def14a
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
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for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
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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)
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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
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
TABLE OF CONTENTS
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 Companys independent
registered public accounting firm;
(3) a non-binding advisory vote to approve the compensation
of the Companys executives;
(4) an advisory vote on the frequency of future non-binding
advisory votes to approve the compensation of the Companys
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 Companys
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.
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 Commissions (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 Companys
Employee Stock Ownership Plan or Tax-Deferred Savings Plans, the
proxy card will also serve as a voting instruction form to
instruct the Trustee
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 Companys 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 Companys 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 Companys 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 Companys principal
office, and upon payment of $5 per exhibit.
2
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 Companys 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 Companys 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.
3
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 directors 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 Companys 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 Companys 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 Companys utility
service territory. His local knowledge helps the Board
understand the perspective of the Companys retail utility
customer and the Companys retail stockholders, many of
whom are also utility customers and who represent a significant
portion of the Companys 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
4
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. Salernos 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. Salernos 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. Cashs 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 DTEs subsidiaries are
Detroit Edison, the nations 10th largest electric
utility, and Michigan Consolidated Gas Co. (MichCon), the
nations 11th largest natural gas local distribution
company. Mr. Ewing also had responsibility for DTEs
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. Ewings extensive executive management experience
at regulated energy companies provides the Board with a valuable
perspective on the Companys regulated businesses. Also,
his responsibility for DTEs exploration and production
subsidiary, with operations in the Antrim and Barnett Shale,
enables Mr. Ewing to provide knowledgeable insights with
regard to the Companys 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
5
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. Mazanecs decades of executive experience in the
natural gas interstate pipeline industry provide the Board with
an important insight into that business. In addition,
Mr. Mazanecs 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. Ackermans more than 40 years
involvement with the Company, including his experience as
President of all of the Companys 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 Companys 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. Matthews 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 Companys
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
6
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. Reitens extensive executive managerial experience
at utility companies provides the Board with important insights
with respect to the utility segment of the Companys
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 Deans 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 Companys 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 Boards 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 Companys
utility service territory and that payments made by Moog to
Company affiliates for natural gas service in each of
Moogs last three fiscal years were not in excess of the
greater of (i) $1,000,000, or (ii) 2% of Moogs
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 SECs 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 Boards
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
7
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 Companys
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 Companys website at
www.nationalfuelgas.com.
Diversity
Under the Companys 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.
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BOARD COMMITTEES
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Nominating/
|
DIRECTOR
|
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Audit
|
|
Compensation
|
|
Executive
|
|
Corporate Governance
|
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Philip C. Ackerman
|
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X
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|
Robert T. Brady
|
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|
X
|
|
X
|
|
X (Chair)
|
R. Don Cash
|
|
X
|
|
X
|
|
|
|
X
|
Stephen E. Ewing
|
|
X
|
|
X
|
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|
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|
Rolland E. Kidder
|
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X
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|
|
|
|
|
X
|
Craig G. Matthews
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|
X (Chair)
|
|
|
|
X
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|
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George L. Mazanec
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X
|
|
X (Chair)
|
|
X
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|
Richard G. Reiten
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X
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|
|
X
|
Frederic V. Salerno
|
|
|
|
X
|
|
|
|
X
|
David F. Smith
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|
|
|
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|
X (Chair)
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|
|
|
|
|
|
|
|
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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 Companys independent registered public
accounting firm and chief internal auditor, to monitor
compliance with the Companys Reporting Procedures for
Accounting and Auditing Matters (included in this proxy
statement as Appendix A) and to prepare a report of
the committees 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
NYSEs 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
8
Companys 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 Companys internal
audit function, the Audit Committee in 2006 had a Quality
Assessment performed by a consulting firm that concluded that
the Companys 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 Companys
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 Companys 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 Companys 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 Companys 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
Companys 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 Committees charter, the Chief Executive
Officer may and does make, and the committee may and does
consider, recommendations regarding the Companys
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 Companys Corporate Governance Guidelines, described in
the following paragraph.
