AGL RESOURCES INC, DEF 14A, 1996-12-16

AGL RESOURCES INC
DEF 14A, 1996-12-16
NATURAL GAS DISTRIBUTION

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

AGL Resources Inc.
- --------------------------------------------------------------------------------
(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):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

AGL RESOURCES, INC. LOGO

303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308

------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 7, 1997

------------------

To the Shareholders of AGL Resources Inc.:

NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of AGL
Resources Inc. (the "Company") will be held at the offices of the Company, 303
Peachtree Street, N.E., Atlanta, Georgia, on Friday, February 7, 1997 at 10:00
a.m., local time, for the purpose of considering and voting upon:

(1) A proposal to elect four directors.

(2) Such other business as properly may come before the Annual Meeting or
any adjournments thereof. The Board of Directors is not aware of any
other business to be presented for a vote of the shareholders at the
Annual Meeting.

Information relating to the above matters is set forth in the attached
Proxy Statement. Only shareholders of record at the close of business on
November 29, 1996 will be entitled to receive notice of and to vote at the
Annual Meeting or any adjournments thereof.

It is important that your shares be represented and voted whether or not
you plan to attend the Annual Meeting in person. Therefore, each shareholder is
requested to date, sign and return the accompanying proxy card(s) in the
enclosed postage-paid envelope.

Your continued interest in the Company is genuinely appreciated by the
directors, officers and personnel who serve you.

By Order of the Board of Directors

/s/ Melanie McGee Platt
--------------------------------------
Melanie McGee Platt
Corporate Secretary
Atlanta, Georgia
December 16, 1996

PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS
EARLY AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU SO DESIRE,
REVOKE THE PROXY CARD AND VOTE IN PERSON THOSE SHARES OF STOCK HELD BY YOU OTHER
THAN SHARES OF COMMON STOCK ALLOCATED TO AN ACCOUNT FOR YOU PURSUANT TO THE
COMPANY'S RETIREMENT SAVINGS PLUS PLAN OR LEVERAGED EMPLOYEE STOCK OWNERSHIP
PLAN.
<PAGE> 3

AGL RESOURCES, INC. LOGO
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308

---------------------

PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 7, 1997

This Proxy Statement is furnished to the shareholders of AGL Resources Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") and at any adjournments thereof. The Annual Meeting will
be held on Friday, February 7, 1997 at 10:00 a.m., local time, at the offices of
the Company, 303 Peachtree Street, N.E., Atlanta, Georgia. The approximate date
on which this Proxy Statement and the enclosed form(s) of proxy card are first
being sent or given to shareholders is December 16, 1996.

VOTING STOCK OUTSTANDING AND VOTE REQUIRED FOR APPROVAL

The securities that may be voted at the Annual Meeting consist of Common
Stock of the Company, $5 par value per share (the "Common Stock"), with each
share entitled to one vote on each matter submitted to the shareholders. Only
shareholders of record as of the close of business on November 29, 1996 (the
"record date") will be entitled to receive notice of and to vote at the Annual
Meeting. On the record date, 55,743,457 shares of Common Stock were outstanding
and eligible to be voted at the Annual Meeting.

The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. In counting the votes to determine whether a quorum exists at the
Annual Meeting, the proposal receiving the greatest number of votes "for" or
"against" and abstentions (including instructions to withhold authority to vote)
will be used.

In voting for the proposal to elect the directors (Proposal 1),
shareholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. The vote required to
approve Proposal 1 is governed by Georgia law, and is a plurality of the votes
cast by the holders of shares entitled to vote, provided a quorum is present. As
a result, in accordance with Georgia law, votes that are withheld will not be
counted and will have no effect.

Under the rules of the New York Stock Exchange (the "Exchange") that govern
most domestic stock brokerage firms, member brokerage firms that hold shares in
street name for beneficial owners may, to the extent that such beneficial owners
do not furnish voting instructions with respect to any or all proposals
submitted for shareholder action, vote in their discretion upon proposals which
are considered "discretionary" proposals under the rules of the Exchange. Member
brokerage firms that have received no instructions from their clients as to
"non-discretionary" proposals do not have discretion to vote on these proposals,
which results in "broker non-votes." Such "broker non-votes" will not be
considered in determining whether a quorum exists at the Annual Meeting and will
not be considered as votes cast in determining the outcome of any proposal.
<PAGE> 4

VOTING AND REVOCATION OF PROXIES

HOLDERS OF COMMON STOCK

Proxy cards are being transmitted with this Proxy Statement to all holders
of Common Stock of the Company. Any proxy given pursuant to this solicitation
may be revoked by any shareholder who attends the Annual Meeting (other than
participants in certain employee benefit plans of the Company as set forth in
the following paragraph), gives oral notice of his or her election to vote in
person, and submits a ballot at the meeting. In addition, any proxy given
pursuant to this solicitation may be revoked prior to the meeting by delivering
an instrument revoking it or a duly executed proxy bearing a later date to the
Corporate Secretary of the Company. If the proxy is completed properly and
returned by the shareholder and is not revoked, it will be voted at the Annual
Meeting in the manner specified thereon. IF THE PROXY IS PROPERLY EXECUTED AND
RETURNED BUT WITHOUT INSTRUCTIONS FOR VOTING, THE SHARES REPRESENTED BY THE
PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS LISTED ON THE PROXY CARD AND
DESCRIBED HEREIN. Any shareholder who executes and delivers a proxy card may
revoke it at any time prior to its use by giving written notice to the Corporate
Secretary of the Company at the following address: AGL Resources Inc., Office of
Corporate Secretary, P.O. Box 4569, Atlanta, Georgia 30302, or by executing and
delivering to the Corporate Secretary a duly executed proxy card bearing a later
date, or by appearing at the meeting and voting in person as described above.
The Board of Directors of the Company does not know of any other business to be
brought before the Annual Meeting other than that described herein, but it is
intended that, as to any such other business, a vote will be cast pursuant to
the proxy in accordance with the judgment of the persons named as proxies.

PARTICIPANTS IN EMPLOYEE BENEFIT PLANS

Separate proxy cards are being transmitted to all persons who have shares
of Common Stock allocated to their accounts as participants or beneficiaries
under the AGL Resources Inc. Retirement Savings Plus Plan (the "RSP Plan") and
the AGL Resources Inc. Leveraged Employee Stock Ownership Plan (the "LESOP").
These proxy cards appoint The Northern Trust Company, which acts as Trustee for
the RSP Plan and the LESOP, to vote the shares held for the accounts of the
participants or their beneficiaries in the RSP Plan and the LESOP in accordance
with the instructions noted thereon. IN THE EVENT NO PROXY CARD IS RECEIVED FROM
A PARTICIPANT OR BENEFICIARY OR A PROXY CARD IS RECEIVED WITHOUT INSTRUCTIONS
FOR VOTING, THE TRUSTEE WILL VOTE THE UNVOTED ALLOCATED SHARES IN THE LESOP IN
THE SAME PROPORTION AS THE LESOP SHARES THAT ARE VOTED BY PARTICIPANTS AND
BENEFICIARIES. THE TRUSTEE WILL VOTE THE UNALLOCATED LESOP SHARES AND ANY
UNVOTED RSP PLAN SHARES, PURSUANT TO THE INSTRUCTIONS OF THE RESPECTIVE
ADMINISTRATIVE COMMITTEES OF THE PLANS, "FOR" EACH OF THE PROPOSALS LISTED ON
THE PROXY CARD AND DESCRIBED HEREIN.

