<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
EnergySouth, Inc.
(Name of Registrant as Specified In Its Charter)
EnergySouth, Inc. [Board of Directors]
(Name of Person(s) Filing Proxy Statement)
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:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------
4) Date Filed:
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<PAGE> 2
ENERGYSOUTH, INC.
2828 DAUPHIN STREET
MOBILE, ALABAMA 36606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 26, 2001
To the Holders of Common Stock of
ENERGYSOUTH, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of EnergySouth,
Inc., an Alabama corporation ("EnergySouth" or the "Company"), will be held in
the Auditorium at the principal office of the Company, 2828 Dauphin Street,
Mobile, Alabama, on Friday, January 26, 2001, at 10:00 o'clock a.m., Central
Standard Time, for the purpose of:
1. Electing four Directors of the Company to serve for terms expiring at
the 2004 Annual Meeting of Stockholders and until their successors
shall be duly elected and qualified.
2. Considering and acting upon such other and further business as may
properly come before the meeting or any and all adjournments thereof.
The Board of Directors has fixed the close of business on December 19, 2000 as
the record date for the determination of holders of the common stock of the
Company entitled to notice of and to vote at the Annual Meeting. Accordingly,
only holders of record of Company common stock at the close of business on
December 19, 2000 will be entitled to vote at the meeting.
By Order of the Board of Directors,
G. EDGAR DOWNING, JR.
Secretary
Mobile, Alabama
December 21, 2000
IMPORTANT: EVEN IF YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY, NO MATTER HOW SMALL YOUR HOLDINGS,
IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. NO POSTAGE IS REQUIRED ON
THE ENCLOSED PROXY IF MAILED WITHIN THE UNITED STATES. IF YOUR SHARES ARE HELD
BY A BROKER, BANK OR NOMINEE, IT IS IMPORTANT THAT YOU GIVE THEM YOUR VOTING
INSTRUCTIONS.
<PAGE> 3
ENERGYSOUTH, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of EnergySouth, Inc. (the
"Company") in connection with the solicitation of the enclosed proxy for use at
the Annual Meeting of Stockholders of the Company to be held on January 26,
2001, or any adjournment or adjournments thereof. This Proxy Statement, the
accompanying form of Proxy and Notice of Annual Meeting of Stockholders, and the
Company's Annual Report to Stockholders for the fiscal year ended September 30,
2000 are first being mailed to stockholders on or about December 21, 1999.
PROXY AND SOLICITATION
The accompanying proxy is solicited on behalf of EnergySouth, Inc. for use at
the Annual Meeting of the Stockholders of the Company to be held in the
Auditorium at the principal office of the Company, 2828 Dauphin Street, Mobile,
Alabama, on January 26, 2001, at 10:00 o'clock a.m., Central Standard Time, and
at any and all adjournments thereof, for the purposes set forth in the notice of
the meeting annexed hereto and incorporated herein by this reference.
All costs and expenses of soliciting proxies will be borne by the Company. The
Company's costs of solicitation will include reimbursement of brokers and other
persons for their expenses in sending proxy materials to their principals and
obtaining their proxies.
Stockholders who execute proxies retain the right to revoke them at any time
before they are voted by delivery of a written revocation to the Secretary of
the Company. A proxy when executed and not so revoked will be voted in
accordance therewith.
VOTING SECURITIES; VOTE REQUIRED
As of December 19, 2000, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 4,916,736 shares of common
stock, $.01 par value per share ("Common Stock"), of the Company outstanding,
with each share entitled to one vote. A majority in number of votes, present in
person or by proxy, constitutes a quorum for the transaction of business.
The vote of a majority of the shares of Common Stock cast by the shares entitled
to vote is required for the election of directors. Votes withheld in connection
with the election of one or more of the nominees for director will not be
counted as votes cast for or against such individuals. All abstentions and
broker non-votes will be counted towards the establishment of a quorum.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the number of
Directors shall not be less than nine nor more than twelve, as determined from
time to time by the Board of Directors. The Board has fixed the number of
Directors at twelve. The Articles of Incorporation also provide that the Board
of Directors shall be divided into three classes, with each class serving
three-year terms which end in successive years. One-third of the Board of
Directors is elected each year. The Articles of Incorporation of the Company do
not provide for cumulative voting in the election of Directors.
Unless authority is withheld on a proxy, shares represented by the proxies
received by the Company will be voted for the election as Directors of the four
nominees listed below. The nominees are to be elected to serve until the Annual
Meeting of Stockholders in 2004 and until their successors have been duly
elected and qualified. Each of the nominees is a current director. Proxies
cannot be voted for more than four persons. Should any nominee be unable or
unwilling to accept election, which the Company has no reason to believe will be
the case, the proxy will be voted for a substitute nominee or nominees
designated by the Company.
The following information is a brief account of the business experience of each
nominee and director during the past five years, and of Common Stock
beneficially owned by each nominee and director as of December 1, 2000, based on
information received from the respective nominees and directors.
<TABLE>
<CAPTION>
First No. of Shares
Name, Age, Principal Occupation During Past Five Years, and Became Beneficially Percent
Other Directorships a Director(1) Owned(2) of Class
<S> <C> <C> <C>
NOMINEES TO SERVE UNTIL ANNUAL MEETING
OF STOCKHOLDERS IN 2004:
JOHN S. DAVIS, 58, was appointed President and Chief 1995 76,046(8) 1.5%
Executive Officer of Mobile Gas in January, 1995, having been
appointed Executive Vice President and Chief Operating Officer
of Mobile Gas Service Corporation in July, 1994. He serves as a
Director of Infirmary Health Systems, Inc., Mobile, Alabama. He
is also a member of the South Area Board of Directors of AmSouth
Bank, Mobile, Alabama. (3)(6)(7)
WALTER L. HOVELL, 72, served as President and Chief 1975 55,126(9) 1.1%
Executive Officer of Mobile Gas Service Corporation from
March, 1984 to January, 1995. (3)(4)(7)
G. MONTGOMERY MITCHELL, 72, retired in 1993 as Senior 1993 6,000(11) *
Vice President and Director of Stone & Webster Management
Consultants, Inc., Houston, Texas. He serves as a Director of
Energy West, Inc., Great Falls, Montana. (4)(6)
F. B. MUHLFELD, 80, retired in 1986 as Vice Chairman of the 1986 2,625 *
Board of Stone & Webster, Incorporated, New York, New York.
