FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
240.14a-12
NATIONAL FUEL GAS COMPANY
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
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Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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NATIONAL FUEL GAS
COMPANY
Notice of Annual
Meeting
and
Proxy Statement
Annual Meeting of
Stockholders
to be held on
March 12, 2009
NATIONAL
FUEL GAS COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NEW YORK
14221
January 30, 2009
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 12, 2009, at
The Grand American Hotel, Salt Lake City, Utah. The matters on
the agenda for the meeting are outlined in the enclosed Notice
of 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 proxy as you designate.
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,
Philip C. Ackerman
Chairman of the Board of Directors
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 12, 2009
To the Stockholders of National Fuel Gas Company:
Notice is hereby given that the Annual Meeting of Stockholders
of National Fuel Gas Company will be held at 10:00 a.m.
local time on March 12, 2009 at The Grand American Hotel,
Salt Lake City, Utah. 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 three-year terms as
provided in the attached proxy statement;
(2) the appointment of an independent registered public
accounting firm;
(3) the approval of the 2009 Non-Employee Director
Equity Compensation Plan;
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 15, 2009, will be entitled to vote at the meeting.
By Order of the Board of
Directors
Paula M. Ciprich
Secretary
January 30, 2009
Important
Notice Regarding The Availability Of Proxy Materials For The
Stockholder
Meeting To Be Held On March 12, 2009
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. Please use
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
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 12, 2009, 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 30, 2009.
All costs of soliciting proxies will be borne by the Company.
The Altman Group, Inc., 1200 Wall Street West,
3rd
Floor, Lyndhurst, NJ 07071, 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
$10,000 plus reasonable
out-of-pocket
expenses. Approximately ten (10) employees from The Altman
Group, Inc. will assist in the solicitation of proxies.
Only stockholders of record at the close of business on
January 15, 2009, will be eligible to vote at the Annual
Meeting or any adjournment or postponement thereof. As of that
date, 79,514,816 shares of Common Stock were issued and
outstanding. The holders of 39,757,409 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. All shares that are represented by effective
proxies received by the Company in time to be voted shall be
voted 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, your broker will not vote your shares for
Proposal 3 without your instruction, which is called a
broker non-vote.
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 at the above address, 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 Plans 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. Participants in the Plan(s) may
also provide those voting instructions by telephone or the
Internet. Those instructions may be revoked 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 9, 2009 at the following address:
National Fuel Gas Company
c/o BNY
Mellon Shareowner Services
Proxy Tabulation
480 Washington Blvd.
Jersey City, NJ 07310
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 can choose to
receive only one copy of the proxy statement and the
Companys annual report. If you would like to receive just
one set of these materials, follow the telephone prompts while
you vote, or check the box at the bottom of the proxy card and
return the card in the pre-addressed postage-paid envelope. This
procedure will reduce our printing costs and postage fees.
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, 2008, 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: R. Don Cash, Stephen
E. Ewing and George L. Mazanec. Messrs. Cash, Ewing and
Mazanec 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.)
Accordingly, Messrs. Cash, Ewing and Mazanec have been
nominated for terms of three years.
It is intended that the Proxies will vote for the election of
Messrs. Cash, Ewing and Mazanec 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. Cash, Ewing, and Mazanec 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 2009 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
The Board
of Directors Recommends a Vote FOR the Election of
Messrs. Cash, Ewing and Mazanec
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Name and Year
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Became a Director
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of the Company
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Age(1)
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Principal Occupation
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Nominees for Election as Directors
For Three-Year Terms to Expire in 2012
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R. DON CASH
2003
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66
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Chairman Emeritus since May 2003, and Board Director since May
1978, of Questar Corporation (Questar), an integrated natural
gas company headquartered in Salt Lake City, Utah. 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. Director of Zions Bancorporation
since 1982 and Associated Electric and Gas Insurance Services
Limited since 1993. Director of Texas Tech Foundation since
November 2003 and TODCO (The Offshore Drilling Company) from May
2004 until July 2007. Former trustee, until September 2002, of
the Salt Lake Organizing Committee for the Olympic Winter Games
of 2002.
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STEPHEN E. EWING
2007
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64
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Vice Chairman of DTE Energy, a Detroit-based diversified energy
company involved in the development and management of
energy-related businesses and services nationwide, from November
1, 2005 until December 31, 2006. Group President, Gas Division,
DTE Energy from June 1, 2001 until November 1, 2005. Former
president and chief operating officer of MCN Energy Group, Inc.
Former president and Chief Executive Officer of Michigan
Consolidated Gas Co. (MichCon), a natural gas utility. MichCon
is a principal operating subsidiary of DTE Energy as a result of
the 2001 merger of DTE Energy and MCN Energy Group, Inc.
Chairman of the Board of Directors of the American Gas
Association for 2006 and past chairman of the Midwest Gas
Association and the Natural Gas Vehicle Coalition.
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GEORGE L. MAZANEC
1996
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72
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Former Vice Chairman, from 1989 until October 1996, of PanEnergy
Corporation, Houston, Texas, a diversified energy company (now
part of Spectra). Advisor to the Chief Operating Officer of Duke
Energy Corporation from August 1997 to 2000. Director of TEPPCO,
LP from 1992 to 1997, Director of Northern Border Pipeline
Company Partnership from 1993 to 1998, Director of Westcoast
Energy Inc. from 1998 to 2002 and Director of the Northern Trust
Bank of Texas, NA from 1998 to 2007. Director of Dynegy Inc.
since May 2004 and Director of Associated Electric and Gas
Insurance Services Limited since 1995. Former Chairman of the
Management Committee of Maritimes & Northeast Pipeline,
L.L.C. Member of the Board of Trustees of DePauw University
since 1996.
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Name and Year
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Age(1)
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Principal Occupation
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Directors Whose Terms Expire in 2010
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Philip C. Ackerman
1994
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65
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Former Chief Executive Officer of the Company from October 2001
until February 21, 2008. Chairman of the Board effective January
3, 2002 to present. President of the Company from July 1999
until February 2006. Senior Vice President of the Company from
June 1989 until July 1999 and Vice President from 1980 to June
1989. President of National Fuel Gas Distribution Corporation
(2) from October 1995 until July 1999 and Executive Vice
President from June 1989 to October 1995. Executive Vice
President of National Fuel Gas Supply Corporation (2) from
October 1994 to March 2002. President of Seneca Resources
Corporation (2) from June 1989 to October 1996. President of
Horizon Energy Development, Inc. (2) from September 1995 to
March 2008 and certain other non-regulated subsidiaries of the
Company since prior to 1992 to March 2008. Director of
Associated Electric and Gas Insurance Services Limited.
Mr. Ackerman is also the Chair of the Erie County
Industrial Development Agency.
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Craig G. Matthews
2005
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66
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Former President, CEO and Director of NUI Corporation, a
diversified energy company acquired by AGL Resources Inc. on
November 30, 2004, from February 2004 until December 2004. Vice
Chairman, Chief Operating Officer and Director of KeySpan
Corporation (previously Brooklyn Union Gas Co.) from March 2001
until March 2002. Director of Hess Corporation (formerly Amerada
Hess Corporation) since 2002. Member and Former Chairman of the
Board of Trustees, Polytechnic University. Board member of
Republic Financial Corporation since May 2007.
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Richard G. Reiten
2004
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69
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Chairman from September 2000 through February 2005 and also from
May 2006 through May 2008 and Director from March 1996 to May
2008 of Northwest Natural Gas Company, a natural gas local
distribution company headquartered in Portland, Oregon. Chief
Executive Officer of Northwest Natural Gas Company from January
1997 until December 2002 and President from January 1996 through
May 2001. Director of Associated Electric and Gas Insurance
Services Limited since 1997. Director of US Bancorp since 1998,
Building Materials Holding Corp. since 2001 and IDACORP Inc.
since January 2004. Mr. Reiten also served in executive
positions at Portland General Electric Company (President, 1992
to 1995) and Portland General Corporation (President, 1989 to
1992). 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).
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David F. Smith
2007
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55
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Chief Executive Officer of the Company since February 2008 and
President of the Company since February 2006, Vice President
from April 2005 until February 2006. President of National Fuel
Gas Supply Corporation (2) from April 2005 to July 1, 2008,
Senior Vice President from June 2000 until April 2005. President
of National Fuel Gas Distribution Corporation (2) from July 1999
to April 2005, Senior Vice President from January 1993 until
July 1999. Chairman of Seneca Resources Corporation (2) since
April 2008. Also president of Empire State Pipeline (2) from
April 2005 through July 2008, and president or chairman of
various non-regulated subsidiaries of the Company. Board member
of the Interstate Natural Gas Association of America (INGAA),
the INGAA Foundation, American Gas Foundation and Chairman of
the Northeast Gas Association.
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As of March 12, 2009 |
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Wholly-owned subsidiary of the Company. |
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Name and Year
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of the Company
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Age(1)
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Principal Occupation
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Directors Whose Terms Expire in 2011
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Robert T. Brady
1995
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Chairman of Moog Inc. since February 1996. Moog is a worldwide
designer, manufacturer and integrator of precision control
components and systems. President and Chief Executive Officer of
Moog Inc. since 1988 and Board member since 1984. Director of
Astronics Corporation, M&T Bank Corporation and Seneca
Foods Corporation. Also, named to the UB Council in January of
2008. 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.
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Rolland E. Kidder
2002
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68
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Executive Director of the Robert H. Jackson Center, Inc., in
Jamestown, New York, from 2002 until 2006. Founder of
Kidder Exploration, Inc., an independent Appalachian oil
and gas company; 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
Associates -- both Appalachian-based energy associations. An
elected member of the New York State Assembly from 1975 to 1982.
Former Trustee of the New York Power Authority. On the
Deans Advisory Council of the University at Buffalo School
of Law from 1996 to 2001. Vice President and investment advisor
for P.B. Sullivan & Co., Inc. from 1994 until 2001.
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Frederic V. Salerno
2008
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65
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Mr. Salerno has since 2006 served as a Senior Advisor to New
Mountain Capital, L.L.C. Mr. Salerno retired as Vice Chairman
and CFO of Verizon, Inc. in September 2002 after more than
37 years in the telecommunications industry. Prior to the
Bell Atlantic/GTE merger, which created Verizon, Mr. Salerno was
Senior Vice Chairman and CFO of Bell Atlantic. Mr. Salerno
joined New York Telephone in 1965. In 1983 Mr. Salerno became
Vice President and in 1987, he was appointed President and CEO.
Mr. Salerno serves as trustee of the Inner City Scholarship Fund
and the Partnership for Quality Education. In 1990
Mr. Salerno was appointed Chairman of the Board of Trustees
of the State University of New York, a position he held until
1996. Mr. Salerno currently is a director of Akamai
Technologies, Inc., Intercontinental Exchange, Inc., Popular,
Inc., Viacom, Inc., and CBS Corp.
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As of March 12, 2009. |
Director
Independence
The Board of Directors has determined that directors Brady,
Cash, Ewing, Kidder, Matthews, Mazanec, Reiten, Salerno and
Riordan, during the time he served as director, are (or were in
the case of Mr. Riordan who passed away during the year
after a short illness) independent, and that Mr. Ackerman,
Chairman of the Board of the Company, and Mr. Smith, Chief
Executive Officer and President of the Company, are not due to
their employment relationship, 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 the Director
Independence Guidelines adopted by the Board and included in
this proxy statement as Appendix A. Generally,
Appendix A provides that, in order for a director to be
considered independent, the Board must affirmatively determine
that the director has no direct or indirect material
relationship with the Company or any subsidiary, after
consideration of all relevant facts and circumstances not merely
from the standpoint of the director, but also from that of
persons or entities with which the director has an affiliation.
Specifically, Appendix A sets out seven specific
circumstances in which a director will not be considered
independent, and three categorical types of commercial or
charitable relationships that will not be considered material
relationships for purposes of determining whether a director is
independent. Appendix A also sets out four types of
independence-related disclosures that the Company will continue
to make.
6
Non-management directors meet at regularly scheduled executive
sessions without management. The sessions are chaired by 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.
Meetings
of the Board of Directors and Standing Committees
During the Companys fiscal year ended September 30,
2008 (fiscal 2008), there were eight meetings of the
Board of Directors. In addition, certain 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 two meetings, and the
Nominating/Corporate Governance Committee held five meetings.
During fiscal 2008, all incumbent directors except for
Mr. Salerno attended at least 75% of the aggregate of
meetings of the Board and of the committees of the Board on
which they served. Mr. Salerno attended approximately 56%
of the meetings of the Board and the committees upon which he
serves.
The table below shows the number of meetings conducted in fiscal
2008 and the directors who currently serve (or did serve) on
these committees.
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BOARD COMMITTEES
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Nominating/
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DIRECTOR
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Audit
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Corporate Governance
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Compensation
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Executive
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Philip C. Ackerman
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X (Chair)
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Robert T. Brady
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X (Chair)
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X
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X
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R. Don Cash
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X
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X
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X
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Stephen E. Ewing
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X
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X
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Rolland E. Kidder
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X
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X
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Craig G. Matthews
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X (Chair)
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George L. Mazanec
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X
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X (Chair)
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Richard G. Reiten
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X
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X
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Frederick V. Salerno
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X
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X
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David F. Smith
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X
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Number of Meetings in Fiscal 2008
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9
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5
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6
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2
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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 2008 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, 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, in SEC regulations, and in the Companys Director
Independence Guidelines. No Audit Committee member
simultaneously serves on the audit committees of more than three
public companies. The Board limits the 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
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
7
holders 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.
Compensation
As described in the Compensation Discussion and Analysis in this
proxy statement, the Compensation Committee held six meetings
during fiscal 2008, in order to review and determine the
compensation of Company executive officers, to review reports
and to grant awards under the 1997 Award and Option Plan, the
Performance Incentive Program, the At Risk Program and,
effective for fiscal 2009, the Executive Annual Cash Incentive
Program. The members of the committee are independent as
independence is defined in the NYSE listing standards applicable
to the Company, in SEC regulations, and in the Companys
Director Independence Guidelines. The committee also administers
the Companys 1993 Award and Option Plan, 1997 Award and
Option Plan, Annual At Risk Compensation Incentive Program, and
the National Fuel Gas Company Performance Incentive Program. A
current copy of the charter of the committee is available to
security holders on the Companys website at
www.nationalfuelgas.com and is available in print to
stockholders who request a copy from the Companys
Secretary at its principal office.
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. As described more fully in the
Compensation Discussion and Analysis, the Company retains The
Hay Group, and Hewitt Consulting, (Hewitt) 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 were two meeting(s) of the Executive Committee during
fiscal 2008. 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, in SEC regulations, and in the Companys
Director Independence Guidelines. 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.
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 (included in this
proxy statement as Appendix B, available to security
holders on the Companys website at
www.nationalfuelgas.com, and available in print to stockholders
who request a copy from the Companys Secretary at its
principal office). A current copy of the charter of the
committee is available to security holders 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. Appendix B also addresses the
qualifications and skills the committee believes are necessary
in a director, and the committees 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
October 2, 2009 in order to be eligible for consideration
at the 2010 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 executive officer which exceeded the
greater of $1 million or 2% of the charitable
organizations consolidated gross revenues.
8
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.
Related
Person Transactions
The Company had no related person transactions in fiscal 2008.
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.
Directors
Compensation
The Retainer Policy for Non-Employee Directors (the
Retainer Policy), which replaced both the
Boards preexisting retainer policy and the Retirement Plan
for Non-Employee Directors (the Directors Retirement
Plan), was approved at the 1997 Annual Meeting of
Stockholders. 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 are covered by the
Retainer Policy, under which directors are paid in money plus an
amount of common stock adjusted from time to time.
In fiscal 2008, pursuant to the Retainer Policy, non-employee
directors, with the exception of Mr. Ackerman, were each
paid an annual retainer of $32,000 and 1,200 shares of
Common Stock, payable in quarterly increments. Common Stock
issued to non-employee directors under the Retainer Policy 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.
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 fee of $7,500 if appointed as
Chairman of any committee; accordingly, Messrs. Brady,
Matthews and Mazanec each received an additional annual retainer
fee of $7,500 during fiscal 2008.
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 will receive his accrued
Directors Retirement Plan benefits of $1,800 per year for
up to ten years. People who first 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 would begin upon the later of
the date of the directors retirement from the board or the
date the director turns age 70, and would continue until
the earlier of the expiration of ten years or the death of the
director.
The Company would like to continue paying its non-employee
directors partially with Company stock after the shares
available under the Retainer Policy have been exhausted.
Accordingly, the Company is seeking stockholder approval of the
2009 Non-Employee Director Equity Compensation Plan, described
in this proxy statement as Proposal Number 3, beginning at
page 49.
In addition, in place of the above-described director
compensation, Philip C. Ackerman, the Chairman of the Board of
Directors, received director compensation under a Director
Services Agreement (Agreement). Generally, the
Agreement provides that, effective as of June 1, 2008,
after Mr. Ackermans retirement from the Company, he
will 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
9
Chief Executive Officer deems appropriate. In no event will
Mr. Ackerman provide, or be required to provide, services
during the term of the Agreement for more than the equivalent of
fifty full time days in any calendar year (pro-rated for the
partial calendar years during such period at the beginning and
the end of the Chairman Services Period). Under the Agreement,
Mr. Ackerman will receive an annual fee equal to $400,000.
The Agreement is for a term of one year and as otherwise agreed
by the Board, the Chief Executive Officer and by
Mr. Ackerman. Under the Agreement, Mr. Ackerman is not
eligible for any other compensation for his services, or to
accrue any additional benefits under any employee benefit plans
of the Company. The Company reimburses Mr. Ackerman for
reasonable travel, lodging, meals and other appropriate expenses
incurred by him and provides him with suitable office space on
its premises and appropriate secretarial services on an as
needed basis under the Agreement.
Under the settlement agreement between the Company and the New
Mountain Group, as defined at Note 5 beginning on
page 14, at the New Mountain Groups request
Mr. Salerno receives no compensation for his Board service
for as long as the New Mountain Group continues to hold common
stock of the Company.
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 during the first year of
service as a director, at least 1,000 shares during the
second year of service and at least 2,500 shares
thereafter. The transfer of shares issued by the Company to a
director as compensation for service as a director is prohibited
until the later of (i) two years after the date those
shares were issued to the director, or (ii) six months
after the director ceases to be as a director of the Company;
however, upon death those transferability restrictions disappear.