Any RSP Plan or LESOP participant or beneficiary who executes and delivers
a proxy card may revoke it at any time prior to its use by giving written notice
to the Trustee at the following address: The Northern Trust Company, Attention:
Master Trust Administrator, Fifty South La Salle Street, Chicago, Illinois
60675, or by executing and delivering a duly executed proxy card bearing a later
date. Under the terms of the RSP Plan and the LESOP, only the Trustee of the
plan can vote the shares allocated to the accounts of participants, even if such
participants or their beneficiaries attend the Annual Meeting in person.

COSTS OF SOLICITATION

The Company will bear the costs of solicitation of proxies, including the
charges and expenses of stock brokerage firms, banks, trust companies and others
for forwarding solicitation material to beneficial owners of stock. In addition
to the use of the mails, proxies may be solicited by telephone, facsimile,
telegraph or personal contact by directors, officers and employees of the
Company without additional compensation. The Company has retained Corporate
Investor Communications, Inc., a proxy solicitation firm, to assist in the
solicitation of proxies at an anticipated cost of approximately $5,000, plus
reasonable out-of-pocket disbursements.

2
<PAGE> 5

PROPOSAL 1 -- ELECTION OF DIRECTORS

NOMINEES

The Amended and Restated Articles of Incorporation (the "Articles") and the
Bylaws of the Company provide that the Board of Directors shall consist of at
least five members and not more than fifteen members and that the exact number
shall be fixed from time to time by the Board of Directors. The Board of
Directors has set the number of directors of the Company at eleven. The Articles
and the Bylaws of the Company also provide that the Board of Directors of the
Company shall be divided into three classes as nearly equal in number as
possible. The term of office of one of the classes of directors expires each
year, and a new class of directors is elected each year by the shareholders for
a term of three years and until their successors are elected and qualified.

The Board of Directors has nominated Otis A. Brumby, Jr., David R. Jones,
Albert G. Norman, Jr. and Charles McKenzie Taylor to stand for election as
directors at the Annual Meeting. Messrs. Brumby, Jones, Norman and Taylor
presently are members of the Board of Directors whose terms are scheduled to
expire at the Annual Meeting. Each of the nominees has consented to serve as a
director if elected. If re-elected by the shareholders, Messrs. Brumby, Jones,
Norman and Taylor will serve a three-year term which will expire at the time of
the Annual Meeting of Shareholders in the year 2000.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO ELECT OTIS A. BRUMBY, JR., DAVID R. JONES, ALBERT G. NORMAN, JR.
AND CHARLES MCKENZIE TAYLOR AS DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE
ANNUAL MEETING OF SHAREHOLDERS IN THE YEAR 2000 AND UNTIL THEIR SUCCESSORS ARE
ELECTED AND QUALIFIED.

INFORMATION CONCERNING NOMINEES AND DIRECTORS

The following table sets forth certain information as of September 30, 1996
regarding the four nominees for director and all current directors whose terms
of office will continue after the Annual Meeting.
PERSONS NOMINATED TO SERVE AS DIRECTORS UNTIL THE ANNUAL MEETING IN THE YEAR
2000

3
<PAGE> 6

<TABLE>
<CAPTION>
NUMBER OF
SHARES
YEAR FIRST OF COMMON STOCK
PRINCIPAL OCCUPATION ELECTED OWNED
NOMINEE AND AGE AND OTHER INFORMATION(1) A DIRECTOR BENEFICIALLY(2)
- ---------------------------- ---------------------------------------- ---------- ---------------
<S> <C> <C> <C>
Charles McKenzie Taylor 1984 6,217(+)
(67)...................... Chairman of the Board of Taylor &
Mathis, Inc. and General Partner in
Taylor & Mathis Enterprises, real estate
developers and brokers; director of
Wachovia Corporation.
DIRECTORS TO SERVE UNTIL THE 1999 ANNUAL MEETING
Frank Barron, Jr. (64)...... Vice President of Public Affairs of Rome 1983 35,658(+)
Coca-Cola Bottling Company and
previously officer and director of seven
Coca-Cola Bottling Companies in Georgia.
W. Waldo Bradley (62)....... Chairman of the Board of Bradley Plywood 1991 3,860(+)
Corporation; director of First Union
Corporation and Savannah Foods &
Industries, Inc.(3)
L.L. Gellerstedt, III 1996 2,916(*)
(40)...................... President and Chief Executive Officer of
Beers, Inc. ("Beers"), Chairman and
Chief Executive Officer of Beers
Construction Company ("BCC"), a wholly
owned subsidiary of Beers, since June
1994, President and Chief Executive
Officer of BCC from November 1990 until
June 1994; director of ALLTEL
Corporation and NationsBank, N.A.
(South).
DIRECTORS TO SERVE UNTIL THE 1998 ANNUAL MEETING
D. Raymond Riddle (63)...... Retired Chairman of the Board and Chief 1978 3,778(+)
Executive Officer of National Service
Industries, Inc. ("National") effective
February 1996, Chairman of the Board and
Chief Executive Officer of National from
September 1994 until February 1996,
President and Chief Executive Officer of
National from January 1993 until
September 1994, Executive Vice President
of Wachovia Corporation and President
and Chief Executive Officer of Wachovia
Bank of Georgia, N.A. and Wachovia
Corporation of Georgia from May 1987
until January 1993; director of
National, Wachovia Bank of Georgia,
N.A., Atlantic American Corporation,
Equifax, Inc. and Vista Resources, Inc.
Dr. Betty L. Siegel (65).... President of Kennesaw State College; 1986 3,908(+)
director of Equifax, Inc., National
Service Industries, Inc. and Acordia
Benefits of the South, Inc.
</TABLE>

4
<PAGE> 7

- ---------------

(1) Except as otherwise indicated, all directors have been engaged in their
principal occupations for more than the past five years.
(2) As of September 30, 1996, neither any individual director nominee nor
director of the Company owned beneficially 1% or more of the outstanding
Common Stock of the Company or any class of Preferred Stock of AGLC or any
interest in any class of Preferred Stock of AGLC. Beneficial ownership as
reported in this Proxy Statement has been determined in accordance with
regulations of the Securities and Exchange Commission (the "Commission")
and includes shares of Common Stock which may be acquired within 60 days
upon the exercise of outstanding stock options. Except as otherwise
indicated, all directors in the above-referenced group have sole voting and
investment power with respect to the shares shown.
(3) Mr. Bradley is a brother-in-law of Mr. Goocher, a named executive officer
(as hereinafter defined).
(*) With regard to Mr. Gellerstedt, the shares shown include 2,500 shares for
which he shares voting and investment power; with regard to Mr. Jones, the
shares shown include 51,648 shares for which he shares voting and
investment power and 1,322 shares which are held of record by the spouse of
Mr. Jones as to which he disclaims beneficial ownership; and with regard to
Mr. Norman, the shares shown include 5,008 shares for which he shares
voting and investment power.
(+) Includes (i) a total of 30,747 shares held for the account of Mr. Jones as a
participant in the Company's LESOP and RSP Plan; (ii) a total of 138,695
shares which may be acquired by Mr. Jones upon the exercise of stock
options granted pursuant to the AGL Resources Inc. Long-Term Stock
Incentive Plan of 1990 (the "LTSIP"); and (iii) 889 shares which may be
acquired by each of Messrs. Barron, Bradley, Brumby, Norman, Riddle,
Tarbutton, Taylor and Ward and Dr. Siegel upon exercise of a stock option
granted pursuant to the AGL Resources Inc. 1996 Non-Employee Directors
Equity Compensation Plan (the "Directors Plan") (a total of 8,001 shares).

