       67,016       15,395       543,372  
Treasurer and Principal
                                                                       
Financial Officer of the Company(1)
                                                                       
Matthew D. Cabell
    2010       503,750       N/A       0       663,377       1,034,467       N/A       138,563       2,340,157  
President of Seneca
    2009       468,750       N/A       1,660,925       245,646       1,128,199       N/A       112,185       3,615,705  
Resources Corporation
    2008       443,750       N/A       0       218,438       337,472       N/A       75,889       1,075,549  
Anna Marie Cellino
    2010       430,000       N/A       0       422,149       734,634       943,312       74,398       2,604,493  
President of National Fuel
    2009       390,250       N/A       0       163,764       652,461       572,066       65,710       1,844,251  
Gas Distribution Corporation
    2008       289,875       250,000       0       109,219       140,420       160,435       47,937       997,886  
John R. Pustulka
    2010       334,978       1,557       0       180,921       456,043       540,454       54,011       1,567,964  
President of National Fuel
    2009       320,375       N/A       0       81,882       361,009       435,759       46,972       1,245,997  
Gas Supply Corporation
    2008       289,875       140,500       0       109,219       140,420       212,629       43,105       935,748  
 
 
(1) Mr. Tanski was the Principal Financial Officer of the Company until July 1, 2010 at which time Mr. Bauer was promoted to Principal Financial Officer.
 
(2) The stock and equity award values show the full grant date fair value of stock and SAR awards including recomputed amounts for prior years. The “Total” column shows total compensation for the prior years, recalculated to reflect the revised stock and equity award values for fiscal 2008 and 2009. For information on the valuation assumptions with respect to these awards, refer to Note A under the heading “Stock-Based Compensation” in the Company’s financial statements in Form 10-K for the fiscal year ended September 30, 2010.
 
The amount for fiscal 2008 reflects the valuation of all the SARs awarded and was not reduced by the subsequent forfeiture of one-third of the SARs on each November 15, 2009 and November 24, 2010 due to failure to meet 2009 and 2010 earnings per share performance conditions set in February 2008 before oil and natural gas prices dropped precipitously. Factoring in the forfeitures, the fiscal 2008 amounts in the above table would have been $203,997 for Mr. Smith, $131,138 for Mr. Tanski, $72,860 for Mr. Cabell, $36,422 for Mrs. Cellino and $36,422 for Mr. Pustulka.
 
(3) For fiscal 2010, for Messrs. Smith, Tanski and Cabell, and Mrs. Cellino, this column reflects both an estimated Performance Incentive Program payment expected to be paid by March 15, 2011 ($1,068,210 for Mr. Smith, $639,100 for Mr. Tanski, $410,850 for Mr. Cabell and $182,600 for Mrs. Cellino) and the actual At Risk Plan payment made in December 2010 ($1,317,499 for Mr. Smith, $877,104 for Mr. Tanski, $623,617 for Mr. Cabell and $552,034 for Mrs. Cellino). For Mr. Pustulka, this column represents the estimated Performance Incentive Program payment expected to be paid by March 15, 2011 of $182,600 and the actual EACIP payment made in December 2010 of $273,443. For Mr. Bauer, this column represents the estimated Performance Incentive Program payment expected to be paid by March 15, 2011 of $49,302 and an annual incentive payment of $125,670. As previously discussed under “Annual Cash Incentive” within the CD&A, Mr. Pustulka and Mr. Bauer also received an additional discretionary amount of $1,557 and $14,330 respectively, which appears under the “Bonus” column.


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For the three-year performance period ended September 30, 2010, the Company estimates that its performance relative to its peer group will result in a payout of approximately 182.6% of the “Target Incentive Opportunity” set for each of the participants in the Performance Incentive Program. This estimate (182.6%) is subject to change based on the final AUS report for the performance period ended September 30, 2010.
 
With respect to fiscal 2009, the estimated Performance Incentive amount that was in the fiscal 2009 proxy has been updated for actual Performance Incentive Program payments made in March 2010 ($703,010 for Mr. Smith, $563,778 for Mr. Tanski, $504,433 for Mr. Cabell, $182,600 for Mrs. Cellino and $182,600 for Mr. Pustulka).
 
Please refer to the Compensation Discussion and Analysis for additional information about these programs, including information regarding the performance conditions applicable to the awards.
 
(4) This column represents the actuarial increase in the present value of the named executive officer’s benefits under all pension plans maintained by the Company determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements as described in Note H, “Retirement Plan and Other Post-Retirement Benefits. The amount for Mr. Bauer also includes the actuarial increase in the present value of his Retirement Plan-Related Tophat. These amounts may include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested as of September 30, 2010, 2009 and 2008, respectively. For 2009, the FASB’s authoritative guidance for pensions and other post-retirement benefits required actuarial values to be calculated using a measurement date of September 30, 2009. In prior years, the values would have been calculated using a measurement date of June 30. This change creates a difference of fifteen months from the prior measurement date of June 30, 2008. As permitted by the Securities and Exchange Commission, the Company has elected to disclose an annualized increase in the change in the value of the accumulated pension benefits in the Summary Compensation Table, thereby adjusting the 15 month period to a 12 month period. For fiscal 2008, the amount includes above market earnings under the Deferred Compensation Plan for Mrs. Cellino of $1,003. See the narrative, tables and notes to the Pension Plan and the Nonqualified Deferred Compensation Plan within this proxy statement.
 
(5) All Other Compensation Table *
 
The following table describes each component of the All Other Compensation column in the Summary Compensation Table for fiscal 2010.
 
                                                 
    David F.
  Ronald J.
  David P.
  Matthew D.
  Anna Marie
  John R.
    Smith
  Tanski
  Bauer
  Cabell
  Cellino
  Pustulka
Description
  ($)   ($)   ($)   ($)   ($)   ($)
 
Defined Contributions(a)
    14,700       14,700       8,770       12,250       14,700       14,700  
401(k) Tophat(b)
    110,350       73,726       5,633       7,625       44,022       21,766  
RSA Tophat(c)
    0       0       0       17,556       0       0  
Employee Stock Ownership Plan (ESOP) Supplemental Payment(d)
    1,002       1,771       0       0       569       2,438  
Executive Officer Life Insurance(e)
    33,000       15,000       964       15,000       15,000       15,000  
Travel Accident Insurance(f)
    183       107       28       107       107       107  
Dividends paid on Restricted Stock(g)
    0       0       0       86,025       0       0  
Total
    159,235       105,304       15,395       138,563       74,398       54,011  
 
* The aggregate amount of perquisites or other personal benefits is less than $10,000 for each of the named officers.
 
 
a) Represent the Company matching contributions for all named executive officers within the 401(k) and the Company contribution into the Retirement Savings Account (RSA) plan for Mr. Cabell. Each officer receives a Company match within the 401(k) plan on the lesser of a) their base salary or b) the IRS annual compensation limits. Messrs. Smith, Tanski, Pustulka and Mrs. Cellino receive a 6% match in the 401(k) plan. Mr. Cabell and Mr. Bauer receive a 401(k) match of 3% and 4% respectively.


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In addition, Mr. Cabell is a participant in the Company’s RSA Plan and receives a 2% Company contribution on the portion of his base salary plus annual bonus that does not exceed the IRS annual compensation limits.
 
b) Each officer is prohibited from receiving the full 401(k) Company match on their salary due to the IRS annual compensation limits. The 401(k) Tophat gives each officer, except Mr. Cabell, a Company match on the following forms of compensation: i.) base salary that exceeds the IRS annual compensation limit; ii.) regular bonus; and iii.) Annual At Risk Plan payment. For Mr. Cabell, the 401(k) Tophat is based on his annual base salary that exceeds the IRS maximum annual compensation limits. The 401(k) Tophat represent the benefit earned in fiscal 2010.
 
c) Represents the Company contributions on Mr. Cabell’s base salary plus annual bonus that exceeded the IRS annual compensation limit. The RSA Tophat represents the benefit earned in fiscal 2010.
 
d) All management participants who were hired prior to December 31, 1986, participate in the ESOP which pays dividends to the participants on the Common Stock held in the plan. The participant does not have the option to reinvest these dividends in order to defer the federal and state income taxes on these dividends. Therefore, the Company makes supplemental payments representing the approximate amount the Company saves in corporate income taxes. The ESOP is a qualified benefit plan that was frozen in 1987 and closed to future participants.
 
e) Represents the Company-paid life insurance premiums on behalf of Mr. Tanski, Mr. Cabell, Mrs. Cellino, and Mr. Pustulka under the ExecutiveLife Insurance Plan. The Company also reimbursed Mr. Smith $33,000 under the Life Insurance Premium Agreement. For Mr. Bauer, this represents the Company paid insurance premiums under the National Fuel Gas Company Group Life Insurance Plan.
 
f) Represents the premiums paid for the blanket travel insurance policy, which provides a death benefit to beneficiaries of an officer if the officer dies while traveling.
 
g) Dividends are paid on unvested restricted stock and reported as taxable income.


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Grants of Plan-Based Awards in Fiscal 2010
 
The following table sets forth information with respect to awards granted to the named executive officers during fiscal 2010 under the Performance Incentive Program, the At Risk Plan, and the 2010 Equity Compensation Plan. There were no Stock Awards during the fiscal year and no future payouts under Equity Incentive Plan Awards to executive officers; therefore we have removed those columns from the table. Please refer to the Compensation Discussion and Analysis (CD&A) within this proxy statement for additional information regarding these plans.
 
                                                                         
                        All Other
           
                        SAR
           
                        Awards:
  Exercise or
       
                        Number of
  Base
      Grant Date
            Estimated Future Payouts Under
  Securities
  Price of
  Closing
  Fair Value of
            Non-Equity Incentive Plan Awards   Underlying
  SAR
  Market
  SAR
        Grant
  Threshold
  Target
  Maximum
  SARs
  Awards
  Price
  Awards
Name
  Note   Date   ($)   ($)   ($)   (#)(1)   ($/Sh)   ($)(4)   ($)(5)
 
David F. Smith
    (1 )     03/11/2010                               125,000       52.10       52.25       1,507,675  
      (2 )     12/23/2009       0       700,000       1,400,000                                  
      (3 )     12/23/2009       337,969       772,500       1,545,000                                  
Ronald J. Tanski
    (1 )     03/11/2010                               70,000       52.10       52.25       844,298  
      (2 )     12/23/2009       0       400,000       800,000                                  
      (3 )     12/23/2009       210,438       481,000       962,000                                  
David P. Bauer
    (1 )     03/11/2010                               4,000       52.10       52.25       48,246  
      (2 )     12/23/2009       0       40,000       80,000                                  
      (3 )     04/16/2010       29,323       67,024       125,670                                  
Matthew D. Cabell
    (1 )     03/11/2010                               55,000       52.10       52.25       663,377  
      (2 )     12/23/2009       0       300,000       600,000                                  
      (3 )     12/23/2009       105,788       352,625       705,250                                  
Anna Marie Cellino
    (1 )     03/11/2010                               35,000       52.10       52.25       422,149  
      (2 )     12/23/2009       0       225,000       450,000                                  
      (3 )     12/23/2009       131,688       301,000       602,000                                  
John R. Pustulka
    (1 )     03/11/2010                               15,000       52.10       52.25       180,921  
      (2 )     12/23/2009       0       120,000       240,000                                  
      (3 )     12/23/2009       65,949       150,740       301,480                                  
 
 
(1) The stock appreciation rights shown on this table were granted under the 2010 Equity Compensation Plan with a ten-year term, and will vest in one-third increments on the dates the Company’s 10-K is filed for fiscal 2010, 2011 and 2012 if certain performance conditions are met, as such are described under “Stock Appreciation Rights, Stock Options and Restricted Stock” within this proxy statement. The exercise price of the SARs is based on the average of the high and low market price of the Common Stock on the date of grant. The SARs may be exercised any time after the “vest date” and prior to the expiration date, if the performance conditions are met, and the holder remains employed by the Company, and subject to the Company’s Insider Trading Policy. Please refer to the narrative disclosure under “Potential Payments Upon Termination or Change-in-Control” section within this proxy statement for additional information regarding termination prior to and after the vest date of the options.
 
(2) Represents the range of possible payments under the National Fuel Gas Company Performance Incentive Program for which target awards were established in fiscal 2010 with a performance period that begins October 1, 2009 and ends on September 30, 2012.
 
(3) For Messrs. Smith, Tanski and Cabell, and Mrs. Cellino, this represents the annual cash incentive set in fiscal 2010 under the At Risk Plan. For Mr. Pustulka, this represents the annual cash incentive under the EACIP. Mr. Bauer was not yet an “executive officer” at the time performance conditions were established for fiscal 2010. Thus, his annual cash incentive was not established under the EACIP. Nevertheless, as he became an “executive officer” during fiscal 2010, the Committee reviewed and approved his annual cash incentive payout for fiscal 2010. The amount actually paid for fiscal 2010 is set forth in the Summary Compensation Table under the “Bonus” and “Non-Equity Incentive Plan


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Compensation” columns. Please refer to the CD&A for additional information about the performance conditions applicable to each payment.
 
(4) This column is included because the fair market value of the stock for purposes of SAR grants was determined using the average of the high and the low sales prices on the grant date. Because such average was less than the closing price on such date, the SEC requires inclusion of a column showing such closing price.
 
(5) The equity award values reflect the fair value of performance based SARs at the date of grant. Refer to Note A under the heading “Stock-Based Compensation” in the Company’s financial statements in Form 10-K for the fiscal year ended September 30, 2010.
 