He had been with the Stone & Webster organization for more than
40 years and had served as Vice Chairman for more than 5 years. (4)(6)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
First No. of Shares
Name, Age, Principal Occupation During Past Five Years, and Became Beneficially Percent
Other Directorships a Director(1) Owned(2) of Class
<S> <C> <C> <C>
DIRECTORS TO SERVE UNTIL ANNUAL
MEETING OF STOCKHOLDERS IN 2002:
WILLIAM J. HEARIN, 91, Chairman of the Board of the Mobile 1960 469,817(12) 9.3%
Press Register, Mobile, Alabama. He serves as Chairman of the
Board of the Company. He serves as a Director Emeritus of
South Alabama Bank, Mobile, Alabama. (3)(5)(7)
GAYLORD C. LYON, 78, is President of Gaylord C. Lyon & 1973 26,000(13) *
Company, Inc., a real estate appraisal and property management
company, Mobile, Alabama. (3)(6)
HARRIS V. MORRISSETTE, 41, is President of Marshall 2000 1,000 *
Biscuit Co., Inc., and Chairman of Azalea Aviation, Inc. He
serves as a Director of South Alabama Bancorporation, Mobile,
Alabama, and as a Director of Williamsburg Investment Trust,
Cincinnati, Ohio. (4)(6)
E. B. PEEBLES, JR., 82, retired in December, 1984 as Chairman of 1978 25,937(14) *
Ryan-Walsh Stevedoring Company, Inc., Mobile, Alabama, and
Senior Vice President of Dravo Corporation, Pittsburgh,
Pennsylvania. He serves as Chairman of Mobile Arts and Sports
Association and Senior Bowl Committee, Mobile, Alabama. (3)(5)
DIRECTORS TO SERVE UNTIL ANNUAL
MEETING OF STOCKHOLDERS IN 2003:
JOHN C. HOPE, III, 51, became Executive Vice President 1993 6,500 *
of Whitney National Bank, the parent company of Whitney
Bank of Alabama, upon its consolidation into Whitney National
Bank in January of 1998. He previously served as Chairman and
Chief Executive Officer of Whitney Bank of Alabama from
November, 1994. He serves as a Director of Infirmary Health
Systems, Inc., Mobile, Alabama. (3)(5)
JUDY A. MARSTON, 57, is the owner of Judy Marston & 2000 100 *
Associates, a business consulting firm. (5)(7)
S. FELTON MITCHELL, JR., 56, is President of S. Felton 1993 6,238(15) *
Mitchell, Jr., P.C., a law practice, and sole proprietor of S. Felton
Mitchell, Jr., CPA, an accounting practice. He is President of
The Vibroplex(R) Co., Inc., a manufacturer of amateur radio
equipment. (3)(4)(7)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
First No. of Shares
Name, Age, Principal Occupation During Past Five Years, and Became Beneficially Percent
Other Directorships a Director(1) Owned (2) of Class
<S> <C> <C> <C>
THOMAS B. VAN ANTWERP, 50, became President of Legal 1993 4,919(16) *
Professional Staffing, Inc., Atlanta, Georgia in July of 1997. He
previously served as Sales and Marketing Director of Georgia
Press Association, Atlanta, Georgia, from May 1996; and as Zoned
Group Advertising Manager, Syracuse Newspapers, Syracuse,
New York, from February 1, 1993. He serves as Director of
Merchants & Marine Bank, Pascagoula, Mississippi. (5)(6)(10)
</TABLE>
--------------
* Less than one percent.
(1) Each director has served continuously since the dates indicated.
(2) Except as noted, the indicated owners have sole voting and dispositive
power with respect to shares beneficially owned.
(3) Member of Executive Committee.
(4) Member of Audit Committee.
(5) Member of Compensation and Planning Committee.
(6) Member of Risk Management Committee.
(7) Member of Retirement Board Committee.
(8) Includes 1,570 shares held in Employees' 401(k) Plan and 48,750 shares
subject to options exercisable within 60 days.
(9) Includes 23,501 shares owned by Mr. Hovell's spouse, with whom he
shares voting and dispositive power, and 12,040 shares held in his
Individual Retirement Account, over which shares he has sole voting
power.
(10) Mr. Van Antwerp is the stepson of Mr. Hearin.
(11) Includes 4,000 shares owned jointly with Mr. Mitchell's spouse with
whom he shares voting and dispositive power and 2,000 shares held in
his Individual Retirement Account, over which shares he has sole voting
power.
(12) Includes 67,500 shares owned by the Chandler Charitable Trust, of which
Mr. Hearin is the trustee. Mr. Hearin shares voting power as to 48,624
shares owned by his wife, Emily Staples Hearin, 69,724 shares owned by
his daughter, Ann Hearin, and 42,698 shares owned by his former spouse,
Louise Hearin.
(13) Includes 5,662 shares owned by Mr. Lyon's spouse.
(14) Includes 3,000 shares owned by Mr. Peebles' spouse as to which he
disclaims beneficial ownership.
(15) Includes 645 shares owned by Mr. Mitchell's spouse as to which he
disclaims beneficial ownership and 1,322 shares owned jointly with his
mother with whom he shares voting and dispositive power.
(16) Includes 2,725 shares owned jointly with Mr. Van Antwerp's spouse with
whom he shares voting and dispositive power, and 1,560 shares held in
two accounts by Mr. Van Antwerp as custodian for two children under the
New York Uniform Transfers to Minors Act, as to which he has voting and
dispositive power.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Director Compensation, Committees and Attendance. The directors of the Company
currently also serve as directors of Mobile Gas Service Corporation ("Mobile
Gas"), and receive no separate compensation for their services in such capacity.