The committees 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
Companys Corporate Governance Guidelines. A current copy
of the charter of the committee is available to stockholders on
the Companys website at www.nationalfuelgas.com and in
print to stockholders who request a copy from the Companys
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 Companys website at www.nationalfuelgas.com.
Appendix B also addresses the qualifications and skills the
committee believes are necessary in a director, and the
committees
9
consideration of stockholder recommendations for director.
Stockholder recommendations identifying a proposed nominee and
setting out his or her qualifications should be delivered to the
Companys 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
organizations 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 Companys Code of Business Conduct and Ethics is
available on the Companys website at
www.nationalfuelgas.com and in print to stockholders who request
it from the Companys 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 Companys 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 Companys 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 directors, officers or employees
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 Companys directors and executive officers.
The Companys 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
persons 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 Companys 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
10
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 recipients
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. Ackermans retirement from the Company, he would
perform the duties and responsibilities of Chairman of the Board
of Directors as established under the Companys 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 ($18,000 per year), multiplied by the
number of full years of service prior to January 1, 1997,
but not to exceed 100% of that annual retainer. The retirement
benefit begins upon the later of the date of the directors
retirement from the board or the date the director turns
age 70, and continues until the earlier of the expiration
of ten years or the death of the director.
The Company requires that each director, in order to receive
compensation for service as a director, must beneficially own at
least 500 shares of Common Stock at the end of the first
year of service as a director, at least 1,000 shares at the
end of the second year of service and at least 2,500 shares
at the end of the third year of service.
11
The following table sets forth the compensation paid to each
non-employee director for service during fiscal 2010:
DIRECTOR
COMPENSATION TABLE FISCAL 2010
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Change in
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Pension Value
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Fees
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and Nonqualified
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Earned or
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Non-Equity
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Deferred
|
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Paid in
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Stock
|
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Option
|
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Incentive Plan
|
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Compensation
|
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All Other
|
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Cash ($)
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|
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Awards
|
|
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Awards
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Compensation
|
|
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Earnings
|
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Compensation
|
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Total
|
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Name
|
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(1)
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($)(2)
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($)
|
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($)
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($) (3)
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($) (4)
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($)
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Philip C. Ackerman
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201,778
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43,007
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None
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None
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N/A
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|
3
|
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244,788
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Robert T. Brady
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76,000
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76,664
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|
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None
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None
|
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N/A
|
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3
|
|
|
|
152,667
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R. Don Cash
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82,000
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76,664
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|
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None
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None
|
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N/A
|
|
|
|
3
|
|
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158,667
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Stephen E. Ewing
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|
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76,000
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|
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76,664
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|
|
|
None
|
|
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|
None
|
|
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|
N/A
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3
|
|
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152,667
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Rolland E. Kidder
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70,000
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76,664
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|
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None
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None
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N/A
|
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|
3
|
|
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|
146,667
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Craig G. Matthews
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|
76,000
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76,664
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None
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None
|
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|
N/A
|
|
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|
3
|
|
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152,667
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George L. Mazanec
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88,000
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|
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76,664
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None
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None
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N/A
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3
|
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164,667
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Richard G. Reiten
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60,000
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76,664
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None
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|
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None
|
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|
N/A
|
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|
3
|
|
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136,667
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Frederic V. Salerno
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64,000
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76,664
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|
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None
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None
|
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N/A
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3
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140,667
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(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 Boards
(FASBs) 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. |
12
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
Companys wholly-owned subsidiaries to meet statutory or
regulatory requirements. |
|
(2) |
|
Audit-Related Fees include audits of certain of the
Companys 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 Committees charter (available on the
Companys website at www.nationalfuelgas.com and in print
to stockholders who request a copy from the Companys
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).
13
AUDIT
COMMITTEE REPORT
The Companys 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 Companys website at
www.nationalfuelgas.com and in print to stockholders who request
a copy from the Companys Secretary at its principal office.