The following table sets forth the compensation paid to each
non-employee director for service during fiscal 2008:
DIRECTOR
COMPENSATION TABLE FISCAL 2008
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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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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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133,333
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None
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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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133,336
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Robert T. Brady
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75,500
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60,019
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None
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None
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N/A
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|
9
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135,528
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R. Don Cash
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88,000
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60,019
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None
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None
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N/A
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|
|
|
9
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148,028
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Stephen E. Ewing
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78,000
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60,019
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|
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None
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None
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N/A
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|
|
9
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138,028
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Rolland E. Kidder
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70,000
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60,019
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None
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None
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N/A
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|
9
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130,028
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Craig G. Matthews
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75,500
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60,019
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None
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None
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N/A
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9
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135,528
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George L. Mazanec
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89,500
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60,019
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None
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None
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N/A
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9
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149,528
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Richard G. Reiten
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70,000
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60,019
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None
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None
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N/A
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|
9
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130,028
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John F. Riordan
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52,000
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60,019
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None
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None
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N/A
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9
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112,028
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Frederick V. Salerno(5)
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None
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None
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None
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None
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N/A
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None
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None
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|
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(1) |
|
Represents the portion of the annual retainer paid in cash, plus
meeting fees, except for Mr. Ackerman. For
Mr. Ackerman it represents the prorated portion of his
annual fee due for the period of June 1
September 30, 2008. |
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(2) |
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Represents the fair value as required by Statement of Financial
Accounting Standards 123R, on the date of issuance, of the
Common Stock issued pursuant to the current Retainer Policy. The
average of the high and low stock price on each date of issuance
was used to compute the fair value. The average prices were as
follows: $47.07 for October 1, 2007, $46.52 for
January 2, 2008, $47.35 April 1 2008 and $59.125 for
July 1, 2008. As of September 30, 2008, the aggregate
number of shares paid under the Retainer Policy to
Messrs. Brady, Cash, Ewing, Kidder, Matthews, Mazanec, and
Reiten are 10,100, 6,733, 1,946, 7,190, 4,341, 10,100, and 4,576
respectively. |
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(3) |
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Benefit accruals under the Directors Retirement Plan
ceased for each current non-employee director on
December 31, 1996. Mr. Brady is the only active
director who has an accrued pension benefit under this plan. His
retirement benefit will begin upon the later of the date of his
retirement as a director or the date he turns age 70. His
benefit is fixed at a set amount of $1,800 per year with no
increase in future benefits. The Company expensed the present
value of this future benefit in a prior fiscal year |
10
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and continues to expense only the interest associated with this
benefit. The fiscal 2008 interest expense to the Company was
$331.65. The directors do not have a non-qualified deferred
compensation plan or any other pension plan. |
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(4) |
|
Represents premiums paid on a Blanket-Travel Insurance Policy,
which covers each director up to a maximum benefit of $500,000.
This insurance provides coverage in case of death or injury
while on a trip for Company business. |
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(5) |
|
Under the settlement agreement between the Company and the New
Mountain Group (as defined in Note 5 beginning on
page 14), at the New Mountain Groups request
Mr. Salerno receives no compensation for his Board service
for as long as the New Mountain Group continues to hold common
stock of the Company. |
AUDIT
FEES
In addition to retaining PricewaterhouseCoopers LLP to report on
the annual consolidated financial statements of the Company for
fiscal 2008, the Company retained PricewaterhouseCoopers LLP to
provide various non-audit services in fiscal 2008. The aggregate
fees billed for professional services by PricewaterhouseCoopers
LLP for each of the last two fiscal years were as follows:
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2007
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2008
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Audit Fees(1)
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$
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1,391,150
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$
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1,379,079
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Audit-Related Fees(2)
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$
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20,000
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$
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0
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|
Tax Fees
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Tax advice and planning(3)
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$
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356,150
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$
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44,900
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Tax compliance(4)
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$
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122,595
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$
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139,000
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All Other Fees(5)
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$
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39,585
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$
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2,610
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TOTAL
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$
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1,929,480
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$
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1,565,589
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(1) |
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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. |
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(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 and implementation of the
Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley). |
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(3) |
|
Tax advice and planning includes consultations on various
federal, state and foreign tax matters. |
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(4) |
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Tax compliance includes tax return preparation and tax audit
assistance. |
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(5) |
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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. The Companys
Reporting Procedures for Accounting and Auditing Matters are
included in this proxy statement as Appendix C.
For fiscal 2008, 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).
11
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 2008 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 in Rule 3200T. The Audit Committee has
received the written disclosures and the letter from the
independent registered public accounting firm required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as
modified or supplemented, 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
12
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 but has not done so. All
information is as of November 30, 2008, except as otherwise
indicated.
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Shares Held in
|
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Name of Beneficial
|
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Exercisable Stock
|
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|
Shares held
|
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|
401(k)
|
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Restricted
|
|
|
Shares Otherwise
|
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Percent of
|
|
Owner
|
|
Options(1)
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|
|
in ESOP(2)
|
|
|
Plan(3)
|
|
|
Stock(4)
|
|
|
Beneficially Owned(5)
|
|
|
Class(6)
|
|
|
Philip C. Ackerman
|
|
|
1,816,890
|
|
|
|
22,052
|
|
|
|
17,772
|
|
|
|
1,328
|
|
|
|
580,685
|
(7)
|
|
|
2.98
|
%
|
Robert T. Brady
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
12,600
|
|
|
|
*
|
|
Matthew D. Cabell
|
|
|
0
|
|
|
|
0
|
|
|
|
345
|
|
|
|
40,000
|
|
|
|
2,000
|
|
|
|
*
|
|
R. Don Cash
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11,033
|
(8)
|
|
|
*
|
|
Anna Marie Cellino
|
|
|
152,918
|
|
|
|
1,054
|
|
|
|
10,650
|
|
|
|
0
|
|
|
|
83,319
|
|
|
|
*
|
|
Stephen E. Ewing
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,746
|
|
|
|
*
|
|
Rolland E. Kidder
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,490
|
(9)
|
|
|
*
|
|
Craig G. Matthews
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,937
|
|
|
|
*
|
|
George L. Mazanec
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,400
|
(10)
|
|
|
*
|
|
John R. Pustulka
|
|
|
66,082
|
|
|
|
3,683
|
|
|
|
13,534
|
|
|
|
0
|
|
|
|
30,392
|
|
|
|
*
|
|
Richard G. Reiten
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,876
|
|
|
|
*
|
|
Frederic F. Salerno
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
100
|
|
|
|
*
|
|
David F. Smith
|
|
|
305,000
|
|
|
|
1,774
|
|
|
|
12,996
|
|
|
|
0
|
|
|
|
122,906
|
(11)
|
|
|
*
|
|
Ronald J. Tanski
|
|
|
251,000
|
|
|
|
2,848
|
|
|
|
16,181
|
|
|
|
0
|
|
|
|
86,158
|
(12)
|
|
|
*
|
|
Directors and Executive Officers as a Group (19 individuals)
|
|
|
3,230,790
|
|
|
|
35,505
|
|
|
|
115,675
|
|
|
|
41,328
|
|
|
|
1,060,898
|
|
|
|
5.34
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1% of issued and
outstanding Common Stock on November 30, 2008. |
|
(1) |
|
This column lists shares with respect to which each of the named
individuals, and all current directors and executive officers as
a group (19 individuals), have the right to acquire beneficial
ownership within 60 days of November 30, 2008, through
the exercise of stock options granted under the 1997 Award and
Option Plan. Stock options, 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,
2008. 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 and shares shown on this table,
expressed as a percent of the Companys outstanding shares
and that individuals (or individuals)
exercisable stock options at November 30, 2008. |
|
(7) |
|
Includes 1,000 shares held by Mr. Ackermans wife
in trust for her mother, and 76,250 shares also held in
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. |
13
|
|
|
(8) |
|
Includes 3,000 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. Mr. Cash disclaims beneficial ownership of
these 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 15, 2009, 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
100 Vanguard Boulevard
Malvern, PA 19355
|
|
|
4,669,967
|
|
|
|
2,091,580
|
(3)
|
|
|
8.50
|
%
|
New Mountain Vantage GP, L.L.C.
and certain related persons
787 7th Avenue,
49th floor
New York, NY 10091
|
|
|
N/A
|
|
|
|
7,691,391
|
(4)(5)
|
|
|
9.67
|
%
|
|
|
|
(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 4,669,967 shares on behalf of the plans as of
January 15, 2009, 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 15, 2009. |
|
(3) |
|
The Vanguard Group, which is affiliated with Vanguard Fiduciary
Trust Company, has sole investment discretion and no voting
authority with respect to 2,058,286 shares of Company
common stock, and defined investment discretion and sole voting
authority with respect to 33,294 shares of Company common
stock, according to its Form 13F for the period ended
September 30, 2008. |
|
(4) |
|
These shares are derived from Amendment No. 9 to
Schedule 13D filed on January 12, 2009 by
New Mountain Vantage GP, L.L.C., New Mountain Vantage,
L.P., New Mountain Vantage (California), L.P., New Mountain
Vantage (California) II, L.P., New Mountain Vantage (Texas),
L.P., New Mountain Vantage Advisers, L.L.C., New Mountain
Vantage (Cayman) Ltd., New Mountain Vantage HoldCo Ltd.,
Mr. Steven B. Klinsky, F. Fox Benton, III, David M.
DiDomenico, Frederic V. Salerno, NMV Special Holdings, LLC, and
California Public Employees Retirement System
(CalPERS). |
|
(5) |
|
According to a Settlement Agreement dated January 24, 2008
(and filed with the SEC on that same date) among the Company and
New Mountain Vantage GP, L.L.C., New Mountain Vantage, L.P.,
New Mountain Vantage (California), L.P., New Mountain
Vantage (Texas), L.P., New Mountain Vantage Advisers, L.L.C.,
New Mountain Vantage (Cayman) Ltd., New Mountain Vantage HoldCo
Ltd., Mr. Steven B. Klinsky, NMV Special Holdings, LLC,
California Public Employees Retirement System
(CalPERS), F. Fox Benton, III, David M.
DiDomenico, and Frederic V. Salerno (collectively, the
New Mountain Group), this year the New Mountain
Group (except CalPERS) must vote all of the |
14
|
|
|
|
|
shares which any of the New Mountain Group is entitled to vote
in favor of the Boards nominees for director, and in
accordance with the Boards recommendation on any other
proposal submitted to the Companys stockholders by a
person other than the Company. The Settlement Agreement applies
solely to votes cast at the 2009 Annual Meeting. CalPERS is not
bound by these requirements for the 2009 Annual Meeting. In
Amendment 9 to Schedule 13D referenced in note
(4) above, the New Mountain Group reported that, on
January 2, 2009, New Mountain Vantage, L.P., New Mountain
Vantage (California), L.P., New Mountain Vantage (Texas), L.P.
and New Mountain Vantage HoldCo Ltd. transferred shares of the
Company to New Mountain Vantage (California) II, L.P., a
controlled affiliate of the New Mountain Group. New Mountain
Vantage (California) II, L.P. agreed to be bound by the terms of
the Settlement Agreement applicable to the New Mountain Group.
In the Settlement Agreement, the New Mountain Group represents
that, for purposes of the Settlement Agreement, CalPERS has sole
voting power with respect to 2,677,000 shares that may be
deemed to be beneficially owned by NMV Special Holdings, L.L.C.
As reported in Amendment 9 to Schedule 13D referenced in
note (4) above, CalPERS has sole voting power with respect
to 288,991 shares and shared voting power with respect to
2,677,000 shares. |
EQUITY
COMPENSATION PLAN INFORMATION
As of September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
6,829,697
|
|
|
$
|
27.30
|
|
|
|
771,452
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,829,697
|
|
|
$
|
27.30
|
|
|
|
771,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Of the securities listed in column (c), 25,655 were reserved at
September 30, 2008 for issuance pursuant to the
Companys Retainer Policy for Non-Employee Directors. The
remaining 745,797 are available for future issuance under the
1997 Award and Option Plan. |
15
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
OBJECTIVES
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.
|
Role
of the Compensation Committee
The Compensation Committee sets the base salaries and bonuses of
the Companys executive officers. It also exercises
authority delegated to it by the stockholders or the Board with
respect to compensation plans. Plans under which stockholders
have delegated authority to the Committee include the National
Fuel Gas Company 1997 Award and Option Plan, as amended (the
1997 Award and Option Plan), and the 2007 Annual At
Risk Compensation Incentive Plan (the At Risk Plan).
In addition, the Committee makes recommendations to the Board
with respect to the development of incentive compensation plans
and equity-based plans and administers the National Fuel Gas
Company Performance Incentive Program (the Performance
Incentive Program) and, effective for fiscal 2009, the
Executive Annual Cash Incentive Program (the Cash
Incentive Program). 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. No member of the Committee is permitted
to receive any award under any plan administered by the
Committee.
Compensation
Consultant
The Committee retains The Hay Group (Hay), an
independent compensation consulting firm, to assist it in
evaluating and setting officer compensation in all subsidiaries.
The Company has utilized Hay and the Hay system, since the early
1980s, with respect to compensation management in its regulated
companies. The Committee believes that Hays base of
information from multiple parent organizations and business
units provides a reliable source of compensation information.
Each year, Hay compares Company compensation practices to energy
industry and general industry market practices based on
Hays proprietary databases. In addition, Hay makes an
annual recommendation 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). The Committee utilizes these
recommendations in exercising its business judgment as to
compensation matters.
16
In 2007, Hay also provided a proxy analysis for the top three
officers (Messrs. Ackerman, Smith and Tanski) based on 2007
proxy data for the Company and energy companies in a comparable
group. Based on that proxy data, the companies in the
fifteen-member peer group range in size from $7.2 billion
in revenues to $136 million in revenues. The median size of
the peer group is $2.8 billion in revenues. The peer group
is:
AGL Resources Inc.
Atmos Energy Corporation
Energen Corporation
Energy East Corporation
EnergySouth Inc.
Equitable Resources Inc.
Keyspan Corporation
MDU Resources Group Inc.
New Jersey Resources Corporation
Northwest Natural Gas Company
Peoples Energy Corporation
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 of the business
segments in which the Company participates. The Committee
reviews the members of the peer group from time to time, and
makes adjustments, as it believes warranted. In 2007, the
Committee revised the group to delete Devon Energy and to add
the following companies:
EnergySouth Inc.
MDU Resources Group Inc.
Northwest Natural Gas Company
UGI Corporation
Southwest Gas Corporation
Southern Union Company
The Committee revised the peer group to more closely align the
median revenue size of the group to that of the Company.
In 2008, the Committee also retained Hewitt Consulting
(Hewitt) to assist in evaluating and setting
compensation at Seneca Resources Corporation, its exploration
and production subsidiary, including that of Mr. Cabell.
The Committee selected Hewitt for this purpose due to that
entitys expertise in the exploration and production
industry. The Hewitt proxy analysis was based on proxy data from
twenty one (21) exploration and production companies chosen
based on certain measures, such as revenues, assets and
standardized measures. The companies range in size from
$2.2 billion to $157 million in E&P revenues,
(with a median of $798 million), from $8.7 billion to
$660 million in E&P asset size (with a median of
$2.4 billion) and from $6.8 billion to
$447 million in standardized measure (with a median of
$2.6 billion). The peer group is:
Berry Petroleum
Cabot Oil & Gas Corporation
Carrizo Oil & Gas, Inc.
Continental Resources Inc.
El Paso Corporation
Energen Corporation
Equitable Resources, Inc.
Kinder Morgan Oil & Gas
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
Ultra Petroleum Corporation
Whiting Petroleum Corporation
Williams Companies, Inc.
17
TOTAL
COMPENSATION
Total compensation for executive officers is comprised of the
following components:
|
|
|
|
|
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.
|
The cash and equity components of total compensation are
determined by the Committee, based on its business judgment,
utilizing the Hay and Hewitt data and recommendations, as the
Committee deems appropriate. The employee benefits for executive
officers employed prior to 2004 are a reflection of the
Companys historic practice of providing benefits that are
commensurate with those in the regulated energy industry.
Mr. Cabell was hired in December 2006, and the Committee
reviews his compensation and benefits based on the advice of
Hewitt and practices of other non-regulated exploration and
production companies.
Base
Salary
We pay salaries to our employees to provide them with a
predictable base compensation for their
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, upon consideration of the
recommendations of its outside compensation consultants and the
Chief Executive Officer. In addition, base salary may be
adjusted during the calendar year when changes in responsibility
occur.
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 for
Messrs. Ackerman, Smith, Tanski, Pustulka and
Mrs. Cellino. With respect to Mr. Cabell, for calendar
year 2008, information provided by Korn Ferry, as described
below, was used to adjust his base salary. The Committee
believes this percentile range sets an appropriate
market-competitiveness standard. The Committee also considers an
individuals specific responsibilities, experience
(including time in position), and effectiveness and makes
adjustments based thereon.
For calendar year 2008, the Committee maintained
Mr. Ackermans base salary at the same level as in
2007. For Mr. Smith, for the reasons stated above and to
reflect Mr. Smiths expected rise to the CEO position,
the Committee increased Mr. Smiths base salary for
calendar year 2008. The Committee also increased
Mr. Tanskis base salary for calendar year 2008 (to an
amount that was slightly below the market median for general
industry) to reflect his dual role of chief financial officer
and president of a major subsidiary.
With regard to Mr. Cabell, the Committee reviewed
information from Korn Ferry, a respected executive search firm
with expertise in the energy industry, in general, and in
exploration and production, in particular, who worked with the
Company to recruit Mr. Cabell. Korn Ferry provided
compensation data showing base salary and short-term incentive
compensation for individuals with similar positions at
exploration and production companies with operations in Houston.
The Committee also considered Mr. Cabells
responsibilities, experience and effectiveness in the past year,
including with respect to the sale of the Canadian assets, in
determining to increase Mr. Cabells base salary for
calendar 2008 to an amount that approximates the
75th
percentile.