The Board of Directors had five meetings during the last fiscal year. Quarterly
fees paid to non-employee members of the Board of Directors are $3,750 per
quarter. Directors also receive $1,000 per Board meeting attended. The maximum
aggregate of fees payable to any director for service on the Board of Directors
and its committees is $20,000 per fiscal year. Directors who are also employees
of
4
<PAGE> 7
Mobile Gas do not receive fees for service on the Board of Directors or its
committees. Pursuant to the Amended and Restated Non-Employee Directors Deferred
Fee Plan, directors may make an advance election to defer director's fees, and
to have such deferred fees treated as though invested in Common Stock, or as
cash earning interest at the prime rate. Messrs. Hope, Hovell, S. Felton
Mitchell, G. Montgomery Mitchell and Van Antwerp elected to defer a portion of
director's fees payable to them during fiscal year 2000. Mobile Gas is
conducting a program with certain of its directors and officers which seeks to
determine the feasibility of operating a new generation of gas air conditioning
technology either exclusively or in combination with a gas driven electric
generating unit in the Gulf Coast environment. Pursuant to the program, the
equipment is placed in the home of the participant and is periodically tested
and evaluated. The equipment remains the property of Mobile Gas and is to be
returned at the end of the program if not earlier recalled. Messrs. Hearin,
Peebles and S. Felton Mitchell participate in the program. The Company estimates
that the aggregate incremental cost of such equipment provided to Messrs.
Hearin, Peebles and Mitchell in fiscal year 2000 was approximately $1,955,
$2,686, and $856, respectively.
There are five standing committees of the Board, which are the Executive
Committee, Audit Committee, Compensation and Planning Committee, Risk Management
Committee and Retirement Board Committee. The Company does not have a nominating
committee.
The Executive Committee, which met once during the last fiscal year, exercises
all the powers of the Board of Directors in the management of the business and
affairs of the Company between meetings of the Board of Directors, except as
restricted by the By-laws of the Company and applicable law. Action by the
Executive Committee is reported at the meeting of the Board next succeeding such
action.
The Audit Committee, which met five times during the last fiscal year,
recommends to the Board the independent auditors and reviews recommendations
made by the auditors. The committee meets with the auditors to review the scope
of the audit to be conducted and afterwards to receive the report of such audit
with recommendations and advises the Board with respect thereto. The Company's
independent public accountants have free access to the Audit Committee and meet
with the committee with and without management present. Members of the Audit
Committee are all non-employee directors.
The Compensation and Planning Committee, which met three times during the last
fiscal year, reviews and makes recommendations to the Board on establishing
salaries and other compensation for the officers of the Company and its
subsidiaries. Members of the Compensation and Planning Committee are all
non-employee directors.
The Risk Management Committee, which met once during the last fiscal year, is
responsible for reviewing risk management policies and programs throughout the
Company to assure that they are appropriate to the short and long term
objectives of the Company. The Committee also advises the Board of Directors of
the effectiveness of these policies and programs.
The Retirement Board Committee, which met two times during the last fiscal year,
is responsible for the general administration of the Employee Savings Plan and
the Voluntary Employees' Beneficiary Association Plans, as well as the
Retirement Plan, all being Plans of Mobile Gas.
Insurance. Mobile Gas provides accidental death and dismemberment insurance of
$200,000 for each Director and $100,000 for the spouse of each director. Premium
cost for the fiscal year for such coverage was $3,128 for all directors not
serving as officers. Mobile Gas is not designated as the beneficiary under the
policy.
5
<PAGE> 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that all requirements under Section 16(a) of the Securities
and Exchange Act of 1934 applicable to directors and executive officers of the
Company were complied with by such persons during the last fiscal year, except
that Mr. G. Montgomery Mitchell filed late on Form 5 reports with respect to two
transactions, each for 2,000 shares one being a gift disposition and the other a
prior-year purchase for his Individual Retirement Account; and each of Harris V.
Morrissette and Judy A. Marston filed late on Form 5 in lieu of Form 3 an
initial report of beneficial ownership. In making this disclosure, the Company
has relied on written representations by or on behalf of its directors and
executive officers and copies of reports filed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 1, 2000, information concerning
(i) beneficial ownership of Common Stock, the only class of voting securities of
the Company, by persons who are known by the Company to own beneficially more
than 5% of such common stock, and (ii) beneficial ownership of such common stock
by all directors and executive officers of the Company and Mobile Gas as a
group. Except as noted below, the indicated owners have sole voting and
investment power with respect to shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address Amount Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
<S> <C> <C>
William J. Hearin 469,817(1) 9.3%
304 Government Street
Mobile, Alabama 36630
All directors and executive 818,577(1)(2) 16.1%
officers as a group (17 persons)
</TABLE>
(1) Includes 67,500 shares owned by the Chandler Charitable Trust, of which
Mr. Hearin is the trustee. Mr. Hearin shares voting power as to 48,624
shares owned by his wife, Emily Staples Hearin, 69,724 shares owned by
his daughter, Ann Hearin, and 42,698 shares owned by his former spouse,
Louise Hearin.
(2) Includes 83,407 shares owned by spouses of officers and directors,
11,712 shares owned jointly by officers and directors and their
respective spouses, 13,660 shares credited to officers' accounts in the
Employees' 401(k) Plan, and 163,900 shares subject to options
exercisable within 60 days.
EXECUTIVE COMPENSATION
The following table contains information with respect to compensation paid or
set aside by the Company and its subsidiaries for services in all capacities
during fiscal years 1998, 1999 and 2000 to the Company's Chief Executive Officer
and to the four most highly compensated executive officers of the Company and
its subsidiaries, other than Chief Executive Officer, whose aggregate salary and
bonus exceeded $100,000 for fiscal year 2000.