The Audit Committee has reviewed and discussed the
Companys audited financial statements for fiscal 2010 with
management. The Audit Committee has also reviewed with
management its evaluation of the Companys internal control
over financial reporting and reviewed managements
assessment about the effectiveness of the Companys
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 firms
independence. The Audit Committee also has considered whether
the independent registered public accounting firms
provision of non-audit services to the Company and its
affiliates is compatible with the independent registered public
accounting firms 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 Companys 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
14
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 Companys 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 individuals (or
individuals) stock options, SARs and shares shown on this
table, expressed as a percent of the Companys outstanding
shares and that individuals (or individuals)
exercisable stock options and SARs at November 30, 2010. |
15
|
|
|
(7) |
|
Includes 1,000 shares held by Mr. Ackermans 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. Kidders
wife, as to which Mr. Kidder shares voting and investment
power. |
|
(10) |
|
Includes 600 shares owned by Mr. Mazanecs wife,
as to which Mr. Mazanec shares voting and investment power. |
|
(11) |
|
Includes 51,902 shares owned by Mr. Smiths wife,
as to which Mr. Smith shares voting and investment power. |
|
(12) |
|
Includes 614 shares owned jointly with
Mr. Tanskis 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 Companys 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 Companys 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. |
16
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
Companys Retainer Policy for Non-Employee Directors, and
100,000 were available for issuance pursuant to the
Companys 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. |
17
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 Companys record of performance is superior. Despite
the recent years volatile and uncertain business
environment, the Companys 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 industrys development of the Marcellus Shale. The
Compensation Committee works to motivate creation of shareholder
value through the compensation program.
18
The Compensation Discussion and Analysis (CD&A)
provides a detailed review of the Companys 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 managements attention on creating
shareholder value from a long-term investors 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 Companys 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 officers potential
compensation depend on the market price of the Companys
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 Companys
compensation program for its executive officers. It sets the
base salaries and available bonus ranges of the Companys
executive officers and exercises the authority delegated to it
by the stockholders or the Board under the Companys 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
Committees compensation consultants with regard to the
functions of the Companys 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
19
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. Hays 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
Hays 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
entitys 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. Cabells 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 Hewitts 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 companys
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
20
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 Companys exploration and
production segment and Messrs. Smith and Tanskis
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 Companys 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
individuals specific responsibilities, experience
(including time in position), and effectiveness and makes
adjustments based on the Committee members business
judgment and the CEOs 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. Smiths 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. Smiths 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. Smiths base salary increase, the Committee also
considered the Companys overall performance, financially
and operationally, particularly with respect to improved
performance in the Companys exploration and production
segment.
The Committee also increased Mr. Tanskis 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. Tanskis base salary by an
additional five percent.
In December 2009, based on its and Mr. Smiths
assessment of Mr. Cabells responsibilities,
experience and effectiveness in the past year, the Committee
increased Mr. Cabells 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
Companys 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
21
President in the Company in recognition of his contributions to
the Companys success and growth strategy, at which time
the Committee increased Mr. Cabells base salary by an
additional five percent. Based primarily on
Mr. Smiths recommendation, the Committee increased
Mrs. Cellinos 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. Smiths recommendations. In making such
recommendations, Mr. Smith referenced Hays
compensation report and made recommendations based on his
opinion, with input from Mr. Tanski, of an
individuals specific responsibilities, experience and
effectiveness. Mr. Bauer received a base salary increase
for calendar 2010 based on his performance managing the
Companys 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
Companys financial matters. In the exercise of its
subjective business judgment, the Committee increased
Mr. Bauers 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 Companys complex system of
pipelines, storage fields and related facilities. In the
exercise of its subjective business judgment, the Committee
increased Mr. Pustulkas 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:
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Target
|
Executive
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|
(As a Percentage of Base Salary)
|
|
Mr. Smith
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|
|
100
|
%
|
Mr. Tanski
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|
|
80
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%
|
Mr. Cabell
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|
|
70
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%
|
Mrs. Cellino
|
|
|
70
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%
|
Mr. Pustulka
|
|
|
45
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%
|
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
22
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 executives 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 executives 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.