The Company’s named executive officers serve at the pleasure of the Board of Directors and are not employed pursuant to employment agreements. Each of the named executive officers is a party to an Employment Continuation and Noncompetition Agreement with the Company, which would become effective upon a Change in Control of the Company. In addition, David F. Smith and the Company are parties to a Retirement Benefit Agreement that provides Mr. Smith with certain retirement benefits in the event the Company terminates him without cause, or Mr. Smith terminates employment with good reason, prior to the first day of the month after which Mr. Smith reaches 571/2 years of age or March 1, 2011. The Employment Continuation and Noncompetition Agreements and the Retirement Benefit Agreement for David F. Smith are described in this proxy statement under “Potential Payments Upon Termination or Change-in-Control.”
 
Outstanding Equity Awards at Fiscal Year-End 2010
 
The following table sets forth, on an award-by-award basis, the number of securities underlying unexercised stock options or SARs and the total number and aggregate market value of shares of unvested restricted stock held by the named executives as of September 30, 2010. The table also provides the exercise price (average of the high and low on grant date) and date of expiration of each unexercised stock option or SAR.
 
                                                         
    Option/SAR Awards   Stock Awards
                            Market
                        Number of
  Value of
        Number of
  Number of
          Shares or
  Shares
        Securities
  Securities
          Units of
  or Units
        Underlying
  Underlying
          Stock
  of Stock
        Unexercised
  Unexercised
  Option/SAR
      That
  That
        Options/SARs
  Options/SARs
  Exercise
  Option/SAR
  Have Not
  Have Not
    Grant Date
  Exercisable
  Unexercisable
  Price
  Expiration
  Vested
  Vested
Name
  (1)   (#)   (#)(1)   ($)(2)   Date   (#)(3)   ($)(3)
 
David F. Smith
    03/14/02       4,082       0       24.50       03/14/2012       0       0  
      03/14/02       95,918       0       24.50       03/15/2012       0       0  
      03/29/05       60,000       0       28.16       03/30/2015       0       0  
      05/10/06       55,000       0       35.11       05/10/2016       0       0  
      12/06/06       60,000       0       39.48       12/06/2016       0       0  
      02/20/08       23,333       23,334       47.37       02/20/2018       0       0  
      12/22/08       50,000       100,000       29.88       12/22/2018       0       0  
      03/11/10       0       125,000       52.10       03/11/2020       0       0  
Ronald J. Tanski
    03/14/02       4,082       0       24.50       03/14/2012       0       0  
      03/14/02       70,918       0       24.50       03/15/2012       0       0  
      03/29/05       40,000       0       28.16       03/30/2015       0       0  
      05/10/06       36,000       0       35.11       05/10/2016       0       0  
      12/06/06       45,000       0       39.48       12/06/2016       0       0  
      02/20/08       15,000       15,000       47.37       02/20/2018       0       0  
      12/22/08       25,000       50,000       29.88       12/22/2018       0       0  
      03/11/10       0       70,000       52.10       03/11/2020       0       0  
David P. Bauer
    03/14/02       667       0       24.50       03/14/2012       0       0  
      03/29/05       25,000       0       28.16       03/30/2015       0       0  
      05/10/06       3,500       0       35.11       05/10/2016       0       0  
      12/06/06       5,000       0       39.48       12/06/2016       0       0  
      02/20/08       1,166       1,167       47.37       02/20/2018       0       0  
      12/22/08       2,000       4,000       29.88       12/22/2018       0       0  
      03/11/10       0       4,000       52.10       03/11/2020       0       0  


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    Option/SAR Awards   Stock Awards
                            Market
                        Number of
  Value of
        Number of
  Number of
          Shares or
  Shares
        Securities
  Securities
          Units of
  or Units
        Underlying
  Underlying
          Stock
  of Stock
        Unexercised
  Unexercised
  Option/SAR
      That
  That
        Options/SARs
  Options/SARs
  Exercise
  Option/SAR
  Have Not
  Have Not
    Grant Date
  Exercisable
  Unexercisable
  Price
  Expiration
  Vested
  Vested
Name
  (1)   (#)   (#)(1)   ($)(2)   Date   (#)(3)   ($)(3)
 
Matthew D. Cabell
    12/11/06       100,000       0       39.50       12/11/2016       0       0  
      12/05/07       0       0       0       N/A       25,000       1,292,000  
      02/20/08       8,333       8,334       47.37       02/20/2018       0       0  
      12/22/08       20,000       40,000       29.88       12/22/2018       0       0  
      09/17/09       0       0       0       N/A       35,000       1,808,800  
      03/11/10       0       55,000       52.10       03/11/2020       0       0  
Anna Marie Cellino
    03/14/02       70,918       0       24.50       03/15/2012       0       0  
      03/29/05       30,000       0       28.16       03/30/2015       0       0  
      05/10/06       12,000       0       35.11       05/10/2016       0       0  
      12/06/06       15,000       0       39.48       12/06/2016       0       0  
      02/20/08       4,166       4,167       47.37       02/20/2018       0       0  
      12/22/08       13,333       26,667       29.88       12/22/2018       0       0  
      03/11/10       0       35,000       52.10       03/11/2020       0       0  
John R. Pustulka
    03/14/02       4,082       0       24.50       03/14/2012       0       0  
      03/29/05       35,000       0       28.16       03/30/2015       0       0  
      05/10/06       12,000       0       35.11       05/10/2016       0       0  
      12/06/06       15,000       0       39.48       12/06/2016       0       0  
      02/20/08       4,166       4,167       47.37       02/20/2018       0       0  
      12/22/08       6,666       13,334       29.88       12/22/2018       0       0  
      03/11/10       0       15,000       52.10       03/11/2020       0       0  
 
 
(1) Options vest one year after grant date except for the following awards:
 
Options granted on March 14, 2002 vested over a period of 3 years with one-third on March 14, 2003, one-third on March 14, 2004 and the balance on March 13, 2005.
 
Options granted on March 29, 2005 vested on June 29, 2005.
 
Options granted on December 11, 2006 vested on December 11, 2009.
 
SARs granted on February 20, 2008 had a vesting schedule over a period of 3 years subject to performance conditions. One third vested on February 20, 2009, one third were scheduled to vest on February 20, 2010 (but did not fulfill the applicable performance condition and thus were forfeited and not included above) and the balance of the unexercisable SARs noted in the table were scheduled to vest on February 20, 2011, but did not fulfill the applicable performance condition, thus were forfeited after the 2010 fiscal year.
 
SARs granted on December 22, 2008 vest over a period of 3 years in one-third increments at each anniversary date of the awards and the SARs granted on March 11, 2010 vest in one-third increments on the dates the Company’s Form 10-K is filed for fiscal 2010, 2011 and 2012. Both grants are subject to fulfillment of performance conditions.
 
(2) Awards were issued at an exercise price equal to the Fair Market Value (FMV), as defined by the stockholder approved 1997 Award and Option Plan and the 2010 Equity Compensation Plan as the average of the high and low trade prices on the day of grant.
 
(3) Represents an award of 25,000 shares of restricted stock that will vest in one-fifth increments on December 5, 2011, 2012, 2013, 2014 and 2015, and an award of 35,000 shares of restricted stock that will vest on March 20, 2018, subject to Mr. Cabell’s continued employment. The market value represents the total number of unvested restricted stock shares multiplied by the FMV as of September 30, 2010.
 
Please refer to the “Potential Payments Upon Termination or Change-in-Control” section within this proxy statement for additional information regarding termination prior to and after the vesting date of the awards.

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Option Exercises and Stock Vested in Fiscal 2010
 
The following table sets forth, as to each named executive officer, information with respect to stock option exercises and vesting of restricted stock during fiscal 2010.
 
                                 
    Option Awards   Stock Awards
    Number of
  Value
  Number of
  Value
    Shares
  Realized
  Shares
  Realized
    Acquired on
  on
  Acquired on
  on
    Exercise
  Exercise
  Vesting
  Vesting
Name
  (#)   ($)(1)   (#)   ($)(2)
 
David F. Smith
    30,000       793,500       0       0  
Ronald J. Tanski
    50,000       1,154,547       0       0  
David P. Bauer
    0       0       0       0  
Matthew D. Cabell
    0       0       15,000       706,950  
Anna Marie Cellino
    25,000       568,188       0       0  
John R. Pustulka
    0       0       0       0  
 
 
(1) Represents the aggregate difference between the exercise price and the fair market value of the common stock on the date of exercise.
 
(2) Represents the fair market value of the shares on the date the restrictions lapse.
 
Pension Benefits
 
The following table sets forth information with respect to the pension benefits as of September 30, 2010 of each of the named executive officers. The Company offers a qualified pension plan and a supplemental benefit plan in which certain of the named executive officers participate, except as noted below.
 
                         
        Number of
  Present Value
    Payments
 
        Years
  of
    During
 
        Credited
  Accumulated
    Last
 
        Service
  Benefit
    Fiscal Year
 
Name
 
Plan Name
  (#)(1)   ($)(1)     ($)  
 
David F. Smith
  Executive Retirement Plan   32     6,335,931       0  
    National Fuel Gas Company Retirement Plan   31     1,429,761       0  
                         
Ronald J. Tanski
  Executive Retirement Plan   31     4,454,514       0  
    National Fuel Gas Company Retirement Plan   30     1,397,661       0  
                         
David P. Bauer
  Executive Retirement Plan   N/A     N/A       N/A  
(not a participant in the ERP)
  National Fuel Gas Company Retirement Plan   8     154,471       0  
    Retirement Plan-Related Tophat   N/A     14,324       0  
                         
Matthew D. Cabell
  Executive Retirement Plan   N/A     N/A       N/A  
(not a participant)
  National Fuel Gas Company Retirement Plan   N/A     N/A       N/A  
                         
Anna Marie Cellino
  Executive Retirement Plan   29     1,784,056       0  
    National Fuel Gas Company Retirement Plan   28     1,233,535       0  
                         
John R. Pustulka
  Executive Retirement Plan   36     1,558,409       0  
    National Fuel Gas Company Retirement Plan   35     1,684,349       0  
 
 
(1) The years of credited service and present value of accumulated benefits were determined by Mercer, the plan actuary using the same assumptions used for accounting and disclosure purposes. Please


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refer to Note H, Retirement Plan and Other Post-retirement Benefits, to the Company’s financial statements for a discussion of these assumptions.
 
Retirement Plan
 
The National Fuel Gas Company Retirement Plan (the “Retirement Plan”) is a tax-qualified defined benefit plan. The Retirement Plan provides unreduced retirement benefits at termination of employment at or after age 65, or, with ten years of service, at or after age 60. Participants may retire with no reduction in their accrued benefit on or after the date on which the sum of their age plus years of service equals ninety. For the Retirement Plan, credited service is the period that an employee is a participant in the plan and receives pay from the Company or one of its participating subsidiaries. Credited service does not include the first year of employment and is measured in years, with a maximum of 40 years of credited service. The Retirement Plan does not permit the granting of extra years of credited service to the participants. Mr. Pustulka is currently eligible for an unreduced benefit.
 
A reduced retirement benefit is available upon attainment of age 55 and completion of ten years of service. For retirement between ages 55 and 60, the benefit is reduced by 5% for each year retirement precedes age 60 (for example, a participant who retires at age 59 would receive a retirement benefit equal to 95% of the unreduced benefit). As of September 30, 2010, Mr. Smith is eligible for an early retirement benefit of approximately 85% of the unreduced benefit. Mr. Smith is eligible for certain retirement benefits under his Retirement Benefit Agreement if, prior to March 1, 2011, he is terminated without cause or resigns for good reason. See the “Potential Payments Upon Termination or Change-in-Control” section within this proxy statement. As of September 30, 2010, Mr. Tanski is eligible for an early retirement benefit equal to approximately 90% of the unreduced benefit. Mrs. Cellino is eligible for an early retirement benefit equal to approximately 85% of the unreduced benefit.
 
The base benefit under the Retirement Plan is a life annuity that is calculated as the product of (a), (b) and (c), where (a) is final average pay, (b) is years of credited service, and (c) is 1.5%. Final average pay is the average of the participant’s total pay during the five consecutive years of highest pay from the last ten years of participation. Total pay includes base salary, bonus payments, and annual At Risk Plan and EACIP payments. Total pay does not include reimbursements or other expense allowances, imputed income, deferrals under the National Fuel Gas Company Deferred Compensation Plan (the “DCP”), fringe benefits, or Performance Incentive Program awards or equity awards. The benefit under the Retirement Plan is limited by maximum benefits and compensation limits under the Internal Revenue Code. Mr. Bauer is a participant in the Retirement Plan and not a participant in the Executive Retirement Plan (ERP), therefore Mr. Bauer receives a nonqualified defined benefit under the Tophat Plan. The Retirement Related-Tophat benefit is provided to all Retirement Plan participants that are not in the ERP. This benefit makes Mr. Bauer whole for any reduction in the Retirement Plan resulting from Internal Revenue Code limitations.
 
A participant may elect to receive distribution of the Retirement Plan benefits in other annuity forms, including joint and survivor, term-certain, and Social Security adjusted annuities. All are calculated on an actuarially equivalent basis using a 6% interest rate and unisex mortality factors developed from 1971 Group Annuity Mortality Table rates.
 
Executive Retirement Plan
 
The National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (the “ERP”) is a non-tax-qualified defined benefit plan. The Chief Executive Officer of the Company designates all participants of the ERP.
 
The ERP provides a two-part benefit: a Tophat Benefit and a Supplemental Benefit. The Tophat Benefit makes an ERP participant whole for any reduction in the regular pension he or she receives under the Retirement Plan resulting from Internal Revenue Code limitations and/or participation in the Company’s Deferred Compensation Plan. The Supplemental Benefit provides an additional retirement benefit to the Retirement Plan.
 