For executive officers below the level of these top four
individuals, including Mrs. Cellino and Mr. Pustulka,
Mr. Ackerman and Mr. Smith made recommendations for
annual base salary increases, which were accepted by the
Committee. In making such recommendations, Mr. Ackerman and
Mr. Smith referenced the compensation consultants
proposal on the appropriate target amount at the 50th and
75th percentiles for the coming year and made
recommendations based on their opinion, and the advice of
Mr. Tanski, on an individuals specific
responsibilities, experience and effectiveness over the past
year. For these reasons, Mrs. Cellino and Mr. Pustulka
received base salary increases for calendar 2008 which placed
them between the 50th percentile and 75th percentile
target amounts provided by Hay.
The fiscal 2008 base salaries of the named executive officers
are shown on the Summary Compensation Table under Base
Salary column within this proxy statement.
18
Annual
Cash Incentive
We pay an additional 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). For fiscal 2008, for
Messrs. Ackerman, Smith, Tanski and Cabell, this incentive
was paid under the At Risk Plan. Effective for fiscal 2009, the
Board of Directors adopted a new program that sets forth the
parameters for awarding an annual cash incentive to those
executives who do not receive an award under the At Risk Plan.
This program is administered by the CEO. Target incentive
opportunities, which are a percentage of base salary, are
established by the CEO and approved by the Committee for
executive officers. Payouts are in cash. The CEO establishes
performance conditions for each participant, which are subject
to the Committees approval for designated executive
officers. At least 75% of the target incentive is dependent on
objective performance criteria, and no more than 25% may be
discretionary.
Target
Award Levels
In setting target award levels for the annual cash incentive for
2008, the Committee exercised its business judgment and, upon
consideration of the recommendations of Hay, set target awards
as follows:
|
|
|
|
|
|
|
Target
|
|
Executive
|
|
(As a Percentage of Base Salary)
|
|
|
Mr. Ackerman
|
|
|
100
|
%
|
Mr. Smith
|
|
|
100
|
%
|
Mr. Tanski
|
|
|
75
|
%
|
Mr. Cabell
|
|
|
65
|
%
|
In each case, the maximum possible award was two times the
target amount. Hays recommendations were based on current
and emerging trends in both energy and general industries.
Performance
Goals
The following are the general categories of performance goals
and the purpose of such goals. The precise performance goals
differ for each executive.
|
|
|
Goal
|
|
Purpose
|
|
Consolidated earnings per share
|
|
To focus executives attention on the profitability of the
Company as a whole
|
Reserves and lifting costs in the exploration and production
segment
|
|
To focus the attention of certain executives on this segment of
our business
|
Safety
|
|
To underscore the Companys commitment to safety, which is
particularly important given the nature of the field operations
in the utility and pipeline and storage segments
|
Long-term strategy
|
|
To focus the executives attention on areas the Committee
believes are important, including succession and business
planning
|
Investor relations
|
|
To further the Companys message regarding strategic value
with the investment community
|
Customer service in the utility segment
|
|
To focus the attention of certain executives on this segment of
our business
|
For fiscal 2008, At Risk Plan goals for Mr. Ackerman were
based on the following:
|
|
|
|
|
|
|
|
|
Weight
|
|
|
Target Performance Level
|
|
Consolidated earnings per share
|
|
|
100
|
%
|
|
$2.70 up to but not including $2.75 diluted earnings per share
|
In fiscal 2008, Mr. Ackerman was awarded a bonus of 200.0%
of his target amount for his performance on the goals set under
the At Risk Plan. Pursuant to the terms of the At Risk Plan,
Mr. Ackerman received a pro-rated portion of the bonus
payment he otherwise would have received given his retirement
prior to the end of the fiscal year.
19
For fiscal 2008, At Risk Plan goals for Mr. Smith were
based on the following:
|
|
|
|
|
|
|
|
|
Weight
|
|
|
Target Performance Level
|
|
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
|
|
|
60
|
%
|
|
$2.70 up to but not including $2.75 diluted earnings per share
|
Long-term strategy
|
|
|
10
|
%
|
|
Review a succession plan for executive officers establish a
formal short-term incentive plan for the executive officers
|
Reserve replacement
|
|
|
10
|
%
|
|
Replace 90% of fiscal 2008 production
|
Production volume
|
|
|
10
|
%
|
|
41 Billion cubic feet equivalent
|
Safety, measured by the number of OSHA
recordable injuries in the utility and pipeline and storage
segments
|
|
|
5
|
%
|
|
6.49 OSHA recordable injuries in these subsidiaries
|
Investor relations, measured by
one-on-one
meetings
|
|
|
5
|
%
|
|
Meetings with 35 different analysts or money managers
|
In fiscal 2008, Mr. Smith was awarded a bonus of 180.1% of
his target amount for his performance on the goals set under the
At Risk Plan.
For fiscal 2008, At Risk Plan goals for Mr. Tanski were
based on the following:
|
|
|
|
|
|
|
|
|
Weight
|
|
|
Target Performance Level
|
|
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
|
|
|
50
|
%
|
|
$2.70 up to but not including $2.75 diluted earnings per share
|
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
|
|
|
10
|
%
|
|
$1.23 up to but not including $1.28 diluted earnings per share
|
Long-term strategy
|
|
|
10
|
%
|
|
Present a plan to rationalize corporate capital structure in
light of regulatory policies
|
Safety, measured by the number of OSHA
recordable injuries in the utility and pipeline and storage
segments
|
|
|
10
|
%
|
|
6.49 OSHA recordable injuries in these subsidiaries
|
Customer service, measured by the utility
segments service quality performance standards in New York
|
|
|
10
|
%
|
|
63 penalty units assessed based on customer service satisfaction
measures
|
Investor relations, measured by the number
of road shows
|
|
|
5
|
%
|
|
Road shows to 16 different cities/SMSAs
|
Investor relations, measured by the number
of
one-on-one
meetings
|
|
|
5
|
%
|
|
Meetings with 70 different analysts or money managers
|
In fiscal 2008, Mr. Tanski was awarded a bonus of 190.0% of
his target amount for his performance on the goals set under the
At Risk Plan.
For fiscal 2008, At Risk Plan goals for Mr. Cabell were
based on the following:
|
|
|
|
|
|
|
|
|
Weight
|
|
|
Target Performance Level
|
|
Production volume
|
|
|
20
|
%
|
|
41 Billion cubic feet equivalent
|
Total reserve replacement for Seneca
|
|
|
15
|
%
|
|
Replace 90% of fiscal 2008 production
|
Appalachian reserve replacement
|
|
|
15
|
%
|
|
Replace 300% of fiscal 2008 Appalachian production
|
Finding and development costs
|
|
|
20
|
%
|
|
$4.00 per million cubic feet equivalent
|
Lease operating expense plus general and administrative expense,
per Mcfe
|
|
|
15
|
%
|
|
$1.64 per million cubic feet equivalent
|
Senecas return on average capital, before other
comprehensive income
|
|
|
15
|
%
|
|
16%
|
20
In fiscal 2008, Mr. Cabell was awarded a bonus of 117.0% of
his target amount for his performance on the goals noted above.
For executive officers below the level of these top four
individuals, including Mrs. Cellino, and Mr. Pustulka,
Mr. Smith made recommendations for fiscal 2008 bonuses,
which were accepted by the Committee. In making such
recommendations, Mr. Smith referenced Hays proposed
structure on the median and 75% percentile level for the Energy
Industry and General Industry, but made adjustments based on his
opinion and the advice of Mr. Tanski on individual
performance over the past year. Mr. Smith recommended that
Mrs. Cellino receive a fiscal 2008 bonus because of her
attention to customer service and oversight of budget and cost
control at the Companys utility subsidiary and her
performance of her duties as Corporate Secretary, and that
Mr. Pustulka receive a fiscal 2008 bonus because of his
management of gas transportation and storage in the
Companys pipeline segment and his attention to pipeline
integrity.
The fiscal 2008 annual cash incentives of Messrs. Ackerman,
Smith, Tanski and Cabell are shown on the Summary Compensation
Table in the Non-Equity Incentive Plan Compensation
column. The fiscal 2008 annual cash incentives for
Mrs. Cellino and Mr. Pustulka are shown in the
Bonus column of this table.
Equity
Compensation and Long Term Incentive Compensation
Stock options, restricted stock, stock appreciation rights and
the Performance Incentive Program represent the longer-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. Awards of stock options, stock-settled stock
appreciation rights (SARs)
and/or
restricted stock are used to attract and retain key management
employees, when necessary or advisable. The Company typically
makes equity awards on an annual basis. The Committee has not
recently granted equity awards at a specific quarterly meeting
because of its ongoing consideration of the appropriate option
practice, including setting of performance criteria.
In exercising its business judgment regarding long-term
incentive compensation, the Committee generally refers to
Hays guidelines on the level of such compensation, but
makes adjustments based on its discussion with the Chief
Executive Officer as to whats appropriate on an individual
basis given the Companys future plans and needs. The
consultant, in setting those guidelines, attempts to balance
general industry and energy industry practice.
Fiscal 2008 SAR grants and other long-term incentives are set
forth in the Grants of Plan-Based Awards in Fiscal 2008 Table
within this proxy statement.
Stock
Appreciation Rights, Stock Options and Restricted
Stock
Awards of stock-settled SARs, stock options and restricted stock
are made by the Committee under the 1997 Award and Option Plan
(Option Plan). The exercise price for all options
and stock-settled SARs is the average of the high and low market
price (FMV) of the Companys Common Stock on the date of
the grant. This method of determining the FMV appears in all of
the Companys stock option Plans since 1983 and has been
approved by the stockholders. In 2008, the Committee awarded
performance-based stock-settled SARs rather than options, as
they are less dilutive to stockholder equity. The Committee
anticipates that it will continue this practice in the future.
The SARs granted to the named executive officers in fiscal 2008
are set out in the Grants of Plan-Based Awards in Fiscal 2008
Table within this proxy statement. As stated above, the number
granted was derived from Hays guidelines. No equity award
was made to Mr. Ackerman due to his possible retirement.
On December 5, 2007, the Committee also awarded
Mr. Cabell 25,000 shares of restricted stock in
recognition of his excellent performance in the sale of the
Canadian assets and to act as a retention tool. This award vests
annually in increments of 5,000 shares, beginning four
years after the grant date.
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.
Under the Performance Incentive Program, the Compensation
Committee may establish a performance condition for a
performance period of at least one year. The default performance
condition is 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). A
21
cash bonus may be paid following the end of the performance
period based on the level of performance. The natural gas
distribution and integrated natural gas companies reported in
the December 2008 Monthly Utility Report are:
AGL Resources Inc.
Atmos Energy Corporation
Chesapeake Utilities Corporation
Delta Natural Gas Company
El Paso Corporation
Energen Corporation
Energy West Incorporated
Equitable Resources, 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
Southwestern Energy Company
UGI Corporation
WGL Holdings, Inc.
Williams Companies, Inc.
In fiscal 2006, the Compensation Committee chose the
Companys total return on capital as the performance metric
for the three-year performance period of October 1, 2005 to
September 30, 2008. 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 each
of the three-year performance periods, payment can range from 0%
to 200% of the target incentives. Target performance is achieved
if the Company ranks in the 60th percentile of the peer group.
Ranking is determined by calculating the average return on
capital for the three-year period for each company and sorting
the companies from highest to lowest. For this performance
period, the Committee approved the following target incentives
for the current named executive officers:
|
|
|
|
|
Mr. Ackerman
|
|
$
|
650,000
|
|
Mr. Smith
|
|
|
375,000
|
|
Mr. Tanski
|
|
|
250,000
|
|
Mrs. Cellino
|
|
|
85,000
|
|
Mr. Pustulka
|
|
|
85,000
|
|
Because the Monthly Utility Report with the necessary data for
fiscal 2008 will not be available until January or February of
2009, the actual award amounts earned for the performance period
of October 1, 2005 through September 30, 2008 are
unknown. The amounts shown in the Summary Compensation Table,
under column (h), footnote (6) within this proxy statement
were accrued by the Company in fiscal 2008 as estimates of the
amount which will be calculated and paid, in the second quarter
of fiscal 2009.
In fiscal 2007 and fiscal 2008 the Committee again chose the
Companys total return on capital as the performance
metric. The performance period selected in fiscal 2007 was the
three-year period of October 1, 2006 through
September 30, 2009, and the target incentive for the
current named executive officers was selected as follows:
|
|
|
|
|
Mr. Ackerman
|
|
$
|
774,000
|
|
Mr. Smith
|
|
$
|
385,000
|
|
Mr. Tanski
|
|
$
|
308,750
|
|
Mr. Cabell
|
|
$
|
276,250
|
|
Mrs. Cellino
|
|
$
|
100,000
|
|
Mr. Pustulka
|
|
$
|
100,000
|
|
22
The performance period selected in fiscal 2008 was the
three-year period of October 1, 2007 through
September 30, 2010, and the target incentive for the
current named executive officers was selected as follows:
|
|
|
|
|
Mr. Ackerman
|
|
$
|
1,548,000
|
|
Mr. Smith
|
|
$
|
585,000
|
|
Mr. Tanski
|
|
$
|
350,000
|
|
Mr. Cabell
|
|
$
|
225,000
|
|
Mrs. Cellino
|
|
$
|
100,000
|
|
Mr. Pustulka
|
|
$
|
100,000
|
|
The target thresholds for these two performance periods are the
same as noted above.
The fiscal 2008 target incentives selected were derived from
Hays guidelines, except that the Committee determined that
Mr. Ackermans long-term compensation should be
awarded solely under the Performance Incentive Program, rather
than a combination of equity and cash due to his possible
retirement. Therefore, Mr. Ackermans target incentive
was doubled, but he received no SAR award. The Committee
believes that equity awards are more appropriate for individuals
who will continue in the employ of the Company due to an equity
awards retention value and its effectiveness in the
alignment of employee and stockholders long-term interests.
EMPLOYEE
BENEFITS
Retirement
Benefits
The Company maintains a qualified defined contribution
retirement plan (401(k)), a qualified defined benefit retirement
plan, a non-qualified executive retirement plan and a
non-qualified tophat plan in order to attract and retain high
caliber employees in high-level management positions, and, in
the case of the non-qualified plans, to 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.
Messrs. Ackerman, Smith, Tanski, Pustulka and
Mrs. Cellino are eligible to participate in both of the
non-qualified plans. Mr. Cabell is eligible to participate
in the non-qualified Tophat plan. These benefits are described
in more detail in the section entitled Pension Benefits
Table within this proxy statement.
Mr. Smith has a Retirement Benefit Agreement, approved by
the Board and entered into in September of 2003, that provides
additional retirement benefits if Mr. Smiths
employment is terminated by the Company without cause or by
Mr. Smith with good reason, prior to March 1, 2011. If
eligible for the enhanced benefit, Mr. Smiths
retirement benefit would be calculated as though he were
571/2
years old for purposes of determining the applicable early
retirement penalty, but without giving Mr. Smith credit for
additional years of service. The Committee recommended this
agreement as a reflection of Mr. Smiths achieving a
high level position at a relatively early age, such that his
retirement benefits could be severely reduced in the event of
termination without cause. The Committee also viewed this
agreement as a retention tool and a means to direct
Mr. Smiths attention to his duties of acting in the
best interests of the stockholders. This benefit is described in
more detail in the section entitled Pension Benefit
Table 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 wanted to continue to provide an appropriate
level of death benefit, but was prohibited by the Sarbanes Oxley
Act from making premium payments on certain split dollar
policies due to their nature as loans.
Life insurance for Messrs. Ackerman and Smith is currently
maintained under split dollar arrangements, into which the
Company makes no premium payments. Mr. Tanski,
Mrs. Cellino and Mr. Pustulka are covered by the
ExecutiveLife Insurance Plan. Mr. Cabell is a participant
in the Companys Group Life Insurance Plan.
23
EXECUTIVE
PERQUISITES
The Company offers a limited number of perquisites to our
executive officers. The basis for offering these perquisites is
to enhance the Companys ability to attract and retain
highly qualified persons and also to assist the officer in
conducting business on behalf of the Company. For certain items,
the perquisite is incidental to other business-related use. For
example, the Company shares a stadium suite with another local
utility company for the local professional football team and an
arena suite with a local law firm for the local professional
hockey team. The Company also has season tickets for seats
outside the suites. The Company made these investments as a
result of specific drives by the Buffalo, New York business
community to support the retention of these professional
athletic teams in the Buffalo area. These suites are primarily
used for Company business. On the occasions when the suites are
not used for Company business, the executive officers as well as
other employees are permitted personal use.
In fiscal 2008, the Compensation Committee directed the
elimination of company-provided cars for most officers,
effective October 1, 2008. Exceptions were allowed at the
CEOs discretion to require use of a company vehicle by
officers with field operations responsibility. Officers whose
vehicles were eliminated were provided a one-time adjustment to
base salary as of October 1, 2008.
The Company also offers executive officers tax preparation
advice, in part to assure the Company that its officers are
properly reporting compensation. The Company also pays the costs
of spouses accompanying named executive officers to certain of
the Board of Directors meetings and functions. In addition, the
Company covered Mr. Ackermans annual dues in a
private country club and a local business club until his
retirement.
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. These items are described in more detail and calculations
as of September 30, 2008, 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). Each of the
named executive officers is a party to an ECNA. In September of
2007, and again in September of 2008, the ECNA was amended and
restated to be in compliance with Internal Revenue Code
Section 409A and the final regulations promulgated
thereunder. No enhancement to the benefit provided under the
agreement was added either time.
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 until age 65.
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 he 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.
24
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
CONSIDERATIONS
Section 162(m) of the Internal Revenue Code prohibits the
Company from deducting compensation paid in excess of
$1 million per year to any executive officer listed in the
Compensation Summary Table unless such compensation qualifies as
performance-based compensation within the meaning of
Section 162(m). The Committee generally intends that
compensation paid to its managers, including its executive
officers, should not fail to be deductible for federal income
tax purposes by reason of Section 162(m). For this reason,
compensation paid under the At Risk Plan is designed to qualify
as performance-based compensation under Section 162(m). The
Committee may elect to award compensation, especially to a Chief
Executive Officer, that is not fully deductible, if the
Committee determines that such award is consistent with its
philosophy and is in the best interests of the company and its
stockholders.
