Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (x) Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) 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 Section 240.14a-11(c) or Section
240.14a-12
RGC Resources, Inc.
(Name of Registrant as Specified in its Charter)
Roger L. Baumgardner, Corporate Secretary
(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>
RGC RESOURCES, INC.
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
-----------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 2001
-----------------------------------------------------------------------
NOTICE is hereby given that, pursuant to its Bylaws and call of its
directors, the Annual Meeting of the Shareholders of RGC Resources, Inc. will be
held at its principal office, 519 Kimball Avenue, N.E., Roanoke, Virginia 24016,
on Monday, January 22, 2001, at 9:00 a.m., Eastern Standard Time, for the
following purposes:
1. To elect three new Class A directors.
2. The transaction of such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement regarding matters proposed to be acted upon
at the meeting. Only those shareholders of record as of the close of business on
November 17, 2000 shall be entitled to notice of and to vote at the meeting.
You are urged to sign and date the enclosed form of proxy and return it
promptly in the enclosed self-addressed, stamped envelope. Should you decide to
attend the meeting and vote in person, you may withdraw your proxy.
By Order of the Board of Directors.
ROGER L. BAUMGARDNER
Secretary
December 19, 2000
Your vote is important. Even if you plan to be present at the Annual
Meeting, please sign, date and promptly return the enclosed proxy, no matter how
small your holdings, to assure that your shares are represented. 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>
-----------------------------------------------------------------------
PROXY STATEMENT
-----------------------------------------------------------------------
Mailed December 19, 2000
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 22, 2001
This Proxy Statement is furnished on December 19, 2000, in connection
with the solicitation of proxies to be used at the Annual Meeting of
Shareholders of RGC Resources, Inc. ("Resources" or the "Company") to be held on
Monday, January 22, 2001, at 9:00 a.m., Eastern Standard Time, at the Company's
office, located at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, and any
adjournments thereof.
Proxies in the form enclosed herewith are solicited by management at
the direction of the Company's Board of Directors. If the enclosed proxy is
properly signed and returned, the shares represented thereby will be voted at
the Annual Meeting in accordance with its terms. Any proxy given pursuant to
this solicitation may be revoked at any time prior to the vote of the
shareholders. An opportunity will be given to shareholders attending the meeting
to withdraw their proxies and to vote their shares in person.
The Company's Annual Report to Shareholders for the year ended
September 30, 2000 is being sent to all shareholders concurrently with this
Proxy Statement. The Annual Report is not to be considered a part of the proxy
solicitation material.
Voting Securities
The close of business on November 17, 2000 has been fixed as the record
date for the determination of shareholders of the Company entitled to notice of
and to vote at the Annual Meeting of Shareholders. At the close of the record
date, there were 1,885,855 shares of common stock outstanding and each such
share is entitled to one vote. To the Company's knowledge, no person is the
beneficial owner of more than five percent of the issued and outstanding common
stock of the Company.
A majority of votes entitled to be cast on matters to be considered at
the Annual Meeting constitutes a quorum. If a share is represented for any
purpose at the Annual Meeting, it is deemed to be present for purposes of
establishing a quorum. Abstentions and shares held of record by a broker or its
nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present or represented at the Annual Meeting.
Conversely, Broker Shares that are not voted on any matter will not be included
in determining whether a quorum is present. If a quorum is established,
directors will be elected by a plurality of the votes cast by shares entitled to
vote at the Annual Meeting. Votes that are withheld and Broker Shares that are
not voted in the election of directors will not be included in determining the
number of votes cast.
2
<PAGE>
PROPOSAL 1 ELECTION OF DIRECTORS OF RESOURCES
Occasionally, officers of the Company have been approached by others to
open discussions for acquisition of the Company. The Board of Directors does not
believe that it is obligated to shareholders to sell, hold out for sale or
engage in discussions for sale of the Company and has formally acted to direct
officers and individual directors to advise those who may propose acquisition or
discussions for acquisition that the Company is not now for sale under any
arrangement requiring Board approval.