The Tophat Benefit vests in the same manner and subject to the same service requirements that apply to the Retirement Plan. The Supplemental Benefit vests at age 55 and completion of five years of credited service. An ERP participant who vests in the Tophat Benefit, but does not vest in the Supplemental Benefit, receives only a Tophat Benefit. A participant who is vested in both the Tophat Benefit and the Supplemental Benefit and who terminates service with the Company before age 65 receives the Tophat Benefit


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and a portion of the Supplemental Benefit that is based upon the participant’s age and years of credited service. For the Executive Retirement Plan, credited service is the number of years the participant has been employed by the Company or one of its participating subsidiaries, not to exceed forty years.
 
The Tophat Benefit is stated as a life annuity that is calculated as the difference between (a) and (b), where (a) is the benefit the ERP participant would have received under the Retirement Plan but for the limitations imposed by the Internal Revenue Code and adjusted as if deferrals under the deferred compensation plan were not excluded from the definition of final average pay; and (b) is the base benefit the participant receives under the Retirement Plan.
 
Assuming retirement at age 65, the Supplemental Benefit is stated as a life annuity that is calculated using the following formula:
 
(a) 1.97% of final average pay for each year of service not in excess of 30 years; plus
 
(b) 1.32% of final average pay for each of the next 10 years of service that are in excess of 30 (but not to exceed 10); minus
 
(c) 1.25% of an assumed Social Security benefit (calculated as if the participant had no future wages) for each year of service not in excess of 40 years; minus
 
(d) the participant’s base benefit under the Retirement Plan; minus
 
(e) the participant’s Tophat Benefit.
 
Final average pay under the ERP is the same as under the Retirement Plan, except that deferrals to DCP are not excluded and the Internal Revenue Code limitations are not considered.
 
If a participant retires before age 65, the amounts determined in (a) and (b) above are multiplied by an early retirement percentage from the table that follows:
 
         
    Early
 
Retirement
  Retirement
 
Age
  Percentage  
 
65
    100  
64
    94  
63
    88  
62
    82  
61
    70  
60
    58  
59
    46  
58
    34  
57
    22  
56
    10  
55 and 2 months
    0  
 
The early retirement percentages set forth above are increased by 1.5% for each year of service in excess of 30 years (provided the total early retirement percentage does not exceed 100%).
 
The normal form of benefit under the ERP is a four-year period certain annuity that is actuarially equivalent to the lump-sum present value (calculated using the most recently published mortality table that is generally accepted by American actuaries and reasonably applicable to the ERP, and a 6 percent discount rate) of the sum of the participant’s Tophat Benefit and Supplemental Benefit (if the participant is vested therein). Other available forms of payment include single life, ten-year period certain and life, and joint and survivor annuities.
 
Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
 
The Deferred Compensation Plan (the “DCP”) is a non-qualified deferred compensation plan, which was instituted for certain high-level management employees of the Company and certain subsidiaries. The DCP is not an active plan and has been closed with no deferrals since July 31, 2002. The purpose of the DCP


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was to provide retirement/savings financial planning opportunities, which were not available to the officers in the qualified retirement plans due to Internal Revenue Code limitations. All account balances are subject to the general creditors of the Company.
 
DCP participants were able to defer receipt of portions of their salaries and bonuses, to be paid to them following retirement, termination of employment, death or earlier in certain circumstances. The participants were eligible to elect a “Savings” and/or a “Retirement” account. The participant signed a contract selecting the amount to be deferred for the upcoming deferral period, the type of account (Savings and/or Retirement), annuity term (5, 10 or 15 years) if a Retirement account and up to three dates with percentages and/or dollar amounts if a Savings account. The annuity for the Retirement account is determined by setting the interest rate on all outstanding balances at 135% of the average of the Moody’s Index in effect for the 60-month period that ends with the month preceding the month of retirement.
 
Beginning with deferrals after May 1, 1994, the participants could select a Savings and/or a Retirement account. The two investment choices were the Moody’s Composite Average of Yields on Corporate Bonds in effect for the month of May prior to the plan year beginning August 1 and a return equal to the total return of the Standard and Poor’s 500 stock index minus 1.2% per annum (“S&P 500 Minus 1.2% Election”). The participant could select either the Moody’s Index or the S&P 500 Minus 1.2% Election, but not both within the same account. In addition, participants with deferrals after May 1, 1994 could elect to defer their Savings and Retirement account balance past their retirement date, but not past age 70.
 
The DCP deferral contract indicates the participant’s investment selection and future payouts or retirement choices regarding the term of the annuity (5, 10 or 15 years). A participant who selected the S&P 500 Minus 1.2% Election for his Retirement account may, after he reaches age 55, switch once to the Moody’s Index. For a participant who retires and elected to invest in the S&P 500 Minus 1.2% Election, the investment’s return will assume the Moody’s Index six months prior to his retirement date in order to determine the final benefit.
 
The Company also maintains a non-qualified tophat plan. See notes b) and c) under the All Other Compensation Table. The Company pays the Tophat benefit no later than March 15 of the calendar year following the year in which the Tophat benefit was earned.
 
See “Potential Payments Upon Termination or Change-in-Control” section within this proxy statement for additional information regarding the effect of termination of employment on the DCP.
 
The following table reflects the earnings, distributions and total balance of the National Fuel Gas Company Deferred Compensation Plan and Tophat Plan:
 
                                         
    Executive
  Registrant
  Aggregate
  Aggregate
  Aggregate
    Contributions
  Contributions
  Earnings (Loss)
  Withdrawals/
  Balance at
    in Last FY
  in Last FY
  in Last FY
  Distributions
  Last FYE
Name
  ($)   ($)(1)   ($)(2)   ($)(3)   ($)(4)
 
David F. Smith
    0       110,350       13,590       103,457       272,921  
Ronald J. Tanski
    0       73,726       0       64,001       68,776  
David P. Bauer
    0       5,633       0       2,800       5,633  
Matthew D. Cabell
    0       25,181       0       23,934       22,306  
Anna Marie Cellino
    0       44,022       19,061       37,032       318,340  
John R. Pustulka
    0       21,766       7,097       15,337       127,227  
 
 
(1) Refer to notes b) and c) to the All Other Compensation Table.
 
(2) This represents the net earnings during the fiscal year for the Deferred Compensation Plan. None of the earnings were considered to be above market as the rates earned were less than what could have been earned by a similar investment choice that were offered in the 401(k) plan which is generally available to full-time employees with six months of service.
 
(3) This represents the annual tophat payment for the calendar year ended December 31, 2009, which was paid in January, 2010.
 
(4) This represents the ending DCP balance, if any, plus the tophat accruals for the period January 1, 2010 through September 30, 2010.


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Potential Payments Upon Termination or Change-in-Control
 
The information below describes and quantifies certain compensation that would become payable under existing plans and arrangements if the named executive officer’s employment had terminated on September 30, 2010 (the last business day of the Company’s fiscal year), assuming the named executive officer’s compensation and service levels as of that date and, if applicable, based on the fair market value (FMV) of the Common Stock on that date. The FMV is the average of the high and low stock price on September 30, 2010 ($51.68 per share). These benefits are in addition to benefits available generally to most salaried employees. Due to the number of factors that affect the nature and amount of any benefit provided upon the events discussed below, any actual amounts paid or distributed in the future may be different from the amounts contained in the following tables. Factors that could affect these amounts include the timing during the year of any such event, the market value of the Common Stock and the named executive officer’s age.
 
National Fuel Gas Company Performance Incentive Program
 
Under this Program, if a named executive officer’s employment terminates during the performance period due to a Change in Control or for any reason other than Cause, the performance period will be truncated, and the Compensation Committee will determine each named executive officer’s payment based on achievement of the performance conditions. The payment will be pro-rated based on the truncated time period. Any payment to the named executive officer will also be subject to any conditions as determined by the Chief Executive Officer.
 
“Change of Control” under the Performance Incentive Program generally means: (a) notice of a Schedule 13D filing with the SEC disclosing that any person (as such term is used in Section 13(d) of the 1934 Act) is the beneficial owner, directly or indirectly, of twenty (20) percent or more of the outstanding stock of the Company; (b) a tender or exchange offer to acquire, directly or indirectly, twenty (20) percent or more of the outstanding stock of the Company; (c) consolidation or merger of the Company in which the Company is not the surviving corporation, other than a consolidation or merger of the Company in which holders of its stock immediately prior to the consolidation or merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger as immediately before; (d) consolidation or merger in which the Company is the surviving corporation but in which the common stockholders of the Company immediately prior to the consolidation or merger do not hold at least a majority of the outstanding common stock of the continuing or surviving corporation; (e) sale or other transfer of all or substantially all the assets of the Company; or (f) a change in the majority of the members of the Board of Directors of the Company within a 24-month period unless the election or nomination for election by the Company’s stockholders of each new director was approved by the vote of at least two-thirds of the directors then still in office who were in office at the beginning of the 24-month period.
 
Regardless of whether the performance period has been completed and the named executive officer would have been entitled to a cash payment, if a named executive officer’s employment is terminated for Cause at any time prior to payment under this program, the named executive officer is no longer entitled to the payment. “Cause” under the Performance Incentive Program generally means either (a) the executive’s failure to comply with a reasonable and lawful written directive of the Board of Directors or the Chief Executive Officer, (b) the executive’s failure to perform the substantial responsibilities of the executive’s position; (c) any act of dishonesty, gross negligence, or misconduct by the executive; (d) the executive’s conviction of or entering a plea of guilty to a crime constituting a felony or the executive’s willful violation of any law, rule or regulation; or (e) the executive’s engagement in any business which is competitive with that of the Company.
 
The following table represents the estimated target incentive that would have been payable upon termination for all forms of termination except for “Cause”.
 
                     
Name
  *Payment ($)  
Name
 
*Payment ($)
 
David F. Smith
    2,283,109     Matthew D. Cabell     885,610  
Ronald J. Tanski
    1,339,067     Anna Marie Cellino     563,017  
David P. Bauer
    110,169     John R. Pustulka     383,460  


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* The above payments represents the sum of three separate three-year performance periods which end on September 30, 2010, 2011 and 2012, respectively, and shall be paid in a lump sum cash amount not later than 21/2 months after the end of the calendar year in which the relevant performance period ends (pro-rated to reflect the portion of the performance period during which the executive was employed).
 
National Fuel Gas Company 1997 Award and Option Plan
 
Under this plan, if a named executive officer engages in any business or activity competitive with that of the Company, without the Company’s written consent, or the named executive officer performs any act that is against the best interests of the Company, all unexercised, unearned or unpaid awards are forfeited.
 
As a general rule, if the named executive officer’s employment with the Company terminates for a reason other than death, disability, retirement, or any approved reason, all unexercised, unearned or unpaid awards are forfeited, unless otherwise stated below or in an award notice to the named executive officer. The Compensation Committee has the authority to determine what events constitute disability, retirement, or termination for an approved reason.
 
Incentive Stock Options — Except as otherwise provided in an award letter, if the named executive officer’s employment with the Company terminates, any incentive stock option that has not expired will terminate, and the named executive officer will no longer be entitled to purchase shares of the Company’s Common Stock pursuant to such incentive stock option, except that:
 
i.) Upon termination of employment other than by death, the named executive officer may, within three months after the date of termination of employment, purchase all or part of the shares of the Common Stock which the named executive officer was entitled to purchase under the incentive stock option on the date of termination of employment. However, if termination of employment occurs by reason of death, disability or retirement at age 65 or later, then the Company must offer to extend the term of those incentive stock options to the lesser of five years or the original term.
 
ii.) Upon the death of the named executive officer while employed with the Company or within three months after the date of termination of employment, the executive officer’s estate or beneficiary may, within one year after the date of the named executive officer’s death, purchase all or part of any shares of Common Stock which the named executive officer was entitled to purchase under such incentive stock option on the date of death.
 
Non-Qualified Stock Options and Stock Appreciation Rights (SAR) — Except as otherwise provided in an award letter, any non-qualified stock option (and any SAR) that has not expired will terminate upon the termination of the named executive officer’s employment with the Company, and no shares of Common Stock may be purchased pursuant to the non-qualified stock option, except that:
 
i.) Upon termination of employment for any reason other than death, discharge by the Company for cause, or voluntary resignation of the named executive officer prior to age 60, a named executive officer may, within five years after the date of termination of employment, or any such greater period of time that the Compensation Committee deems appropriate, exercise all or part of the non-qualified stock options, which the named executive officer was entitled to exercise on the date of termination of employment or subsequently becomes eligible to exercise as follows: (a) six months after the date of grant, if the named executive officer has voluntarily resigned on or after his 60th birthday, after the date of grant, and before such six months; or (b) on the date of the named executive officer’s voluntary resignation on or after his 60th birthday and at least six months after the date of grant. However, if termination of employment occurs by reason of death, disability or retirement, then each non-qualified stock option would remain exercisable for the lesser of five years or the unexpired term.
 
ii.) Upon the death of a named executive officer while employed with the Company or within the period stated in the preceding paragraph i), the named executive officer’s estate or beneficiary may, within five years after the date of the named executive officer’s death while employed, or within the period stated in paragraph i.) above, exercise all or part of the non-qualified stock options, which the named executive officer was entitled to exercise on the date of death.
 
As specified in Mr. Cabell’s non-qualified stock options award letter dated December 12, 2006, upon a voluntary termination of employment or an involuntary termination for Just Cause (as defined in that award letter), all non-qualified stock options are forfeited. Upon an involuntary termination due to death


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or for other than Just Cause, all non-qualified stock options will become exercisable and will remain exercisable for three years.
 