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------
OTHER SECURITIES
SALARY BONUS ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION($) OPTIONS(#)
--------------------------- ---- ------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C>
John S. Davis 2000 253,833 50,800 9,632(1)(6) 15,000
President and Chief Executive 1999 241,000 61,000 9,055(1)(6)
Officer 1998 229,167 70,000 8,739(1)(6)
W. G. Coffeen, III 2000 143,667 21,000 4,377(2)(6) 7,500
Vice President - Corporate 1999 135,833 24,500 4,210(2)(6)
Development and Planning 1998 128,833 25,800 3,994(2)(6)
Charles P. Huffman 2000 131,833 19,000 4,094(3)(6) 7,500
Vice President, Chief Financial 1999 125,000 20,500 3,886(3)(6)
Officer and Treasurer 1998 118,083 22,800 3,456(3)(6)
Gerald S. Keen 2000 140,000 16,000 4,339(4)(6) 5,000
Vice President - Operations 1999 134,333 21,900 4,134(4)(6)
of Mobile Gas 1998 130,000 23,500 4,029(4)(6)
A. H. Tenhundfeld, Jr. 2000 129,333 16,000 4,019(5)(6) 5,000
Vice President - Marketing and 1999 125,000 17,500 3,886(5)(6)
Employee Services of Mobile Gas 1998 118,917 23,800 3,647(5)(6)
</TABLE>
(1) Includes $5,195, $4,891 and $4,920 contributed to Mr. Davis' account in
the Employees' 401(k) Plan for the 2000, 1999 and 1998 fiscal years,
respectively, and $4,298, $4,028 and $3,690 paid to Mr. Davis in 2000,
1999 and 1998, respectively, pursuant to incentive units granted under
the Company's 1992 Incentive Plan.
(2) Includes $4,238, $4,074 and $3,865 contributed to Mr. Coffeen's account
in the Employees' 401(k) Plan for the 2000, 1999 and 1998 fiscal years,
respectively.
(3) Includes $3,955, $3,750 and $3,417 contributed to Mr. Huffman's account
in the Employees' 401(k) Plan in the 2000, 1999 and 1998 fiscal years,
respectively.
(4) Includes $4,200, $3,998 and $3,900 contributed to Mr. Keen's account in
the Employees' 401(k) Plan for the 2000, 1999 and 1998 fiscal years,
respectively.
(5) Includes $3,880, $3,750 and $3,518 contributed to Mr. Tenhundfeld's
account in the Employees' 401(k) Plan in the 2000, 1999 and 1998 fiscal
years, respectively.
(6) Includes insurance premiums for each officer of $139 in 2000, $136 in
1999 and $129 in 1998.
The following table and notes provide information on option grants to the
executive officers named in the Summary Compensation Table above to whom grants
were made in fiscal year 2000.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
------------------------------------------------------------------------- ------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise at
Options Employees in Base Price Expiration Grant Date
Name Granted(1) Fiscal Year(2) Per Share Date Present Value(3)
---- ----------- --------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
John S. Davis 15,000 17.4% $19.375 1/28/2010 $87,300
W.G. Coffeen, III 7,500 8.7% $19.375 1/28/2010 $43,650
Charles P. Huffman 7,500 8.7% $19.375 1/28/2010 $43,650
Gerald S. Keen 5,000 5.8% $19.375 1/28/2010 $29,100
A.H. Tenhundfeld, Jr. 5,000 5.8% $19.375 1/28/2010 $29,100
</TABLE>
(1) Options are granted with an exercise price equal to market value on the
date of the grant and are exercisable in cumulative 25% increments at
the end of each of the four years following the date of grant, subject
to accelerated vesting upon a change of control, and further subject to
the condition that no option may be exercised later than ten years
after the date of the grant.
(2) The Company granted options representing 86,000 shares to employees
during fiscal year 2000.
(3) The Company has used the Black-Scholes Option Valuation model adjusted
for dividends to determine grant date present value of the options. The
Company does not advocate or necessarily agree that the Black-Scholes
model properly reflects the value of an option. The assumptions used in
calculating the option value are as follows: a risk-free interest rate
of 6.637%, the rate applicable to a ten-year treasury security at the
time of the award; a dividend yield of 5.08%, the yield at the time the
option award was made; volatility of 0.384, calculated using daily
stock returns for the twelve month period preceding the option award; a
stock price at date of grant of $19.375; and a ten-year stock option
term. No adjustments were made for forfeitures or vesting restrictions
on exercise.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND 2000 FISCAL YEAR-END OPTION VALUES
The following table and notes provide information on the value of unexercised
options at September 30, 2000 held by the executive officers listed in the
Summary Compensation Table. No options were exercised during the last fiscal
year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 9/30/00(#) at 9/30/00($)(1)
---------------------------------- ------------------------------
Name and Position Exercisable Unexercisable Exercisable Unexercisable
----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John S. Davis 45,000 15,000 266,250 9,375
W.G. Coffeen, III 22,500 7,500 133,125 4,688
Gerald S. Keen 22,500 5,000 133,125 3,125
Charles P. Huffman 22,500 7,500 133,125 4,688
A. H. Tenhundfeld, Jr. 17,650 5,000 104,429 3,125
</TABLE>
(1) The ultimate realization of value on the exercise of such options is
dependent upon the market price of Common Stock at the time of
exercise. Calculations are based on the $20.00 closing price of Common
Stock on the last trading day of the fiscal year.
Employees' Retirement Plan. The Employees' Retirement Plan is a defined benefit
plan which covers all full-time employees upon attainment of age 21 and
completion of one year of service. Benefits are generally based on various
percentages of regular basic compensation for each year of the individual's
service, but if the resulting benefit is greater, is based upon average
compensation during the last five years
8
<PAGE> 11
of employment proportionately reduced for years of service less than twenty and
reduced by 70% of Social Security benefits. Participants are vested after five
years of continuous service and are eligible for early retirement at or after
age 55 with ten years of credited service.
The full cost of the Plan is paid by Mobile Gas. Amounts accrued pursuant to the
Plan for the accounts of the individuals named in the Summary Compensation Table
above cannot be readily calculated. The estimated annual retirement benefit
under the Plan, based on current remuneration and assuming retirement at age 65,
of Mr. Davis, Mr. Coffeen, Mr. Keen, Mr. Huffman and Mr. Tenhundfeld are
$50,480, $66,881, $35,492, $72,672 and $48,308, respectively. Years of service
now credited under the Plan for Mr. Davis, Mr. Coffeen, Mr. Keen, Mr. Huffman
and Mr. Tenhundfeld are 5 (subject to the provisions of the Deferred
Compensation Agreement with Mr. Davis described below), 13, 10, 20 and 5 years,
respectively. The estimated annual benefits are net of any reductions for Social
Security benefits or other offset amounts.