The Company's Board of Directors is divided into three classes (A, B
and C) with staggered three-year terms. The current term of office of the Class
A directors expires at the 2001 Annual Meeting. The terms of the Class B and
Class C directors will expire in 2002 and 2003, respectively.
There are three management nominees for Class A directors, Abney S.
Boxley, III, S. Frank Smith and John B. Williamson, III, who currently serve on
the Board and are standing for reelection.
Unless authorization is withheld, the persons named as proxies will
vote for the election of the nominees named below. Each nominee has agreed to
serve if elected. In the event any nominee unexpectedly is unable to serve, the
proxies will be voted for such other persons as the Board may designate. The
present principal occupation and employment during the past five years and the
office, if any, held with the Company are set forth opposite the name of each
nominee and director. Proxies cannot be voted for a greater number of persons
than the number of nominees:
Your Board of Directors recommends a vote "FOR" each of the nominees
for Class A Director.
<TABLE>
<CAPTION>
Year In Which
Year In Director
Which First Assumed
Elected As Principal
Name and Age Director Principal Occupation Occupation
--------------------- -------------- ---------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR DIRECTOR
---------------------
CLASS A DIRECTORS (Serving until 2004 Annual Meeting)
Abney S. Boxley, III 1994 President & CEO, Boxley Co., Inc. 1988
Age 42 (Construction Materials); Director,
Valley Financial Corporation
S. Frank Smith 1990 Vice President, Coastal Coal Co., LLC 1986
Age 52 (Coal mining)
John B. Williamson, III 1998 President & CEO of the Company since 1999
Age 46 June 1999; President & CEO of Roanoke
Gas Company February 1998 to June
1999; Vice President-Rates & Finance
January 1993 to February 1998
3
<PAGE>
Year In Which
Year In Director
Which First Assumed
Elected As Principal
Name and Age Director Principal Occupation Occupation
--------------------- -------------- ---------------------------- --------------------
Year In Which
DIRECTORS CONTINUING IN OFFICE
------------------------------
CLASS B DIRECTORS (Serving until 2002 Annual Meeting)
Lynn D. Avis 1986 Chairman of the Board, Avis 1998
Age 66 Construction Co., Inc. (Construction
company) since 1998; President, Avis
Construction Co., Inc. 1995 to 1998
J. Allen Layman 1991 President and Chief Executive Officer, 1991
Age 48 R&B Communications, Inc.
(Telecommunications)
since 1991; Director,
The Bank of Fincastle
and mPhase Technologies,
Inc.
Thomas L. Robertson 1986 President and Chief Executive Officer, 1986
Age 57 Carilion Health System and Carilion
Medical Center (Health care); Director,
Roanoke Electric Steel Corporation
CLASS C DIRECTORS (Serving until 2003 Annual Meeting)
Frank T. Ellett 1983 President, Virginia Truck Center, Inc. & 1981
Age 62 Virginia Truck Center of Richmond
(Sale, lease and service of heavy trucks,
trailers and buses)
F. A. Farmer, Jr. 1979 Chairman of the Board of Directors of 1999
Age 68 the Company since June 1999;
Chairman of the Board of Roanoke Gas
Company 1996 to June 1999; President
and Chief Executive Officer, January
1991 to February 1998
</TABLE>
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of November 17, 2000, certain
information regarding the beneficial ownership of the common stock of the
Company by each director, nominee and named executive officer and by all
directors and executive officers as a group. Unless otherwise noted in the
footnotes to the table, the named persons have sole voting and investment power
with respect to all outstanding shares of common stock shown as beneficially
owned by them.