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors conducts its business through meetings of the full
Board and committees of the Board, consisting of an Executive Committee, an
Audit Committee, a Nominating and Compensation Committee, and a Long Range
Planning Committee. During the fiscal year ended September 30, 1996, the Board
of Directors met seven times, the Executive Committee met seven times, the Audit
Committee met two times, the Nominating and Compensation Committee met two times
and the Long Range Planning Committee met two times. Each incumbent director
attended 75% or more of the aggregate of all meetings of the Board of Directors
and all committees of the Board of Directors on which he or she served during
such fiscal year.

The Executive Committee is composed of Messrs. Jones (Chairman), Barron,
Norman, Riddle and Tarbutton. The Executive Committee is authorized to exercise
all of the powers of the Board of Directors in the management of the business
and affairs of the Company with the exception of certain actions specified by
the Company's Bylaws and by law.

5
<PAGE> 8

The Audit Committee is composed of Messrs. Riddle (Chairman), Bradley,
Brumby, Ward and Dr. Siegel. The functions of the Audit Committee are as
follows: (i) to consider the choice of the Company's independent public
accountants; (ii) to review the planned scope of the audit and the results
thereon; (iii) to report the results of the independent auditors' examinations
of the financial statements and their opinions and recommendations with respect
to accounting, internal controls and other matters; and (iv) to convey
information between the Board of Directors and the Company's independent public
accountants.

The Nominating and Compensation Committee is composed of Messrs. Bradley,
Brumby, Norman, Tarbutton and Taylor. The purpose of the Nominating and
Compensation Committee is as follows: (i) to review the performance of the
senior officers of the Company and to recommend the appropriate compensation
level for all officers of the Company; (ii) to review and recommend any changes
in the Company's various benefit programs; (iii) to review the level and manner
of compensation paid to the members of the Company's Board of Directors and make
recommendations for adjustments, as appropriate; (iv) to identify and recommend
the nominees for election to the Board; and (v) to administer the LTSIP. The
Nominating and Compensation Committee will consider nominees recommended by
shareholders but has not established any formal procedures for so doing.

The Long Range Planning Committee is composed of Messrs. Barron (Chairman),
Jones, Taylor, Ward and Dr. Siegel. The Long Range Planning Committee is
responsible for reviewing plans for the growth and financial stability of the
Company.

NON-EMPLOYEE DIRECTOR COMPENSATION

Each non-employee director of the Company receives an annual retainer for
services as a director which is paid in accordance with the terms of the AGL
Resources Inc. 1996 Non-Employee Directors Equity Compensation Plan as set forth
in the following paragraph. In addition, non-employee directors receive $1,000
for attendance at each meeting of the Board and any standing committee of which
he or she is a member. Directors are reimbursed for expenses incurred in
connection with attendance of meetings of the Board and committees. Any director
who is an officer or employee of the Company does not receive any compensation
for his or her services as a director or as a member of a standing committee of
the Board.

1996 NON-EMPLOYEE DIRECTORS EQUITY COMPENSATION PLAN. The Company
maintains the AGL Resources Inc. 1996 Non-Employee Directors Equity Compensation
Plan (the "Directors Plan"), in which all non-employee directors participate.
The Plan provides for an automatic grant to each non-employee director on the
first day of each annual service term of (i) an award of Common Stock equivalent
in fair market value on such date to the $16,000 annual retainer payable to each
director and (ii) a non-qualified stock option to purchase the same number of
shares of Common Stock as are awarded on such date in payment of the retainer.
The per share option exercise price is equal to the fair market value of the
Company's Common Stock on the date of grant of the option. The stock award and
the stock option are subject to a holding period of six months from the date of
issuance and grant, respectively. Directors realize value from option grants
only to the extent that the fair market value of the Common Stock of the Company
on the date of exercise of the option exceeds the fair market value of the
Common Stock on the date of grant.

For the 1996 annual term of service, which began in March following the
1996 Annual Meeting of Shareholders, Messrs. Barron, Bradley, Brumby, Kenneth D.
Lewis (see footnote (5) to "Security Ownership of Certain Beneficial Owners and
Management" below), Norman, Riddle, Tarbutton, Taylor and Ward and Dr. Siegel
were each granted stock awards for 889 shares, which was calculated by dividing
the $16,000 annual retainer fee by $18.00, the then current fair market value of
the Company's Common Stock. Each of the directors also was granted an option to
purchase 889 shares at $18.00 per share. Mr. Gellerstedt, who became a director
in August 1996, was granted a prorated stock award for 416 shares, which was
calculated by dividing one half of the annual retainer by $19.25, the then
current fair market value of the Company's Common Stock. Mr. Gellerstedt also
was granted an option to purchase 416 shares at $19.25 per share.

6
<PAGE> 9

DEFERRED COMPENSATION PLAN FOR CORPORATE DIRECTORS. The Company also
maintains the AGL Resources Inc. Deferred Compensation Plan for Corporate
Directors pursuant to which any non-employee director of the Company may elect
to defer fees paid for attendance at Board and committee meetings. Deferred fees
are credited during any calendar year with interest at the rate applicable to
the first auction of 26-week Treasury Bills during the calendar year.

Generally, a participant will receive payment of his or her benefit under
the plan in a lump sum or in a series of five annual installments, in cash,
beginning after such participant attains age 70 or after the director otherwise
retires from service on the Board of Directors of the Company. The total amount
of the cash payment(s) is determined by the amount of fees deferred plus the
interest accrued thereon. If a participant dies before receiving full payment of
his or her benefit under the plan, the remaining amount will be paid to the
beneficiary designated by the director.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of September 30, 1996
regarding the ownership of Common Stock by each person known to the Company to
be the beneficial owner of more than 5% of the Common Stock of the Company, by
each executive officer named in the Summary Compensation Table (collectively,
the "named executive officers") who is not a director and by all executive
officers and directors as a group, based on data furnished to the Company. The
Company knows of no other beneficial owner of more than 5% of the outstanding
Common Stock of the Company.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
OWNED BENEFICIALLY (PERCENT OF
BENEFICIAL OWNER CLASS)(1)
---------------------------------------------------------------------------------------
<S> <C> <C>
AGL Resources Inc. Retirement Savings Plus Plan...... 4,653,266 (8.3%)
P.O. Box 4569
Atlanta, Georgia 30302
Charles W. Bass...................................... 103,301 (*)(2)(3)(4)(6)
Thomas H. Benson..................................... 94,359 (*)(2)(3)(4)(6)
Robert L. Goocher.................................... 86,830 (*)(2)(3)(4)(6)
Richard H. Woodward, Jr.............................. 69,343 (*)(2)(3)(6)
All executive officers and directors as a group...... 863,472 (1.5%)(2)(3)(4)(5)(6)
(20 persons)
</TABLE>