Employee Savings Plan. The Employee Savings Plan is a qualified voluntary
contributory retirement plan under Section 401(k) of the Internal Revenue Code
established by Mobile Gas on September 1, 1988. Eligibility requirements are one
year of employment and 21 years of age. Eligible employees can invest up to 15%
of their base salary in the plan. Employee contributions vest immediately and
can be allocated among a money market fund, bond funds, or equity funds, as
directed by the employee. The Company makes a contribution, equal to 50% of an
employee's contribution, but not more than 3% of the employee's base salary.
Company contributions are invested in Common Stock and are vested at 20% for
each year of an employee's service. A participant's account will be distributed
following termination of employment. Participants may withdraw their
contributions or borrow from their accounts subject to certain conditions.
Company contributions for the 2000, 1999 and 1998 fiscal years for each of the
executive officers are included in the Summary Compensation Table above.
Agreements with Mr. Davis. As of January 26, 1996 Mobile Gas entered into an
unfunded and unsecured deferred compensation agreement with Mr. Davis
substantially in accordance with a proposal provided by consultants retained by
Mobile Gas (the "Deferred Compensation Agreement"). The Deferred Compensation
Agreement provides for benefits to be paid to Mr. Davis upon retirement, in such
amount as would, taken together with amounts payable under the Employees'
Retirement Plan, equal that which would have been payable to Mr. Davis upon
retirement with the greater of 20 years or his actual years of service with
Mobile Gas. The Deferred Compensation Agreement also provides for a benefit
payable if Mr. Davis terminates employment with Mobile Gas for any reason prior
to age 65. The severance benefit would be equal to two-thirds of the monthly
benefit which would have been paid to Mr. Davis under the Employees' Retirement
Plan if he had retired on his 65th birthday, but based on Mr. Davis' actual
employment history with Mobile Gas as of the date his employment ceases.
On December 10, 1999, the Company entered into an unfunded Supplemental Deferred
Compensation Agreement (the "Supplemental Agreement") with Mr. Davis. Under the
Supplemental Agreement, the Company will pay a benefit to Mr. Davis equal the
difference between: (a) the benefit that would have been payable to Mr. Davis
under the Employee's Retirement Plan, as supplemented by the Deferred
Compensation Agreement, but for (i) the limit on compensation that can be taken
into account in calculating benefits payable thereunder pursuant to Section
401(a)(17) of the Internal Revenue Code, as amended (the "Code"), and (ii) the
limit on the benefits that may be paid thereunder pursuant to Section 415 of the
Code; and (b) the benefit that is payable to Mr. Davis under the Employees'
Retirement Plan, as supplemented by the Deferred Compensation Agreement. The
Supplemental Agreement provides that the benefit paid to Mr. Davis thereunder
shall be paid in the same form and manner as the benefit paid under the Deferred
Compensation Agreement, provided, however, that the Company may in its
discretion accelerate the payments due under the Supplemental Agreement. The
Supplemental Agreement further provides that the amounts payable thereunder are
a general unsecured obligation of the Company. The Company estimates that the
annual amount payable to Mr. Davis under the Supplemental Agreement and the
Deferred
9
<PAGE> 12
Compensation Agreement, based upon Mr. Davis' current remuneration and the
formula for calculating benefits under the Employees' Retirement Plan and
assuming retirement at age 65, would be $77,653.
Change of Control Agreements. On December 10, 1999 the Company entered into
Change of Control Agreements with Messrs. Davis, Coffeen, Huffman, Keen, and
Tenhundfeld, as well as one other officer of the Company not named in the
Summary Compensation Table. Generally, such agreements provide that if, within
twenty-four months following the change in control of the Company (as defined in
the agreements), the officer's employment is terminated in a qualified
termination, then the Company shall make a lump-sum payment to the officer equal
to a specified percentage of the officer's "compensation," defined as the
officer's annualized base salary in effect immediately prior to the change in
control, plus the higher of (a) the annual bonus awarded the officer pursuant to
the Company's Officer's Incentive Compensation Plan ("Bonus") with respect to
the fiscal year immediately preceding the fiscal year in which the change in
control occurs or (b) the average of the Bonus awards to the officer with
respect to the three fiscal years immediately preceding the fiscal year in which
the change in control occurs. For purposes of establishing the applicable
percentage, the Company has established a two-tier structure in which tier-one
officers receive 297% of such compensation, and tier-two officers receive 200%
of such compensation, and has designated Mr. Davis as a tier-one officer and the
remainder of the officers with whom the Company has entered into change of
control agreements as tier-two officers. The agreements also provide for
continuation of certain insurance and other employee benefits for a period of
twenty-four months following a qualified termination of employment. For purposes
of the agreements, (i) the term "qualified termination" means a termination
other than for cause, by the officer for good reason or by written agreement to
such effect between the officer and the Company, (ii) the term "cause" generally
means failure to substantially perform duties, misconduct injurious to the
Company or conviction of a felony, and (iii) the term "good reason" generally
means a reduction in the officer's position, duties, responsibilities, status
compensation or benefits.
Insurance. Mobile Gas provides accidental death and dismemberment insurance of
$200,000 for each officer and $100,000 for the spouse of each officer. Mobile
Gas is not designated as the beneficiary under the policy. Premium cost for such
insurance for each of each of the executive officers named therein is included
in the Summary Compensation Table above.
Other Compensation. The Company provides certain equipment, facilities and
services to various officers to assist them in performing their corporate
responsibilities and duties in connection with business of the Company, such as
automobiles and club memberships. The Summary Compensation Table does not
include the value of such equipment, facilities and services which might be
deemed attributable to personal use by the recipient, because the cost to the
Company of such personal benefits with respect to any executive officer named in
the Summary Compensation Table did not exceed the lesser of $50,000 or 10
percent of the compensation reported with respect to such executive officer.
COMPENSATION AND PLANNING COMMITTEE REPORT
The Compensation and Planning Committee of the Company's Board of Directors is
currently comprised of five outside directors: Mr. Hearin, Ms. Marston, Mr.