Unvested stock options/SARs — The following table represents the estimated value of unvested stock options/SARS issued to the named executive officers on February 20, 2008 and December 22, 2008 under this plan, upon termination due to death, disability or involuntary termination not for cause. No benefit for unvested stock options/SARs is payable due to a voluntary resignation, retirement or termination for Cause. The amounts below are based on the number of options/SARs that would have vested at a termination event on September 30, 2010 multiplied by the difference between the FMV on September 30, 2010 of $51.68, and the exercise prices of $47.37, and $29.88, respectively.
 
                     
    Value of
      Value of
    Awards that
      Awards that
    would Vest
      would Vest
Name
  ($)*  
Name
 
($)*
 
David F. Smith
    2,280,570     Matthew D. Cabell     907,920  
Ronald J. Tanski
    1,154,650     Anna Marie Cellino     599,300  
David P. Bauer
    92,230     John R. Pustulka     308,641  
 
 
* If termination had been due to a change in control or change in ownership and the named executive officer is terminated without Cause or the named executive officer terminates for Good Reason as defined below, the above amounts would be payable as a lump sum cash payment upon termination.
 
Restricted Stock — As of September 30, 2010, Mr. Cabell was the only named executive officer who had unvested restricted stock. The terms and conditions are stated within his award letter as follows:
 
Mr. Cabell was awarded 25,000 shares of restricted stock on December 5, 2007. There are vesting restrictions applicable to this stock. These restrictions lapse on 20% of the stock on December 5, 2011, and on an additional 20% of such stock on each subsequent December 5. All vesting restrictions will lapse on December 5, 2015. Mr. Cabell will forfeit his right to this restricted stock if his employment with the Company terminates for any reason other than death prior to the expiration of the vesting restrictions. In the event of his death, the restrictions will lapse. The estimated value of the 25,000 shares of restricted stock upon death on September 30, 2010 would have been $1,292,000 based on the FMV at September 30, 2010 multiplied by the 25,000 shares.
 
Mr. Cabell was also awarded 35,000 shares of restricted stock on September 17, 2009 which vesting restrictions lapse on March 20, 2018. Mr. Cabell will forfeit his rights to this restricted stock if his employment with the Company terminates for any reason other than death or disability prior to the expiration of the vesting restrictions. In the event of death or disability, all restrictions will lapse. The estimated value of the 35,000 shares of restricted stock upon death or disability on September 30, 2010 would have been $1,808,800 based on the FMV at September 30, 2010 multiplied by the 35,000 shares.
 
If Mr. Cabell had been terminated on September 30, 2010 due to a change in control or a change in ownership as described below, all restrictions on his unvested restricted stock would have lapsed and the estimated values as noted above would have been payable as a lump sum cash payment.
 
Change in control and change in ownership — If there is a Change in Ownership or a named executive officer’s employment terminates within three years following a Change in Control, unless the termination is due to death, disability, Cause, resignation by the named executive officer other than for Good Reason, or retirement, then all terms and conditions would lapse, and all unvested awards become vested. In addition, any outstanding awards are cashed out based on the Fair Market Value of the Common Stock as of either the date the Change in Ownership occurs or the date of termination following a Change in Control. For this purpose, “Fair Market Value” is the average of the high and low market price. In addition, the noncompetition provision mentioned above would become null and void.
 
The following table represents the estimated values of already vested SARs/options issued and outstanding to the named executive officers under this plan as of September 30, 2010, payable as a lump


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sum cash payment upon termination due to a Change in Control and the named executive officer were terminated without Cause or the executive officer terminates for Good Reason.
 
                     
    Payment Due on
      Payment Due on
    Already Vested
      Already Vested
Name
  SARs/Options ($)  
Name
  SARs/Options ($)
 
David F. Smith
    6,964,490     Matthew D. Cabell     1,689,915  
Ronald J. Tanski
    4,735,450     Anna Marie Cellino     3,324,245  
David P. Bauer
    773,920     John R. Pustulka     1,479,593  
 
For purposes of this section, “Change in Control” has a meaning similar to the definition of Change of Control set out in the “Performance Incentive Program” section. The major difference is that the 1997 Award and Option Plan provides that a Change in Control shall be deemed to have occurred at such time as individuals who constitute the Board of Directors of the Company on January 1, 1997 (the “Incumbent Board”) have ceased to constitute at least a majority, provided that any person becoming a director subsequent to January 1, 1997 whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall be considered as though such person was a member of the Incumbent Board.
 
“Change in Ownership” means a change which results directly or indirectly in the Common Stock ceasing to be actively traded on a national securities exchange or the National Association of Securities Dealers Automated Quotation System.
 
“Good Reason” means a good faith determination made by a named executive officer that the Company has materially reduced the responsibilities, prestige or scope of the named executive officer’s position. Examples include the assignment to the named executive officer of duties inconsistent with the named executive officer’s position, assignment of the executive to another place of employment more than 30 miles from the named executive officer’s current place of employment, or reduction in the named executive officer’s total compensation or benefits. The named executive officer must specify the event relied upon for his or her determination by written notice to the Board of Directors within six months after the occurrence of the event.
 
National Fuel Gas Company 2010 Equity Compensation Plan
 
Under this plan, which was approved by the shareholders at the 2010 Annual Meeting of Stockholders, the only awards that have been issued through September 30, 2010 to named executive officers are stock-settled stock appreciation rights which become exercisable (vested) upon achievement of specified performance goals, except as otherwise described below. At September 30, 2010 the Grant Price of each of these stock appreciation rights was higher than their FMV (i.e. all of these awards were at that time “under water”).
 
Stock Appreciation Rights — Except as otherwise provided in an award notice (and no exception was included in any of the outstanding award notices to named executive officers):
 
i.) upon termination of employment due to death, disability or retirement, any vested or unvested stock appreciation right that has not expired will become immediately and fully exercisable and shall remain exercisable until the earlier of five years after termination or the original term, after which the award expires;
 
ii.) upon termination of employment due to the divestiture by the Company of one or more subsidiaries or other business segments, divisions or operations that do not amount to a Change in Control, any vested or unvested stock appreciation right that has not expired will become immediately and fully exercisable and shall remain exercisable until the earlier of three years after termination or the original term, after which the award expires;
 
iii.) upon termination of employment due to a reduction in force, any unvested stock appreciation right shall be immediately forfeited and cancelled, and any vested stock appreciation right that has not expired shall remain exercisable until the earlier of one year after termination or the original term, after which the award expires;
 
iv.) upon termination of employment for Cause, any vested or unvested stock appreciation right shall be immediately forfeited and cancelled;


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v.) upon termination of employment for any other reason (such as a voluntary resignation not amounting to a retirement), any unvested stock appreciation right shall be immediately forfeited and cancelled, and any vested stock appreciation right that has not expired shall remain exercisable until the earlier of ninety days after termination or the original term, after which the award expires.
 
Change in Control — If there is a Change in Control, each vested and unvested stock appreciation right then outstanding shall become exercisable regardless of the exercise schedule otherwise applicable, and the Compensation Committee may either:
 
i.) at the time of the Change in Control, provide that each stock appreciation right shall be cancelled in exchange for a cash payment equal to the excess of FMV over the Grant Price of that stock appreciation right; or
 
ii.) reasonably determine in good faith, prior to the Change in Control, that each stock appreciation right shall be honored or assumed, or new rights substituted (an Alternate Award) by the named executive officer’s employer, provided that any Alternative Award must:
 
a) be based on stock traded on an established U.S. securities market;
 
b) provide the named executive officer with substantially equivalent rights, entitlements and economic value as the stock appreciation rights did; and
 
c) provide that, if the named executive officer’s employment is involuntarily terminated (other than for Cause) or is Constructively Terminated, in either case within 24 months after the Change in Control, then all of the named executive officer’s awards shall vest and be paid in cash or immediately transferable, publicly-traded securities in an amount equal to the excess of the Fair Market Value on the date of termination over the Grant Price or exercise price of the Alternative Award.
 
The only awards made under this plan in fiscal 2010 were awards of SARs issued on March 11, 2010 at a grant price of $52.10 which was higher than the FMV at September 30, 2010. Therefore, using the same methodology as used above for the values of the options/SARs under the 1997 Plan, no amounts are due for these “under water” awards.
 
Like the 1997 Plan, this plan also provides that, if a named executive officer engages in any business or activity competitive with that of the Company, without the Company’s written consent, or the named executive officer performs any act that is against the best interests of the Company, all unexercised, unearned or unpaid awards are forfeited.
 
For purposes of this section, “Change in Control” has a meaning similar to the definition of Change of Control set out in the “Performance Incentive Program” section. The major difference is that the 2010 Equity Compensation Plan provides that a Change in Control shall be deemed to have occurred at such time as individuals who constitute the Board of Directors of the Company at the beginning of the twelve-month period ended on the date of determination (the “Incumbent Board”) have ceased to constitute at least a majority, provided that any person becoming a director subsequent to that date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, shall be considered as though such person was a member of the Incumbent Board.
 
For purposes of this section, “Good Reason” has the same meaning as the definition of Good Reason set out in the “National Fuel Gas Company 1997 Award and Option Plan” section.
 
National Fuel Gas Company Tophat Plan
 
Under the Company’s Tophat Plan, the Company restores to the named executive officers benefits that may be lost under the Company’s qualified retirement benefit plans (Retirement Plan, TDSP and RSA) due to the Internal Revenue Code or qualified plan limits. If a named executive officer retires or his or her employment is terminated, the named executive officer (or his or her beneficiary in the event of his death) will receive a lump sum payment equal to the value of his or her TDSP Related Tophat benefit and/or RSA Related Tophat benefit that would have been payable upon termination.


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The following table represents the amount payable for the TDSP and RSA Tophat benefit if termination is due to retirement, death, disability, involuntary termination, for a Change in Control and the Company terminates without Cause or named executive terminates for Good Reason.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    103,225     Matthew D. Cabell     22,306  
Ronald J. Tanski
    68,776     Anna Marie Cellino     41,697  
David P. Bauer
    33     John R. Pustulka     20,589  
 
The value of the Tophat benefit for all other forms of termination for Messrs. Smith, Tanski, Bauer, Cabell and Pustulka and Mrs. Cellino are $24,175, $16,150, $33, $9,833, $4,089 and $8,575 respectively.
 
In addition to the above payment, Mr. Bauer will also receive a Retirement Related Tophat benefit with a present value of $14,324, payable as a lump-sum six months after the termination date for all forms of termination. Mr. Bauer is not currently eligible for retirement.
 
National Fuel Gas Company 2007 Annual at Risk Compensation Incentive Plan (“AARCIP”)
 
In the event of the disability, retirement or termination for an approved reason of a named executive officer during a performance period, the named executive officer’s participation will be deemed to continue to the end of the performance period, and the named executive officer will be paid a percentage of the amount earned, based upon the extent, if any to which the respective performance criteria are attained, proportionate to the named executive officer’s period of active service during the performance period.
 
If a named executive officer dies during a performance period, the named executive officer’s beneficiary will be paid an amount proportionate to the period of active service during the performance period, based upon the maximum amount, which the named executive officer could have earned under the At Risk Award.
 
In the event of a Change in Ownership (which has the same definition as provided in the 1997 Award and Option Plan, discussed above) or a named executive officer’s employment terminates within three years following a Change in Control, unless the termination is due to death, disability entitling the named executive officer to benefits under the Company’s long-term disability plan, Cause, resignation by the named executive officer other than for Good Reason (which has the same definition as provided in the 1997 Award and Option Plan, discussed above), or retirement entitling the named executive officer to benefits under the Company’s retirement plan, the named executive officer will be entitled to a single lump sum cash payment equal to a prorated portion of the At Risk Award previously established for the performance period which has commenced but has not yet ended, and 100% of the At Risk Award previously earned by, but not yet paid, to the named executive officer during each performance period that has ended.
 
“Change in Control” under the AARCIP has the same meaning as provided in the 1997 Award and Option Plan, discussed above, except with respect to an incumbent board. The AARCIP provides that a Change in Control occurs if individuals who constitute the Board on January 1, 2007 (the “Incumbent Board”) cease to constitute at least a majority, provided that any person becoming a director subsequent to January 1, 2007 whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board will be considered as though he or she was a member of the Incumbent Board.
 
“Cause” means the executive’s willful and continued failure to substantially perform his duties after written warnings specifically identifying his lack of substantial performance or the willful engaging in illegal conduct which is materially and demonstrably injurious to the Company or its subsidiaries.
 
If, in the opinion of the Compensation Committee, the named executive officer, without the written consent of the Company, engages in any business or activity that is competitive with that of the Company, or the named executive officer performs any act which in the opinion of the Committee is against the best interests of the Company, the named executive officer must forfeit all unearned and/or unpaid At Risk Awards.


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If a named executive officer’s employment with the Company or a subsidiary terminates for a reason other than death, disability, retirement, or an approved reason, all unearned or unpaid At Risk Awards will be canceled or forfeited, unless stated above or in an award notice to the named executive officer. The Compensation Committee has the authority to determine what events constitute disability, retirement, or termination for an approved reason.
 
The following table represents the benefit that would have been payable for all forms of termination except for termination for Cause or resignation other than for Good Reason.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    1,317,499     Matthew D. Cabell     623,617  
Ronald J. Tanski
    877,104     Anna Marie Cellino     552,034  
 
National Fuel Gas Company Executive Annual Cash Incentive Program (“EACIP”)
 
Participants in the Company’s EACIP for fiscal 2010 include executive officers other than those who participate in the Company’s AARCIP. Payment in full of any amount payable to the participant requires service by the participant for the entire performance period.
 