- ---------------

(*) Less than one percent.
(1) As of September 30, 1996, no individual director or executive officer of the
Company owned beneficially 1% or more of the outstanding Common Stock of
the Company or any class of Preferred Stock of AGLC or any interest in any
class of Preferred Stock of AGLC. Beneficial ownership as reported in this
Proxy Statement has been determined in accordance with regulations of the
Commission and includes shares of Common Stock which may be acquired within
60 days upon the exercise of outstanding stock options. Except as otherwise
indicated in footnote (4) below or in footnote (*) to table "Information
Concerning Nominees and Directors" above, all executive officers, directors
and director nominees have sole voting and investment power with respect to
the shares shown.
(2) Includes shares held for the accounts of the above-named persons and the
above-referenced group as participants in the Company's LESOP and RSP Plan
as follows: Mr. Bass -- 15,415 shares; Mr. Benson -- 16,222 shares; Mr.
Goocher -- 13,184 shares; Mr. Woodward -- 13,618 shares; and the
above-referenced group -- 125,369 shares.
(3) Includes shares which may be acquired by the above-named persons and the
above-referenced group upon the exercise of stock options as follows: Mr.
Bass -- 77,963 shares; Mr. Benson -- 65,055 shares; Mr. Goocher -- 65,729
shares; Mr. Woodward -- 52,877 shares; and the above-referenced group --
536,438 shares.

7
<PAGE> 10

(4) With regard to Mr. Bass, the shares shown include 3,683 shares for which he
shares voting and investment power; with regard to Mr. Benson, the shares
shown include 13,082 shares for which he shares voting and investment
power; with regard to Mr. Goocher, the shares shown include 7,917 shares
for which he shares voting and investment power; and with regard to the
group, the shares shown include 97,270 shares held with shared voting and
investment power and 1,322 shares held of record by certain spouses of
members of the above-referenced group as to which the respective members of
the group disclaim beneficial ownership.
(5) Includes Mr. Kenneth D. Lewis, a director of the Company since 1992, who
reluctantly tendered his resignation as a director of the Company,
effective October 2, 1996, due to business demands. He most recently served
as a member of the Executive Committee and the Nominating and Compensation
Committee. The Company greatly appreciates Mr. Lewis' significant
contributions to the Company during his years of service as a director of
the Company.
(6) Excludes shares held by the Trust of the AGL Resources Inc. Nonqualified
Savings Plan (the "NSP") for the benefit of the above-named persons and the
above-referenced group as follows: Mr. Bass -- 577 shares; Mr.
Benson -- 849 shares; Mr. Goocher -- 2,047 shares; Mr. Woodward -- 204
shares; and the above-referenced group -- 7,440 shares. As determined in
accordance with the regulations of the Commission, such shares are not
deemed to be beneficially owned and, accordingly, are excluded from the
shares of Common Stock shown in the table above. (See footnotes (1) and (5)
to "Table 1: Summary Compensation Table" below.)

8
<PAGE> 11

EXECUTIVE COMPENSATION

COMPENSATION SUMMARY

Table 1 summarizes by various categories, for the fiscal years ended
September 30, 1996, 1995 and 1994, the total compensation paid to or accrued by
the Company for the President and Chief Executive Officer of the Company and
each of the other four most highly compensated executive officers of the Company
whose salary and bonus for the fiscal year ended September 30, 1996 exceeded
$100,000 (collectively referred to as the "named executive officers"). For
information regarding the various factors considered by the Nominating and
Compensation Committee in recommending the compensation of the President and
Chief Executive Officer of the Company and, generally, the other executive
officers of the Company, see "Nominating and Compensation Committee Report"
below.

TABLE 1: SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
OTHER SECURITIES
FISCAL YEAR ANNUAL UNDERLYING ALL OTHER
NAME AND ENDED SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION SEPTEMBER 30, ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
- -------------------------------- -------------- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David R. Jones 1996 $474,923 $160,800 -- 37,161 $ 46,080
President and Chief Executive 1995 444,423 230,000 $ 11,750 43,126 33,293
Officer 1994 409,981 53,950 26,500 33,536 28,181
Charles W. Bass 1996 248,885 83,600 -- 20,129 17,069
Executive Vice President and 1995 214,085 67,500 -- 21,094 12,745
Chief Operating Officer 1994 173,363 22,185 -- 14,182 10,984
Thomas H. Benson 1996 248,885 83,600 -- 20,129 17,497
Executive Vice President; 1995 214,362 67,500 -- 24,510 24,510
Chief
Operating Officer of Atlanta 1994 176,375 23,205 -- 14,424 11,636
Gas
Light Company*
Robert L. Goocher 1996 248,885 83,600 -- 20,129 15,522
Executive Vice President; 1995 213,208 67,500 -- 21,094 11,884
Chief
Operating Officer of AGL 1994 162,669 21,580 -- 13,414 10,300
Resources Service Company*
Richard H. Woodward, Jr. 1996 174,496 58,465 -- 9,239 12,082
Vice President; President of 1995 162,962 49,200 -- 10,250 10,442
AGL
Investments, Inc.* 1994 158,973 20,930 -- 13,010 10,550
</TABLE>

- ---------------

* A wholly owned subsidiary of the Company.
(1) Includes before-tax contributions for the indicated fiscal years made to the
RSP Plan and the NSP.
(2) For fiscal 1996, 1995 and 1994, reflects cash bonus earned pursuant to the
Company's Variable Compensation Plan (formerly the Short-Term Incentive
Plan) by each of the named executive officers other than Mr. Jones. For
fiscal 1996, reflects for Mr. Jones a cash bonus earned. For fiscal 1995
and 1994, reflects for Mr. Jones a cash bonus and a bonus award of
restricted stock which is not subject to any vesting restrictions. The
dollar value of the restricted stock awards is based on the number of
shares of restricted stock multiplied by the fair market value per share on
the date of issuance. (See "Nominating and Compensation Committee Report"
below.)
(3) Includes for Mr. Jones director's fees of $11,750 and $26,500 paid during
fiscal 1995 and 1994, respectively. Effective January 1, 1995, Mr. Jones no
longer receives any compensation for his services as a director or as a
member of a standing committee of the Board. (See "Non-Employee Director
Compensation" above.)
(4) Includes grants of reload options pursuant to the LTSIP.
(5) All Other Compensation paid during fiscal 1996 includes the following: (i)
Company contributions to the LESOP: Mr. Jones -- $1,829; Mr.
Bass -- $1,829; Mr. Benson -- $1,829; Mr. Goocher -- $1,829; and

9
<PAGE> 12

Mr. Woodward -- $1,829; (ii) Company contributions to the RSP Plan: Mr.
Jones -- $4,275; Mr. Bass -- $5,297; Mr. Benson -- $5,297; Mr.
Goocher -- $5,297; and Mr. Woodward -- $5,273; (iii) Company contributions
to the NSP: Mr. Jones -- $13,586; Mr. Bass -- $3,671; Mr. Benson -- $3,671;
Mr. Goocher -- $3,671; and Mr. Woodward -- $1,387; and (iv) premiums paid
by the Company for life insurance policies, any proceeds of which are
payable to the respective beneficiaries designated by the named officers:
Mr. Jones -- $26,390; Mr. Bass -- $6,272; Mr. Benson -- $6,700; Mr.
Goocher -- $4,725; and Mr. Woodward -- $3,593.