Summary
Compensation Table
The following table sets forth a summary of the compensation
paid to or earned by each person who served as the Chief
Executive Officer, the Principal Financial Officer and each of
the three other most highly compensated executive officers (the
named executive officers) of the Company in fiscal
2008. The compensation reflected for each officer was for the
officers services provided in all capacities to the
Company and its subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
(4)
|
|
|
Non-Equity
|
|
|
and Nonqualified
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
(2)
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
Philip C. Ackerman
|
|
|
2008
|
|
|
$
|
573,333
|
|
|
|
N/A
|
|
|
|
3,513
|
|
|
|
0
|
|
|
|
2,229,567
|
|
|
|
213,330
|
|
|
|
127,055
|
|
|
|
3,146,798
|
|
Chief Executive Officer of the Company through 2/20/08. Retired
effective 6/1/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip C. Ackerman
|
|
|
2007
|
|
|
$
|
851,250
|
|
|
|
N/A
|
|
|
|
64,750
|
|
|
|
798,644
|
|
|
|
1,634,391
|
|
|
|
1,340,042
|
|
|
|
148,785
|
|
|
|
4,837,862
|
|
Chief Executive Officer of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Smith
|
|
|
2008
|
|
|
$
|
625,000
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
308,106
|
|
|
|
1,750,375
|
|
|
|
431,116
|
|
|
|
116,467
|
|
|
|
3,231,064
|
|
President and Chief Executive Officer of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Smith
|
|
|
2007
|
|
|
$
|
543,750
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
580,133
|
|
|
|
686,464
|
|
|
|
531,864
|
|
|
|
49,031
|
|
|
|
2,391,242
|
|
President and Chief Operating Officer of the Company and
President of National Fuel Gas Supply Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Tanski
|
|
|
2008
|
|
|
$
|
512,500
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
206,497
|
|
|
|
1,146,813
|
|
|
|
656,006
|
|
|
|
91,100
|
|
|
|
2,612,916
|
|
Treasurer and Principal Financial Officer of the Company and
President of National Fuel Gas Supply Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Tanski
|
|
|
2007
|
|
|
$
|
456,250
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
413,798
|
|
|
|
581,874
|
|
|
|
486,590
|
|
|
|
60,167
|
|
|
|
1,998,679
|
|
Treasurer and Principal Financial Officer of the Company and
President of National Fuel Gas Distribution Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
(4)
|
|
|
Non-Equity
|
|
|
and Nonqualified
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
(2)
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
Matthew D. Cabell
|
|
|
2008
|
|
|
$
|
443,750
|
|
|
|
0
|
|
|
|
373,183
|
|
|
|
325,346
|
|
|
|
337,472
|
|
|
|
0
|
|
|
|
75,889
|
|
|
|
1,555,640
|
|
President of Seneca Resources Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew D. Cabell
|
|
|
2007
|
|
|
$
|
343,269
|
|
|
|
150,000
|
|
|
|
159,395
|
|
|
|
196,072
|
|
|
|
265,338
|
|
|
|
0
|
|
|
|
18,543
|
|
|
|
1,132,617
|
|
President of Seneca Resources Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anna Marie Cellino
|
|
|
2008
|
|
|
$
|
289,875
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
60,636
|
|
|
|
141,610
|
|
|
|
160,435
|
|
|
|
47,937
|
|
|
|
950,493
|
|
President National Fuel Gas Distribution Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Pustulka
|
|
|
2008
|
|
|
$
|
289,875
|
|
|
|
140,500
|
|
|
|
0
|
|
|
|
60,636
|
|
|
|
141,610
|
|
|
|
212,629
|
|
|
|
43,105
|
|
|
|
888,355
|
|
Senior Vice President of National Fuel Gas Supply Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts in column (c) reflect base salary paid during
each respective fiscal year. For fiscal 2007,
Mr. Cabells salary reflects a partial year, as he was
hired on December 11, 2006. |
|
(2) |
|
For Mrs. Cellino and Mr. Pustulka, the amount in
column (d) represents a cash bonus earned in the fiscal
year and paid in December 2008. For Mr. Cabell, for 2007
this amount represents a sign-on bonus as part of his employment
package. |
|
(3) |
|
Column (e) represents the dollar amount recognized in
fiscal 2008 and 2007 for financial statement reporting purposes
with respect to Restricted Stock awarded to Mr. Cabell
during fiscal years 2008 and 2007 and to Mr. Ackerman in
prior years. Restricted stock is subject to restrictions on
vesting and transferability. The fair market value of restricted
stock on the date of the award, calculated as the average of the
high and low market price of Company stock on the date of award,
is recorded as compensation expense over the vesting period.
SFAS 123R requires such awards to be valued at fair value. |
|
(4) |
|
Column (f) represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2008
and 2007 fiscal years for the fair value of the stock options
(including SARs) granted to each of the named executive
officers. The expense associated with all options granted in
fiscal 2008 and fiscal 2007 (including the SARs granted in
fiscal 2008), as well as those issued in prior years, has been
recorded in accordance with SFAS 123R. For information on
the valuation assumptions with respect to option grants
(including SARs) 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, 2008. |
|
(5) |
|
With respect to fiscal 2007 the estimated amount that was in the
fiscal 2007 proxy has been updated for actual payments made in
February 2008 and filed in the
8-K on
February 26, 2008. For Messrs. Ackerman, Smith and
Tanski, column (g) reflects both a Performance Incentive
Program payment made February 29, 2008 ($874,650 for
Mr. Ackerman, $324,870 for Mr. Smith and $99,960 for
Mr. Tanski) and the actual At Risk Program payment made in
December 2007 ($759,741 for Mr. Ackerman, $361,594 for
Mr. Smith and $481,914 for Mr. Tanski.) For
Mr. Cabell, this amount represents his bonus paid in
December 2007 for performance in fiscal 2007 based on his
short-term incentive goals. Please refer to the Compensation
Discussion and Analysis for additional information about these
programs, including information regarding the performance
conditions applicable to the awards. |
|
|
|
For fiscal 2008, for Messrs. Ackerman, Smith and Tanski
column (g) reflects both an estimated Performance Incentive
Program payment expected to be paid by March 15, 2009
($1,082,900 for Ackerman, $624,750 for Mr. Smith and
$416,500 for Mr. Tanski) and the actual At Risk Program
payment made in December 2008 ($1,146,667 for Mr. Ackerman,
$1,125,625 for Mr. Smith and $730,313 for Mr. Tanski).
For Mr. Cabell this amount represents the actual At Risk
Program payment made in December 2008. For Mrs. Cellino and
Mr. Pustulka, column (g) represents the estimated
Performance Incentive payment expected to be paid by
March 15, 2009. |
|
|
|
For the three-year performance period ended September 30,
2008, the Company estimates that its performance relative to its
peer group will result in a payout of approximately 166.6% of
the Target Incentive Opportunity set for each of the
participants in the Performance Incentive Program. This |
26
|
|
|
|
|
estimate (166.6%) is subject to change based on the final AUS
report for the performance period ended September 30, 2008. |
|
(6) |
|
Column (h) 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. 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, 2008 and 2007,
respectively. Also, the amounts include above market earnings
under the Deferred Compensation Plan for Mr. Ackerman
($33,139 for fiscal 2007 and $32,017 for fiscal 2008),
Mrs. Cellino ($1,003 for fiscal 2008), and
Mr. Pustulka ($468 for fiscal 2008). See the narrative,
tables and notes to the Pension Plan and the Nonqualified
Deferred Compensation Plan within this proxy statement. |
|
(7) |
|
All Other Compensation Table |
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table for fiscal
2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip C.
|
|
|
David F.
|
|
|
Ronald J.
|
|
|
Matthew D.
|
|
|
Anna Marie
|
|
|
John R.
|
|
Description
|
|
Ackerman
|
|
|
Smith
|
|
|
Tanski
|
|
|
Cabell
|
|
|
Cellino
|
|
|
Pustulka
|
|
|
Defined Contribution Company Match 401(k))(a)
|
|
$
|
9,100
|
|
|
$
|
13,700
|
|
|
$
|
13,700
|
|
|
$
|
6,954
|
|
|
$
|
13,700
|
|
|
$
|
13,700
|
|
401(k) Tophat(b)
|
|
|
94,100
|
|
|
|
90,838
|
|
|
|
60,619
|
|
|
|
6,400
|
|
|
|
18,630
|
|
|
|
12,060
|
|
RSA Tophat(c)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,016
|
|
|
|
0
|
|
|
|
0
|
|
Employee Stock Ownership Plan (ESOP) Supplemental Payment(d)
|
|
|
5,211
|
|
|
|
931
|
|
|
|
1,646
|
|
|
|
0
|
|
|
|
529
|
|
|
|
2,267
|
|
Executive Officer Life Insurance(e)
|
|
|
0
|
|
|
|
0
|
|
|
|
15,000
|
|
|
|
1,584
|
|
|
|
15,000
|
|
|
|
15,000
|
|
Travel Accident Insurance(f)
|
|
|
51
|
|
|
|
77
|
|
|
|
135
|
|
|
|
135
|
|
|
|
78
|
|
|
|
78
|
|
Dividends paid on Restricted Stock(g)
|
|
|
1,687
|
|
|
|
0
|
|
|
|
0
|
|
|
|
50,800
|
|
|
|
0
|
|
|
|
0
|
|
Perquisites(h)
|
|
|
16,906
|
|
|
|
10,921
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
$
|
127,055
|
|
|
$
|
116,467
|
|
|
$
|
91,100
|
|
|
$
|
75,889
|
|
|
$
|
47,937
|
|
|
$
|
43,105
|
|
|
|
|
a) |
|
Represents the Company matching contributions within the 401(k)
plan. |
|
b) |
|
Each officer, except for Mr. Cabell, has over 20 years
of service and receives a 6% match within the
401-K plan
on the lesser of a) their base salary or b) the IRS
annual compensation limit for fiscal 2008. Each of these
officers is prohibited from receiving the full 401(k) Company
match on their salary due to the IRS annual compensation limit
of $225,000 for 2007 and $230,000 for 2008. The 401(k) Tophat
gives each officer, except Mr. Cabell, a match (6%) 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. Mr. Cabell became eligible for
the 401(k) plan July 1, 2007 and receives a 3% Company
match within the 401(k) plan. For Mr. Cabell, the 401(k)
Tophat is based on his annual base salary that exceeds the IRS
maximum annual compensation. The 401(k) Tophat represent the
benefit earned in fiscal 2008. |
|
c) |
|
Mr. Cabell is a participant in the Companys
Retirement Savings Account (RSA) Plan and receives a 2% Company
contribution on the lesser of a) his total compensation
(base salary plus annual bonus) or b) the IRS annual
compensation limit for fiscal 2008. Mr. Cabell is
prohibited from receiving the full RSA contribution on his
compensation due to the IRS annual compensation limit of
$225,000 for 2007 and $230,000 for 2008. The RSA Tophat is based
on the amount of his annual compensation that exceeds the IRS
annual compensation limit. The RSA Tophat represents the benefit
earned in fiscal 2008. |
|
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,
including Mr. Cabell. |
|
e) |
|
Represents the Company-paid life insurance premiums on behalf of
Mr. Tanski, Mrs. Cellino and Mr. Pustulka under
the ExecutiveLife Insurance Plan. |
27
|
|
|
|
|
None of the officers, except Mr. Cabell, receive a death
benefit under the Companys Group Life Insurance Plan.
Mr. Cabell is a participant in the Companys Group
Life Insurance Plan. The above dollars represent the premiums
paid for this benefit. |
|
f) |
|
Represents the premiums paid for the blanket travel insurance
policy, which provides a death benefit to each officer while
traveling on business. |
|
g) |
|
Dividends are paid on unvested restricted stock and reported as
taxable income for each officer. |
|
h) |
|
Perquisites for Mr. Ackerman included club membership dues
and expenses, tax preparation and advice, personal use of a
company-owned automobile, personal use of the shared suite for
local athletic events, blanket travel insurance for personal
travel, attendance at company events for
Mr. Ackermans wife and a minimal amount for use of a
Company property. Perquisites for Mr. Smith included tax
preparation and advice, personal use of a company-owned
automobile, tickets to a local theater, blanket travel insurance
for personal travel, and attendance at company events for
Mr. Smiths wife. No single perquisite exceeded the
greater of $25,000 or 10% of the total perquisites provided to
Mr. Ackerman or Mr. Smith. Perquisites for each of the
other named executive officers were less than $10,000. |
Grants of
Plan-Based Awards in Fiscal 2008
The following table sets forth information with respect to
awards granted to the named executive officers during fiscal
2008 under the Performance Incentive Program, the At Risk Plan,
and the 1997 Award and Option Plan. There are no future payouts
under Equity Incentive Plan Awards; therefore we have removed
those columns from the table. Please refer to the Compensation
Discussion and Analysis (CD&A) within this proxy statement
for additional information regarding these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
SAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Base
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
|
|
|
of Stock and
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option/SAR
|
|
|
Closing
|
|
|
Option/SAR
|
|
|
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
SARs
|
|
|
Awards
|
|
|
Market
|
|
|
Awards
|
|
Name
|
|
Note
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)(1)
|
|
|
(#)(1)
|
|
|
($/Sh)
|
|
|
Price($)
|
|
|
($)(4)
|
|
|
Philip C. Ackerman
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
1,548,000
|
|
|
|
3,096,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
12/22/2007
|
|
|
|
0
|
|
|
|
573,333
|
|
|
|
1,146,667
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David F. Smith
|
|
|
(1
|
)
|
|
|
02/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
70,000
|
|
|
$
|
47.37
|
|
|
$
|
47.60
|
|
|
|
611,625
|
|
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
585,000
|
|
|
|
1,170,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
12/22/2007
|
|
|
|
375,000
|
|
|
|
625,000
|
|
|
|
1,250,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Tanski
|
|
|
(1
|
)
|
|
|
02/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
$
|
47.37
|
|
|
$
|
47.60
|
|
|
|
393,188
|
|
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
350,000
|
|
|
|
700,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
12/22/2007
|
|
|
|
230,625
|
|
|
|
384,375
|
|
|
|
768,750
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew D. Cabell
|
|
|
(1
|
)
|
|
|
12/05/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
48.31
|
|
|
|
1,210,125
|
|
|
|
|
(1
|
)
|
|
|
02/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
$
|
47.37
|
|
|
$
|
47.60
|
|
|
|
218,438
|
|
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
225,000
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
12/22/2007
|
|
|
|
0
|
|
|
|
288,438
|
|
|
|
576,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anna Marie Cellino
|
|
|
(1
|
)
|
|
|
02/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
$
|
47.37
|
|
|
$
|
47.60
|
|
|
|
109,219
|
|
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Pustulka
|
|
|
(1
|
)
|
|
|
02/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
$
|
47.37
|
|
|
$
|
47.60
|
|
|
|
109,219
|
|
|
|
|
(2
|
)
|
|
|
02/20/2008
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The stock appreciation rights shown on this table were granted
under the 1997 Award and Option Plan with a ten-year term, and
will vest in 1/3 increments on February 20, 2009,
February 20, 2010 and February 20, 2011, if certain
performance conditions are met. Mr. Cabells
restricted stock will vest in 5,000 share increments on
12/5/2011, 12/5/2012, 12/5/2013, 12/5/2014 and 12/5/2015. The
exercise price of the SARs and the Grant Date Fair Value of the
restricted stock 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. |
28
|
|
|
(2) |
|
This line lists the range of possible payments under the
National Fuel Gas Company Performance Incentive Program for
which target awards were established in fiscal 2008 with a
performance period that begins October 1, 2007 and ends on
September 30, 2010. |
|
(3) |
|
For Messrs. Ackerman, Tanski, Smith and Cabell, this
represents the annual cash incentive target set in fiscal 2008
under the At Risk Plan. |
|
(4) |
|
This column shows the hypothetical value of the SARs awarded
according to a Black-Scholes-Merton option-pricing model. The
assumptions used in this model for the SARs granted on
February 20, 2008 were: quarterly dividend yield of 0.65%,
an annual standard deviation (volatility) of 17.69% (calculation
of volatility based on average of high and low price), a
risk-free rate of 3.754%, and an expected term before exercise
of 7.25 years. Whether the assumptions used will prove
accurate cannot be known at the date of grant. The model
produces a value based on freely tradable securities, which the
options are not. The holder can derive a benefit only to the
extent the market value of Company Common Stock is higher than
the exercise price at the date of actual exercise and
performance targets are met. Please 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, 2008 for additional
detail regarding the accounting for these awards. |
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.