<TABLE>
<CAPTION>
Shares of Common
Name of Stock Beneficially Owned
Beneficial Owner As of 11/17/00 1 Percent of Class
------------------------------------------- -------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Lynn D. Avis 10,812 *
Abney S. Boxley, III 4,666 *
Frank T. Ellett 8,425 *
Frank A. Farmer, Jr. 42,767 2 2.27%
J. Allen Layman 7,160 *
Arthur L. Pendleton 14,022 3 *
Thomas L. Robertson 7,191 *
S. Frank Smith 7,277 *
John B. Williamson, III 18,659 4 *
All Directors and Executive
Officers as a Group (12 persons) 133,502 5 7.08%
* Less than 1%
1 Includes restricted shares purchased by directors pursuant to Restricted
Stock Plan For Outside Directors.
2 Includes 9,405 shares owned by spouse.
3 Includes 10,000 shares that Mr. Pendleton has the right to acquire through
the exercise of stock options.
4 Includes 14,000 shares that Mr. Williamson has the right to acquire through
the exercise of stock options.
5 Includes an aggregate of 34,000 shares that executive officers have the
right to acquire through the exercise of stock options.
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
The following table contains information with respect to the individual
compensation of the following officers for services in all capacities to
Resources and its subsidiaries for fiscal years ended September 30, 2000, 1999
and 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------- --------------------------------------------
Name and Awards All Other
Principal Position Year Salary ($) Bonus($)1 Options/SARs (#) Compensation($)2
--------------------------- -------- ----------- ----------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John B. Williamson, III 2000 165,568 20,000 4,000 6,938
President & CEO of 1999 149,185 20,000 ------- 7,000
RGC Resources, Inc. 1998 111,164 7,500 3,500 4,974
Arthur L. Pendleton 2000 122,091 10,000 2,000 5,258
President & COO 1999 118,573 10,000 ------- 5,388
Roanoke Gas Company 1998 100,332 7,500 1,500 4,519
-----------------
1 Bonus paid in current year for previous year's performance.
2 Consists entirely of the Company's contribution under the Employees' 401(k) Plan.
</TABLE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------------------------------ Potential Realizable
Value(1) at
Assumed
% of Total Annual Rates of
Number of Options Market Stock Price
Securities Granted To Exercise Price on Appreciation for
Underlying Employees or Base Date of Option Term
Options in Fiscal Price Grant Expiration --------------------
Name Granted(#) Year ($/Share)(2) ($/Share) Date 5%($) 10%($)
------------------------- ----------- ------------ ------------ ---------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Williamson, III 4,000 20% $20.875 $20.875 11/30/09 136,013 216,578
Arthur L. Pendleton 2,000 10% $20.875 $20.875 11/30/09 68,006 108,289
--------------------------------------
1 The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of Resources' stock price.
Additionally, these values do not take into consideration the provisions of
the options providing for nontransferability or termination of the options
following termination of employment. Resources did not use an alternative
formula for a grant valuation, as it is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
2 The exercise price of the options granted is equal to the closing sales
price of Resources' common stock on the Nasdaq National Market on the date
of grant. Options generally expire ten years from the date of grant.
</TABLE>
6
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Unexercised In-the-money
Acquired on Value Options at fiscal Options at Fiscal
Name Exercise (#) Realized ($) Year-end (#) Year-End ($)
---------------------------- --------------- --------------- ---------------------- ----------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
John B. Williamson, III 0 0 14,000/0 $18,472/0
Arthur L. Pendleton 0 0 10,000/0 $18,472/0
</TABLE>
Retirement Plan
Resources has in effect a noncontributory Retirement Plan. The costs of
benefits under the Plan, which are borne by Resources, are computed actuarially
and defrayed by earnings from the Plan's investments and/or Resources' annual
contributions. The Plan generally provides for the monthly payment, at normal
retirement age 65, of the greater of (a) the participant's accrued benefit as of
December 31, 1988 under the formula then in effect or (b) one-twelfth of (1)
plus (2) minus (3) as follows:
(1) 1.2% of the participant's average compensation for his highest
consecutive sixty months of service multiplied by years of
credited service up to thirty years,
(2) .65% of the participant's average compensation for his highest
consecutive sixty months of service in excess of covered
compensation (generally defined as the average of Social Security
wage bases over a participant's assumed working lifetime)
multiplied by years of credited service up to thirty years, and
(3) the participant's balance, if any, from the Company's former
profit sharing plan.