OPTION GRANTS

Table 2 sets forth information regarding the number and terms of stock
options granted to the named executive officers during the fiscal year ended
September 30, 1996. In addition, in accordance with the rules and regulations of
the Commission, set forth is the present value of each option granted,
calculated using the Black-Scholes option pricing model.

TABLE 2: OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF% OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE PRESENT VALUE
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) EXPIRATION DATE ($)(3)
- --------------------------------- ------------- ------------ ----------- --------------- -------------
<S> <C> <C> <C> <C> <C>
David R. Jones................... 37,161 12.41% $19.375 2/2/06 $90,673
Charles W. Bass.................. 20,129 6.72 19.375 2/2/06 49,115
Thomas H. Benson................. 20,129 6.72 19.375 2/2/06 49,115
Robert L. Goocher................ 20,129 6.72 19.375 2/2/06 49,115
Richard H. Woodward, Jr.......... 9,239 3.08 19.375 2/2/06 22,543
</TABLE>

- ---------------

(1) Options were granted to each of the named executive officers pursuant to the
LTSIP and became fully exercisable six months after the date of grant.
Options are subject to early termination upon the occurrence of certain
events related to termination of employment.
(2) The exercise price of options may be paid in cash, by delivery of already
owned shares of Common Stock of the Company or by any other method approved
by the Nominating and Compensation Committee, which administers the LTSIP.
To the extent that the exercise price of an option is paid with shares of
Common Stock of the Company, a "Reload Option" will be granted to the
optionee. A Reload Option is an option granted for the same number of
shares as is exchanged in payment of the exercise price and is subject to
all of the same terms and conditions as the original option except for the
exercise price which is determined on the basis of the fair market value of
the Common Stock of the Company on the date the Reload Option is granted.
One or more successive Reload Options may be granted to an optionee who
pays for the exercise of a Reload Option with shares of Common Stock of the
Company.
(3) The "Grant Date Present Value" is calculated using the Black-Scholes Warrant
Valuation Call Option Model, assuming a constant dividend yield. This model
assumes no dilution effects and includes the following assumptions for the
options granted to the named executive officers: expected volatility --
16.15%; annual risk free rate of return (represents the monthly average
yield on ten year Treasury notes during the month of the grant) -- 5.81%;
annual dividend yield -- 5.47%. The model also assumes an exercise period
for options granted of ten years.

10
<PAGE> 13

OPTION EXERCISES

Table 3 sets forth option exercises by the named executive officers during
the fiscal year ended September 30, 1996, including the aggregate value of gains
on the date of exercise. The table also sets forth (i) the number of shares
covered by options (both exercisable and unexercisable) as of September 30, 1996
and (ii) the respective values for "in-the-money" options, which represent the
positive spread between the exercise price of existing options and the fair
market value of the Company's Common Stock at September 30, 1996.

TABLE 3: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES

<TABLE>
<CAPTION>
FISCAL YEAR END
---------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
EXERCISES DURING YEAR OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
----------------------------- END(#) AT FISCAL YEAR END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R. Jones........... -- -- 138,695 -- $ 272,288 --
Charles W. Bass.......... -- -- 77,963 -- 171,399 --
Thomas H. Benson......... -- -- 65,055 -- 74,888 --
Robert L. Goocher........ 1,000 $ 4,188 65,729 -- 98,780 --
Richard H. Woodward,
Jr..................... -- -- 52,877 -- 102,547 --
</TABLE>

- ---------------

(1) Certain exercisable options held by the named executive officers were not
"in-the-money" at September 30, 1996.

RETIREMENT PLAN

Table 4 reflects the estimated annual lifetime benefits calculated on a
straight-life annuity basis and payable under the terms of the AGL Resources
Inc. Retirement Plan (the "Retirement Plan") and the AGL Resources Inc. Excess
Benefit Plan (the "Excess Benefit Plan") (as described below), as currently in
effect, to persons in specified compensation and years of service
classifications upon retirement at age 65. Benefit amounts as reflected in the
table are subject to reductions for a portion of Social Security benefits.

TABLE 4: PENSION PLAN TABLE

<TABLE>
<CAPTION>
3 YEAR YEARS OF SERVICE
AVERAGE ---------------------------------------------------------------
EARNINGS 20 25 30 35 40 45
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000........................... $ 33,333 $ 41,667 $ 50,000 $ 57,500 $ 65,000 $ 72,500
150,000........................... 50,000 62,500 75,000 86,250 97,500 108,750
200,000........................... 66,667 83,333 100,000 115,000 130,000 145,000
250,000........................... 83,333 104,167 125,000 143,750 162,500 181,250
300,000........................... 100,000 125,000 150,000 172,500 195,000 217,500
350,000........................... 116,667 145,833 175,000 201,250 227,500 253,750
400,000........................... 133,333 166,667 200,000 230,000 260,000 290,000
450,000........................... 150,000 187,500 225,000 258,750 292,500 326,250
500,000........................... 166,667 208,333 250,000 287,500 325,000 362,500
</TABLE>

The Retirement Plan is a qualified defined benefit pension plan which
covers all employees of the Company and its participating affiliate companies
(except leased employees) who have satisfied certain standards as to hours of
service with the Company, who have attained age 21 and who have been employed
for one year. Benefits under the Retirement Plan are based upon length of
service with the Company, with varying provisions for employees who are
terminated or take early, normal or deferred retirement. A participant's
benefits also vary depending upon the participant's earnings for the three
consecutive years of highest compensation during his or her final 60 months of
employment with the Company.

11
<PAGE> 14

The compensation covered by the Retirement Plan includes generally the base
rate of earnings actually paid to a participant by the Company (up to dollar
limits imposed by the Internal Revenue Service). This amount of compensation
does not include the bonuses or director's fees that are included in the above
Summary Compensation Table. The Retirement Plan also provides, subject to
certain conditions, for the payment of vested benefits of a deceased employee to
his or her spouse during such spouse's lifetime.

The Company makes contributions to the Retirement Plan to fund the benefits
which accrue thereunder. Annual contribution amounts are determined actuarially.
Participant contributions are not permitted.

In addition, the Company maintains an Excess Benefit Plan for its
employees, the purpose of which is to restore pension benefits to employees who
are prevented from receiving their total accrued benefits under the Retirement
Plan because of the maximum benefit limitations imposed on qualified retirement
plans by Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Excess Benefit Plan is not funded, but benefit
payments are made directly by the Company. Benefits under the Excess Benefit
Plan are payable in the same form and according to the same general terms and
conditions as benefits under the Retirement Plan. All employees who participate
in the Retirement Plan whose benefits are limited by the provisions of the Code
will receive restoration of benefits under the Excess Benefit Plan.

The amounts shown in the Summary Compensation Table above do not include
the Company's contributions in connection with the Retirement Plan or the Excess
Benefit Plan for the named executive officers. Such amounts are not and cannot
be readily separated or individually calculated. The Company made a contribution
of approximately $13.4 million to the Retirement Plan for the plan year ended
June 30, 1996.