Hope, Mr. Peebles and Mr. Van Antwerp. Based upon recommendations of the Chief
Executive Officer with respect to executive officers other than himself, the
Committee reviews and makes recommendations to the Board with respect to
salaries and other compensation for officers of the Company and its
subsidiaries. Decisions by the Committee with respect to compensation of
executive officers of the Company and its subsidiaries, including the Chief
Executive Officer of the Company, are reviewed and approved by the Board. The
Committee is continuing to implement its compensation philosophy, which is
intended to change Mobile Gas' historical emphasis on base salary as the primary
basis of executive compensation. The Committee's compensation philosophy
includes the following five principles:
10
<PAGE> 13
1. Objectives: The Company's two primary compensation objectives are to provide
a competitive compensation package that will enable the Company to attract and
retain a highly-qualified executive team, and to provide a significant amount of
variable compensation that is contingent upon objectively-measured performance,
so as to align executive interests with those of customers and stockholders.
2. Competitiveness: Compensation comparisons will be made against similar-size
public utilities on a national basis, to allow the Company to compete nationally
for top executive talent. Competitive levels of four compensation components
will be measured:
o Base salary, to be targeted above the median for the peer group, with
the primary consideration being external market levels and a secondary
consideration being internal equity concerns.
o Annual incentives, to be targeted at the median, to motivate and reward
accomplishment of key corporate priorities and objectives.
o Long-term incentives, to be targeted below the median, so that total
target compensation (base salary plus annual incentives plus long-term
incentives) would equal median total compensation for peer group
executives.
o Benefits and perquisites, to be targeted at the low end of the
competitive range, so as to provide reasonable levels of security and
protection but to not emphasize this component of the total compensation
package.
3. Leverage: Annual and long-term incentives are to have significant upside and
downside variability so as to create a strong relationship between the level of
total executive compensation and the level of performance achieved.
4. Basis for measurements: Annual and incentive plans are to emphasize teamwork,
and are to be based primarily on corporate performance, but will provide
latitude to reward individual performance and contributions. Annual incentives
are to reflect a balance between stockholder and customer interests, and between
financial and operational goals, with financial objectives weighted more heavily
with respect to senior executives, and operational goals being more heavily
weighted at lower executive levels. Long-term incentives are to focus on
stockholder interests and are to be tied, in part, to performance of Common
Stock.
5. Stock ownership: The executive compensation program is intended to facilitate
senior executives acquiring an equity stake in the Company, to increase the
alignment between executive interests and stockholders.
Determination of annual base salary and incentive compensation for each of the
Company's executive officers, including Mr. Davis, are made in accordance with
the foregoing criteria, with salary amounts and cash incentive targets and
awards being recommended by the Chief Executive Officer with respect to other
executive officers, and the salary and cash incentive targets and awards for the
Chief Executive Officer being determined by the Committee.
Consistent with the foregoing compensation philosophy, long-term incentives in
the form of stock options were granted in fiscal year 1995 under the Mobile Gas
Service Corporation 1992 Stock Option Plan (the "Stock Option Plan") and awards
were also made under the Mobile Gas Service Corporation Incentive Compensation
Plan (the "1992 Incentive Plan"), each of which was assumed by the Company in
1998. All incentive units which had been awarded, other than 3,000 units awarded
to Mr. Davis, have been surrendered; payments to Mr. Davis under the 1992
Incentive Plan are included under the "Other Annual Compensation" column in the
Summary Compensation Table above. Additional grants of stock options were made
in 2000, as described under "Option Grants in Last Fiscal Year" above.
11
<PAGE> 14
It is the Committee's current intention that no further awards will be made
under the 1992 Incentive Plan, and that incentive awards will continue to be
made under the Company's Officers Incentive Compensation Plan which became
effective as of the fiscal year beginning October 1, 1996 (the "Officers
Incentive Plan"). Under the Officers Incentive Plan, cash incentive awards to
Company officers, computed as a percentage of base salary, are made by the
Committee based on three performance measures (the first two being referred to
as "Company Objectives" and the third being referred to as "Personal
Objectives"):
o The Company's Return on Common Equity ("ROE"), compared to the ROE of a
group of peer companies;
o The Company's earnings per share ("EPS") compared to a target EPS goal
established by the Committee; and
o Specific individual personal performance objectives to be established
annually for each participant in the Officers Incentive Plan.
The Officers Incentive Plan provides for a target award level for the President
and Chief Executive Officer of the Company at a specified percentage of base
salary, and for other officers of the Company at a lesser percentage. The
Officers Incentive Plan also provides for relative weighting of the three
performance objectives at specified percentages for the President and Chief
Executive Officer, with different specified percentages for all other officers.
The relative weighting of performance objectives for the President and Chief
Executive Officer places more emphasis on the Company Objectives, while the
relative weighting for other officers places equal emphasis on attainment of
Personal Objectives and Company Objectives. Depending on the degree to which
Company Objectives and Personal Objectives are attained or exceeded, awards may
range from 50% to 150% of the target award level. Although the Committee may in
its discretion set target award levels and weighting of performance criteria at
percentages different from those in the Officers Incentive Plan, the Committee
did not do so for fiscal year 2000. However, the Committee reduced by 20% the
amount of awards which would have been made based solely on target award levels.
Personal Objectives for the President and Chief Executive Officer for the 2000
fiscal year were generally parallel to the Company Objectives.
Incentive awards made for the 2000 fiscal year to the named executive officers
are reported as bonus in the Summary Compensation Table above. The awards made
reflect that of the Company Objectives, the ROE objective was exceeded and the
EPS objective was not attained, and that accordingly part of the Personal
Objectives of the President and Chief Executive Officer were exceeded.
William J. Hearin Judy A. Marston E. B. Peebles, Jr.
John C. Hope, III Thomas B. Van Antwerp
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. Hearin, who is a member of the Compensation and Planning Committee, serves
as Chairman of the Board of the Company, but receives no compensation for such
service.