Early retirement with reduced monthly benefits is available at age 55
after ten years' service. Provisions also are made for vesting of benefits after
five years of service and for disability and death benefits. All employees who
have completed one year of service to the Company and are credited with at least
1,000 hours of service in a Plan year are eligible to participate in the Plan.
At age 65, for Plan purposes, Mr. Williamson and Mr. Pendleton will
have 28 and 37 credited years of service, respectively.
The compensation covered by the Plan includes the total of all amounts
paid to a participant by the Company for personal services reported on the
participant's federal income tax withholding statement (Form W-2), up to certain
statutory limits. For 2000, these earnings are limited to $170,000. This limit
is indexed for cost of living after 1994.
7
<PAGE>
<TABLE>
<CAPTION>
Estimated Annual Pension For
Representative Years of Credited Service 1
------------------------------------------------------------------------------
Highest Sixty Months
Average Compensation 15 20 25 30 35
------------------------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 31,800 $ 42,400 $ 52,900 $ 63,500 $ 63,500
150,000 38,700 51,600 64,500 77,400 77,400
175,000 39,300 52,300 65,400 78,500 78,500
200,000 39,300 52,300 65,400 78,500 78,500
-------------------------
1 The benefit amounts assume the employee is retiring at normal retirement age
(age 65). The benefit amounts listed in the table are computed as a straight
life annuity. No offset to pension benefits due to the Profit-Sharing Plan
(which has been converted into the 401(k) Plan) is reflected. Benefits are
not reduced by Social Security.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee"), which is made up of five
members of the Board of Directors who are not officers or employees of
Resources, is responsible for setting and administering the policies that govern
the annual compensation paid to the executive officers of the Company, including
the Chief Executive Officer.
In fiscal 2000, annual salary continued to be the primary component of
compensation for executive officers of the Company. This is based in large part
on concern that external factors beyond the control of Company executives, such
as weather and regulatory decisions, may have a significant impact on corporate
performance.
The Committee recommends, for approval by the Board of Directors, the
annual salaries of executive officers. Salaries are based on the respective
positions held by the executive officers, including their accomplishments, level
of responsibility and experience and the relationship of such salaries to the
salaries of other Company managers and employees. In this regard, the Committee
reviews the Chief Executive Officer's recommendations on compensation of the
other executive officers and information concerning executive compensation at
other companies in the American Gas Association. Such other companies are
included in (but do not solely comprise) both of the peer indices reflected in
the Performance Graph on page 10. The Committee also considers overall corporate
performance, customer service and satisfaction, relationships with regulatory
agencies and the ability to manage and maintain a competent work force in
preparing its compensation recommendations.
Pursuant to the Company's Stock Bonus Plan, the Committee approved the
payment in fiscal 2000 of bonuses to the CEO and other executive officers of the
Company for outstanding performance during the fiscal year 1999. The Stock Bonus
Plan is intended to allow the Board of Directors to award individual or
collective superior performance that has resulted in enhanced shareholder value
or returns and to encourage increased ownership of Company common stock by
officers and management. The Stock Bonus Plan is administered by the Committee,
which considers recommendations from the Company's President. The Company's
bonus award proposals are subject to approval of the Board of Directors. Under
the Stock Bonus Plan, executive officers are encouraged to own a position in the
Company's common stock of at least 50% of the value of their annual
8
<PAGE>
salary. To promote this policy, the Plan provides that all officers with stock
ownership positions below 50% of the value of their annual salaries must, unless
approved by the Committee, receive no less than 50% of any performance bonus in
the form of Company common stock. Bonus amounts, if any, for a fiscal year will
generally be determined in the January following that fiscal year end. Bonus
award determinations under the Stock Bonus Plan for performance in the 1999
fiscal year were based on the performance of the Company, combined with an
analysis of the individual contributions of officers receiving the bonuses to
the overall performance of the Company.