23
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Annual Cash Incentive
|
Executive
|
|
|
David F. Smith
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Ronald J. Tanski
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David P. Bauer
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Matthew D. Cabell
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|
Anna Marie Cellino
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John R. Pustulka
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%
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Wghtd %
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%
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|
Wghtd %
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%
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Wghtd %
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%
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Wghtd %
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%
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Wghtd %
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%
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|
Wghtd %
|
Fiscal 2010 Goals
|
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Achvd
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Wght
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Achvd
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Achvd
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Wght
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Achvd
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Achvd
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|
Wght
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Achvd
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Achvd
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Wght
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Achvd
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Achvd
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Wght
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Achvd
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Achvd
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Wght
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Achvd
|
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1.
|
|
|
Consolidated EPS
|
|
|
|
200%
|
|
|
|
|
0.25
|
|
|
|
|
50.00%
|
|
|
|
|
200%
|
|
|
|
|
0.25
|
|
|
|
|
50.00%
|
|
|
|
|
200%
|
|
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|
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0.25
|
|
|
|
|
50.00%
|
|
|
|
|
200%
|
|
|
|
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0.15
|
|
|
|
|
30.00%
|
|
|
|
|
200%
|
|
|
|
|
0.25
|
|
|
|
|
50.00%
|
|
|
|
|
200%
|
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0.25
|
|
|
|
|
50.00%
|
|
|
2.
|
|
|
Regulated EPS
|
|
|
|
150%
|
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|
|
0.25
|
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37.50%
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150%
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0.25
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37.50%
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150%
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0.25
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37.50%
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150%
|
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0.25
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|
37.50%
|
|
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|
|
150%
|
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|
|
0.25
|
|
|
|
|
37.50%
|
|
|
3.
|
|
|
Seneca EPS
|
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|
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175%
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|
|
0.15
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|
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26.25%
|
|
|
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|
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|
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|
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|
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4.
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|
|
Production Volume
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193%
|
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|
|
|
0.20
|
|
|
|
|
38.60%
|
|
|
|
|
193%
|
|
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|
|
0.15
|
|
|
|
|
28.95%
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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193%
|
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0.20
|
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38.60%
|
|
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5.
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|
|
Marcellus Production
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|
110%
|
|
|
|
|
0.15
|
|
|
|
|
16.50%
|
|
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|
|
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|
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|
|
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|
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|
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110%
|
|
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|
|
0.20
|
|
|
|
|
22.00%
|
|
|
|
|
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6.
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|
|
Safety
|
|
|
|
159%
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|
|
|
|
0.05
|
|
|
|
|
7.95%
|
|
|
|
|
159%
|
|
|
|
|
0.10
|
|
|
|
|
15.90%
|
|
|
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|
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|
|
|
|
|
|
|
|
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|
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159%
|
|
|
|
|
0.10
|
|
|
|
|
15.90%
|
|
|
|
|
159%
|
|
|
|
|
0.10
|
|
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|
15.90%
|
|
|
7.
|
|
|
Operational Safety
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200%
|
|
|
|
|
0.10
|
|
|
|
|
20.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
8.
|
|
|
Segment Growth
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
200%
|
|
|
|
|
0.15
|
|
|
|
|
30.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
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9.
|
|
|
Total Seneca Reserve Replmt
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
24
|
|
|
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
segments 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
segments 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%
|
25
|
|
|
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 investors 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 Companys stock.
26
Stock
Appreciation Rights, Stock Options and Restricted
Stock
In 2010, the Committee awarded one-half of each executive
officers 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 Senecas 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 Companys 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 Companys 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 Companys 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.
27
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 Companys
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 Companys 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 Companys total return on capital as compared with the
Companys peer group for the performance period of
October 1, 2007 through September 30, 2010 is 182.6%.
28
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 Companys 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 officers
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. Smiths death, (2) October 31,
2017, or (3) the date Mr. Smiths employment is
terminated if for cause.