29
Outstanding
Equity Awards at Fiscal Year-End 2008
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, 2008. 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
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Number of
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares
|
|
|
|
|
|
|
Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
or Units
|
|
|
|
|
|
|
Underlying
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Stock
|
|
|
of Stock
|
|
|
|
|
|
|
Unexercised
|
|
|
Options/SARs
|
|
|
Option/SAR
|
|
|
Option/SAR
|
|
|
That
|
|
|
That
|
|
|
|
|
|
|
Options/SARs
|
|
|
(#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
Grant Date
|
|
|
(#)
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested
|
|
Name
|
|
(2)
|
|
|
Exercisable
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
($)(5)
|
|
|
Philip C. Ackerman
|
|
|
12/10/98
|
|
|
|
315,660
|
|
|
|
0
|
|
|
$
|
23.03
|
|
|
|
12/11/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
12/9/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,328
|
|
|
$
|
54,335
|
|
|
|
|
2/17/00
|
|
|
|
435,312
|
|
|
|
0
|
|
|
|
21.33
|
|
|
|
2/18/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/7/00
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
27.80
|
|
|
|
12/8/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/14/02
|
|
|
|
195,918
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/15/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/29/05
|
|
|
|
160,000
|
|
|
|
0
|
|
|
|
28.16
|
|
|
|
6/1/2013
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5/10/06
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
35.11
|
|
|
|
6/1/2013
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/6/06
|
|
|
|
110,000
|
|
|
|
0
|
|
|
|
39.48
|
|
|
|
6/1/2013
|
|
|
|
0
|
|
|
|
0
|
|
David F. Smith
|
|
|
3/14/02
|
|
|
|
4,082
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/14/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/14/02
|
|
|
|
125,918
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/15/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/29/05
|
|
|
|
60,000
|
|
|
|
0
|
|
|
|
28.16
|
|
|
|
3/30/2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5/10/06
|
|
|
|
55,000
|
|
|
|
0
|
|
|
|
35.11
|
|
|
|
5/10/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/6/06
|
|
|
|
60,000
|
|
|
|
0
|
|
|
|
39.48
|
|
|
|
12/6/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/20/08
|
|
|
|
|
|
|
|
70,000
|
|
|
|
47.37
|
|
|
|
2/20/2018
|
|
|
|
0
|
|
|
|
0
|
|
Ronald J. Tanski
|
|
|
12/10/98
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
23.03
|
|
|
|
12/11/2008
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/17/00
|
|
|
|
4,688
|
|
|
|
0
|
|
|
|
21.33
|
|
|
|
2/17/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/17/00
|
|
|
|
20,312
|
|
|
|
0
|
|
|
|
21.33
|
|
|
|
2/18/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/7/00
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
27.80
|
|
|
|
12/8/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/14/02
|
|
|
|
4,082
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/14/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/14/02
|
|
|
|
70,918
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/15/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/29/05
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
28.16
|
|
|
|
3/30/2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5/10/06
|
|
|
|
36,000
|
|
|
|
0
|
|
|
|
35.11
|
|
|
|
5/10/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/6/06
|
|
|
|
45,000
|
|
|
|
0
|
|
|
|
39.48
|
|
|
|
12/6/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/20/08
|
|
|
|
|
|
|
|
45,000
|
|
|
|
47.37
|
|
|
|
2/20/2018
|
|
|
|
0
|
|
|
|
0
|
|
Matthew D. Cabell
|
|
|
12/11/06
|
(1)
|
|
|
|
|
|
|
100,000
|
|
|
|
39.50
|
|
|
|
12/11/2016
|
|
|
|
15,000
|
|
|
|
613,725
|
|
|
|
|
12/5/07
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
1,022,875
|
|
|
|
|
2/20/08
|
|
|
|
|
|
|
|
25,000
|
|
|
|
47.37
|
|
|
|
2/20/2018
|
|
|
|
0
|
|
|
|
0
|
|
Anna Marie Cellino
|
|
|
12/7/00
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
27.80
|
|
|
|
12/8/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/14/02
|
|
|
|
70,918
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/15/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/29/05
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
28.16
|
|
|
|
3/30/2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5/10/06
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
35.11
|
|
|
|
5/10/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/6/06
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
39.48
|
|
|
|
12/6/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/20/08
|
|
|
|
|
|
|
|
12,500
|
|
|
|
47.37
|
|
|
|
2/20/2018
|
|
|
|
0
|
|
|
|
0
|
|
John R. Pustulka
|
|
|
3/14/02
|
|
|
|
4,082
|
|
|
|
0
|
|
|
|
24.50
|
|
|
|
3/14/2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
3/29/05
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
28.16
|
|
|
|
3/30/2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
5/10/06
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
35.11
|
|
|
|
5/10/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/6/06
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
39.48
|
|
|
|
12/6/2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2/20/08
|
|
|
|
|
|
|
|
12,500
|
|
|
|
47.37
|
|
|
|
2/20/2018
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1) |
|
On November 16, 2006, the Compensation Committee approved
the award of the stock options and restricted stock subject to
Mr. Cabell commencing employment as President of Seneca
Resources Corporation. The actual award date was
Mr. Cabells first day of employment,
December 11, 2006. |
|
(2) |
|
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 1/3 on March 14, 2003, 1/3 on
March 14, 2004 and the balance on March 13, 2005. |
|
|
|
Options granted on March 29, 2005 vested on June 29,
2005. |
|
|
|
Options and restricted stock granted on December 11, 2006
will vest on December 11, 2009. |
|
|
|
Stock-settled SARs granted on February 20, 2008 vest over a
period of 3 years 1/3 on February 20,
2009, 1/3 on February 20, 2010 and 1/3 on February 20,
2011, subject to fulfillment of performance conditions. |
30
|
|
|
(3) |
|
Awards were issued at Fair Market Value (FMV), as defined by the
stockholder approved 1997 Award and Option Plan as the average
of the high and low trade prices on the day of exercise. |
|
(4) |
|
Option expiration date unless there is a premature termination
of employment or a change in control or change
in ownership of the Company as defined in the Plan. |
|
(5) |
|
For Mr. Ackerman, represents a 1999 award of
1,328 shares of restricted stock which will vest in January
2009. For Mr. Cabell, represents an award of
15,000 shares of restricted stock that will vest on
December 11, 2009 and 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, 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 28, 2008. |
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 vest date of the
awards.
Option
Exercises and Stock Vested Fiscal 2008
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 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
Philip C. Ackerman
|
|
|
4,082
|
|
|
$
|
148,197
|
|
|
|
0
|
|
|
$
|
0
|
|
David F. Smith
|
|
|
20,000
|
|
|
|
621,250
|
|
|
|
0
|
|
|
|
0
|
|
Ronald J. Tanski
|
|
|
20,000
|
|
|
|
473,221
|
|
|
|
0
|
|
|
|
0
|
|
Matthew D. Cabell
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Anna Marie Cellino
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
John R. Pustulka
|
|
|
120,918
|
|
|
|
2,850,593
|
|
|
|
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. |
31
Pension
Benefits
The following table sets forth information with respect to the
pension benefits as of September 30, 2008 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value
|
|
|
Payments
|
|
|
|
|
|
Years
|
|
of
|
|
|
During
|
|
|
|
|
|
Credited
|
|
Accumulated
|
|
|
Last
|
|
|
|
|
|
Service
|
|
Benefit
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)(1)
|
|
($)(1)
|
|
|
($)
|
|
|
Philip C. Ackerman
|
|
Executive Retirement Plan
|
|
40
|
|
|
12,701,345
|
|
|
|
0
|
|
|
|
National Fuel Gas Company Retirement Plan
|
|
39
|
|
|
1,284,352
|
|
|
|
35,889
|
|
David F. Smith
|
|
Executive Retirement Plan
|
|
30
|
|
|
2,708,381
|
|
|
|
0
|
|
|
|
National Fuel Gas Company Retirement Plan
|
|
29
|
|
|
857,219
|
|
|
|
0
|
|
Ronald J. Tanski
|
|
Executive Retirement Plan
|
|
29
|
|
|
1,667,362
|
|
|
|
0
|
|
|
|
National Fuel Gas Company Retirement Plan
|
|
28
|
|
|
842,799
|
|
|
|
0
|
|
Matthew 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
|
|
27
|
|
|
639,456
|
|
|
|
0
|
|
|
|
National Fuel Gas Company Retirement Plan
|
|
26
|
|
|
719,740
|
|
|
|
0
|
|
John R. Pustulka
|
|
Executive Retirement Plan
|
|
34
|
|
|
928,454
|
|
|
|
0
|
|
|
|
National Fuel Gas Company Retirement Plan
|
|
33
|
|
|
1,229,151
|
|
|
|
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 refer to Note G, 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. 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.
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).
However, 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. Mr. Ackerman
retired as of June 1, 2008. The present value of his
accumulated Benefit is as of his retirement date. As of
September 30, 2008, Mr. Smith is eligible for an early
retirement benefit of 75% 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 for 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,
2008, Mr. Tanski is eligible for an early retirement
benefit equal to 80% of the unreduced benefit. Mrs. Cellino
is eligible for an early retirement benefit equal to 75% of the
unreduced benefit and Mr. Pustulka is eligible for an early
retirement benefit equal to 80% 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 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
32
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.
Other forms available at retirement include 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 deferred compensation 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 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.
33
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 (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 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. For DCP deferrals prior to
May 1, 1994, the Company credited deferred amounts and all
earnings with interest equal to the Moodys Composite
Average of Yields on Corporate Bonds (Moodys
Index) in effect for the month of May prior to the plan
year beginning August 1 plus 135% of the Moodys Composite
Average of Yields on Corporate Bonds (Accumulation
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 similar to DCP deferrals prior to May 1,
1994 but without the Accumulation Account and including one
additional investment opportunity. 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. For
deferrals after May 1, 1994, the rate of 135% of
Moodys was no longer available. 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
34
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 (DCP) 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)
|
|
|
Philip C. Ackerman
|
|
|
0
|
|
|
|
94,100
|
|
|
|
(140,441
|
)
|
|
|
130,458
|
|
|
|
1,544,990
|
|
David F. Smith
|
|
|
0
|
|
|
|
90,838
|
|
|
|
(50,133
|
)
|
|
|
41,096
|
|
|
|
255,482
|
|
Ronald J. Tanski
|
|
|
0
|
|
|
|
60,619
|
|
|
|
0
|
|
|
|
43,564
|
|
|
|
56,869
|
|
Matthew D. Cabell
|
|
|
0
|
|
|
|
16,416
|
|
|
|
0
|
|
|
|
3,000
|
|
|
|
14,916
|
|
Anna Marie Cellino
|
|
|
0
|
|
|
|
18,630
|
|
|
|
(23,083
|
)
|
|
|
10,795
|
|
|
|
274,280
|
|
John R. Pustulka
|
|
|
0
|
|
|
|
12,060
|
|
|
|
(4,144
|
)
|
|
|
10,795
|
|
|
|
108,484
|
|
|
|
|
(1) |
|
Refer to notes b) and c) to the All Other Compensation
Table. |
|
(2) |
|
This represents the net losses during the fiscal year for the
Deferred Compensation Plan. The earnings associated with the
Moodys Index were more than offset by the losses
associated with the S&P 500 minus 1.2% elections during the
year. Mr. Ackermans, Mrs. Cellinos and
Mr. Pustulkas earnings (loss) include $32,017, $1,003
and $468, respectively, of Above Market Rate of Interest in
respect to DCP plan balances that were credited with the
Moodys Index. The total Above Market Rate of Interest is
included in the Summary Compensation Table under Column (h).
Mr. Smith, and Mr. Tanski were not credited with Above
Market Rate of Interest on their DCP balances. The DCP interest
credited for the S&P 500 Minus 1.2% Election is not
considered Above Market because a similar type of investment
choice is offered within the 401(k) plan which is generally
available to full-time employees with six months of service. The
net effect of the two investment choices resulted in an overall
decrease in account balances. |
|
(3) |
|
This represents the annual tophat payment for the calendar year
ended December 31, 2008 for all officers except
Mr. Ackerman. The amount in this column for
Mr. Ackerman represents the tophat payment of $99,309 made
in fiscal 2008 plus DCP annuity payments of $31,149 paid to him
after his retirement for the period June 1 through
September 30, 2008. |
|
(4) |
|
This represents the ending DCP balance, if any, plus the tophat
accruals for the period January 1, 2008 through
September 30, 2008. Mr. Ackermans DCP account
balance and tophat accrual on June 1, 2008, his retirement
date, was $1,707,218. |
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, 2008 (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, 2008. These benefits
are in addition to benefits available generally to most salaried
employees.
National
Fuel Gas Company Performance Incentive Program
Termination
for Cause
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.
35
Cause under the Performance Incentive Program
generally means:
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the executives failure to comply with a reasonable and
lawful written directive of the Board of Directors or the Chief
Executive Officer;
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the executives failure to perform the substantial
responsibilities of his position;
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any act of dishonesty, gross negligence, or misconduct by the
executive;
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the executives conviction of or entering a plea of guilty
or nolo contendere (will not contest) to a crime constituting a
felony or the executives willful violation of any law,
rule or regulation; or
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the executive engages in any business which is competitive with
that of the Company.
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Termination
for Any Other Reason
If a named executive officers employment terminates during
a performance period for any reason other than Cause, the named
executive officer will be entitled to the amount that would have
been payable to the named executive officer if the named
executive officer remained employed for the entire performance
period, pro-rated based on the number of days completed within
said performance period prior to termination. Any payment to the
named executive officer will also be subject to any conditions
as determined by the Chief Executive Officer.
Change of
Control
In the event of a Change of Control, 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.
Change of Control under the Performance Incentive
Program generally means:
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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;
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a tender or exchange offer to acquire, directly or indirectly,
twenty (20) percent or more of the outstanding stock of the
Company;
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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;
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consolidation 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;
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sale or other transfer of all or substantially all the assets of
the Company; or
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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.
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National
Fuel Gas Company 1997 Award and Option Plan
Noncompetition
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.
Termination
of Employment
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.
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Incentive
Stock Options
Except as otherwise disclosed 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, unless the named executive officer
is president or chief executive officer of the Company or
president of a principal subsidiary (an entity owned
at least 80% by the Company with at least $5 million net
income in the most recently completed fiscal year), in which
case the Company must offer to extend the term of that
persons incentive stock options to 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
Except as otherwise disclosed in an award letter, any
non-qualified stock option (including any stock appreciation
right) 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 option, 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 at age 65 or later and if
the named executive officer is the president or chief executive
officer of the Company, or president of a principal subsidiary,
then each non-qualified stock option would remain exercisable
for the balance of its 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 option, which the named executive
officer was entitled to exercise on the date of death.
As specified in Mr. Cabells award letter, upon a
voluntary termination of employment or an involuntary
termination for Just Cause, all non-qualified stock options are
forfeited. Upon an involuntary termination due to death or for
other than Just Cause, all non-qualified stock options will
become exercisable and will remain exercisable for three years.
Restricted
Stock
As specified in Mr. Cabells award letter dated
December 12, 2006, the following will occur with respect to
his restricted stock upon a termination:
i.) unless his termination is due to death or termination by the
Company without Just Cause, he will forfeit his right to the
restricted stock if his employment with the Company terminates
for any reason prior to the expiration of the vesting
restrictions;
ii.) in the event of either his termination by the Company
without Just Cause or his death before December 11, 2009,
all restrictions will lapse on the date of his death or
termination without Just Cause.
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In this context, Just Cause means the failure to
comply with Company policies on hedging, financial reporting,
accurate accounting, disclosure of information about the
Company, or regulatory compliance; fraud, misconduct, or
dishonesty related to employment; illegal conduct amounting to a
misdemeanor or felony; or the willful and continued failure to
substantially perform duties with the Company after written
warnings specifically identifying the lack of substantial
performance.
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, all terms and
conditions 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 will
become null and void.
For purposes of this section, Change in Control has
a meaning similar to the definition of Change of Control, which
was defined earlier under the Performance Incentive
Program section. The only major difference between the
1997 Award and Option Plan definition of Change in Control and
the Performance Incentive Program Change of Control definition
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 for any reason 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 (either by specific vote or by approval of the proxy
statement of the Company in which such person is named as
nominee for director without objection to such nomination) shall
be considered as though such person was a member of the
Incumbent Board. The Performance Incentive Program instead
states that a Change of Control shall be deemed to have occurred
when there is 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.
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 Tophat Plan
Under the Companys Tophat Plan, the Company restores to
the named executive officers benefits lost under the Tax
Deferred Savings Plan due to the Internal Revenue Code or
qualified plan limits.
Retirement
or Termination of Employment
If a named executive officer retires or his employment is
terminated, the named executive officer (or his beneficiary in
the event of his death) will receive a lump sum payment equal to
the value of his benefit, as of the date of retirement or
termination of employment.
National
Fuel Gas Company 2007 Annual at Risk Compensation Incentive Plan
(AARCIP)
Noncompetition
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
38
interests of the Company, the named executive officer must
forfeit all unearned
and/or
unpaid At Risk Awards.
Termination
of Employment Other Than Due to Death, Disability, Retirement,
Or an Approved Reason
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 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.
Termination
Due to Disability, Retirement, Or an Approved Reason
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.
Death
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.
Change in
Control and Change in Ownership
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 his willful engaging in illegal
conduct which is materially and demonstrably injurious to the
Company or its subsidiaries.
Deferred
Compensation Plan (DCP)
The term Change in Control under the DCP has a similar
definition as provided in the Performance Incentive Program,
discussed above.
Termination
For Any Reason Other Than Death or Retirement Prior to a Change
in Control
In the event of a termination for any reason, other than death
or retirement, prior to a Change in Control, the named executive
officer is entitled to receive any undistributed savings account
balance and his retirement account balance in the form of a lump
sum payment. However, the named executive officer will not be
entitled to the accumulation account balance.
39
Termination
After A Change in Control or Death
If the named executive officers employment terminates for
any reason, other than retirement, after a Change in Control or
the named executive officer dies at any time during his
employment with the Company, the named executive officer (or his
beneficiary) will receive in the form of a lump sum payment any
undistributed savings account balance, retirement account
balance, and accumulation account balance.
Retirement
In the case of retirement at any time, the named executive
officer is entitled to a monthly payment (a
15-year
annuity, unless the named executive officer elected to receive a
5- or
10-year
annuity) based on his retirement account balance and
accumulation account balance; provided that the named executive
officer provides the Company at least 90 days notice of his
retirement. However, if the named executive officer does not
have a retirement account balance and his accumulation account
balance is less than $5,000 at the date of retirement, that
account will be paid in the form of a lump sum equal to the
value of the account. 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.
Under the plan, for certain deferrals after May 1, 1994,
Mr. Ackerman was eligible and elected to defer a portion of
his salary to a retirement account that would entitle him to
commence monthly payments beginning the first of the month
coinciding with or following his
70th birthday.
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.
Termination
by the Company Without Cause Or Termination By the Executive For
Good Reason
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 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.
If the named executive officers employment terminates at
any time during the three year period ending on the first day of
the month following the named executive officers
sixty-fifth birthday, the multiplier will not be 1.99, but will
be a number equal to 1.99 times (x/1095), where x equals the
number of days remaining until the named executive
officers sixty-fifth birthday. In addition, the extension
of any welfare benefits will cease at age 65.
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.
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
40
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.
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.
Mr. Cabell will be entitled to a single lump sum payment
equal to the present value of his unvested accrued benefits
under the Companys retirement plans, which he participated
in immediately before the Change in Control.
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 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 beneficiary) will be entitled 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.
Noncompetition
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 of one 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
noncompete payment will not be paid to the named executive
officer if his 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.
Split
Dollar Arrangement and Death Benefit Agreement for Philip C.