In the event of a Change in Control of the Company, all performance periods then in progress will be deemed to have ended as of the end of the most recently completed fiscal quarter, or as of the date of the Change in Control if that date coincides with the end of a quarter. The amount payable will be based on achievement of the performance conditions through the end of the truncated performance period, but annualized for the then-current fiscal year, and pro-rated based upon the duration of the truncated performance period. “Change in Control” under the EACIP has the same meaning as provided in the Performance Incentive Program, discussed above.
 
A participant will forfeit any right to receive payment if i.) his or her employment is terminated for cause, or ii.) his or her employment is terminated for any other reason and fewer than six months of the performance period have passed. “Cause” has the same definition as provided in the Performance Incentive Program, discussed above.
 
If a participant’s employment is terminated for any reason other than cause and six or more months of the performance period have passed, the amount payable to the participant will be based upon the amount that would have been payable absent termination, pro-rated for the amount of time worked during the performance period. The payment due on September 30, 2010 for Mr. Pustulka would have been $273,443.
 
Deferred Compensation Plan (the “DCP”)
 
In the event of a termination for any reason, other than disability or retirement, prior to a Change in Control, the named executive officer is entitled to receive his or her retirement account balance in the form of a lump sum payment. Note, the term “Change in Control” under the DCP has a similar definition as provided in the Performance Incentive Program, discussed above.
 
If the named executive officer’s employment terminates for any reason, other than death or retirement, after a Change in Control or the named executive officer dies at any time during his or her employment with the Company, the named executive officer (or his or her beneficiary) will receive in the form of a lump sum payment any undistributed savings and retirement account balance.
 
In the case of retirement, including disability retirement at any time, the named executive officers below are entitled to a monthly payment (a 15-year annuity, unless the named executive officer elected to receive a 5 or 10-year annuity) beginning the first of the month following retirement based on their retirement account balance. If the named executive officer dies before the commencement of the retirement annuity, the entire DCP balance will be paid in full as a lump sum payment to the named executive officer’s beneficiary. If the named executive officer dies after commencement of the annuity, the annuity will continue to be paid to the named executive officer’s beneficiary for the remainder of its original term.


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The following table represents the estimated total benefit payable as a lump-sum payment for all types of termination except for retirement or disability.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    169,696     Matthew D. Cabell     N/A  
Ronald J. Tanski
    N/A     Anna Marie Cellino     276,643  
David P. Bauer
    N/A     John R. Pustulka     106,638  
 
If termination is due to retirement or disability, the final account balances are calculated with a plan-mandated switch to the Moody’s index rate six months prior to retirement or disability for those participants who elected a return based on the S&P 500 Minus 1.2% Election. For those participants, DCP retirement and disability benefits will be different than DCP benefits provided upon death or voluntary termination other than retirement. Upon retirement or disability, Mr. Smith would have received a projected ten-year annuity of $1,980 per month with a present value of $178,979. Mrs. Cellino would have received a projected ten-year annuity of $3,299 per month with a present value of $282,498. Mr. Pustulka would have received a projected ten-year annuity with a payment of $1,515 per month for years 1 through 5, then a payment of $957 per month for years 6 through 10 with a present value of $108,143.
 
Employment Continuation and Noncompetition Agreement
 
If there is a Change in Control, and the executive remains employed thereafter, the executive’s annual salary and employee benefits are preserved for at least three years at the levels then in effect for the named executive officers. The Agreement also provides the benefits described below.
 
Severance Benefit
 
In the event of termination of a named executive officer within three years of a Change in Control without Cause or by the named executive officer for Good Reason, the named executive officer is entitled to a single lump sum cash payment equal to 1.99 times the sum of the named executive officer’s annual base salary and the average of the annual cash bonus for the previous two fiscal years. The named executive officers are also entitled to their base salary through the date of termination and to any vested benefits under the employee benefit plans, including any compensation previously deferred and not yet paid and any amounts payable pursuant to any agreement with the named executive officer.
 
“Cause” means the named executive’s gross misconduct, fraud or dishonesty, which has resulted or is likely to result in material economic damage to the Company or its subsidiaries as determined in good faith by a vote of at least two-thirds of the non-employee directors of Company at a meeting of the Board.
 
“Change in Control” has a similar definition as provided in the Performance Incentive Program, discussed above. However, Mr. Cabell’s agreement also provides that a Change in Control will occur if the Company sells more than 50% ownership of Seneca Resources.
 
“Good Reason” means there is a material diminution in the named executive’s responsibilities, base compensation or budget, or in the responsibilities of the person to whom the named executive is required to report. “Good Reason” also includes a requirement that the named executive relocate to an office outside the United States or more than 30 miles from the location at which the executive performed his services immediately prior to the Change in Control, or any other action or inaction that constitutes a material breach by the Company of the agreement. The Company has a period of 30 days to cure any acts which would otherwise give the executive the right to terminate his employment for Good Reason.
 
Payment will only be made upon a Change in Control and if the named executive officer is terminated without Cause or officer terminates for Good Reason. The following table represents the estimated Severance benefit payable as a lump sum payment.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    3,939,693     Matthew D. Cabell     2,011,132  
Ronald J. Tanski
    2,716,258     Anna Marie Cellino     1,591,862  
David P. Bauer
    636,800     John R. Pustulka     1,013,814  


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Continuation of Health and Welfare Benefits
 
In addition to the severance payment, the named executive officer will be entitled to participate in the Company’s employee and executive health and welfare benefit plans, excluding any vacation benefits, for eighteen months following termination (or, in the case of Mr. Cabell, until the end of the second calendar year following termination for purposes of any non-health-related benefit) or until the named executive officer becomes eligible for comparable benefits at a subsequent employer. The estimated value of the continuation of health benefits due to a change in control for each of the executive officers is $23,130. This amount was based on 18 months of COBRA rates for the medical, drug and dental benefits.
 
The following table represents the estimated value of the Post-retirement/Post termination welfare & fringe benefits, consisting of an allowance for tax preparation and financial planning for all of the named executive officers except for Mr. Cabell and Mrs. Cellino and the annual payment for life insurance under the ExecutiveLife Insurance Plan for Mr. Tanski, Mr. Cabell, Mrs. Cellino and Mr. Pustulka.
 
                     
Name
  Amount ($)  
Name
  Amount ($)
 
David F. Smith
    9,623     Matthew D. Cabell     15,000  
Ronald J. Tanski
    17,772     Anna Marie Cellino     15,000  
David P. Bauer
    384     John R. Pustulka     20,715  
 
Retirement — Except for Mr. Cabell, if the named executive officer is at least fifty-two years old at the date of termination, the named executive officer will be deemed to have earned and be vested in the retirement benefits that are payable to the named executive officer under the Company retirement plans.
 
Termination for Cause or the Executive Voluntarily Terminates — If the named executive officer’s employment is terminated for Cause, death, disability, or the named executive officer voluntarily terminates his or her employment other than for Good Reason, the named executive officer will not be entitled to the severance benefit discussed above. The named executive officer (or his or her beneficiary) will be entitled to his or her base salary through the date of termination and to any vested benefits under the employee benefit plans, including any compensation previously deferred and not yet paid and any amounts payable pursuant to any agreement between the named executive officer and the Company. The named executive officer will also be entitled to any other benefits provided in the Company’s plans for death or disability.
 
Non-competition — Unless the named executive officer has elected not to be bound by the noncompete provisions of the Agreement, the Company will make a lump sum payment within 30 days following the named executive officer’s date of termination equal to one times the sum of i.) the named executive officer’s annual base salary and ii.) the average of the annual cash bonus for the previous two fiscal years. The noncompete payment will not be paid to the named executive officer if his or her employment is terminated by reason of death or disability.
 
In order for the named executive officer to be entitled to the noncompete payment, the named executive officer may not directly or indirectly engage in, become employed by, serve as an agent or consultant to, or become a partner, principal or stockholder (other than a holder of less than 1% of the outstanding voting shares of any publicly held company) of any business or entity that is engaged in any activity which is competitive with the business of the Company or its subsidiaries or affiliates in any geographic area in which the Company or its subsidiaries are engaged in competitive business.
 
The following table represents the estimated Non-Compete payable upon termination due to a Change-in-Control as compensation for the covenant not to compete for all forms of termination except for death, disability or retirement.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    1,979,745     Matthew D. Cabell     1,010,619  
Ronald J. Tanski
    1,364,954     Anna Marie Cellino     799,931  
David P. Bauer
    320,000     John R. Pustulka     509,455  
 
Life Insurance Premium Agreement for David F. Smith
 
The Life Insurance Premium Agreement for David F. Smith provides Mr. Smith with an annual payment of $33,000 commencing October 1, 2009 and continuing until the Termination Date (see below).


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Mr. Smith must document that all payments received were used to make premium payments on life insurance covering Mr. Smith’s life and that life insurance remains in force.
 
In this context, “Termination Date” means the earliest of Mr. Smith’s death, October 31, 2017, or the date Mr. Smith’s employment is terminated for Cause; and “Cause” means misconduct in respect of Mr. Smith’s duties that has damaged or is likely to damage the Company, including any endeavor to interfere in the business relations of the Company, to compete with the Company or otherwise engage or assist in any enterprise that is competitive with the Company in any material respect. If the Termination Date occurs before October 1 of any year, the Company is not obligated to make the payment.
 
National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (the “ERP”)
 
Mr. Cabell and Mr. Bauer are not participants in the ERP and will not receive any benefit under this plan upon termination. Under the ERP, no benefits will be payable to a named executive officer whose employment is terminated or could have been terminated for serious, willful misconduct in respect of his or her obligations to the Company, including the commission of a felony or a perpetration of a common law fraud damaging to the Company.
 
In addition, except when a Change in Control has already occurred, rights under the ERP are forfeited if the named executive officer is employed by anyone who engages in a business competitive with the Company; engages, or advises or assists others engaged in such business; endeavors, directly or indirectly, to interfere with the relations between the Company and any customer; or engages in any activity the committee administering the ERP (“ERP Committee”) would deem detrimental to the Company’s best interests, unless the ERP Committee determines that such activity is not detrimental to the best interests of the Company. From and after 60 days following cessation of such activity by the named executive officer and provision of written notice to the ERP Committee, the right to receive benefits under the ERP will be restored, unless the ERP Committee determines that the prior activity caused substantial damage to the Company.
 
The following table gives the estimated value of the first payment payable under the ERP that would have been due for all forms of termination except for Death or Company terminates for cause.
 
                     
Name
  Payment ($)  
Name
  Payment ($)
 
David F. Smith
    1,781,604     Matthew D. Cabell     N/A  
Ronald J. Tanski
    1,298,049     Anna Marie Cellino     471,822  
David P. Bauer
    N/A     John R. Pustulka     443,348  
 
The default form of benefit payment to the named executive officers is a four-year certain annuity, therefore, if a payment is shown above, three additional payments of the same amount would be made under the ERP, one in each of the next three years as elected by the executive officer.
 
If termination is due to death, a reduced payment will be calculated as a straight life annuity payment to the named executive officer’s surviving spouse/beneficiary until his or her death. The first annualized reduced payment would be $349,375 for Mr. Smith, $240,488 for Mr. Tanski, $102,714 for Mrs. Cellino and $78,526 for Mr. Pustulka.
 
Retirement Benefit Agreement for David F. Smith
 
The Retirement Benefit Agreement for David F. Smith provides Mr. Smith with certain retirement benefits in the event the Company terminates Mr. Smith without Cause, or Mr. Smith terminates employment with Good Reason, prior to March 1, 2011 (the first day of the month after which Mr. Smith reaches 571/2 years of age). “Cause” means the failure by Mr. Smith to substantially perform duties or the engaging in illegal conduct, gross misconduct, fraud or dishonesty, which injures the Company in a material way. “Good Reason” means a significant reduction in the nature and scope of duties and direct reporting responsibilities, a significant reduction in total potential compensation, or a requirement to relocate more than 100 miles away from the Company’s headquarters.
 
The payment that Mr. Smith would receive under the Retirement Benefit Agreement would be calculated to ensure that Mr. Smith receives benefits equivalent to what he would have received under the terms of the Executive Retirement Plan and the qualified Retirement Plan if he had attained age 571/2 at the


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time of his termination of employment. The Retirement Benefit Agreement will terminate on March 1, 2011 if benefits have not become payable under the agreement or the first date both Mr. Smith and his wife are deceased. In addition, the agreement will terminate before March 1, 2011 if Mr. Smith is terminated for any reason other than a termination by the Company without cause or by Mr. Smith with Good Reason. The estimated annual benefit that would have been paid expressed as a 50% joint and survivor annuity due to a involuntary termination or a Change in Control and Company terminates without Cause or Executive terminates for Good Reason is $25,571.
 
Post-Employment Benefits for Matthew D. Cabell
 
To the extent Matthew D. Cabell is employed by Seneca Resources Corporation or another Company subsidiary until and including March 20, 2018, post-employment medical and prescription drug benefits will be provided to Mr. Cabell, subject to the same terms and conditions, including the same monthly cost and with the same levels and types of benefits, as applicable to then-retiring officers of the Company’s utility subsidiary. Mr. Cabell will forfeit these benefits if he resigns before March 20, 2018 or if the Company or one of its subsidiaries terminates his employment at any time.
 
 
 
In summary, the following table provides an estimated value of total benefits for each named executive officer if their termination had occurred on September 30, 2010. As disclosed in the table above under the National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (ERP), the ERP benefit in the following totals represents the first payment due upon termination.
 