AUDIT COMMITTEE REPORT
Each member of the Company's Audit Committee meets the independence requirements
set by the National Association of Securities Dealers. The Committee members
reviewed and discussed the Company's audited financial statements for the fiscal
year ending September 30, 2000 with management. The Committee also discussed all
the matters required to be discussed by Statement of Auditing Standards No. 61
with the Company's independent auditors, Deloitte & Touche LLP. The Committee
received the written disclosures
12
<PAGE> 15
and letter from Deloitte & Touche LLP as required by Independence Standards
Board Standard No. 1, and has discussed with the independent accountants their
independence. Based on the review and discussions described above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000 for filing with the Securities and Exchange Commission.
The Board of Directors has adopted a written charter to govern the Audit
Committee. A copy of the Company's Audit Committee Charter is included as
Appendix A to this proxy statement.
Walter L. Hovell
G. Montgomery Mitchell
F.B. Muhlfeld
Harris V. Morrissette
S. Felton Mitchell
Members, Audit Committee
ENERGYSOUTH, INC. STOCK PERFORMANCE GRAPH
The following graph compares the value of $100 invested on October 1, 1995 in
Mobile Gas common stock, the Media General Gas Utilities Industry Group Index
(the "MG Group"), and the Russell 2000 Index, assuming reinvestment of
dividends. Results after February 2, 1998 reflect the 3-for-2 conversion of
Mobile Gas common stock into Common Stock on that date. The Media General Gas
Index, published as Industry Group Index No. 912 by Media General Financial
Services of Richmond, Virginia, consists of 36 gas utilities including the
Company.
<TABLE>
<CAPTION>
Fiscal Year Ending 1995 1996 1997 1998 1999 2000
------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ENERGYSOUTH, INC. 100 119.83 185.28 163.96 176.37 174.66
MG Group Index 100 127.69 167.41 173.36 181.99 238.06
Russell 2000 Index 100 113.24 150.80 122.12 143.56 174.81
</TABLE>
---------------------------------------------
13
<PAGE> 16
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has served as independent public accountants
to audit the Company's financial statements for the past fourteen years and they
have been selected by the Board of Directors to continue in such capacity as
independent public accountants for the Company for the current fiscal year.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement, if they so
desire, and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission ("SEC"). In order to be included in EnergySouth's proxy statement and
form of proxy relating to its 2002 Annual Meeting pursuant to Rule 14a-8
promulgated by the SEC ("Rule 14a-8"), proposals from stockholders to be
presented at the 2002 Annual Meeting must be received by the Secretary of
EnergySouth no later than August 16, 2001. The date after which notice of a
shareholder proposal submitted outside of the processes of Rule 14a-8 will be
considered untimely is October 30, 2001. If notice of such a shareholder
proposal is received by the Company after October 30, 2001, then the Company's
proxy for the 2002 Annual Meeting may confer discretionary authority to vote on
such matter without discussion of such matter in the proxy statement for the
2002 Annual Meeting.
OTHER PROPOSALS
As of this date, the Company does not know of any other business to be presented
at the meeting. However, the enclosed proxy gives discretionary authority to the
proxy holders named therein should any other matters be presented to the meeting
and it is the intention of such proxy holders to take such action in connection
therewith as shall be in accordance with their best judgment.
-----------------------
Please sign, date, and return the enclosed proxy promptly in the enclosed
envelope on which no postage stamp is necessary if mailed in the United States.
ENERGYSOUTH, INC.
By G. EDGAR DOWNING, JR.
Secretary
Mobile, Alabama
Dated December 21, 2000
14
<PAGE> 17
APPENDIX A
ENERGYSOUTH, INC.
AUDIT COMMITTEE CHARTER
PREAMBLE:
The very integrity of reporting to EnergySouth's Shareholders and the
securities markets rests on the integrity of the Company's financial reporting
system. The Blue Ribbon Committee's Report on Improving the Effectiveness of
Corporate Audit Committees ("the Blue Ribbon Report", commissioned by the NYSE
and NASD) which was issued in February 1999 offers recommendations that are both
thoughtful and practical for the function of an effective audit committee. The
Audit Committee and full Board of Directors of EnergySouth supports the Report's
recommendations and goals. "Good" corporate governance means that structures and
processes are in place to ensure that directors have the ability to objectively
and effectively assess management and corporate performance. EnergySouth's Audit
Committee is the key to fulfilling EnergySouth's Board of Director's oversight
function, and will ensure that significant issues are carried to the full Board.
The Audit Committee is not to duplicate the work of internal and
independent auditors, rather, its role is that of oversight. The Audit Committee
will serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system, review and appraise the
audit efforts of the Company's independent accountants and internal audit
department, and provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing department,
and the Board of Directors.
ORGANIZATION:
The Audit Committee of the Board of Directors of the Company was
established by the action of the Board. Only independent directors (which shall
be at least three in number) will serve as members of the Audit Committee. An
independent director is free of any relationship that could influence his or her
judgment as a Committee member. An independent director may not be associated
with a major vendor to, or customer of, the company. When there is any doubt
about independence, the director will recuse himself or herself from any
decisions that might be influenced by that relationship. All members of the
Committee will have a working familiarity with basic finance and accounting
practices and at least one member must have accounting or related financial
management expertise.
FUNCTION:
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities related to corporate
accounting, internal controls, financial reporting practices, quality and
integrity of financial reports, legal compliance and business ethics.
GENERAL RESPONSIBILITIES:
The Audit Committee serves as the representative of the Board for the
general oversight of Company affairs in the area of financial accounting and
reporting and the underlying internal controls as well as the financial aspects
of the Company's benefit plans. The Audit Committee will assist the Board in
discharging its fiduciary responsibilities to shareholders, providing assurance
as to the independence of the Company's outside accountants and the adequacy of
disclosure to shareholders and to the public.
The Audit Committee provides open avenues of communication among the
internal auditors, the independent accountant and the board of directors.
A-1
<PAGE> 18
The Audit Committee will inquire of both management and the independent
public accountant about significant accounting issues and contingencies and will
review with management the processes used to assure compliance by the Company
with all applicable laws, regulations and Company policy.
The Audit Committee will meet with the internal auditor; the
independent accountant and management in separate executive sessions to discuss
any matters the Committee or these groups believe should be discussed privately
with the audit Committee.