CHANGE IN
CONTROL ARRANGEMENTS
If an executive officers 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
29
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 officers 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 Companys 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
30
highly compensated executive officers (the named executive
officers) of the Company in fiscal 2010. The compensation
reflected for each officer was for the officers services
provided in all capacities to the Company and its subsidiaries.
|
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Change in
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Pension Value
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and
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Nonqualified
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Non-Equity
|
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Deferred
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Stock
|
|
Equity
|
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Incentive Plan
|
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Compensation
|
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All Other
|
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Fiscal
|
|
Salary
|
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Bonus
|
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Awards
|
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Awards
|
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Compensation
|
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Earnings
|
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Compensation
|
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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
|
|
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2009
|
|
|
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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
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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Ronald J. Tanski
|
|
|
2010
|
|
|
|
601,250
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
844,298
|
|
|
|
1,516,204
|
|
|
|
1,693,463
|
|
|
|
105,304
|
|
|
|
4,760,519
|
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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)
|
|
|
|
|
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|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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David P. Bauer
|
|
|
2010
|
|
|
|
223,413
|
|
|
|
14,330
|
|
|
|
0
|
|
|
|
48,246
|
|
|
|
174,972
|
|
|
|
67,016
|
|
|
|
15,395
|
|
|
|
543,372
|
|
Treasurer and Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
Financial Officer of the Company(1)
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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N/A
|
|
|
|
75,889
|
|
|
|
1,075,549
|
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Anna Marie Cellino
|
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2010
|
|
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430,000
|
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|
|
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 Companys
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. |
31
|
|
|
|
|
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 officers benefits under all
pension plans maintained by the Company determined using
interest rate and mortality rate assumptions consistent with
those used in the Companys 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 FASBs 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. |
32
|
|
|
|
|
In addition, Mr. Cabell is a participant in the
Companys 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. Cabells
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 $33,000 under the Life
Insurance Premium Agreement. For Mr. Bauer, this represents
the Company paid insurance premiums under the National Fuel Gas
Company Group Life Insurance Plan. |
|
f) |
|
Represents the premiums paid for the blanket travel insurance
policy, which provides a death benefit to beneficiaries of an
officer if the officer dies while traveling. |
|
g) |
|
Dividends are paid on unvested restricted stock and reported as
taxable income. |
33
Grants of
Plan-Based Awards in Fiscal 2010
The following table sets forth information with respect to
awards granted to the named executive officers during fiscal
2010 under the Performance Incentive Program, the At Risk Plan,
and the 2010 Equity Compensation Plan. There were no Stock
Awards during the fiscal year and no future payouts under Equity
Incentive Plan Awards to executive officers; therefore we have
removed those columns from the table. Please refer to the
Compensation Discussion and Analysis (CD&A) within this
proxy statement for additional information regarding these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Exercise or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Base
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
Securities
|
|
Price of
|
|
Closing
|
|
Fair Value of
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Underlying
|
|
SAR
|
|
Market
|
|
SAR
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
SARs
|
|
Awards
|
|
Price
|
|
Awards
|
Name
|
|
Note
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(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
Companys
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
Companys 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 |
34
|
|
|
|
|
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
Companys financial statements in
Form 10-K
for the fiscal year ended September 30, 2010. |
The Companys 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
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Companys
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. Cabells 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.
36
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 |
37
|
|
|
|
|
refer to Note H, Retirement Plan and Other Post-retirement
Benefits, to the Companys 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 participants 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 Companys 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
38
and a portion of the Supplemental Benefit that is based upon the
participants 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 participants base benefit under the
Retirement Plan; minus
(e) the participants 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 participants 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
39
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
Moodys 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
Moodys 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 Poors 500 stock index minus 1.2% per annum
(S&P 500 Minus 1.2% Election). The participant
could select either the Moodys 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 participants
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 Moodys Index. For a participant who
retires and elected to invest in the S&P 500 Minus 1.2%
Election, the investments return will assume the
Moodys 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. |
40
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 officers employment
had terminated on September 30, 2010 (the last business day
of the Companys fiscal year), assuming the named executive
officers 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 officers age.