                                                         
        Potential Payments Upon Termination
    Potential Payments Upon Termination Other than in
  Following a Change in Control or Change
    Connection with a Change in Control   in Board
                    Company
       
                    Terminates
      Executive
                    without Cause
      Terminates
                    and/or
      Voluntarily
Executive Benefits
                  Executive
      Other
and Payments
                  Terminates
  Company
  than for
Upon Termination
  Voluntary
              for Good
  Terminates
  Good
For:
  Termination
  Retirement
  Death
  Disability
  Reason
  for Cause
  Reason
(1)
  $   $(2)   $   $   $   $   $
 
David F. Smith
    4,291,584       5,697,416       6,503,474       7,977,986       20,910,954       2,173,616       6,271,329  
Ronald J. Tanski
    2,653,266       3,582,996       3,680,085       4,737,646       13,595,210       1,381,104       4,018,220  
David P. Bauer
    124,526       N/A       216,756       216,756       1,970,990       334,357       444,526  
Matthew D. Cabell
    895,443       N/A       5,540,253       4,248,253       10,290,048       1,020,452       1,906,062  
Anna Marie Cellino
    1,320,057       1,911,068       2,135,405       2,510,368       8,258,680       1,085,149       2,119,988  
John R. Pustulka
    937,535       1,228,982       1,171,297       1,537,623       4,582,826       620,181       1,446,989  
 
 
(1) The value of the benefits due upon an “involuntary termination” other than for cause and other than in connection with a Change-in-Control for Messrs. Smith, Tanski, Bauer, Cabell and Pustulka and Mrs. Cellino are $7,994,274, $4,737,646, $216,756, $5,540,253, $1,536,119 and $2,504,513 respectively.
 
The value of the benefits due upon a “termination for cause” other than in connection with a Change-in-Control for Messrs. Smith, Tanski, Bauer, Cabell and Pustulka and Mrs. Cellino are $193,871, $16,150, $14,357, $9,833, $110,727 and $285,218 respectively.
 
(2) “Retirement,” will be “N/A” if the named executive officer was not eligible to retire on September 30, 2010. In that case, the Company would have accrued benefits payable to the named executive officer, which are accrued amounts in the other columns for the different types of terminations.


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PROPOSAL 2.  APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 
At the Annual Meeting, stockholders will be asked to approve the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company’s fiscal year ending September 30, 2011 (“fiscal 2011”). If approved by the stockholders, PricewaterhouseCoopers LLP will examine the financial statements of the Company and its subsidiaries and report upon the annual consolidated financial statements for fiscal 2011, as they did for fiscal 2010.
 
A representative of PricewaterhouseCoopers LLP will be attending the Annual Meeting.
 
The affirmative vote of a majority of the votes cast with respect to the appointment of the independent registered public accounting firm by the holders of shares of Common Stock entitled to vote is required for the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm.
 
If the necessary votes are not received, or if PricewaterhouseCoopers LLP declines to accept or otherwise becomes incapable of accepting or exercising the appointment, or its services are otherwise discontinued, the Audit Committee of the Board of Directors will appoint another independent registered public accounting firm. Unless they are otherwise directed by the stockholders, the Proxies intend to vote for the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm.
 
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS APPOINTMENT.


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PROPOSAL 3.  NON-BINDING ADVISORY VOTE
APPROVING EXECUTIVE COMPENSATION
 
The Company has performed exceedingly well when compared to its peers, despite the recent years’ volatile and uncertain business environment. The following graph compares the yearly cumulative total return on the Company’s Common Stock against the cumulative total return of the Standard & Poors 500 Composite Stock Price Index (“S&P 500”), the S&P Midcap Multiutility Index and the SIG Oil Exploration & Production Index, for a period of five years commencing September 30, 2005 and ended September 30, 2010. The S&P Midcap Multiutility Index comprises the cumulative total return of 23 diversified energy companies, including the Company. The SIG Oil Exploration & Production Index includes the cumulative total return of 21 exploration and production companies.
 
(PERFORMANCE GRAPH)
 
 
You have the opportunity to vote on the following resolution:
 
“RESOLVED, that the stockholders of the Company do hereby approve the compensation of the Company’s executives named in the Summary Compensation Table of the Company’s Proxy Statement for the 2011 Annual Meeting of Stockholders, as described in the Compensation Discussion and Analysis, the accompanying compensation tables and the related compensation disclosure contained in the Proxy Statement.”
 
This proposal, sometimes called a “say on pay” vote, provides shareholders with a vote to approve, or not, the compensation of the Company’s top executive officers. The Company’s executive compensation is described and explained in the Compensation Discussion & Analysis (the “CD&A”) beginning on page 18 of this proxy statement, and in the tabular disclosure starting with the Summary Compensation Table beginning on page 30. This vote is now part of the annual shareholder meetings of essentially all publicly traded companies in the U.S.
 
The Company’s executive compensation program is designed and implemented by the Compensation Committee, which is comprised entirely of independent directors, in consultation with The Hay Group and Hewitt Consulting (now Meridian Compensation Partners, LLC.) The Compensation Committee


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emphasizes programs that reward executives for results that are consistent with shareholder interests. Before casting your vote on this proposal, please carefully review the CD&A to understand how the Company’s executive compensation is designed and how it compares with other similar companies. The Company believes that its compensation policies and procedures:
 
  •  encourage a culture of pay for performance,
 
  •  are strongly aligned with both the short and long-term interests of the Company’s shareholders, a belief supported by the Company’s total return to shareholders as shown in the above five-year total return chart, and therefore
 
  •  justify a vote by shareholders FOR this resolution.
 
Consistent with the SEC rule implementing the requirement that the Company include a say on pay proposal in this proxy statement, the vote on this proposal is advisory and is not binding on the Board. The vote on this proposal will not be construed as overruling any decision by the Board. The Compensation Committee may take the results of this vote into consideration when making future compensation decisions, but is not required to do so.
 
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.


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PROPOSAL 4.  NON-BINDING ADVISORY VOTE ON
THE FREQUENCY OF THE “SAY ON PAY” VOTE
 
This proposal addresses how often, over the next six years, shareholders should be asked to participate in votes like Proposal 3, the Non-Binding Advisory Vote Approving Executive Compensation (“say on pay”). Shareholders may choose whether such a vote should be on the agenda for the Annual Meeting of Stockholders every year, every two years, or every three years, or they may abstain from voting. Six years from now, the shareholders will have the opportunity to revisit this question and again vote on the frequency with which there should be a say on pay vote.
 
In keeping with our philosophy of long-term value creation, we recommend that shareholders should choose to be presented with the say on pay vote every three years for the following reasons:
 
  •  as discussed in the CD&A that starts on page 18, our long-term compensation goals and equity grants incent officers based on performance metrics that span a three-year period; and
 
  •  the success of the design of the Company’s compensation strategy is demonstrated by the Company’s performance, illustrated by the five-year total return chart in Proposal 3; and
 
  •  the Company’s pay practices do not vary significantly from year-to-year thereby tempering the need for an annual say on pay vote.
 
Please note that this proposal does not provide shareholders with the opportunity to vote for or against any particular resolution. Rather, it permits shareholders to choose how often they would like the Company to include a say on pay vote on the agenda for the Annual Meeting of Stockholders. Accordingly, there are four choices presented on the enclosed proxy card: shareholders may vote that the say on pay vote should take place every one, two or three years, or abstain from voting.
 
Consistent with the SEC rule implementing the requirement that the Company include a say on pay proposal in this proxy statement, the vote on this proposal is advisory and is not binding on the Board. The vote on this proposal will not be construed as overruling any decision by the Board. The Board may take the results of this vote into consideration when deciding upon the frequency of the say on pay vote in the future, but is not required to do so.
 
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE 3 YEAR OPTION.


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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Securities Exchange Act requires the Company’s directors and officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Directors, officers and greater-than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of information furnished to the Company, reports filed through the Company and/or written representations that no Form 5 was required, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and greater-than 10% beneficial owners were complied with during fiscal 2010.
 
CODE OF ETHICS
 
The Company has adopted a code of ethics that applies to the Company’s directors, principal executive officer, principal financial officer, controller, other officers and employees that is designed to deter wrongdoing and to promote honest and ethical conduct. The text of the code of ethics is available on the Company’s website at www.nationalfuelgas.com. Upon request, the Company will provide to any person without charge a copy of the code of ethics. Requests must be made to the Secretary at the principal offices of the Company.
 
IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
 
Only one copy of this proxy statement and one copy of the Company’s Annual Report for the 2010 fiscal year are being delivered to some multiple stockholders who share an address unless the Company has received contrary instructions from one or more of the stockholders. A separate proxy card and a separate notice of the Annual Meeting are being included for each account at the shared address.
 
Registered stockholders who share an address and would like to receive a separate annual report to stockholders and/or a separate proxy statement for the Annual Meeting or future Annual Meetings of Stockholders, or have questions regarding the householding process, may call Broadridge, toll free at 1-800-542-1061. You will need your 12-digit Investor ID number. Simply follow the prompts. You may also write to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Promptly upon request, additional copies of the Company’s Annual Report for fiscal 2010 and separate proxy statements for the Annual Meeting will be sent. By contacting Broadridge, registered stockholders sharing an address can also request delivery of a single copy of annual reports to stockholders or proxy statements in the future if registered stockholders at the shared address are receiving multiple copies.
 
Many brokerage firms and other holders of record have also instituted householding procedures. If your family has one or more “street name” account under which you beneficially own shares of Common Stock, you may have received householding information from your broker, financial institution or other nominee in the past. Please contact the holder of record directly if you have questions, require additional copies of this proxy statement or our Annual Report to Stockholders for fiscal 2010 or wish to revoke your decision to household and thereby receive multiple copies. You should also contact the holder of record if you wish to institute householding and see the section “Multiple Copies of Proxy Statement” within this proxy statement. These options are available to you at any time.
 
PROPOSALS OF SECURITY HOLDERS
 
Proposals that security holders intend to present at the 2012 Annual Meeting of Stockholders must be received by the Secretary at the principal offices of the Company no later than September 23, 2011, in order to be considered for inclusion in the Company’s proxy statement and proxy for that meeting. Notice of a stockholder proposal submitted outside the processes of SEC Rule 14a-8 under the Securities Exchange Act, or a notice of a stockholder’s intent to nominate one or more directors, for consideration at the 2012 Annual Meeting of Stockholders, shall be considered untimely unless received by the Secretary at the Company’s principal office between October 12, 2011 and November 11, 2011.


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OTHER BUSINESS
 
The Board of Directors does not know of any business that will be presented for consideration at the Annual Meeting except as set forth above. However, if any other business is properly brought before the Annual Meeting, or any adjournment or postponement thereof, the Proxies will vote in regard thereto according to their discretion.
 
WHERE YOU CAN FIND ADDITIONAL INFORMATION
 
We file periodic reports and other information with the SEC. You may read and copy any document we file at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov and at the Company’s website at www.nationalfuelgas.com.
 
Statements contained in this proxy statement, or in any document incorporated in this proxy statement by reference regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows the Company to incorporate by reference the information that it files with the SEC. Incorporation by reference means that the Company can disclose important information to you by referring you to other documents filed separately with the SEC that are legally considered to be part of this document, and such documents are automatically updated and superseded by this proxy statement. Later information that is filed by the Company with the SEC will automatically update and supersede the information in this document.
 
     
     
    By Order of the Board of Directors
     
    Paula M. Ciprich
General Counsel and Secretary
     
January 21, 2011
   


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APPENDIX A TO PROXY STATEMENT
 
NATIONAL FUEL GAS COMPANY
REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
 
I.   Purpose
 
National Fuel Gas Company (“Company”) has a longstanding commitment to comply with federal and state securities laws and regulations, accounting standards, accounting controls and audit practices. In furtherance of this commitment, the Audit Committee of the Company’s Board of Directors has established these Reporting Procedures for Accounting and Auditing Matters (“Procedures”), which provide for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding accounting or auditing matters.
 
II.   Scope
 
These Procedures apply to all employees of all divisions and subsidiaries of the Company.
 
III.   Procedures
 
A. Making a Report of Accounting and Auditing Matters
 
  1.  An employee with a concern or complaint regarding accounting, internal accounting controls, or auditing matters (collectively “Accounting and Auditing Matters”) may report such concerns, on a confidential and anonymous basis if the employee so desires, as follows:
 
  a.  Via the Company’s dedicated toll-free hotline (1-800-605-1338) operated by a third party service company; or
 
  b.  In writing in a sealed envelope addressed to the Chairman of the Audit Committee, National Fuel Gas Company, 6363 Main Street, Williamsville, New York 14221. The sealed envelope should be labeled with a legend such as: “Submitted pursuant to the Reporting Procedures for Accounting and Auditing Matters.”
 
  2.  A sufficiently detailed description of the factual basis for the report should be given in order to allow appropriate investigation into the matter.
 
B. Treatment of Reports
 
  1.  All reports will be forwarded to the Chairman of Audit Committee, the Chief Auditor, and General Counsel.
 
  2.  Upon receipt of a report, the Chief Auditor will determine whether the complaint pertains to Accounting and Auditing Matters. If the report does not pertain to Accounting and Auditing Matters, the Chief Auditor and General Counsel will decide together on the appropriate disposition.
 
  3.  Reports relating to Accounting and Auditing Matters will be promptly investigated by the Chief Auditor under the Audit Committee’s direction and oversight, and may involve the assistance of other Company resources as needed. To the fullest extent possible, such investigations and reports will be kept confidential.
 
  4.  If the results of an investigation indicate that corrective action is required, the Audit Committee will decide what steps should be taken to rectify the problem and reduce the likelihood of recurrence, and may also recommend appropriate discipline.
 
  5.  No person making a report under these Procedures shall be subject to retaliation because of making a good faith report. In addition, any employee of the Company responsible for retaliating against individuals who in good faith report concerns regarding Accounting and Auditing Matters will be subject to disciplinary action, up to and including termination. Any employee making a bad faith report, including a report made for the purpose of harassing or maliciously injuring the subject of the report, will be subject to disciplinary action, up to and including termination.