As of the plan year ended June 30, 1996, Messrs. Jones, Bass, Benson,
Goocher and Woodward had 36, 26, 26, 24 and 26 years of service, respectively.

The Retirement Plan and the Excess Benefit Plan are administered by or are
under the direction of the Retirement Plan Administrative Committee appointed by
the Board of Directors. Wachovia Bank of North Carolina, N.A., serves as Trustee
to the Retirement Plan. The Retirement Plan must be amended to bring it into
compliance with recent changes in federal law.

CHANGE IN CONTROL EMPLOYMENT AGREEMENTS

During fiscal 1996, the Board of Directors approved an Employment
Continuity Program in which each of the named executive officers participates on
one of three tier levels. The purpose of the program is to retain key management
personnel and assure continued productivity of such personnel in the event of a
change in control of the Company.

For purposes of the program, a "change in control" will be deemed to have
occurred in connection with any of the following events: (i) the acquisition by
a person or group of persons of 10% or more of the voting securities of the
Company; (ii) approval by the shareholders of a merger, business combination, or
sale of 50% or more of the Company's assets, the result of which is that less
than 80% of the voting securities of the resulting corporation is owned by the
former shareholders of the Company; or (iii) the failure, during any period of
two years, of incumbent directors to constitute at least a majority of the Board
of Directors of the Company.

Generally, no benefits are provided under the program for any type of
termination prior to the occurrence of a change in control, or for terminations
following a change in control due to death, disability, voluntary termination
(other than the Chief Executive Officer) or any termination for "cause," which
includes failure to perform duties and responsibilities and fraud or dishonesty.

Upon becoming operational, and depending on the tier level of participation
and on the timing of employment termination, the program provides a severance
benefit of between one and three years of base salary and annual incentive
compensation to participants whose employment is involuntarily terminated within
twelve months following the occurrence of a change in control.

Other benefits provided include the payout of a pro rata bonus for the
portion of the year in which the termination occurs, full vesting of all
long-term incentives, a lump-sum payment of between one and three

12
<PAGE> 15

years of age and service credits under the Company's pension plan, full vesting
and funding of nonqualified retirement and deferral plan benefits, a one to
three year continuation of healthcare benefits and life insurance, and
outplacement assistance. The Chief Executive Officer and the Executive Vice
Presidents also will receive payments of legal fees (up to a maximum dollar
limit) in connection with the enforcement of payouts under the program.

For all participants, total severance benefits are limited to the maximum
benefit allowable without triggering excise taxes.

NOMINATING AND COMPENSATION COMMITTEE REPORT

The following report of the Nominating and Compensation Committee (the
"Committee") of the Board of Directors discusses generally its objectives and
policies regarding executive compensation. The report also specifically
discusses the Committee's bases for compensation for the fiscal year ended
September 30, 1996 of the Company's President and Chief Executive Officer, as
reported in the Summary Compensation Table, and generally with respect to all
executive officers. The Committee is composed entirely of independent, non-
employee directors.

To assist the Committee in performing its functions and in formulating
executive compensation policies and practices to be adopted by the Committee,
the Company retains Hewitt Associates, a nationally recognized consulting firm
specializing in executive compensation issues. Hewitt Associates prepares
surveys and other materials reflecting executive compensation policies of other
companies and other relevant factors (including relative performance and general
economic conditions).

EXECUTIVE OFFICER COMPENSATION

The compensation program of the Company for its executive officers is
intended to retain and appropriately reward experienced and well-trained
executive officers, align the long-term interests of the executive officers with
those of the Company's shareholders and tie total compensation opportunities to
both individual and corporate performance. There are three components of
executive compensation which are designed to meet those objectives. The three
components include base salary, annual incentive compensation and long-term
incentive compensation.

The base salary component for executive officers is based upon several
factors, including a performance review of executive officers by the President
and Chief Executive Officer or an Executive Vice President of the Company, as
appropriate, and an analysis of salary data, primarily from a "peer group"
consisting of local distribution companies in the United States similar in size,
revenue and in other characteristics to the Company. The group of companies used
by the Company for comparison purposes is not, however, composed of the same
group of companies as those comprising the S&P Utilities Index. First, complete
salary data of all executive positions at each of the S&P Utilities Index
companies is not in general publicly available to the Company. Moreover, when
the Company determines the appropriate competitive salary levels for various
executive positions, certain of such positions are found only within the utility
industry while others are benchmark jobs found in most industries. As a result,
the Company must ensure that the salary levels of its various executive
positions remain competitive with regard to labor market rates in general, as
well as within the utility industry. For these reasons, the Company uses data
from both utility companies and from non-utility companies to ensure that the
base salaries of its executive positions remain competitive. In general, the
highest base salary paid to an executive officer is targeted for an amount that
represents the average of base salaries of similar positions at comparable
companies.

The annual incentive component of the executive compensation program (other
than the President and Chief Executive Officer) is addressed by the Company's
Variable Compensation Plan which was developed to reinforce pay for performance
by emphasizing individual and corporate performance goals and putting a
significant amount of total compensation at risk. The individual goals are set
annually on a calendar year basis, are based upon critical business needs of the
Company, have measurable performance criteria, are significant in magnitude and
difficulty and are approved by the President and Chief Executive Officer. Such
individual

13
<PAGE> 16

performance objectives are primarily based upon increasing revenues, decreasing
expenses or improving company operating efficiencies and effectiveness,
improving customer service and increasing shareholder value. If the individual
performance goals established pursuant to the Variable Compensation Plan are
fully met or exceeded, an executive officer could earn an award equal to 10% of
base salary. The individual performance cash bonus generally is paid in February
following attainment of the calendar year objectives. The individual performance
goals were met for the executive officers for calendar 1995. The corporate
performance goal is based upon attaining a pre-established annual Earnings Per
Share ("EPS") target. If the EPS target established pursuant to the Variable
Compensation Plan is significantly exceeded, an executive officer could earn up
to 30% of base salary. The corporate performance goal generally is paid in
November following the attainment of the fiscal year target. The corporate
performance goal was met for fiscal 1996, resulting in a 23 1/2% annual
incentive compensation award to each executive officer in accordance with the
terms of the Variable Compensation Plan. (See "Table 1 -- Summary Compensation
Table.")

The Company's long-term incentive component of the executive compensation
program is based upon the LTSIP, which provides for the grant of stock options,
stock appreciation rights and awards of restricted stock to executive officers.
The LTSIP provides for ownership of Common Stock of the Company which, in turn,
creates a direct relationship between the performance of the Company, as
reflected by the market value of its Common Stock, and compensation, and creates
a direct link between the interests of executive officers of the Company and the
Company's shareholders. The awards to executive officers pursuant to the LTSIP
are based on the decision of the Committee, which is responsible for
administering the LTSIP. In determining such amounts, the Committee considers
total compensation information it obtains from various comparable companies that
it surveys as well as the general trend in compensation in the industry. In
recent years, the Committee has made awards in the form of non-qualified stock
approximately equal to 100-150% of the base salary of executive officers as of
the grant date. For fiscal 1996 specifically, each Executive Vice President of
the Company was granted a nonqualified stock option pursuant to the LTSIP to
purchase shares of Common Stock of the Company having a fair market value on the
date of grant equal to 150% of base salary. (See "Table 1 -- Summary
Compensation Table" and "Table 2 -- Option Grants in Last Fiscal Year.") All
other executive officers were granted a nonqualified stock option having a fair
market value on the date of grant equal to 100% of base salary.