National
Fuel Gas Company Performance Incentive Program
Under this Program, if a named executive officers
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 officers
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
Companys 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 officers 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 executives
failure to comply with a reasonable and lawful written directive
of the Board of Directors or the Chief Executive Officer,
(b) the executives failure to perform the substantial
responsibilities of the executives position; (c) any
act of dishonesty, gross negligence, or misconduct by the
executive; (d) the executives conviction of or
entering a plea of guilty to a crime constituting a felony or
the executives willful violation of any law, rule or
regulation; or (e) the executives 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
|
|
41
|
|
|
* |
|
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 Companys 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 officers
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
officers 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 Companys 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 officers
estate or beneficiary may, within one year after the date of the
named executive officers 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 officers 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 officers 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 officers estate or
beneficiary may, within five years after the date of the named
executive officers 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. Cabells 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
42
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 $1,808,800 based on the FMV at
September 30, 2010 multiplied by the 35,000 shares.
If Mr. Cabell had been terminated on September 30,
2010 due to a change in control or a change in ownership as
described below, all restrictions on his unvested restricted
stock would have lapsed and the estimated values as noted above
would have been payable as a lump sum cash payment.
Change in control and change in
ownership If there is a Change in Ownership
or a named executive officers employment terminates within
three years following a Change in Control, unless the
termination is due to death, disability, Cause, resignation by
the named executive officer other than for Good Reason, or
retirement, then all terms and conditions would lapse, and all
unvested awards become vested. In addition, any outstanding
awards are cashed out based on the Fair Market Value of the
Common Stock as of either the date the Change in Ownership
occurs or the date of termination following a Change in Control.
For this purpose, Fair Market Value is the average
of the high and low market price. In addition, the
noncompetition provision mentioned above would become null and
void.
The following table represents the estimated values of already
vested SARs/options issued and outstanding to the named
executive officers under this plan as of September 30,
2010, payable as a lump
43
sum cash payment upon termination due to a Change in Control and
the named executive officer were terminated without Cause or the
executive officer terminates for Good Reason.
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due on
|
|
|
|
Payment Due on
|
|
|
Already Vested
|
|
|
|
Already Vested
|
Name
|
|
SARs/Options ($)
|
|
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 Companys 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 officers position. Examples include the
assignment to the named executive officer of duties inconsistent
with the named executive officers position, assignment of
the executive to another place of employment more than
30 miles from the named executive officers current
place of employment, or reduction in the named executive
officers 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;
44
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 officers 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 officers
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 officers 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 Companys
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
Companys 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 Companys Tophat Plan, the Company restores to
the named executive officers benefits that may be lost under the
Companys 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.
45
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 officers
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 officers period of
active service during the performance period.
If a named executive officer dies during a performance period,
the named executive officers 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 officers 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 Companys
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 Companys 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 Companys 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 executives 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.
46
If a named executive officers 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 Companys EACIP for fiscal 2010 include
executive officers other than those who participate in the
Companys 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 participants 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 $273,443.
Deferred
Compensation Plan (the DCP)
In the event of a termination for any reason, other than
disability or retirement, prior to a Change in Control, the
named executive officer is entitled to receive his or her
retirement account balance in the form of a lump sum payment.
Note, the term Change in Control under the DCP has a
similar definition as provided in the Performance Incentive
Program, discussed above.
If the named executive officers employment terminates for
any reason, other than death or retirement, after a Change in
Control or the named executive officer dies at any time during
his or her employment with the Company, the named executive
officer (or his or her beneficiary) will receive in the form of
a lump sum payment any undistributed savings and retirement
account balance.
In the case of retirement, including disability retirement at
any time, the named executive officers below are entitled to a
monthly payment (a
15-year
annuity, unless the named executive officer elected to receive a
5 or 10-year
annuity) beginning the first of the month following retirement
based on their retirement account balance. If the named
executive officer dies before the commencement of the retirement
annuity, the entire DCP balance will be paid in full as a lump
sum payment to the named executive officers beneficiary.
If the named executive officer dies after commencement of the
annuity, the annuity will continue to be paid to the named
executive officers beneficiary for the remainder of its
original term.