Ackerman
The Company has maintained a split dollar life insurance
arrangement with Mr. Ackerman since 1991, as amended from
time to time. The split dollar arrangement formerly required
that i.) the Company would pay, until his retirement date, the
premiums on two life insurance policies owned by
Mr. Ackerman (ownership later transferred to a life
insurance trust established by Mr. Ackerman), ii.) the
Company would be repaid its premiums upon the earlier of his
70th birthday or death, and iii.) if he died before
age 70 his beneficiaries would receive a death benefit from
the policies of no more than twice the sum of his most recent
annual salary and lump sum compensation, with any additional
death benefit payable to the Company. In light of
Sarbanes-Oxleys prohibition on loans to executive
officers, the Company stopped paying premiums on those policies
in 2002. All subsequent premiums on those policies have instead
been paid from the policies owned by Mr. Ackermans
trust. In fiscal 2006, the trust transferred to the Company one
of its insurance policies as a partial early repayment to the
Company of the insurance premiums previously paid by the
Company, which left one existing insurance policy covered by the
split dollar arrangement. To place Mr. Ackerman in
approximately the position he would have been in had the Company
not been prohibited under Sarbanes-Oxley from performing its
obligations under the split dollar arrangement, in fiscal 2006
the Company and Mr. Ackerman agreed that i.) if
Mr. Ackerman dies before his 70th birthday, the
Company will pay his beneficiaries a death benefit equal to the
sum of 24 times his base monthly salary in the month prior to
his death or retirement plus two times the most recent award, if
any, paid to him under the Companys lump sum payment
programs other than the Performance Incentive Program, reduced
by the amount received by his trust from the remaining insurance
policy pursuant to the split dollar arrangement, or ii.) if
Mr. Ackerman is living on his 70th birthday, the
Companys agreement to pay a death benefit will terminate,
and the Company will make a cash payment to Mr. Ackerman in
the amount of $968,905. This cash amount represents the amount
that, at that time, was projected as the difference between the
cash surrender value that would have been available to
Mr. Ackerman at age 70 under the original arrangement
(net of the premiums that would have been repayable to the
Company)
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over the projected net cash surrender value available to
Mr. Ackermans trust on his 70th birthday under
the remaining insurance policy.
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 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. 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.
Potential
Payments Upon Termination or
Change-in-Control
Table
Due to the number of factors that affect the nature and amount
of any benefit provided upon the events discussed above, any
actual amounts paid or distributed may be different from the
amounts contained in the table. 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. For Column (2), Retirement, will
be N/A if the named executive officer was not
eligible to retire on September 30, 2008. 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.
Mr. Ackerman retired from the Company effective
June 1, 2008. Therefore, the table for Mr. Ackerman
below sets forth information with respect to retirement only.
The payments that would have been due upon a termination
for cause on September 30, 2008 other than in
connection with a
change-in-control
are not shown in a separate column in the following table. The
payments that would have been due in that case are the Deferred
Compensation Plan balances of $169,519 for Mr. Smith, $0
for Mr. Tanski, $0 for Mr. Cabell, $256,482 for
Mrs. Cellino and $97,256 for Mr. Pustulka and the
applicable accrued Tophat Plan benefit for the period
January 1, 2008 to September 30, 2008 of $84,575 for
Mr. Ackerman, $85,963 for Mr. Smith, $56,869 for
Mr. Tanski, $14,916 for Mr. Cabell, $17,798 for
Mrs. Cellino and $11,228 for Mr. Pustulka. All of the
unvested and vested stock options and restricted stock awards
would have been forfeited on the date of termination for cause
other than in connection with a
change-in-control.
The payments that would have been due upon an involuntary
termination other than for cause and other than in
connection with a change in control are the same as the payments
under Column (1) for Voluntary Termination,
with the following exceptions: i.) the
Bonus-At-Risk
Award could have been paid if termination was for an
approved reason, such as a reduction in force, ii.) the unvested
stock options would have vested if not already reflected as
vested under Column (1), iii.) Mr. Smith would have
received a benefit of $84,563 under the Retirement Benefit
Agreement, and iv.) for Mr. Cabell, the unvested Restricted
Stock would have vested upon termination.
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without Cause
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and/or
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|
|
Other
|
|
Executive Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminates
|
|
|
Company
|
|
|
than for
|
|
and Payments
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
for Good
|
|
|
Terminates
|
|
|
Good
|
|
Upon Termination
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Reason
|
|
|
for Cause
|
|
|
Reason
|
|
for:
|
|
$(1)
|
|
|
$(2)
|
|
|
$(3)
|
|
|
$(4)
|
|
|
$(5)
|
|
|
$(6)
|
|
|
$(7)
|
|
|
Mr. Philip Ackerman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus At Risk Award(b)
|
|
|
N/A
|
|
|
|
1,146,667
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Performance Incentive Program(c)
|
|
|
N/A
|
|
|
|
2,802,212
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Deferred Compensation Plan(h)
|
|
|
N/A
|
|
|
|
1,622,643
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Executive Retirement Plan(i)
|
|
|
N/A
|
|
|
|
3,560,248
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
401k Tophat(k)
|
|
|
N/A
|
|
|
|
84,575
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Death Benefit(n)
|
|
|
N/A
|
|
|
|
(n
|
)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Welfare Plan Benefits and Fringe Benefits(o)
|
|
|
N/A
|
|
|
|
11,053
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mr. Ackerman
|
|
|
|
|
|
|
9,227,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. David Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
2,773,283
|
|
|
|
0
|
|
|
|
0
|
|
Bonus At Risk Award(b)
|
|
|
0
|
|
|
|
1,125,625
|
|
|
|
1,125,625
|
|
|
|
1,125,625
|
|
|
|
1,125,625
|
|
|
|
0
|
|
|
|
0
|
|
Performance Incentive Program(c)
|
|
|
1,377,227
|
|
|
|
1,377,227
|
|
|
|
1,377,227
|
|
|
|
1,377,227
|
|
|
|
1,377,227
|
|
|
|
0
|
|
|
|
1,377,227
|
|
Non-Compete(d)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,393,610
|
|
|
|
1,393,610
|
|
|
|
1,393,610
|
|
Vested and Outstanding exercisable Options(g)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
3,306,150
|
|
|
|
0
|
|
|
|
N/A
|
|
Deferred Compensation Plan(h)
|
|
|
169,519
|
|
|
|
196,979
|
|
|
|
169,519
|
|
|
|
196,979
|
|
|
|
169,519
|
|
|
|
169,519
|
|
|
|
169,519
|
|
Executive Retirement Plan(i)
|
|
|
761,401
|
|
|
|
761,401
|
|
|
|
202,391
|
|
|
|
761,401
|
|
|
|
761,401
|
|
|
|
0
|
|
|
|
761,401
|
|
Retirement Agreement(j)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
84,563
|
|
|
|
0
|
|
|
|
0
|
|
401k Tophat(k)
|
|
|
85,963
|
|
|
|
85,963
|
|
|
|
85,963
|
|
|
|
85,963
|
|
|
|
85,963
|
|
|
|
85,963
|
|
|
|
85,963
|
|
Post-retirement/Post- termination Health Care(m)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
26,302
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Welfare Plan Benefits and Fringe Benefits(o)
|
|
|
0
|
|
|
|
7,731
|
|
|
|
0
|
|
|
|
7,731
|
|
|
|
11,597
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mr. Smith
|
|
|
2,394,110
|
|
|
|
3,554,926
|
|
|
|
2,960,725
|
|
|
|
3,554,926
|
|
|
|
11,115,240
|
|
|
|
1,649,092
|
|
|
|
3,787,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Ronald Tanski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
2,250,917
|
|
|
|
0
|
|
|
|
0
|
|
Bonus At Risk Award(b)
|
|
|
0
|
|
|
|
730,313
|
|
|
|
730,313
|
|
|
|
730,313
|
|
|
|
730,313
|
|
|
|
0
|
|
|
|
0
|
|
Performance Incentive Program(c)
|
|
|
953,785
|
|
|
|
953,785
|
|
|
|
953,785
|
|
|
|
953,785
|
|
|
|
953,785
|
|
|
|
0
|
|
|
|
953,785
|
|
Non-Compete(d)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,131,114
|
|
|
|
1,131,114
|
|
|
|
1,131,114
|
|
Vested and Outstanding exercisable Options(g)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
2,922,888
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Executive Retirement Plan(i)
|
|
|
512,138
|
|
|
|
512,138
|
|
|
|
126,093
|
|
|
|
512,138
|
|
|
|
512,138
|
|
|
|
0
|
|
|
|
512,138
|
|
401k Tophat(k)
|
|
|
56,869
|
|
|
|
56,869
|
|
|
|
56,869
|
|
|
|
56,869
|
|
|
|
56,869
|
|
|
|
56,869
|
|
|
|
56,869
|
|
Post-retirement/Post- termination Health Care(m)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
26,302
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Welfare Plan Benefits and Fringe Benefits(o)
|
|
|
0
|
|
|
|
1,720
|
|
|
|
0
|
|
|
|
1,720
|
|
|
|
17,580
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mr. Tanski
|
|
|
1,522,792
|
|
|
|
2,254,825
|
|
|
|
1,867,060
|
|
|
|
2,254,825
|
|
|
|
8,601,906
|
|
|
|
1,187,983
|
|
|
|
2,653,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination Other than in
|
|
|
Potential Payments Upon Termination
|
|
|
|
Connection with a Change in Control
|
|
|
Following a Change in Control or Change in Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminates
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
|
|
Terminates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and/or
|
|
|
|
|
|
Voluntarily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
Other
|
|
Executive Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminates
|
|
|
Company
|
|
|
than for
|
|
and Payments
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
for Good
|
|
|
Terminates
|
|
|
Good
|
|
Upon Termination
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Reason
|
|
|
for Cause
|
|
|
Reason
|
|
for:
|
|
$(1)
|
|
|
$(2)
|
|
|
$(3)
|
|
|
$(4)
|
|
|
$(5)
|
|
|
$(6)
|
|
|
$(7)
|
|
|
Mr. Matthew Cabell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1,495,296
|
|
|
|
0
|
|
|
|
0
|
|
Bonus At Risk Award(b)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
337,472
|
|
|
|
337,472
|
|
|
|
337,472
|
|
|
|
0
|
|
|
|
0
|
|
Performance Incentive Program(c)
|
|
|
431,772
|
|
|
|
N/A
|
|
|
|
431,772
|
|
|
|
431,772
|
|
|
|
431,772
|
|
|
|
0
|
|
|
|
431,772
|
|
Non-Compete(d)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
751,045
|
|
|
|
751,045
|
|
|
|
751,045
|
|
Unvested Restricted Stock(e)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
1,636,600
|
|
|
|
1,636,600
|
|
|
|
1,636,600
|
|
|
|
0
|
|
|
|
0
|
|
Unvested Stock Options(f)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
141,500
|
|
|
|
141,500
|
|
|
|
141,500
|
|
|
|
0
|
|
|
|
0
|
|
401k Tophat(k)
|
|
|
4,900
|
|
|
|
N/A
|
|
|
|
4,900
|
|
|
|
4,900
|
|
|
|
4,900
|
|
|
|
4,900
|
|
|
|
4,900
|
|
RSA Tophat(l)
|
|
|
10,016
|
|
|
|
N/A
|
|
|
|
10,016
|
|
|
|
10,016
|
|
|
|
10,016
|
|
|
|
10,016
|
|
|
|
10,016
|
|
Post-retirement/Post- termination Health Care(m)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
21,774
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mr. Cabell
|
|
|
446,688
|
|
|
|
N/A
|
|
|
|
2,562,260
|
|
|
|
2,562,260
|
|
|
|
4,830,375
|
|
|
|
765,961
|
|
|
|
1,197,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Anna Marie Cellino
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
956,195
|
|
|
|
0
|
|
|
|
0
|
|
Short Term Incentive bonus(b)
|
|
|
0
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
0
|
|
Performance Incentive Program(c)
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
0
|
|
|
|
308,210
|
|
Non-Compete(d)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
480,500
|
|
|
|
480,500
|
|
|
|
480,500
|
|
Vested and Outstanding exercisable Options(g)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
1,966,531
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Deferred Compensation Plan(h)
|
|
|
256,482
|
|
|
|
273,799
|
|
|
|
256,482
|
|
|
|
273,799
|
|
|
|
256,482
|
|
|
|
256,482
|
|
|
|
256,482
|
|
Executive Retirement Plan(i)
|
|
|
162,090
|
|
|
|
162,090
|
|
|
|
51,628
|
|
|
|
162,090
|
|
|
|
162,090
|
|
|
|
0
|
|
|
|
162,090
|
|
401k Tophat(k)
|
|
|
17,798
|
|
|
|
17,798
|
|
|
|
17,798
|
|
|
|
17,798
|
|
|
|
17,798
|
|
|
|
17,798
|
|
|
|
17,798
|
|
Post-retirement/Post- termination Health Care(m)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
26,302
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Welfare Plan Benefits and Fringe Benefits(o)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mrs. Cellino
|
|
|
744,580
|
|
|
|
1,011,897
|
|
|
|
884,118
|
|
|
|
1,011,897
|
|
|
|
4,439,108
|
|
|
|
754,780
|
|
|
|
1,225,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. John Pustulka
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
847,243
|
|
|
|
0
|
|
|
|
0
|
|
Short Term Incentive bonus(b)
|
|
|
0
|
|
|
|
140,500
|
|
|
|
140,500
|
|
|
|
140,500
|
|
|
|
140,500
|
|
|
|
0
|
|
|
|
0
|
|
Performance Incentive Program(c)
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
308,210
|
|
|
|
0
|
|
|
|
308,210
|
|
Non-Compete(d)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
425,750
|
|
|
|
425,750
|
|
|
|
425,750
|
|
Vested and Outstanding exercisable Options(g)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
604,946
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Deferred Compensation Plan(h)
|
|
|
97,256
|
|
|
|
101,706
|
|
|
|
97,256
|
|
|
|
101,706
|
|
|
|
97,256
|
|
|
|
97,256
|
|
|
|
97,256
|
|
Executive Retirement Plan(i)
|
|
|
263,724
|
|
|
|
263,724
|
|
|
|
64,190
|
|
|
|
263,724
|
|
|
|
263,724
|
|
|
|
0
|
|
|
|
263,724
|
|
401k Tophat(k)
|
|
|
11,228
|
|
|
|
11,228
|
|
|
|
11,228
|
|
|
|
11,228
|
|
|
|
11,228
|
|
|
|
11,228
|
|
|
|
11,228
|
|
Post-retirement/Post- termination Health Care(m)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
26,302
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Welfare Plan Benefits and Fringe Benefits(o)
|
|
|
0
|
|
|
|
3,350
|
|
|
|
0
|
|
|
|
3,350
|
|
|
|
20,025
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for Mr. Pustulka
|
|
|
680,418
|
|
|
|
828,718
|
|
|
|
621,384
|
|
|
|
828,718
|
|
|
|
2,745,184
|
|
|
|
534,234
|
|
|
|
1,106,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
For all officers, other than Mr. Ackerman who retired at
June 1, 2008, severance is equal to 1.99 multiplied by the
sum of i.) annual base salary and ii.) the average of the named
executive officers annual cash bonus for the two fiscal
years of the Company ending immediately prior to the effective |
44
|
|
|
|
|
date of the change in control. The earned salary and severance
amount shall be paid in cash in a lump sum. |
|
(b) |
|
Represents the Annual At Risk Award or Short Term Incentive
bonus paid in December 2008 that was earned in fiscal 2008. This
amount also appears in the Summary Compensation Table. |
|
(c) |
|
The target incentive payable to Mr. Ackerman of $2,802,212
at September 30, 2008, represents the estimated target
incentive if he were to die. The total estimated payment of
$2,802,212 is composed of $1,082,900 for the three-year
performance period ended September 30, 2008, $859,656 for
the
three-year
performance period ended September 30, 2009, and $859,656
for the three-year performance period ended September 30,
2010. |
|
|
|
The target incentive payable to Mr. Smith of $1,377,227 at
September 30, 2008, represents the estimated target
incentive if he were to terminate, except for cause, as a
participant of the three separate performance periods. The total
estimated payment of $1,377,227 is composed of $624,750 for the
three-year performance period ended September 30, 2008,
$427,607 for the three-year performance period ended
September 30, 2009, and $324,870 for the three-year
performance period ended September 30, 2010. |
|
|
|
The target incentive payable to Mr. Tanski of $953,785 at
September 30, 2008, represents the estimated target
incentive if he were to terminate, except for cause, as a
participant of the three separate performance periods. The total
estimated payment of $953,785 is composed of $416,500 for the
three-year
performance period ended September 30, 2008, $342,918 for
the three-year performance period ended September 30, 2009,
and $194,367 for the three-year performance period ended
September 30, 2010. |
|
|
|
The target incentive payable to Mrs. Cellino and
Mr. Pustulka of $308,210 at September 30, 2008,
represents the estimated target incentive if she/he were to
terminate, except for cause, as a participant of the three
separate performance periods. The total estimated payment of
$308,210 is composed of $141,610 for the three-year performance
period ended September 30, 2008, $111,067 for the
three-year performance period ended September 30, 2009, and
$55,533 for the three-year performance period ended
September 30, 2010. |
|
|
|
The target incentive payable to Mr. Cabell of $431,772 at
September 30, 2008, represents the estimated target
incentive if he were to terminate, except for cause, as a
participant in two of the three performance periods in which he
participates. The total estimated payment of $431,772 is
composed of $306,822 for the three-year performance period ended
September 30, 2009 and $124,950 for the three-year
performance period ended September 30, 2010. |
|
|
|
The above payments in respect of any three-year performance
period will be paid in a lump sum cash amount not later than
2-1/2
months after the end of the calendar year in which the relevant
performance period ends. |
|
(d) |
|
If the named executive officer elected to be bound by the
non-compete provision contained in the Employment Continuation
and Noncompetition Agreement, he shall receive 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 named executive officers average cash bonus
payable to the named executive officer for the two fiscal years
of the company ending immediately prior to the effective date of
the change in control, as compensation for the covenant not to
compete. |
|
(e) |
|
The value, at September 30, 2008, of any restricted stock
that would have vested upon the termination of employment for
the stated reason on September 30, 2008. Because the
vesting of Mr. Ackermans unvested restricted stock
was not accelerated so as to occur upon his actual retirement in
fiscal 2008, zero is set forth in column 2. All of
Mr. Ackermans unvested restricted stock will vest on
January 15, 2009. |
|
(f) |
|
All named executive officers except for Mr. Ackerman have
unvested options. However, only Mr. Cabell has certain
options with a positive value as of September 30, 2008.
Specifically, options granted in February 2008 vest in 1/3
increments on February 20, 2009, February 20, 2010,
and February 20, 2011, subject to satisfaction of
performance conditions. Because the exercise price of $47.37 is
higher than the FMV of the stock on September 30, 2008 of
$40.915, these February 2008 options have no value.