The Company adopted a Key Employee Stock Option Plan, which became
effective January 1996. The Plan is intended to provide the Company's executive
officers with long-term (ten-year) incentives and rewards tied to the price of
Resources' common stock. The Committee believes that stock options will assist
the Company in attracting, maintaining and motivating officers and other key
employees of the Company, upon whose judgment, initiative and efforts the
Company depends, by providing such persons with the opportunity to acquire an
equity interest in Resources. Stock options are used to provide executive
officers additional incentive to use their best efforts and superior
performances to promote the best interest of Resources and the shareholders.
In making its recommendation regarding the 2000 compensation of the
Chief Executive Officer, the Committee considered all of the criteria above.
Specific consideration also was given to the Chief Executive Officer's efforts
toward cost containment, the Company's earnings, and shareholder and customer
growth in the preceding fiscal year. During 2000, Mr. Williamson received a
bonus of $20,000, which he elected to take in Company common stock, for his
performance during the fiscal year 1999. The amount of the bonus was determined
based upon Mr. Williamson's success during fiscal 1999 in monitoring operational
and capital budgets for maximum cost efficiency and monitoring his management
team's performance in regard to corporate objectives. The control of costs,
operational and financing, resulted in improved earnings for Resources.
Submitted by the Compensation Committee of the
Board of Directors of Resources:
Lynn D. Avis, Abney S. Boxley, III, Frank T. Ellett,
J. Allen Layman, S. Frank Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John B. Williamson, III, President and Chief Executive Officer of
Resources, serves as a director of R&B Communications, Inc. J. Allen Layman, who
is a director of Resources and serves on the Compensation Committee of the Board
of Directors of Resources, is President and Chief Executive Officer of R&B
Communications, Inc.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change and the
cumulative total of shareholder return on Resources common stock with the
cumulative return on the Standard and Poor's Utilities Index (the "S&P Utilities
Index") and the Edward Jones Natural Gas Distribution Index for the five-year
period commencing on September 30, 1995 and ending on September 30, 2000. These
comparisons assume the investment of $100 in the Company's common stock and each
of the indices on September 30, 1995 and the reinvestment of dividends.
9
<PAGE>
[Performance graph appears here.]
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
RGC Resources, Inc. $ 100 121 133 151 164 166
S&P Utilities $ 100 108 123 160 158 228
Edward Jones Natural Gas
Distribution Index $ 100 121 143 161 172 186
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Roanoke Gas Company purchased natural gas from Engage Energy, a
subsidiary of the Coastal Corporation in fiscal 2000. Mr. S. Frank Smith, a
director of the Company, is vice president of Coastal Coal Co., LLC, also a
subsidiary of Coastal Corporation. It is anticipated that a portion of Roanoke
Gas Company's natural gas supply will be provided by Engage Energy in fiscal
2001.
REMUNERATION OF DIRECTORS
Directors are compensated $6,000 per year in addition to receiving fees
for meetings of Resources' Board of Directors and of Committees of the Board
that they attend. Mr. Williamson is not compensated for attendance at Board and
Committee meetings and does not receive $6,000 per year for service as a Board
member. The schedule of fees paid to directors for each such meeting attended is
as follows:
Board of Directors $ 400
Executive & Nominating Committee $ 400
Audit Committee $ 400
Compensation Committee $ 400
However, the fee for any Committee meeting held the same day as a Board
meeting is $250.
10
<PAGE>
Restricted Stock Plan for Outside Directors
The Board of Directors of the Company implemented the Restricted Stock
Plan for Outside Directors effective January 27, 1997. The Plan is applicable to
not more than 50,000 shares of Resources' common stock.