47
The following table represents the estimated total benefit
payable as a lump-sum payment for all types of termination
except for retirement or disability.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payment ($)
|
|
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 Moodys 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 executives 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 officers 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 executives 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. Cabells 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 executives 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
|
|
48
Continuation
of Health and Welfare Benefits
In addition to the severance payment, the named executive
officer will be entitled to participate in the Companys
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 officers
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 Companys 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 officers date
of termination equal to one times the sum of i.) the named
executive officers 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).
49
Mr. Smith must document that all payments received were
used to make premium payments on life insurance covering
Mr. Smiths life and that life insurance remains in
force.
In this context, Termination Date means the earliest
of Mr. Smiths death, October 31, 2017, or the
date Mr. Smiths employment is terminated for Cause;
and Cause means misconduct in respect of
Mr. Smiths 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 Companys 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 officers 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 Companys
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
50
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 Companys 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. |
51
PROPOSAL 2. APPOINTMENT
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
At the Annual Meeting, stockholders will be asked to approve the
Audit Committees appointment of PricewaterhouseCoopers LLP
as the independent registered public accounting firm for the
Companys 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.
52
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 Companys 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.
You have the opportunity to vote on the following resolution:
RESOLVED, that the stockholders of the Company do
hereby approve the compensation of the Companys executives
named in the Summary Compensation Table of the Companys
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 Companys top executive officers. The
Companys 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 Companys 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
53
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 Companys executive compensation is
designed and how it compares with other similar companies. The
Company believes that its compensation policies and procedures:
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|
|
|
|
encourage a culture of pay for performance,
|
|
|
|
are strongly aligned with both the short and long-term interests
of the Companys shareholders, a belief supported by the
Companys 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.
54
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:
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|
|
|
|
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 Companys compensation
strategy is demonstrated by the Companys performance,
illustrated by the five-year total return chart in
Proposal 3; and
|
|
|
|
the Companys 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.
55
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the
Companys directors and officers, and persons who own more
than 10% of a registered class of the Companys 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
Companys 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 Companys 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
Companys 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 Companys 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
Companys 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
stockholders 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
Companys principal office between October 12, 2011
and November 11, 2011.
56
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 SECs 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 SECs
website at www.sec.gov and at the Companys 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.
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|
|
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|
|
|
|
By Order of the Board of
Directors
|
|
|
|
|
|
Paula M. Ciprich
General Counsel and Secretary
|
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|
January 21, 2011
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57
APPENDIX A
TO PROXY STATEMENT
NATIONAL
FUEL GAS COMPANY
REPORTING
PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
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 Companys 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.
These Procedures apply to all employees of all divisions and
subsidiaries of the Company.
A. Making a Report of Accounting and Auditing Matters
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|
|
|
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 Companys 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.
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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
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|
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|
1.
|
All reports will be forwarded to the Chairman of Audit
Committee, the Chief Auditor, and General Counsel.
|
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|
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.
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|
|
3.
|
Reports relating to Accounting and Auditing Matters will be
promptly investigated by the Chief Auditor under the Audit
Committees 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.
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|
|
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.
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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.
|
A-1
C. Retention of Reports and Investigation Documents
The Chief Auditor will maintain, in accordance with the
Companys 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.
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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 Companys Chief
Auditor, shall have the authority to make any interpretations
regarding the operation of these Procedures.
A-2
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.
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.
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 Companys annual
proxy statement.
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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 Companys 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 members 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 Companys and Boards 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.
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|
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
B-1
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 Boards
behalf.
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 directors continuation on the Board whenever
the director experiences a change in professional
responsibilities, as a way to assure that the directors
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.
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.
|
|
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
B-2
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.
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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.
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.
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B.
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Assignment
of Committee Members
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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.
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C.
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Committee
Charters and Authority
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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.
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.
B-3
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B.
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Role
of the Chairman of the Board
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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.
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C.
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Distribution
of Board Materials in Advance
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Materials for review, discussion
and/or
action of the Board should be distributed to Board members in
advance of meetings whenever practicable.
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D.
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Non-Management
Director Meetings/Independent Director Meetings
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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.
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
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information about the Companys 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;
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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;
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information about discussions and deliberations relating to
business issues and decisions, between and among employees,
officers and directors.
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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.
B-4
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12.