CHIEF EXECUTIVE OFFICER COMPENSATION

The compensation of the Company's President and Chief Executive Officer is
consistent with the compensation philosophy of the Company and is based upon
considerations of competitive industry practice as well as the overall
performance of the Company. As a result, the base salary component of Mr. Jones'
compensation is based upon a comprehensive analysis of the salary data of
companies that the Company considers "peer" companies in the natural gas
industry in the United States. Such companies, a subset of the larger group of
companies the Company utilizes to determine the appropriate levels of executive
compensation, in general, are local distribution companies that are similar not
only in size to the Company, but also with respect to such characteristics as
revenue, number of customers and number of employees. An analysis of Chief
Executive Officer compensation of the Company and those peer companies reveals
that the current base salary component of compensation paid to Mr. Jones does
not exceed the average of the Company's peer companies. The President and Chief
Executive Officer does not participate in the Variable Compensation Plan, but
generally the Committee would consider granting a bonus to the President and
Chief Executive Officer in the event other executive officers were entitled to
receive annual incentive compensation under the Variable Compensation Plan. For
fiscal 1996, Mr. Jones was awarded annual incentive compensation equal to
33 1/2% of his base salary. (See "Table 1 -- Summary Compensation Table.")

The President and Chief Executive Officer is entitled to receive long-term
incentive compensation pursuant to the LTSIP. The Committee determines the
amount of any long-term compensation award to be granted to Mr. Jones pursuant
to the LTSIP based upon an analysis of the trend of Chief Executive Officer
compensation at comparable local distribution companies. The Committee also
compares current and historical performance data it obtains from surveys of peer
companies to that of the Company. If the overall performance of the Company
compares favorably with the performance of the comparable companies, the

14
<PAGE> 17

award of compensation to the Chief Executive Officer typically follows the
trend. If the Company's performance is significantly better or worse than that
of the comparable companies, the award could be adjusted accordingly. For fiscal
1996, Mr. Jones was granted a nonqualified stock option pursuant to the LTSIP to
purchase shares of Common Stock of the Company having a fair market value on the
date of grant equal to 150% of his base salary. (See "Table 1 -- Summary
Compensation Table" and "Table 2 -- Option Grants in Last Fiscal Year.")

OMNIBUS BUDGET RECONCILIATION ACT OF 1993 IMPLICATIONS FOR EXECUTIVE
COMPENSATION

It is the responsibility of the Committee to address the issues raised by
the recent change in the tax laws which made certain non-performance-based
compensation to executives of public companies in excess of $1,000,000
nondeductible to the Company beginning in 1994. In this regard, the Committee
must determine whether any actions with respect to this new limit should be
taken by the Company. Given the Company's current level of executive
compensation, it is not now necessary to consider this issue. The Committee will
continue to monitor this situation and will take appropriate action if it is
warranted in the future.

W. Waldo Bradley
Otis A. Brumby, Jr.
Albert G. Norman, Jr.
Ben J. Tarbutton, Jr.
Charles McKenzie Taylor

15
<PAGE> 18

STOCK PERFORMANCE GRAPH

The following line graph presentation compares the cumulative five year
shareholder return on Common Stock of the Company with the cumulative five year
total return of companies in the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index") and the Standard & Poor's Utilities Index (the "S&P
Utilities Index").

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AGL RESOURCES INC., THE S&P 500 INDEX
AND THE S&P UTILITIES INDEX

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------

<CAPTION>
9/30/91 9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AGL Resources Inc. $100 $116 $123 $106 $142 $149
--------------------------------------------------------------------------------------------------
S&P 500 Index $100 $111 $125 $130 $169 $203
--------------------------------------------------------------------------------------------------
S&P Utilities Index $100 $114 $142 $124 $158 $170
--------------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

* ASSUMES $100 INVESTED ON SEPTEMBER 30, 1991 IN COMMON STOCK OF THE COMPANY,
THE S&P 500 INDEX AND THE S&P UTILITIES INDEX AND ALSO ASSUMES DIVIDEND
REINVESTMENT.

16
<PAGE> 19

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Nominating and Compensation Committee is composed of Messrs. Bradley,
Brumby, Norman, Tarbutton and Taylor, none of whom is an officer or employee of
the Company. Mr. Norman is a partner in the law firm of Long, Aldridge & Norman,
LLP, General Counsel to the Company. For the fiscal year ended September 30,
1996, the Company paid to Long, Aldridge & Norman, LLP approximately $3.6
million for legal services to the Company and its subsidiaries.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company is required to identify any director, executive officer or
person who owns more than ten percent of the Company's Common Stock who failed
to timely file with the Commission a required report under Section 16(a) of the
Securities Exchange Act of 1934. Section 16(a) and regulations of the Commission
thereunder require the Company's executive officers and directors and persons
who own more than ten percent of the Company's Common Stock, as well as certain
affiliates of such persons, to file initial reports of ownership and changes in
ownership of such Common Stock with the Commission and the Exchange. Executive
officers, directors and persons owning more than ten percent of the Company's
Common Stock are required by regulation of the Commission to furnish the Company
with copies of all Section 16(a) forms that they file. Based solely on its
review of the copies of such forms received by it and written representations
that no other reports were required for those persons, the Company believes
that, during the fiscal year ended September 30, 1996, all filing requirements
applicable to its executive officers, directors, and owners of more than ten
percent of the Company's Common Stock were complied with except that one report,
covering an aggregate of one transaction in connection with a voluntary cash
contribution feature of the Company's Dividend Reinvestment and Stock Purchase
Plan, was filed late by Mr. Ward.

INDEPENDENT AUDITORS

The firm of Deloitte & Touche LLP, 100 Peachtree Street, Atlanta, Georgia
30303, was the independent auditor for the Company and examined the financial
statements of the Company for the fiscal year ended September 30, 1996. The
Board of Directors intends to continue the services of this firm for the current
fiscal year ending September 30, 1997. A representative of the firm will be
present at the Annual Meeting and will be afforded the opportunity to make a
statement and to respond to appropriate questions.

SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING

Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders should be submitted by certified mail, return receipt
requested, and must be received by the Company at its offices in Atlanta,
Georgia on or before August 18, 1997 to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to that meeting.

OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING

The Board of Directors of the Company knows of no matters other than those
referred to in the accompanying Notice of Annual Meeting of Shareholders that
are to be brought before the Annual Meeting. However, if any other matter should
be properly presented for consideration and voting at the Annual Meeting or any
adjournments thereof, it is the intention of the person(s) named as proxies on
the enclosed form(s) of proxy card to vote the shares represented by all valid
proxy cards in accordance with their judgment of what is in the best interest of
the Company.

17
<PAGE> 20
APPENDIX A

Revocable Proxy COMMON STOCK
AGL RESOURCES INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1997 ANNUAL MEETING
OF SHAREHOLDERS

The undersigned hereby appoints David R. Jones, Albert G. Norman, Jr., and
Robert L. Goocher, and each of them, proxies, with full power of substitution,
to act for and in the name of the undersigned to vote all shares of Common
Stock of AGL Resources Inc. (the "Company") which the undersigned is entitled
to vote at the 1997 Annual Meeting of Shareholders of the Company, to be held
at the offices of the Company, 303 Peachtree Street, N.E., Atlanta, Georgia, on
Friday, February 7, 1997, at 10:00 a.m., local time, and at any and all
adjournments thereof, as set forth on the reverse side.