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C. Retention of Reports and Investigation Documents
 
The Chief Auditor will maintain, in accordance with the Company’s document retention policy, a complete record of all reports received (including those determined not to pertain to Accounting and Auditing Matters), all records associated with reports of Accounting and Auditing Matters, the treatment of reports of Accounting and Auditing Matters under these Procedures, and the ultimate disposition of Accounting and Auditing Matters reports. In addition, the Chief Auditor shall prepare an update on the status of (i) all reports of Accounting and Auditing Matters under investigation, and (ii) those reports of Accounting and Auditing Matters whose investigation has been concluded since the previous status update. Status updates shall be provided on a monthly basis for the Chairman of the Audit Committee and shall be provided on a quarterly basis for the entire Audit Committee.
 
IV.   Administration of Procedures
 
The Audit Committee is the issuer and owner of these Procedures. These Procedures shall be subject to periodic review and revision by the Audit Committee as necessary or appropriate. The Audit Committee, in consultation with the Company’s Chief Auditor, shall have the authority to make any interpretations regarding the operation of these Procedures.


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APPENDIX B TO PROXY STATEMENT
 
NATIONAL FUEL GAS COMPANY
CORPORATE GOVERNANCE GUIDELINES
AMENDED: DECEMBER 9, 2010
 
The business of National Fuel Gas Company (the “Company”) is conducted by its employees, managers and officers, under the oversight of the Board of Directors (the “Board”), in order to serve the long-term interests of its shareholders. The Board and management recognize that the long-term interests of shareholders are served by considering the interests of customers, employees and the communities in which the Company operates. In addition, the Board requires directors, officers and employees to comply with all legal and regulatory requirements and to adhere to the highest ethical standards in the performance of their duties. To help discharge its responsibilities, the Board has adopted the following guidelines on corporate governance matters.
 
1.   Board Of Directors
 
The Board shall consist of a number of directors, not less than seven nor more than eleven, as determined by a majority vote of the full Board.
 
The business and affairs of the Company shall be managed by or under the direction of the Board, acting as a body, in accordance with Section 14A:6-1 of the New Jersey Business Corporation Act. Individual directors shall have no authority to act for or on behalf of the Company without the express authorization of the Board, or as may be provided by law, the Certificate of Incorporation or the By-Laws.
 
2.   Independent Directors
 
A majority of the Board must qualify as independent directors under the listing standards of the New York Stock Exchange (NYSE). The Board will annually review the relationship that each director has with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). All determinations of director independence will be disclosed in the Company’s annual proxy statement.
 
3.   Director Qualifications
 
The Board, with input from the Nominating/Corporate Governance Committee, is responsible for periodically determining the appropriate skills, perspectives, experiences, and characteristics required of Board candidates, taking into account the Company’s needs and current make-up of the Board. This assessment should include knowledge, experience, and skills in areas critical to understanding the Company and its business; personal characteristics, such as integrity and judgment; and candidates’ commitments to the boards of other publicly-held companies. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as a director and that he or she devotes the time necessary to discharge his or her duties as a director.
 
The Nominating/Corporate Governance Committee is responsible for periodically reviewing these qualification guidelines and recommending modifications, as appropriate. The Board believes the qualification guidelines included as Exhibit A are currently appropriate, but it may change these guidelines as the Company’s and Board’s needs warrant.
 
Directors are expected to carry out the functions of the Board in a professional and diligent manner, and to spend the time and effort necessary to properly discharge such responsibilities. Accordingly, a director is expected to regularly attend meetings of the Board and Committees on which such director sits, with the understanding that on occasion a director may be unable to attend a meeting. A director who is unable to attend a meeting is expected to notify the Chairman of the Board or the Chair of the appropriate Committee in advance of such meeting. A director is also expected to review provided materials in advance of a meeting.
 
4.   Selection of New Directors
 
The Board is responsible for selecting its members and nominating them for election by the stockholders and for filling vacancies on the Board. The Nominating/Corporate Governance Committee


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will recommend to the Board nominees for election, including, as appropriate, incumbent directors for re-election.
 
Stockholders may propose candidates for consideration in accordance with the Process for Identifying and Evaluating Nominees for Director included as Exhibit B.
 
In selecting individuals for nomination, the Committee will seek the input of the Chairman of the Board and Chief Executive Officer and will evaluate candidates using the qualification guidelines included as Exhibit A and the Process for Identifying and Evaluating Nominees for Director included as Exhibit B, as they may be supplemented from time to time. Once a candidate is selected to join the Board, the Chairman of the Board and/or the Chair of the Nominating/Corporate Governance Committee will extend the invitation to join the Board on the Board’s behalf.
 
5.   Term Limits
 
The Board does not believe it should limit the number of terms for which an individual may serve as a director. While term limits could help ensure fresh ideas, they also would force the Board to lose the contributions of directors who have developed an insight into the Company. This insight and continuity of directors is an advantage, not a disadvantage. As an alternative to term limits, the Nominating/Corporate Governance Committee will review a director’s continuation on the Board whenever the director experiences a change in professional responsibilities, as a way to assure that the director’s skills and experience continue to match the needs of the Board. In addition, in connection with nomination of the slate of directors that the Board proposes for election by stockholders each year, the Nominating/Corporate Governance Committee will consider re-nominated directors’ continuation on the Board and take steps as may be appropriate to ensure that the Board maintains an openness to new ideas.
 
A director shall normally serve on the Board for a three-year term, except that subject to paragraph 7, a director appointed to fill a vacancy shall stand for election at the next annual meeting of shareholders.
 
6.   Change in Professional Responsibilities
 
It is the view of the Board that each director who experiences a change in his or her business or professional affiliation or responsibilities should bring this change to the attention of the Board and should offer to resign. The Board does not believe that each director who retires or has a change in position or responsibilities should necessarily leave the Board. The Nominating/Corporate Governance Committee will, however, review the continued appropriateness of Board membership under these circumstances and make a recommendation to the Board.
 
This same guideline applies to any inside directors, including the Chief Executive Officer of the Company, in the event he or she no longer serves in that position.
 
7.   Director Age
 
As a general guideline, the Board will not nominate an individual to stand for election to the Board by shareholders if at the time of such election the individual will have reached his or her 72nd birthday. The Board shall have the authority to make exceptions to this general guideline on a case-by-case basis.
 
8.   Board Leadership
 
A.   Chairman of the Board and Chief Executive Officer
 
1. The Chairman of the Board, who may also be the Chief Executive Officer, shall be a director and preside at all meetings of the Board and meetings of the shareholders. The Chairman of the Board is chosen on an annual basis by at least a majority vote of the remaining directors.
 
2. The Chief Executive Officer, who may also be the Chairman of the Board, shall be appointed by the Board and serve at the pleasure of the Board.
 
B.   Lead Independent Director
 
The Lead Independent Director will preside at all meetings of the non-management directors at which he or she is present and all meetings of the independent directors at which he or she is present. The Lead


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Independent Director will perform such other functions as the Board may direct. The Lead Independent Director is chosen on an annual basis by at least a majority vote of the remaining directors.
 
C.   Succession Planning and Leadership Development
 
Each year, the Chief Executive Officer will report to the Compensation Committee on succession planning and his or her recommendation as to a potential successor, along with a review of any development plans recommended for such individuals. The Committee will make an annual report to the Board on succession planning, and the Board will work with the Committee to evaluate potential successors to the Chief Executive Officer. When the Compensation Committee and the Board review management succession plans for the Chief Executive Officer, they will consider succession in the event of an emergency or retirement of the Chief Executive Officer. The Committee and the Board will also review succession candidates for executive officers other than the Chief Executive Officer and other senior managers as it deems appropriate.
 
9.   Board Committees
 
A.   Number of Committees
 
Currently there are five Committees: Executive, Audit, Compensation, Nominating/Corporate Governance, and Financing. The Board believes the current Committee structure is appropriate. From time to time, depending upon the circumstances, the Board may form a new Committee or disband a current Committee.
 
B.   Assignment of Committee Members
 
The Board appoints members of the Committees on an annual basis. Vacancies in the Committees will be filled by the Board. In making assignments to the Committees, only independent directors may serve on the Audit Committee, the Compensation Committee, or the Nominating/Corporate Governance Committee, and at least one member of the Audit Committee must have accounting or financial management experience, as defined by the U.S. Securities and Exchange Commission rules or as required under applicable New York Stock Exchange listing requirements. Additionally, a member of the Audit Committee may not sit on more than three other Audit Committees of other public companies, unless the Board determines that such commitments would not impair his or her effective service to the Company.
 
The Board will take into account tenure on a Committee and give consideration to rotating Committee members periodically, but the Board does not feel that rotation should be mandated as a policy.
 
C.   Committee Charters and Authority
 
The Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, each have a written charter, which has been approved by the Board. Each charter delegates certain responsibilities to the respective Committee.
 
The Executive Committee may exercise Board authority with respect to matters other than those for which action of the full Board is required under applicable law. The Financing Committee may exercise Board authority with respect to specific matters for which the Board has delegated responsibility to it.
 
Unless delegated to one of the Committees either in the Charter, the Bylaws, a resolution of the Board or a vote of stockholders, each Committee shall make recommendations to the Board and the Board will consider and approve the recommendations. The Committee charters may be changed from time to time by approval of the Board.
 
10.   Board Meetings
 
A.   Number of Meetings
 
The Board has at least four scheduled meetings per year at which it reviews and discusses reports by management on the performance of the Company, its plans and prospects, as well as immediate issues facing the Company.


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B.   Role of the Chairman of the Board
 
The Chairman of the Board shall preside at all meetings of the Board. The Chairman of the Board shall determine the agenda for all Board meetings with the assistance of the Chief Executive Officer. Each director shall be entitled to suggest the inclusion of items on the agenda, with the final determination of the agenda to be made by the Chairman of the Board. The Chairman of the Board shall also determine the timing and length of Board meetings, and the time to be devoted to each topic on the agenda. All procedural matters with respect to the conduct of Board meetings shall be determined by the Chairman of the Board, including whether any individuals other than Board members shall be invited to attend and/or participate in all or any portion of any meetings, and the conditions of such individuals’ attendance and/or participation. In the absence of the Chairman of the Board, the Chief Executive Officer shall exercise all powers and authority conferred herein.
 
C.   Distribution of Board Materials in Advance
 
Materials for review, discussion and/or action of the Board should be distributed to Board members in advance of meetings whenever practicable.
 
D.   Non-Management Director Meetings/Independent Director Meetings
 
The non-management directors will meet at regularly scheduled executive sessions without management. The Audit Committee Chair, Nominating/Corporate Governance Committee Chair and Compensation Committee Chair may call the non-management directors to additional sessions without management. The independent directors will meet in executive session without management at least once per year. The Board shall not take formal actions at meetings of the non-management directors or independent directors, although the participating directors may make recommendations for consideration by the full Board.
 
11.   Confidentiality
 
Pursuant to their fiduciary duties, directors are required to protect and hold confidential all non-public information obtained by reason of their directorship position absent the express or implied permission of the Board of Directors to disclose such information or the written agreement of the Company to permit disclosure. No director shall use Confidential Information for his or her own personal benefit or to benefit persons or entities outside the Company. No director shall disclose Confidential Information outside the Company, either during or after his or her service as a director of the Company, except (i) with authorization of the Board of Directors, (ii) as may be permitted by written agreement with the Company, or (iii) as may be otherwise required by law.
 
“Confidential Information” is all non-public information entrusted to or obtained by a director by reason of his or her position as a director of the Company. It includes, but is not limited to, non-public information that might be of use to competitors or harmful to the Company or its customers if disclosed, such as
 
  •  information about the Company’s financial condition, results of operations, prospects, plans, objectives or strategies, and information relating to mergers and acquisitions, stock splits, stock repurchases, divestitures and other transactions;
 
  •  trade secrets, information or techniques, marketing and research and development information, drilling and exploration data, information concerning customers, suppliers, producers and joint venture partners, payroll and benefits information, current/past employee information, technical and computer/software related information, and legal information;
 
  •  information about discussions and deliberations relating to business issues and decisions, between and among employees, officers and directors.
 
To promote a free and unfettered exchange of ideas among directors, the directors will treat all discussions and deliberations that take place at Board meetings as confidential unless disclosure of those discussions is otherwise required by law or permitted by written agreement with the Company. No video or electronic recording of Board proceedings shall be made without the consent of the Chairman of the Board and a majority of the Board.


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12.   Board and Committee Performance Evaluations
 
The Board and the Audit, Compensation and Nominating/Corporate Governance Committees will perform an annual self-evaluation. Each year the directors will provide assessments of the effectiveness of the Board, and the members of the Audit, Compensation and Nominating/Corporate Governance Committees will provide assessments of the effectiveness of their respective committees. These evaluations will be submitted to the Nominating/Corporate Governance Committee which will review them and determine if any additional evaluation is necessary. If the Nominating/Corporate Governance Committee determines that additional evaluation is necessary, it may elect to have such evaluation performed internally, or by an independent corporate governance expert. The Nominating/Corporate Governance Committee will report all evaluation results to the Board and make recommendations for areas which, in its judgment, require improvement.
 
13.   Board Compensation
 
The Board’s compensation philosophy is that directors (other than those who are also salaried officers of the Company or any of its subsidiaries) are entitled to receive reasonable compensation for their services and reimbursement for certain expenses, as may be determined by the Board. The Compensation Committee shall have the responsibility for recommending to the Board changes in compensation levels for non-employee directors. In discharging this duty, the Committee shall be guided by four general principles: compensation should fairly pay directors for work required; compensation should attract and retain highly qualified candidates for Board membership; compensation should align directors’ interests with the long-term interests of shareholders; and compensation should be transparent and as simple as possible within the limitations of tax and legal considerations.
 