The Committee must meet on a regular basis, at least four times each
year, more frequently if circumstances make that preferable. The Audit Committee
chairman will call a Committee meeting whenever he or she thinks there is a
need. The Committee will maintain minutes or other records of meetings and
activities of the Audit Committee, and must report Committee actions, with
appropriate recommendations, through its Chairman, to the Board of Directors
following the meetings of the Audit Committee.
The Audit Committee has the power to conduct or authorize
investigations into matters within the Committee's scope of responsibilities.
The Board of Directors may request the Audit Committee to investigate any
activity of the Company. All employees are directed to cooperate as requested by
members of the Committee. The Committee is authorized to retain independent
counsel, accountants or others it needs to assist in an investigation.
The Committee will do whatever else the law, the Company's charter or
bylaws or the board of directors requires.
The Audit Committee will prepare letters or statements for inclusion in
the annual report and proxy, as required by the SEC and NASD, that describes the
Committee's composition and responsibilities and how the responsibilities were
fulfilled.
The Audit Committee will review the annual report to shareholders prior
to its public release.
The Audit Committee will review audit and control procedures proposed
to be implemented for any new significant business ventures of the Company,
which are out of the ordinary course of the Company's business.
The Audit Committee shall be responsible for the oversight of the
Company's Code of Ethics.
The Audit Committee will review and update the Committee's charter
annually.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE
INTERNAL AUDITOR:
The Audit Committee will select the independent accountants for company
audits. The Committee's selection is subject to approval by the full board of
directors. The Audit Committee also will review and set any fees paid to the
independent accountants and review and approve dismissal of the independent
accountants.
The Audit Committee will review and have concurrence with the
appointment, replacement, reassignment or dismissal of the internal auditor.
The Audit Committee will confirm and assure the independence of the
internal auditor and the independent accountant, including a review of
consulting and non-audit services provided by the independent accountant and the
fees paid for them.
A-2
<PAGE> 19
The Audit Committee will consider results of the independent
accountants' last peer review, litigation status, and disciplinary actions, if
any.
The Audit Committee will review with the independent accountant and the
internal auditor the adequacy of the company's internal controls, including
computerized information system controls and security and any significant
findings and recommendations made by the independent accountant or internal
auditor, together with management's responses to them.
The Committee will discuss with management and the independent
accountant the substance of any significant issues raised by outside counsel
concerning litigation, contingencies or other claims; and how such matters
affect the Company's financial statements.
The Audit Committee will evaluate the cooperation received by the
independent accountants during their audit examination, including their access
to all requested records, data and information. Also, the Audit Committee will
elicit the comments of management regarding the responsiveness of the
independent accountants to the Company's needs. The Committee will inquire of
the independent accountants, whether there have been any disagreements with
management, which if not satisfactorily resolved, would have caused them to
issue a non-standard report on the company's financial statements.
As soon as possible after the annual examination is completed, the
Audit Committee will review with management and the independent accountant the
company's annual financial statements and related footnotes; the independent
accountant's audit of and report on the financial statements; the auditor's
qualitative judgments about the appropriateness, not just the acceptability, of
accounting principles and financial disclosures, and how aggressive or
conservative the accounting principles and underlying estimates are.
The Audit Committee will ascertain that the independent accountant
views the board of directors as its client, that it will be available to the
full board of directors at least annually and that it will provide the Committee
with a timely analysis of significant financial reporting issues.
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS:
The Audit Committee will consider and review with management and the
internal auditor any significant findings during the year and management's
responses to them. The Committee will consider and review any difficulties the
internal auditor encountered while conducting his or her audits, including any
restrictions on the scope of work or access to required information.
The Audit Committee will consider and review any changes to the planned
scope of the internal audit plan that the Committee thinks advisable. The
Committee will review whether the internal auditor has complied with the
Institute of Internal Auditing's Standards for the Professional Practice of
Internal Auditing.
The Committee will review annual filings with the SEC and other
published documents containing the Company's financial statements and will
consider whether the information in the filings is consistent with the
information in the financial statements.
The Audit Committee or its Chairman will review the interim financial
reports with management, the independent accountant and the internal auditor
before those interim reports are released to the public or filed with the SEC or
other regulators.
A-3
<PAGE> 20
PROXY
ENERGYSOUTH, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, JANUARY 26, 2001
The undersigned hereby appoints John S. Davis and G. Edgar Downing,
Jr., and each of them as proxies, each with power of substitution and
revocation, to vote at the Annual Meeting of Stockholders of EnergySouth, Inc.
(the "Company") to be held in the Auditorium of the Company at 2828 Dauphin
Street, Mobile, Alabama on Friday, January 26, 2001, at 10:00 a.m., Central
Standard Time, or at any adjournment or adjournments thereof, according to the
number of votes that the undersigned would be able to cast if personally present
at the Annual Meeting.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE> 21
[X] Please mark votes as in this example.
IF NO SPECIFIC DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED "FOR" ALL OF THE DIRECTOR NOMINEES IDENTIFIED IN PROPOSAL 1.
1. ELECTION OF DIRECTORS (the Board of Directors favors a vote
"FOR"):
Nominees for a term expiring 2004: (01) John S. Davis, (02) Walter L.
Hovell, (03) G. Montgomery Mitchell, (04) F.B. Muhlfeld
[ ] FOR all nominees
[ ] WITHHELD from all nominees
[ ] ______________________________________
For all nominees except as noted above
2. In their discretion, the proxies are authorized to vote upon such other
and further business as may properly come before the meeting or any and
all adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
The shares represented by this Proxy will be voted in the manner directed herein
by the undersigned stockholder. The proxies, or either one of them, are
authorized, in their or his discretion to vote the shares of the undersigned
stockholder represented by this Proxy in favor of an adjournment or adjournments
of said meeting for the purpose of allowing time for additional solicitation of
proxies.
Please sign, date and mail this Proxy in the envelope provided. No postage is
necessary if mailed in the United States.
Please sign exactly as the name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys, executors, administrators, guardians,
trustees and corporate officers should so indicate.
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Signature Date
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Signature Date