Mr. Cabell, also has unvested options issued on
December 11, 2006 that would have vested at certain
termination events and are scheduled to vest on
December 11, 2009. The exercise price of
Mr. Cabells December 2006 options is $39.50. |
45
|
|
|
(g) |
|
This represents the total number of vested options outstanding
at September 30, 2008 multiplied by the difference between
the FMV of stock on September 30, 2008 and the exercise
price of each option. Under the terms of the 1997 Award and
Option Plan this amount will be paid in a lump sum, which is why
this is separately disclosed. |
|
(h) |
|
Represents the Deferred Compensation Plan (DCP)
balances as of September 30, 2008, except for
Mr. Ackerman whose balance is as of June 1, 2008.
Under the plan, DCP retirement and disability benefits are the
same for participants listed on this table (Columns 2 and
4) and are calculated with the 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. DCP benefits provided upon death are the full
lump sum value of all account balances, with no switch to the
Moodys index rate as noted above (Column 3). DCP benefits
provided upon termination other than death, retirement or
disability are the lump sum value of all accounts. Benefits are
paid as a lump sum in all situations except retirement or
disability, in which case benefits are paid as an annuity. |
|
|
|
Upon retirement, Mr. Ackerman would receive three separate
monthly annuities, the present value of which equals $1,622,643.
The first of those three payments began on June 1, 2008,
Mr. Ackermans retirement date, in the amount of
$7,787 per month for 15 years with a present value of
$821,051. The other two projected payments consist of i.) a
fifteen-year annuity of $3,180 per month with a present value of
$400,953 and ii.) a ten-year annuity commencing at age 70
of $5,603 per month with a present value of $400,639. Upon
death, Mr. Ackermans beneficiary would receive a lump
sum payment of the value of all accounts. |
|
|
|
Upon retirement and/or disability, Mr. Smith would receive
a projected ten-year annuity of $2,169 per month with a present
value of $196,979. The amounts for all other terminations are
the account balances as of September 30, 2008. |
|
|
|
Upon retirement and/or disability, Mrs. Cellino would
receive a projected ten-year annuity of $3,165 per month with a
present value of $273,799. The amounts for all other
terminations are the account balances as of September 30,
2008. |
|
|
|
Upon retirement and/or disability, Mr. Pustulka would
receive two separate monthly annuities, the present value of
which equals $101,706. The first is a projected
five-year
annuity of $613 per month with a present value of $31,925. The
second is a projected ten-year annuity of $839 per month with a
present value of $69,781. The amounts for all other terminations
are the account balances as of September 30, 2008. |
|
|
|
Mr. Tanski does not have any outstanding account balances
under the DCP. Mr. Cabell is not eligible to participate in
the DCP. |
|
(i) |
|
For Mr. Ackerman this is the first amount payable following
retirement (subject to at least a six month delay, in accordance
with IRC Section 409A). Three subsequent payments of the
same amount would be made one in each of the next three years
pursuant to Mr. Ackermans election. For each of the
other named executive officers, this is the value of the first
payment payable under the Executive Retirement Plan (the
ERP) that would have been due following the
termination of employment for the stated reason on
September 30, 2008, as elected by the named executive
officer. If a payment is shown in any column on this line
(except for amounts shown in the Column 3, Death),
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
named executive officer. Column 3, Death, represents
a straight life annuity payment to the named executive
officers surviving spouse/beneficiary until his/her death.
For further description of the ERP, the calculation of the
benefit payable under the ERP and the applicable early
retirement percentages, please refer to the caption
Executive Retirement Plan following the Pension
Benefits Table. |
|
|
|
The amounts in this row represent the following, with respect to
benefits provided under the ERP: |
|
|
|
Mr. Ackerman retired on June 1, 2008 with an unreduced
retirement benefit. His first Executive Retirement Plan payment
will occur in January 2009, and subsequent payments will occur
in January 2010, 2011 and 2012, as determined by his four
year sum certain election. In the event of his death prior to
commencement of the ERP benefit, Mr. Ackermans spouse
shall receive the ERP benefit payment in the same form as
elected. |
|
|
|
For Mr. Smith, in the event of termination resulting from
retirement, Mr. Smith is eligible to retire with a reduced
retirement benefit that includes the tophat portion of the ERP
benefit, but not the supplemental portion of the ERP. In the
event of a voluntary termination, involuntary termination |
46
|
|
|
|
|
other than for cause or disability, Mr. Smith is eligible
to receive a reduced early retirement benefit. With respect to
an involuntary termination for cause (willful misconduct), no
retirement benefits will be paid under the ERP. In the event of
death prior to commencement of the ERP benefit,
Mr. Smiths spouse shall receive the ERP benefit for
her lifetime commencing on the first day of the month following
the date of death. |
|
|
|
For Mr. Tanski, in the event of termination resulting from
retirement, Mr. Tanski is eligible to retire with a reduced
retirement benefit that includes the tophat and supplemental
portions of the ERP benefit. In the event of a voluntary
termination, involuntary termination other than for cause or
disability, Mr. Tanski is eligible to receive a reduced
early retirement benefit. With respect to an involuntary
termination for cause (willful misconduct), no retirement
benefits will be paid under the ERP. In the event of death prior
to commencement of the ERP benefit, Mr. Tanskis
spouse shall receive the ERP benefit for her lifetime commencing
on the first day of the month following the date of death. |
|
|
|
For Mrs. Cellino, in the event of termination resulting
from retirement, Mrs. Cellino is eligible to retire with a
reduced retirement benefit that includes the tophat portion of
the ERP benefit, but not the supplemental portion of the ERP. In
the event of a voluntary termination, involuntary termination
other than for cause or disability, Mrs. Cellino is
eligible to receive a reduced early retirement benefit. With
respect to an involuntary termination for cause (willful
misconduct), no retirement benefits will be paid under the ERP.
In the event of death prior to commencement of the ERP benefit,
Mrs. Cellinos spouse shall receive the ERP benefit
for his lifetime commencing on the first day of the month
following the date of death. |
|
|
|
For Mr. Pustulka, in the event of termination resulting
from retirement, Mr. Pustulka is eligible to retire with a
reduced retirement benefit that includes the tophat and
supplemental portions of the ERP. In the event of a voluntary
termination, involuntary termination other than for cause or
disability, Mr. Pustulka is eligible to receive a reduced
early retirement benefit. With respect to an involuntary
termination for cause (willful misconduct), no retirement
benefits will be paid under the ERP. In the event of death prior
to commencement of the ERP benefit, Mr. Pustulkas
spouse shall receive the ERP benefit for her lifetime commencing
on the first day of the month following the date of death. |
|
(j) |
|
Represents the annual benefit payable under The Retirement
Benefit Agreement, expressed as a 50% joint and survivor annuity. |
|
(k) |
|
Represents the RSA Tophat Plan benefit for the period
January 1, 2008 through September 30, 2008. |
|
(l) |
|
Represents the RSA Tophat Plan benefit for Mr. Cabell for
the period January 1, 2008 through September 30, 2008. |
|
(m) |
|
For all terminations other than for a
Change-in-Control:
the officer receives the same health benefits as other
supervisory employees hired prior to January 1, 2003. The
amount shown under Column (5) represents 18 months of
COBRA rates for medical, drug and dental, except for
Mr. Cabell for whom it represents 15 months of rates.
The actual COBRA rates were used for 2008 and 2009 and the 2010
rates were projected using a 9% trend for medical, 10% for drug
and 5% for dental. |
|
(n) |
|
Mr. Ackerman by contract, would receive a death benefit
payment based on two times the sum of his base salary at the
time of retirement and his most recent annual cash bonus, less
proceeds paid under his split dollar policy. The amount that
would have been paid by the Company if he had died is
$1,297,469. If Mr. Ackerman survives to age 70 he
would instead receive a lump sum payment of $968,905 |
|
(o) |
|
For Columns (2) and (4), this represents an allowance for
tax preparation and financial planning in the year following the
year of retirement and/or disability. For Column (5), this
includes an allowance for tax preparation and financial planning
and the annual payment for life insurance under the
ExecutiveLife Insurance Plan for 18 months.
Mr. Tanski, Mrs. Cellino and Mr. Pustulka are
participants in the ExecutiveLife Insurance Plan. |
47
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, 2009
(fiscal 2009). 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 2009, as they did
for fiscal 2008.
Representatives of PricewaterhouseCoopers LLP will not be
attending the Annual Meeting. Therefore, no representative will
be available to answer questions or make a statement.
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.
48
PROPOSAL 3. APPROVAL
OF THE 2009 NON-EMPLOYEE DIRECTOR
EQUITY
COMPENSATION PLAN
At the Annual Meeting, stockholders will be asked to approve the
National Fuel Gas Company 2009 Non-Employee Director Equity
Compensation Plan (the Plan) included in this proxy
statement at Appendix D. The Board of Directors adopted the
Plan on December 4, 2008, subject to approval by the
stockholders.
The Board of Directors believes that the Companys ability
to attract and retain highly qualified non-employee directors is
critical to the Companys long-term success. The Board also
wishes to encourage individual directors to acquire a
proprietary interest in the long-term success of the Company,
thereby aligning their financial interests with those of the
Companys stockholders. The Plan is designed to serve these
purposes.
The Plan provides for the issuance of shares of common stock of
the Company to non-employee directors, as compensation in whole
or in part for their service on the Board. Shares will be issued
on a quarterly basis, in advance (as of the first business day
of the quarter). The Board will determine from time to time in
its discretion the number of shares to be issued per quarter.
The Company has been compensating its non-employee directors
with a combination of Company common stock and cash since 1997,
and wishes to continue doing so after the shares authorized for
this purpose by the Companys stockholders in 1997 have
been exhausted. The Company currently has ten directors, nine of
whom are non-employee directors. Of those nine, seven currently
receive compensation under the 1997 authorization. The
compensation of the Companys directors is discussed in
considerable detail beginning at page 16 of this proxy
statement.
Shares will not be issued under the Plan to any non-employee
director who declines receipt of the shares or whose
compensation is otherwise determined by written agreement
between the Company and the non-employee director. For example,
the Director Services Agreement between the Company and its
non-executive Chairman, Philip Ackerman, sets forth the
compensation to be paid to Mr. Ackerman during the period
in which he serves as non-executive Chairman. The Director
Services Agreement also provides that Mr. Ackerman will not
be eligible for any other compensation for his services during
that period, including any compensation otherwise made available
to non-employee directors of the Company. In addition, at the
New Mountain Groups request, Frederic Salerno receives no
compensation for his service as a non-employee director for as
long as the New Mountain Group continues to hold common stock of
the Company.
The aggregate number of shares that will be available for
issuance under the Plan will be 100,000, which is about
one-tenth of one percent of the 79,514,816 shares of
Company common stock outstanding as of January 15, 2009.
The number of shares available for issuance under the Plan is
subject to adjustment in the event certain transactions occur.
For example, in the event of changes in the common stock by
reason of a common stock dividend, stock split, reverse stock
split or other combination, the Board will make appropriate
adjustment in the aggregate number of shares available under the
Plan and in the rate of payment of shares under the Plan. In the
event of a merger, reorganization, reclassification of the
common stock, spinoff or other changes in the capitalization of
the Company, the Board may make appropriate provision with
respect to shares issued under the Plan for (i) the
substitution, on an equitable basis, of other securities or
consideration to which holders of common stock will be entitled
pursuant to such transaction, or (ii) adjustment in the
number of shares available for issuance under the Plan and in
the rate of payment of shares under the Plan.
Each share of common stock issued to a non-employee director
under the Plan will be non-transferable until the later of two
years after its issuance or six months after the
non-employees cessation of service on the Board, except as
follows. Upon a non-employee directors death, whether in
office or after his or her service as a director ceases, all
restrictions on transferability imposed under the Plan will
lapse.
Non-employee directors will be entitled to all of the rights of
stockholders with respect to shares issued under the Plan,
including the right to vote the shares, the right to receive
dividends and the right to reinvest dividends, outside of the
Plan, into additional shares of the Companys common stock.
Shares issued under the Plan will not be subject to forfeiture
or cancellation for any reason.
49
The Plan will be effective as of the date of the Annual Meeting,
provided stockholders approve the Plan. Unless earlier
terminated by the Board, the Plan will expire when all of the
shares available for issuance under the Plan have been issued.
The Board will administer the Plan and will have the authority
to interpret the Plan, establish administrative rules, grant
waivers of Plan terms and conditions and take other actions it
deems advisable. The Boards determinations with respect to
the Plan will be made by a majority of the Board and will be
final, binding and conclusive.
The Board may suspend or terminate the Plan at any time. In
addition, the Board may amend the Plan. Any amendment to the
Plan will be subject to stockholder approval i.) at the
discretion of the Board and ii.) to the extent that stockholder
approval may be required by law or under the applicable
requirements of the New York Stock Exchange or any other
exchange on which the Companys common stock is listed to
trade.
The Plan is not the only means of compensating non-employee
directors for their service on the Board. The Board may continue
to provide, outside of the Plan, for payment of non-equity
compensation for such service, including cash, on terms and in
amounts as determined by the Board in its discretion. The Board
may also continue to issue shares of common stock under the
Retainer Policy for Non-Employee Directors approved by the
Companys stockholders at the 1997 Annual Meeting of
Stockholders, until the remaining 21,455 shares available
under that approval are exhausted. The Plan also amends that
Retainer Policy so as to provide that all restrictions on the
transferability of any shares ever issued under that Retainer
Policy shall lapse upon the death of the holder of those shares.
50
The following table contains information about the shares of
common stock that the individuals and groups listed therein
would have received under the Plan had the Plan been in effect
in fiscal 2008, the most recently completed fiscal year. The
table assumes that the rate of issuance of shares under the Plan
in fiscal 2008 would have been the same as the rate of issuance
of shares under the Retainer Policy for Non-Employee Directors
in fiscal 2008.
NEW
PLAN BENEFITS
National
Fuel Gas Company 2009 Non-Employee Director
Equity Compensation Plan
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Name and Position
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Dollar Value(1)
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Number of Units
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Philip C. Ackerman
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$
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0
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0
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Chairman of the Board and Chief Executive Officer of the Company
through 2/20/08. Chairman of the Board 2/21/08 through 5/31/08.
Retired from employment effective 6/1/08. Non-Executive Chairman
of the Board since 6/1/08
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David F. Smith
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$
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0
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0
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Director, President and Chief Executive Officer of the Company
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|
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Ronald J. Tanski
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$
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0
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0
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Treasurer and Principal Financial Officer of the Company and
President of National Fuel Gas Supply Corporation
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|
|
|
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Matthew D. Cabell
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$
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0
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|
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0
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President of Seneca Resources Corporation
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|
|
|
|
|
|
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James D. Ramsdell
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$
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0
|
|
|
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0
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Senior Vice President of National Fuel Gas Distribution
Corporation
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|
|
|
|
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Anna Marie Cellino
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$
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0
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0
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President National Fuel Gas Distribution Corporation
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John R. Pustulka
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$
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0
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0
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Senior Vice President of Supply Corporation
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All current executive officers as a group
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$
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0
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0
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All current directors who are not executive officers, as a group
(9 persons)(2)
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$
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420,136.50
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8,400
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All employees, including all current officers who are not
executive officers, as a group
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$
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0
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0
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(1) |
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Represents the fair value as required by Statement of Financial
Accounting Standards 123R, on the date of issuance, of the
common stock that would have been issued pursuant to the Plan
had it been in effect in fiscal 2008. The average of the high
and low stock price on each date of issuance was used to compute
the fair value. The average prices were as follows: $47.07 for
October 1, 2007, $46.52 for January 2, 2008,
$47.35 April 1 2008 and $59.125 for July 1, 2008. |
|
(2) |
|
Seven of the nine current directors who are not executive
officers of the Company would have received shares pursuant to
the Plan had it been in effect in fiscal 2008. They are Robert
T. Brady, R. Don Cash, Stephen E. Ewing, Rolland E. Kidder,
Craig G. Matthews, George L. Mazanec and
Richard G. Reiten. Each individual would have received
1,200 shares. Two current directors who are not executive
officers of the Company would not have received shares pursuant
to the Plan had it been in effect in fiscal 2008. They are
Philip C. Ackerman and Frederic V. Salerno. |
The affirmative vote of a majority of the votes cast with
respect to the approval of the Plan is required for approval of
the Plan.
THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
51
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 2008, except
as described below.
A single Section 16(a) report (a Form 4) was
filed late on November 13, 2008 by Director
Stephen E. Ewing with regard to a single transaction
that occurred on September 19, 2008 in which Mr. Ewing
purchased 500 shares of Company stock on the open market
through his brokerage account. That Form 4 was filed late
due to an inadvertent lapse in communications among
Mr. Ewing, his broker and the Company personnel who file
Form 4s for the Companys directors and executive
officers. That Form 4 also amended a Form 4 filed
October 2, 2008, in order to correct the cumulative total
of his Company stock owned so as to include his September
purchase.
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 2008 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 contact the Companys transfer
agent, The Bank of New York Mellon, by calling
1-800-648-8166
or by forwarding a written request addressed to The Bank of New
York, 101 Barclay St., 11 East, New York, NY 10286. Promptly
upon request, additional copies of the Companys Annual
Report for the 2008 fiscal year and separate proxy statements
for the Annual Meeting will be sent. By contacting The Bank of
New York Mellon, 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 accounts 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 2008 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. These
options are available to you at any time.
PROPOSALS OF
SECURITY HOLDERS
Proposals that security holders intend to present at the 2010
Annual Meeting of Stockholders must be received by the Secretary
at the principal offices of the Company no later than
October 2, 2009, 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
52
Act, for consideration at the 2010 Annual Meeting of
Stockholders, shall be considered untimely unless received by
the Secretary at the Companys principal office between
October 13, 2009 and November 12, 2009.
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 and the documents listed below.
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By Order of the Board of
Directors
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Paula M. Ciprich
Secretary
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January 30, 2009
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53
APPENDIX A
TO PROXY STATEMENT
NATIONAL FUEL GAS COMPANY
DIRECTOR INDEPENDENCE GUIDELINES
AS AMENDED DECEMBER 4, 2008
The following Director Independence Guidelines (the
Guidelines) have been adopted by the Board of
Directors (the Board) of National Fuel Gas Company
(National Fuel) to assist the Board in the exercise
of its responsibilities to National Fuel and its shareholders.