Reasonable compensation also may be paid to any person (other than a salaried officer or employee of the Company or any of its subsidiaries) formally requested by the Board to attend a meeting.
 
14.   Board Access to Company Officers
 
Board members will have access to all officers of National Fuel Gas Company. Independent Board members may consult with such officers without senior corporate management present. Members of committees of the Board will also have such access to management as is provided in committee charters or as may otherwise be authorized by the Board. Management is encouraged to invite Company personnel to any Board meeting at which their presence and expertise would help the Board to have a full understanding of matters being considered and to introduce managers with significant potential.
 
15.   Access to Independent Advisors
 
The Board shall have the power at any time by majority vote to retain independent outside financial, legal or other advisors, at the Company’s expense.
 
16.   Director Contact with the Company’s Constituencies
 
Except as otherwise required by NYSE listing standards or applicable law, or as authorized by the Board, communications with parties external to the Company (including but not limited to shareholders, the media, attorneys, vendors, service providers, etc.) shall be the responsibility of the Chief Executive Officer or delegated by the Chief Executive Officer to the appropriate area of the Company. The directors will be consulted from time to time for their advice, as the Chief Executive Officer so determines.
 
17.   Director Orientation and Continuing Education
 
All directors, upon their initial appointment to the Board, shall attend an educational session, thereby enabling them to better perform their duties and recognize and deal with various issues that may arise during their tenure as directors. Subsequently, the directors shall attend ongoing educational programs related to their Board service as the Board deems appropriate.


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18.   Amendment and Interpretation
 
These Guidelines are in addition to and are not intended to change or interpret any federal or state law or regulation, or the Company’s Certificate of Incorporation or Bylaws or any Committee Charter reviewed and approved by the Board. The Guidelines are subject to modification from time to time by the Board.


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EXHIBIT A
TO
NATIONAL FUEL GAS COMPANY
CORPORATE GOVERNANCE GUIDELINES
 
NATIONAL FUEL GAS COMPANY
DIRECTOR QUALIFICATION GUIDELINES
 
The Board of Directors in considering qualifications of directors standing for re-election and candidates for Board membership will consider the following factors, in addition to those other factors it may deem relevant:
 
1. Strong management experience, ideally with major public companies.
 
2. Other areas of expertise or experience that are desirable given the Company’s business and the current make-up of the Board, such as expertise or experience in: the natural gas industry, information technology businesses, manufacturing, financial or investment banking, scientific research and development, senior level government experience, and academic administration or teaching.
 
3. Desirability of range in age, so that retirements are staggered to permit replacement of directors of desired skills and experience in a way that will permit appropriate continuity of Board members.
 
4. Independence, as defined by the Board.
 
5. Diversity of perspectives brought to the Board by individual members.
 
6. Knowledge and skills in accounting and finance, business judgment, general management practices, crisis response and management, industry knowledge and leadership.
 
7. Personal characteristics matching the Company’s values, such as integrity, accountability, financial literacy, and high performance standards.
 
8. Additional characteristics, such as:
 
  a.)  willingness to commit the time required to fully discharge their responsibilities to the Board, including the time to prepare for Board and Committee meetings by reviewing the material supplied before each meeting;
 
  b.)  commitment to attend a minimum of 75% of meetings;
 
  c.)  ability and willingness to represent the stockholders’ long and short-term interests;
 
  d.)  awareness of the Company’s responsibilities to its customers, employees, suppliers, regulatory bodies, and the communities in which it operates; and
 
  e.)  willingness to advance their opinions, but once a decision is made by a majority of the Board, a willingness to support the majority decision assuming questions of ethics or propriety are not involved.
 
9. The number of commitments to other entities, with one of the more important factors being the number of other public-company boards on which the individual serves.
 
10. In order to qualify for election as a director, a nominee must be a shareholder of the Company.


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EXHIBIT B
TO
NATIONAL FUEL GAS COMPANY
CORPORATE GOVERNANCE GUIDELINES
 
NATIONAL FUEL GAS COMPANY
NOMINATING/CORPORATE GOVERNANCE COMMITTEE

Process for Identifying and Evaluating Nominees for Director
 
1. The Nominating/Corporate Governance Committee (the Committee) will observe the following procedures in identifying and evaluating candidates for election to the Company’s Board of Directors.
 
2. The Company believes that the continuing service of qualified incumbents promotes stability and continuity in the boardroom, contributing to the Board’s ability to work as a collective body, while giving the company the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. Accordingly, the process of the Committee for identifying nominees shall reflect the Company’s practice of re-nominating incumbent directors who continue to satisfy the Board’s criteria for membership on the Board, whom the Committee believes continue to make important contributions to the Board and who consent to continue their service on the Board.
 
3. Consistent with this policy, in considering candidates for election at annual meetings of stockholders, the Committee will consider the incumbent directors whose terms expire at the upcoming meeting and who wish to continue their service on the Board.
 
4. The Board will evaluate the qualifications and performance of the incumbent directors who desire to continue their service. In particular, as to each such incumbent director, the Committee will —
 
  (a)  consider if the director continues to satisfy the Director Qualification Guidelines which are Exhibit A to the Company’s Corporate Governance Guidelines;
 
  (b)  review any prior assessments of the performance of the director during the preceding term made by the Committee; and
 
  (c)  determine whether there exist any special, countervailing considerations against re-nomination of the director.
 
5. If the Committee determines that:
 
  (a)  an incumbent director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as a director during the preceding term; and
 
  (b)  there exist no reasons, including considerations relating to the composition and functional needs of the Board as a whole, why in the Committee’s view the incumbent should not be re-nominated, the Committee will, absent special circumstances, propose the incumbent director for re-nomination.
 
6. The Committee will identify and evaluate new candidates for election to the Board, including for the purpose of filling vacancies arising by reason of the resignation, retirement, removal, death or disability of an incumbent director or the desire of the directors to expand the size of the Board.
 
7. The Committee will accept recommendations for nominees from persons that the Committee believes are likely to be familiar with qualified candidates. These persons may include members of the Board, including members of the Committee, and management of the Company. The Committee may also determine to engage a professional search firm to assist in identifying qualified candidates. If such a firm is engaged, the Committee shall set its fees and the scope of its engagement.
 
8. As to each recommended candidate that the Committee believes merits consideration, the Committee will:
 
  (a)  cause to be assembled information concerning the background and qualifications of the candidate;
 
  (b)  determine if the candidate satisfies the Director Qualification Guidelines which are Exhibit A to the Company’s Corporate Governance Guidelines; if so, then


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  (c)  consider the contribution that the candidate can be expected to make to the overall functioning of the Board.
 
9. The Committee shall solicit the views of the Chief Executive Officer and the Chairman of the Board, and the views of such other persons as the committee deems appropriate, regarding the qualifications and suitability of candidates to be nominated as directors.
 
10. In its discretion, the Committee may designate one or more of its members (or the entire Committee) to interview any proposed candidate.
 
11. Based on all available information and relevant considerations, the Committee will select a candidate who, in the view of the Committee, is suited for membership on the Board. The Committee will then recommend to the Board that the candidate be nominated. The Board would then, if it chooses, nominate the candidate by a resolution adopted by the Board at a meeting or by unanimous written consent.
 
12. Stockholders may propose candidates for consideration by the Committee by communication directed to the Company’s Secretary at its principal office, received not less than 120 calendar days before the anniversary date of the Company’s proxy statement released to stockholders in connection with the previous year’s annual meeting of stockholders. However, if the date of the annual meeting is changed more than 30 days from the date corresponding to the date of the prior year’s annual meeting, then a stockholder’s communication must be received not later than the close of business on the tenth day following the date on which notice of the meeting is given by the Company (or, if earlier, by the tenth day following public disclosure of the new date of the annual meeting). The communication must include all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case under applicable SEC regulations, including such person’s written consent to be named in the proxy statement as a nominee and to serving as a director if elected. In making its selection, the Committee will evaluate candidates proposed by stockholders owning at least five percent (5%) of the Company’s outstanding common stock, under criteria similar to the evaluation of other candidates. The Committee shall have no obligation whatsoever to consider other unsolicited recommendations received from stockholders proposing candidates for the Board. The Committee may consider, as one of the factors in its evaluation of stockholder recommended nominees, the size and duration of the interest of the recommending shareholder or shareholder group on the equity of the Company, and the candidate’s relationship to that stockholder or group, in order to determine whether the candidate can effectively represent the interests of all stockholders. The Committee may also consider the extent to which the recommending stockholder or group intends to continue holding its interest in the Company, including, in the case of nominees recommended for election at an annual meeting of stockholders, whether the recommending stockholder intends to continue holding its interest at least through the time of such annual meeting.


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(NATIONAL FUEL LOGO)
NATIONAL FUEL GAS COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NY 14221
PROXY VOTING INSTRUCTIONS
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up through March 9, 2011. Have your proxy card in hand.
VOTE BY MAIL
Mark, sign and date your proxy card and return it (for receipt by March 9, 2011) in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up through March 9, 2011. Have your proxy card in hand when you access the web site.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce your Company’s costs of mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card.
FOR EMPLOYEE BENEFIT PLAN VOTES:
Please note, all votes must be received by 11:59 p.m., Eastern Time on March 7, 2011.
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE
VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting are available through 11:59 P.M. Eastern Time on March 9, 2011 for all votes other than employee plan votes.


TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M28858-P04819
  KEEP THIS PORTION FOR YOUR RECORDS  
 
 
  DETACH AND RETURN THIS PORTION ONLY  
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

                   
NATIONAL FUEL GAS COMPANY
  For   Withhold   For All   To withhold authority to vote for any individual  
 
  All   All   Except   nominee(s), mark “For All Except” and write the  
The Board of Directors recommends a vote FOR the
              number(s) of the nominee(s) on the line below.
 
 
 
 
Election of Directors
               

PROPOSAL 1: ELECTION OF DIRECTORS
  o   o   o  
 
     
01)
  Robert T. Brady
02)
  Rolland E. Kidder
03)
  Frederic V. Salerno
                 
 
The Board of Directors recommends a vote FOR Proposals 2 and 3
      For   Against   Abstain
 
               
PROPOSAL 2. Vote to ratify PricewaterhouseCoopers LLP as our registered public accounting firm
      o   o   o
 
               
PROPOSAL 3. Advisory vote to approve compensation of executives
      o   o   o
 
               
The Board of Directors recommends a vote FOR every 3 years for Proposal 4
  3 Years   2 Years   1 Year   Abstain
 
               
PROPOSAL 4. Advisory vote on frequency of vote to approve compensation of executives
  o   o   o   o
 
               
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” ITEMS 1 THROUGH 3 AND AS RECOMMENDED FOR ITEM 4.
               
                 
For address changes and/or comments, please check this box and write them on the back where indicated.
          o    
 
               
Will attend meeting.
  o   o        
 
               
 
  Yes   No        
Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
 
 
 
 
 
 
 
 
 
Signature [PLEASE SIGN WITHIN BOX]
Date   Signature (Joint Owners)     Date

 


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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and 2010 Annual Report to Stockholders are available at http://proxy.nationalfuelgas.com.
 
M28859-P04819     

PROXY
NATIONAL FUEL GAS COMPANY
Annual Meeting of Stockholders - March 10, 2011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints D.F. Smith and P.M. Ciprich, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of National Fuel Gas Company Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the company to be held March 10, 2011 or at any adjournment or postponement thereof, respecting (i) matters of which the Company did not have timely notice but that may be presented at the meeting; (ii) approval of the minutes of the prior meeting; (iii) the election of any person as a director if a nominee is unable to serve or for good cause will not serve; (iv) any shareholder proposal omitted from the enclosed proxy statement pursuant to Rule 14a-8 or 14a-9 of the Securities and Exchange Commission’s proxy rules, and (v) all matters incident to the conduct of the meeting. This proxy may be revoked by notice to the Secretary of the meeting as described in the Proxy Statement.
Employee Benefit Plans. This card also provides voting instructions for shares held in the National Fuel Gas Company Employee Stock Ownership Plan and the National Fuel Gas Company Tax-Deferred Savings Plans. If you are a participant in any of these plans and have shares of the Common Stock of the Company allocated to your account under these plans, please read the following authorization to the Trustee of those plans as to the voting of such shares.
Trustee’s Authorization. The undersigned on the reverse side of this card authorizes and instructs Vanguard Fiduciary Trust Company as Trustee of the National Fuel Gas Company Tax Deferred Savings Plans and the National Fuel Gas Company Employee Stock Ownership Plan to vote all shares of the Common Stock of the Company allocated to the undersigned’s account under such plan(s) (as shown on the reverse side) at the Annual Meeting, or at any adjournment thereof, in accordance with the instructions on the reverse side. All shares of Company stock for which the Trustee has not received timely directions shall be voted or exercised by the Trustee in the same proportion as the shares of Company Stock for which the Trustee received timely directions, except in the case where to do so would be inconsistent with the provisions of Title I of ERISA. You may revoke your instructions by notice to the Trustee as described in the enclosed Proxy Statement.
This proxy, when properly executed, will be voted as directed by the stockholder. See below for important provisions and additional instructions.
Incomplete Directions and Instructions. If this card is returned signed but without directions marked for one or more items, regarding the unmarked items, you are instructing the Trustee and granting the Proxies discretion to vote FOR items 1, 2, 3 and as recommended for item 4.
This proxy may be revoked by notice to the Secretary of the meeting as described in the Proxy Statement.
THIS PROXY/VOTING CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE VOTE BY TELEPHONE, INTERNET OR SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
         
     
  Address Changes/Comments:  
 
 
 
 
 
     
 
 
 
 
         
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be marked, dated and signed, on the other side)