The undersigned may elect to withdraw this proxy card at any time prior to its
use by giving written notice to the Corporate Secretary, by executing and
delivering to the Corporate Secretary a duly executed proxy card bearing a
later date, or by appearing at the Annual Meeting and voting in person. The
undersigned hereby revokes any previous proxies with respect to matters covered
by this proxy.

Receipt of the Notice of the Meeting, the accompanying Proxy Statement and the
Annual Report to Shareholders hereby is acknowledged.

PLEASE COMPLETE, DATE, SIGN ON THE REVERSE SIDE, AND MAIL THIS PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE

Please mark, date and sign exactly as your name appears on this proxy card.
When shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee, guardian or custodian, please give
your full title. If the holder is a corporation or a partnership, the full
corporate or partnership name should be signed by a duly authorized officer.

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
IF SO, PRINT NEW ADDRESS BELOW:

- --------------------------------------- ------------------------------------

<PAGE> 21

<TABLE>
<S> <C> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
This proxy card, when properly executed, will be voted as
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE BELOW-LISTED directed. IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY
PROPOSAL CARD WILL BE VOTED "FOR" THE PROPOSAL LISTED ON THIS
PROXY CARD.
1) Elect as directors the four nominees listed below to
serve until the Annual Meeting of Shareholders in In their discretion, the proxies are authorized to vote
the year 2000 and until their successors are elected upon such other business as properly may come before the
and qualified: Annual Meeting and any and all adjournments thereof.

Otis A. Brumby, Jr., David R. For With- For All If any other business is presented at the Annual Meeting,
Jones, Albert G. Norman, Jr. hold Except this proxy card will be voted by the proxies in their
and Charles McKenzie Taylor [ ] [ ] [ ] best judgment. At the present time, the Board of
Directors knows of no other business to be presented at
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY the Annual Meeting.
INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME FROM
THE LIST ABOVE.

Please sign and date this proxy card. Date Do you plan to attend the Annual Meeting? [ ] YES [ ] NO

------------------------

Shareholder sign here Co-owner sign here Mark the box at right if comments or address change have
been noted on the reverse side of this card. [ ]
- ------------------------------------------------------------
</TABLE>

DETACH CARD DETACH CARD

AGL RESOURCES INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308

Dear Shareholder:

YOUR VOTE IS IMPORTANT, AND YOU ARE STRONGLY ENCOURAGED TO EXERCISE
YOUR RIGHT TO VOTE YOUR SHARES. ON BEHALF OF THE BOARD OF DIRECTORS,
WE URGE YOU TO SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN
TO ATTEND THE ANNUAL MEETING.

Thank you in advance for your prompt cooperation.

Sincerely,

AGL Resources Inc.
<PAGE> 22

Revocable Proxy RETIREMENT SAVINGS PLUS PLAN
AND
LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN
AGL RESOURCES INC.
303 PEACHTREE STREET, N.E., ATLANTA, GEORGIA 30308

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1997 ANNUAL MEETING
OF SHAREHOLDERS

The undersigned hereby appoints The Northern Trust Company, which acts as
Trustee for the AGL Resources Inc. Retirement Savings Plus Plan (the "RSP
Plan") and the AGL Resources Inc. Leveraged Employee Stock Ownership Plan (the
"LESOP"), as proxy to act for and in the name of the undersigned to vote all
shares of Common Stock of AGL Resources Inc. (the "Company"), which have been
allocated to the account of the undersigned pursuant to the RSP Plan and/or the
LESOP, at the 1997 Annual Meeting of Shareholders of the Company, to be held at
the offices of the Company, 303 Peachtree Street, N.E., Atlanta, Georgia, on
Friday, February 7, 1997, at 10:00 a.m., local time, and at any and all
adjournments thereof, as set forth on the reverse side.

The undersigned may elect to withdraw this proxy card at any time prior to its
use by giving written notice to the proxy or by executing and delivering to the
proxy a duly executed proxy card bearing a later date. Under the terms of the
RSP Plan and the LESOP, only the Trustee of each plan can vote the shares
allocated to the accounts of the participants, even if such participants or
their beneficiaries attend the Annual Meeting in person. The undersigned
hereby revokes any previous proxies with respect to matters covered by this
proxy.

Receipt of the Notice of the Meeting, the accompanying Proxy Statement and the
Annual Report to Shareholders hereby is acknowledged.

PLEASE COMPLETE, DATE, SIGN ON THE REVERSE SIDE, AND MAIL THIS PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
IF SO, PRINT NEW ADDRESS BELOW:

- --------------------------------------- ------------------------------------

<PAGE> 23

<TABLE>
<S> <C> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
This proxy card, when properly executed, will be voted as
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE BELOW-LISTED directed. IF NO PROXY CARD IS RECEIVED OR A PROXY CARD
PROPOSAL IS RECEIVED WITHOUT INSTRUCTIONS FOR VOTING, THE PROXY
WILL VOTE THE UNVOTED ALLOCATED SHARES IN THE LESOP IN
1) Elect as directors the four nominees listed below to THE SAME PROPORTION AS THE LESOP SHARES THAT ARE VOTED BY
serve until the Annual Meeting of Shareholders in PARTICIPANTS AND BENEFICIARIES. THE PROXY WILL VOTE THE
the year 2000 and until their successors are elected UNALLOCATED LESOP SHARES AND ANY UNVOTED RSP PLAN SHARES,
and qualified: PURSUANT TO THE INSTRUCTIONS OF THE RESPECTIVE
ADMINISTRATIVE COMMITTEES OF THE PLANS, "FOR" THE
Otis A. Brumby, Jr., David R. For With- For All PROPOSAL LISTED ON THIS PROXY CARD.
Jones, Albert G. Norman, Jr. hold Except
and Charles McKenzie Taylor [ ] [ ] [ ] In its discretion, the proxy is authorized to vote upon
such other business as properly may come before the
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY Annual Meeting and any and all adjournments thereof.
INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME FROM If any other business is presented at the Annual Meeting,
THE LIST ABOVE. this proxy card will be voted by the proxy in its best
judgment. At the present time, the Board of Directors
knows of no other business to be presented at the Annual
Meeting. In the event you also own shares otherwise than
pursuant to the RSP Plan and the LESOP, you must return the
proxy card relating to such other shares in accordance with
the instructions set forth thereon.

Please sign and date this proxy card. Date Do you plan to attend the Annual Meeting? [ ] YES [ ] NO

------------------------

DETACH CARD DETACH CARD

AGL RESOURCES INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308

Dear Shareholder:

YOUR VOTE IS IMPORTANT, AND YOU ARE STRONGLY ENCOURAGED TO EXERCISE
YOUR RIGHT TO VOTE YOUR SHARES. ON BEHALF OF THE BOARD OF DIRECTORS,
WE URGE YOU TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.

Thank you in advance for your prompt cooperation.

Sincerely,

AGL Resources Inc.