The Guidelines should be interpreted in the context of all
applicable laws and National Fuels other corporate
governance documents, and are intended to serve as a flexible
framework within which the Board may conduct its business. The
Guidelines are subject to modification from time to time, and
the Board shall be able, in the exercise of its discretion, to
deviate from the Guidelines from time to time, as the Board may
deem appropriate and as required or permitted by applicable laws
and regulations.
1. Effectiveness. The Guidelines will
become effective on January 1, 2004.
2. Implementation. The Board will
annually review the independence of all directors, affirmatively
make a determination as to the independence of each director and
disclose those determinations, in each case, consistent with the
requirements of the New York Stock Exchange (NYSE)
and the Securities and Exchange Commission (SEC), as
applicable.
3. Independence of at Least a Majority of the
Board. The Board will at all times have at least
a majority of directors who meet the criteria for independence
required by the NYSE and the SEC.
4. Absence of a Material Relationship. In
order for a director to be considered independent,
the Board must affirmatively determine, after consideration of
all relevant facts and circumstances, that the director has no
direct or indirect material relationship with National Fuel or
any subsidiary in a consolidated group with National Fuel
(together, the Company). When assessing the
materiality of a directors relationship with the Company,
the Board will consider the issue not merely from the standpoint
of the director, but also from that of persons or entities with
which the director has an affiliation.
5. Cooling-Off Period. A director will
not be considered independent if:
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(i)
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currently or within the preceding three years the director is or
was employed by the Company;
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(ii)
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currently or within the last three years, an immediate family
member of the director is or was employed by the Company as an
executive officer;
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(iii)
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the director or an immediate family member of the director
received during any twelve-month period within the last three
years more than $120,000 in direct compensation from the Company
(excluding (A) director and committee
fees, (B) pension and other deferred compensation for
prior service provided such compensation is not contingent in
any way on continued service and (C) compensation
received by such immediate family member for service as an
employee of the Company (other than an executive officer));
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(iv)
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the director (A) is a current partner or employee of a
firm that is the present auditor of the Company
or (B) within the past three years was a partner or
employee of such firm and worked on the Companys audit;
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(v)
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an immediate family member of the director (A) is a
current partner of a firm that is the present auditor of the
Company (B) is a current employee of a firm and
personally works on the Companys audit
or (C) within the past three years was a partner or
employee of such firm and worked on the Companys audit;
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(vi)
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a present Company executive officer currently serves or within
the past three years served on the compensation committee of an
entity which employed the director or an immediate family member
of the director as an executive officer (this three year
cooling-off period shall apply to both service and employment);
or
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A-1
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(vii)
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the director is an employee, or an immediate family member of
the director is an executive officer, of an entity that in any
of the last three fiscal years made payments to, or received
payments from, the Company for property or services in excess of
the greater of (A) $1 million,
or (B) 2% of the other entitys consolidated
gross revenues. Contributions to tax-exempt organizations shall
not be considered payments.
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6. Categorical Standards. Provided that
the independence criteria set forth in Paragraph 5 above
are met, the Board has determined that the following commercial
or charitable relationships will not be considered material
relationships for purposes of determining whether a director is
independent:
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(i)
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the director is a member, partner, director, trustee or
executive officer of, or of counsel to or otherwise associated
with, an entity (excluding any charitable organization) that
makes annual payments to or receives annual payments from the
Company for property or services in an amount less than the
greater of (A) $1 million, or (B) 2% of
the others consolidated gross revenues for its last
completed fiscal year;
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(ii)
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the director is a member, partner, director, trustee or
executive officer of, or of counsel to or otherwise associated
with, an entity, and the Companys discretionary charitable
contributions to that entity are less than 5% of that
entitys total annual charitable receipts for its last
completed fiscal year; and
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(iii)
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the director is a member, partner, director, trustee or
executive officer of, or of counsel to or otherwise associated
with an entity which is indebted to the Company, or to which the
Company is indebted, and the total amount of eithers
indebtedness to the other is less than 5% of its own total
consolidated assets, measured as of the last fiscal year-end.
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For purposes of the Guidelines:
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immediate family member means a persons
spouse, parents, children, siblings, mothers and
fathers-in-law,
sons and
daughters-in-law,
brothers and
sisters-in-law
and anyone (other than domestic employees) who shares such
persons home.
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For purposes of the Categorical Standards:
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(i)
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The calculation of payments to and from the Company may exclude:
(A) payments determined by competitive bid or authorized
by, or in conformity with, law or governmental authority and
(B) payments arising solely from the ownership of
securities of the Company with no benefit being received that is
not shared on a pro rata basis by all holders of the class of
securities.
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(ii)
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The calculation of indebtedness owed to or by the Company may
exclude: (A) debt securities publicly offered, traded
on a national exchange or quoted on an automated quotation
system of a registered securities association
and (B) trade debt subject to usual terms.
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7. Relationships and Transactions Not Covered by the
Categorical Standards. Any determination by the
Board that a director who has a business or other relationship
that is not covered by the Categorical Standards set forth in
Paragraph 6 above is independent, will be disclosed by
National Fuel in its annual proxy statement, together with the
basis for such determination.
8. Affirmative Obligation of
Directors. Each director has an affirmative
obligation to inform the Board of any material change in his or
her business or other relationships that may impact the
Boards determination with regard to his or her
independence.
A-2
9. Disclosure by the Company. The Board
will cause National Fuel to disclose the following in its annual
proxy statement:
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(i)
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the Guidelines, including the categorical standards adopted by
the Board to assist it in making determinations regarding the
independence of a director;
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(ii)
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the identity of the independent directors and the basis for the
affirmative determinations of the Board regarding the
independence of each director;
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(iii)
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a specific explanation of any determination by the Board that a
director is independent notwithstanding that the director does
not meet the categorical standards set forth in the Guidelines;
and
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(iv)
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charitable contributions by the Company to an entity that
employs a director of the Company as an executive officer if,
within the preceding three years, contributions by the Company
in any fiscal year exceeded the greater
of (A) $1 million, or (B) 2% of the
other entitys consolidated gross revenues.
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A-3
APPENDIX B
TO PROXY STATEMENT
NATIONAL FUEL GAS COMPANY
CORPORATE GOVERNANCE GUIDELINES
AMENDED: DECEMBER 4, 2008
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). The Board has established
Director Independence Guidelines for purposes of this review.
All determinations of director independence will be disclosed in
the Companys annual proxy statement.
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3.
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Director
Qualifications
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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.
B-1
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4.
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Selection
of New Directors
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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 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.
Subject to paragraph 7, a director shall normally serve on
the Board for a three-year term, except that a director
appointed to fill a vacancy shall stand for election at the next
annual meeting of shareholders.
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6.
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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, directors shall retire not later than
the date of the first Annual Meeting of Shareholders following
the date of their 72nd birthday. The Board shall have the
authority to make exceptions to this general guideline on a
case-by-case
basis.
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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-2
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B.
|
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.
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B.
|
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
B-3
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
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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 Board
shall not take formal actions at meetings of the non-management
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.
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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
B-4
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.
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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-5
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-6
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-7
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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-8
APPENDIX C
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.
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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:
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a.
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Via the Companys dedicated toll-free hotline
(1-800-605-1338)
operated by a third party service company; or
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b.
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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.
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A sufficiently detailed description of the factual basis for the
report should be given in order to allow appropriate
investigation into the matter.
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B. Treatment of Reports
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1.
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All reports will be forwarded to the Chairman of Audit
Committee, the Chief Auditor, and General Counsel.
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2.
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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.
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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.
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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.
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No person making a report under these Procedures shall be
subject to retaliation because of making a good faith report. In
addition, any employee of the Company responsible for
retaliating against individuals who in good faith report
concerns regarding Accounting and Auditing Matters will be
subject to disciplinary action, up to and including termination.
Any employee making a bad faith report, including a report made
for the purpose of harassing or maliciously injuring the subject
of the report, will be subject to disciplinary action, up to and
including termination.
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C. Retention of Reports and Investigation Documents
C-1
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.
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Administration
of Procedures
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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.
C-2
APPENDIX D
TO PROXY STATEMENT
NATIONAL
FUEL GAS COMPANY
2009 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN
The purpose of the Plan is to advance the interests of the
Company and its stockholders, by enhancing the Companys
ability to attract and retain highly qualified individuals to
serve as non-employee members of the Board, and by encouraging
such directors to acquire a proprietary interest in the
long-term success of the Company, thereby aligning their
financial interests with those of the Companys
stockholders.
2.1 1997 Retainer Policy means the Retainer
Policy for Non-Employee Directors approved by the Companys
stockholders at the 1997 Annual Meeting of Stockholders.
2.2 Board means the Board of Directors of the
Company.
2.3 Code means the Internal Revenue Code of
1986, and the rules, regulations and interpretations promulgated
thereunder, as amended from time to time.
2.4 Common Stock means the common stock of the
Company.
2.5 Company means National Fuel Gas Company.
2.6 Exchange Act means the Securities Exchange
Act of 1934, as amended from time to time.
2.7 Participant means any individual to whom
shares of Common Stock have been issued under this Plan.
2.8 Plan means the National Fuel Gas Company
2009 Non-Employee Director Equity Compensation Plan. Any
reference in the Plan to a paragraph number refers to that
portion of the Plan.
The Plan shall be administered by the Board. The Board shall
have the authority to: (a) interpret the Plan;
(b) establish such administrative rules, regulations and
procedures as it deems necessary for the proper administration
of the Plan; (c) grant waivers of Plan terms and conditions
when any such action would be in the best interest of the
Company; and (d) take any and all other action it deems
advisable for the proper administration of the Plan. All
determinations of the Board shall be made by a majority of its
members, and its determinations shall be final, binding and
conclusive. For the avoidance of doubt, the Board shall not take
any action under the Plan, including without limitation pursuant
to this paragraph 3, which would result in the imposition
of an additional tax under Section 409A of the Code on the
Participant holding shares issued hereunder.
All non-employee directors of the Company are Participants in
the Plan, and may receive shares of Common Stock under the Plan,
except as otherwise provided in this section. Shares of Common
Stock will not be issued under the Plan to any non-employee
director who declines receipt of such shares or whose
compensation as a non-employee director is otherwise determined
by written agreement between the Company and the non-employee
director.
The number of shares of Common Stock which shall be available
for issuance under the Plan shall be 100,000, subject to
adjustment as provided in paragraph 8. The shares of Common
Stock available for issuance under the Plan may be authorized
and unissued shares or treasury shares.
The Plan shall be effective as of the date of the Companys
2009 Annual Meeting of Stockholders, provided the Plan is
approved by the Companys stockholders at such meeting.
Unless earlier terminated
D-1
by the Board pursuant to the provisions of the Plan, the Plan
shall expire when all of the shares of Common Stock available
for issuance under the Plan have been issued. The expiration of
the Plan shall not adversely affect any rights of any
Participant, without such Participants consent.
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7.
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Shares
Issued Under the Plan
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(a) Shares of Common Stock will be issued to Participants
on a quarterly basis, in advance (as of the first business day
of the quarter), as compensation in whole or in part for the
Participants service on the Board during the quarter.
Shares will be issued in such amounts as the Board shall
determine from time to time in its discretion. The number of
shares to be issued to a Participant will be prorated as
applicable for the quarter in which the Participant joins the
Board and the quarter in which the Participant is scheduled to
retire or resign from the Board, but shares actually issued
under the Plan to a Participant shall not be subject to
forfeiture or cancellation for any reason.
(b) Each share of Common Stock issued under the Plan shall
be non-transferable until the later of later of two years after
its issuance or six months after the Participants
cessation of service on the Board; provided, however, that upon
a Participants death, whether in office or after his or
her service as a director ceases, any restrictions on
transferability imposed hereunder shall lapse.
(c) Participants shall be entitled to all of the rights of
stockholders with respect to shares issued under the Plan,
including, but not by way of limitation, the right to vote such
shares, the right to receive dividends and the right to reinvest
dividends into additional shares of Common Stock. Shares
acquired by reinvesting dividends are not subject to the
transferability restrictions in paragraphs 7(b)
and/or 8.
(d) Shares of Common Stock issued under the Plan may be
evidenced in such manner as the Board deems appropriate,
including, without limitation, book-entry registration or
issuance of a stock certificate or certificates.
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8.
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Adjustment
of Shares Available
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(a) Changes in Stock. In the event of
changes in the Common Stock by reason of a Common Stock
dividend, stock split, reverse stock split or other combination,
appropriate adjustment shall be made by the Board in the
aggregate number of shares available under the Plan and in the
rate of payment of shares under the Plan. Such proper adjustment
as may be deemed equitable may be made by the Board in its
discretion to give effect to any other change affecting the
Common Stock. Any shares of Common Stock or other securities
acquired by a Participant as a dividend shall (i) be deemed
to have been acquired at the same time as the securities on
which the dividend or, if more than one, the initial dividend
was paid, and (ii) be subject to the same terms and
conditions, including restrictions on transfer, that apply to
the securities on which the dividend or, if more than one, the
initial dividend was paid. Any shares of Common Stock or other
securities acquired by a Participant pursuant to a stock split,
reverse stock split or other combination shall (i) be
deemed to have been acquired at the same time as the securities
involved in the stock split, reverse stock split or other
combination, and (ii) be subject to the same terms and
conditions, including restrictions on transfer, that apply to
the securities involved in the stock split, reverse stock split
or other combination.
(b) Changes in Capitalization. In case of
a merger or consolidation of the Company with another
corporation, a reorganization of the Company, a reclassification
of the Common Stock of the Company, a spinoff of a significant
asset or other changes in the capitalization of the Company,
appropriate provision may be made with respect to shares of
Common Stock issued under the Plan for (i) the
substitution, on an equitable basis, of appropriate stock or
other securities or other consideration to which holders of
Common Stock of the Company will be entitled pursuant to such
transaction or succession of transactions, or
(ii) adjustment in the number of shares issuable pursuant
to the Plan and in the rate of payment of shares under the Plan,
in each case as deemed appropriate by the Committee. Any
securities acquired by a Participant pursuant to this paragraph
shall (i) be deemed to have been acquired at the same time
as the securities surrendered in or otherwise subject to the
transaction or succession of transactions described in this
paragraph, and (ii) be subject to the same terms and
conditions, including restrictions on transfer, that apply to
the securities surrendered in or otherwise subject to such
transaction or succession of transactions.
D-2
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9.
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Regulatory
Approvals and Listings
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Notwithstanding anything contained in this Plan to the contrary,
the Company shall have no obligation to issue or deliver shares
of Common Stock prior to (a) the obtaining of any approval
from any governmental agency which the Company shall, in its
sole discretion, determine to be necessary or advisable,
(b) the admission of such shares to listing on the stock
exchange on which the Common Stock may be listed, and
(c) the completion of any registration or other
qualification of said shares under any state or federal law or
ruling of any governmental body which the Company shall, in its
sole discretion, determine to be necessary or advisable.
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10.
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No Right
to Continued Service on Board
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Participation in the Plan shall not give any Participant any
right to remain on the Board.
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11.
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Other
Compensation of Non-Employee Directors
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The Plan is not the only means of compensating Participants for
their service on the Board. The Board may provide, outside of
the Plan, for payment of non-equity compensation for such
service, including cash, on terms and in amounts as determined
by the Board in its discretion. The Board also may continue to
issue shares of Common Stock under the 1997 Retainer Policy
until the shares available under that approval are exhausted.
The 1997 Retainer Policy is hereby amended so as to provide that
all restrictions on the transferability of shares ever issued
under the 1997 Retainer Policy shall lapse upon the death of the
holder of those shares.
The Board may suspend or terminate the Plan at any time. In
addition, the Board may, from time to time, amend the Plan in
any manner, provided however, that any such amendment shall be
subject to stockholder approval (i) at the discretion of
the Board and (ii) to the extent that shareholder approval
may be required by law or under the applicable requirements of
any exchange on which the Common Stock is listed to trade.
Notwithstanding the foregoing, the Board may not amend the Plan
in any manner that would either (i) result in the
imposition of an additional tax under section 409A of the
Code on any Participant, or (ii) adversely affect any
Participant with respect to shares already issued under the
Plan, without that Participants consent.
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13.
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No Right,
Title or Interest in Company Assets
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To the extent any person acquires a right to receive payments
from the Company under this Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company.
D-3
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED FOR ITEMS 1 THROUGH 3.
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Please mark |
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your votes as indicated in this example
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FOR |
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ALL |
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1. ELECTION OF DIRECTORS
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2. Vote to ratify PricewaterhouseCoopers LLP as our independent
registered public accounting firm
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Nominees: |
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3. Vote to approve the 2009 Non-Employee Director Equity Compensation Plan |
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01 R. Don Cash |
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02 Step hen E. Ewing |
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03 George L. Mazanec |
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the |
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Exceptions box above and write the nominee name(s) in the space provided below. |
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Will Attend Meeting
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Mark Here for Address
Change or Comments SEE REVERSE
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NOTE: 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.
5 FOLD AND DETACH HERE 5
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 PM Eastern Time
the
day prior to annual meeting day.
Important notice regarding the Internet availability of
proxy materials for the Annual Meeting of Stockholders
The Proxy Statement and the
2008 Annual Report to Stockholders are
available at:
http://proxy.nationalfuelgas.com
41151
INTERNET
http:/ www.eproxy.com/nfg
Use the Internet to vote your proxy.
Have your proxy card in hand when you
access the web site .
OR
TELEPHONE
1-866-580-9477
Use any touch-tone telephone to vote
your proxy. Have your proxy card in
hand when you call.
If you vote your proxy by Internet or by telephone, you
do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named
proxies to vote your shares in the same manner as if
you marked, signed and returned your proxy card.
PROXY
NATIONAL FUEL GAS COMPANY
Annual Meeting of Stockholders March 12, 2009
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints P.C. Ackerman 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 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 12, 2009 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 with the Secretary of the meeting as described in the
Proxy Statement.
(Continued and to be marked, dated and signed, on the other side)
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Address Change/Comments
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(Mark the corresponding box on the reverse side) |
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BNY MELLON SHAREOWNER SERVICES |
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P.O. BOX 3550 |
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SOUTH HACKENSACK, NJ 07606-9250 |
5 FOLD AND DETACH HERE 5
Employee Benefit Plans. This card also provides voting instructions for shares held in the
National Fuel Gas Company Employee Stock Ownership Plans 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 Plans 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 on the first page of 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, and 3.
This proxy may be revoked with 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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Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply
log on to Investor ServiceDirect® at www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through
enrollment. |
41151