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Board and
Committee Performance Evaluations
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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.
The Boards 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.
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14.
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Board
Access to Company Officers
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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.
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15.
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Access to
Independent Advisors
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The Board shall have the power at any time by majority vote to
retain independent outside financial, legal or other advisors,
at the Companys expense.
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16.
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Director
Contact with the Companys Constituencies
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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.
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17.
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Director
Orientation and Continuing Education
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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.
B-5
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18.
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Amendment
and Interpretation
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These Guidelines are in addition to and are not intended to
change or interpret any federal or state law or regulation, or
the Companys 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.
B-6
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 Companys 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 Companys
values, such as integrity, accountability, financial literacy,
and high performance standards.
8. Additional characteristics, such as:
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a.)
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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;
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b.)
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commitment to attend a minimum of 75% of meetings;
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c.)
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ability and willingness to represent the stockholders long
and short-term interests;
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d.)
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awareness of the Companys responsibilities to its
customers, employees, suppliers, regulatory bodies, and the
communities in which it operates; and
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e.)
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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.
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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.
B-7
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 Companys
Board of Directors.
2. The Company believes that the continuing service of
qualified incumbents promotes stability and continuity in the
boardroom, contributing to the Boards ability to work as a
collective body, while giving the company the benefit of the
familiarity and insight into the Companys affairs that its
directors have accumulated during their tenure. Accordingly, the
process of the Committee for identifying nominees shall reflect
the Companys practice of re-nominating incumbent directors
who continue to satisfy the Boards 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
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(a)
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consider if the director continues to satisfy the Director
Qualification Guidelines which are Exhibit A to the
Companys Corporate Governance Guidelines;
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(b)
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review any prior assessments of the performance of the director
during the preceding term made by the Committee; and
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(c)
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determine whether there exist any special, countervailing
considerations against re-nomination of the director.
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5. If the Committee determines that:
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(a)
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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
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(b)
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there exist no reasons, including considerations relating to the
composition and functional needs of the Board as a whole, why in
the Committees view the incumbent should not be
re-nominated, the Committee will, absent special circumstances,
propose the incumbent director for re-nomination.
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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:
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(a)
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cause to be assembled information concerning the background and
qualifications of the candidate;
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(b)
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determine if the candidate satisfies the Director Qualification
Guidelines which are Exhibit A to the Companys
Corporate Governance Guidelines; if so, then
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B-8
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(c)
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consider the contribution that the candidate can be expected to
make to the overall functioning of the Board.
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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 Companys
Secretary at its principal office, received not less than 120
calendar days before the anniversary date of the Companys
proxy statement released to stockholders in connection with the
previous years 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 years
annual meeting, then a stockholders 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 persons 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 Companys 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 candidates 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.
B-9
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 Companys 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:
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M28858-P04819 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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NATIONAL FUEL GAS COMPANY |
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For |
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Withhold |
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For All |
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To withhold authority to vote for any individual |
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All |
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All |
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Except |
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nominee(s), mark For All Except and write the |
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The
Board of Directors recommends a vote FOR the |
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number(s) of the nominee(s) on the line below. |
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Election of Directors |
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PROPOSAL 1: ELECTION OF DIRECTORS
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01) |
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Robert T. Brady |
02) |
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Rolland E. Kidder |
03) |
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Frederic V. Salerno |
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The Board of Directors recommends a vote FOR Proposals 2 and 3 |
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For |
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Against |
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Abstain |
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PROPOSAL 2. Vote to ratify PricewaterhouseCoopers LLP as our registered public accounting firm |
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PROPOSAL 3. Advisory vote to approve compensation of executives |
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The Board of Directors recommends a vote FOR every 3 years for Proposal 4 |
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2 Years |
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1 Year |
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Abstain |
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PROPOSAL 4. Advisory vote on frequency of vote to approve compensation of executives |
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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. |
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For address changes and/or comments, please check this box
and write them on the back where indicated. |
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Will attend meeting. |
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Yes |
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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.
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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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 Commissions 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.
Trustees 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 undersigneds 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.
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Address Changes/Comments: |
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(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)