Under the Plan, a minimum of 40% of the monthly retainer fee paid to
each non-employee director of Resources is paid in shares of common stock. The
number of shares of Restricted Stock is calculated each month based on the
closing sales price of Resources' common stock on the Nasdaq-NMS on the first
day of the month, if the first day of the month is a trading day, or if not, the
first trading day prior to the first day of the month. Beginning in fiscal 1998,
a participant can, subject to approval of the Board, elect to receive up to 100%
of his retainer fee for the fiscal year in Restricted Stock. Such election
cannot be revoked or amended during the fiscal year.
The shares of Restricted Stock of Resources issued under the Plan will
vest only in the case of a participant's death, disability, retirement
(including not standing for reelection to the Board), or in the event of a
change in control of Resources. There is no option to take cash in lieu of stock
upon vesting of shares under the Plan. The Restricted Stock may not be sold,
transferred, assigned or pledged by the participant until the shares have vested
under the terms of the Plan. At the time the Restricted Stock vests, a
certificate for vested shares will be delivered to the participant or the
participant's beneficiary.
The shares of Restricted Stock will be forfeited to Resources by a
participant's voluntary resignation during his term on the Board or removal for
cause as a director.
Subject to the terms of the Plan, a participant, as owner of the
Restricted Stock, has all rights of a shareholder, including but not limited to,
voting rights, the right to receive cash or stock dividends, and the right to
participate in any capital adjustment of Resources. Resources requires that all
dividends or other distributions paid on shares of Restricted Stock be
automatically sequestered and reinvested on an immediate or deferred basis in
additional Restricted Stock.
All directors, except Mr. Williamson (who does not qualify as an
outside director), participated in the Plan in fiscal 2000. The directors
received a total of 1,872.591 shares of Restricted Stock in fiscal 2000, valued
at $35,931.28. (This value was calculated using the closing price of $19.188 per
share of Company's common stock on September 30, 2000).
BOARD OF DIRECTORS AND COMMITTEES
Audit Committee
The Audit Committee of the Board of Directors, composed of Messrs.
Boxley, Ellett, Layman, Robertson, and Smith, meets at least annually with
Resources' chief financial officer, the independent auditors, and certain
appropriate officers of Resources. The basic functions of this Committee include
reviewing significant financial information, reviewing accounting procedures and
internal controls and recommending the selection of independent auditors. The
Audit Committee met once during the 2000 fiscal year.
11
<PAGE>
Report of the Audit Committee
The Audit Committee of the RGC Resources, Inc. Board of Directors (the
"Committee") is composed of five independent directors and operates under a
written charter adopted by the Board of Directors, which is attached hereto as
Exhibit A.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants of the Company,
Deloitte & Touche LLP, are responsible for performing an independent audit of
the Company's consolidated financial statements in accordance with generally
accepted auditing standards and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions with
management and the independent accountants. Management represented to the
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Committee has
reviewed and discussed the consolidated audited financial statements with
management and the independent accountants. The Committee discussed with the
independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), which includes,
among other things:
o methods used to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative
guidance or consensus;
o the process used by management in formulating particularly
sensitive accounting estimates and the basis for the auditors'
conclusions regarding the reasonableness of these estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and
the disclosures in the financial statements.
The independent accountants also provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence from RGC Resources,
Inc. and its management.
Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management
regarding the audited financial statements and of the report of the independent
accountants to the Committee, the Committee recommended to the Board of
Directors, and the Board has approved, 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.
Frank T. Ellett, Chair J. Allen Layman S. Frank Smith
Abney S. Boxley, III Thomas L. Robertson
12
<PAGE>
Executive & Nominating Committee
The Executive & Nominating Committee of the Board of Directors, which
is composed of Messrs. Avis, Ellett, Farmer, Layman and Robertson is empowered
to exercise all authority of the Board of Directors, except with respect to
matters reserved for the Board by Virginia law. Thus, in the absence of
nominations by the Board of Directors, this Committee may nominate persons as
management's nominees for election to the Board of Directors by the shareholders
at Resources' annual meeting. This Committee did not meet during fiscal year
2000. The Board of Directors does not have a standing nominating committee as
such.
Compensation Committee
The Compensation Committee of the Board of Directors is composed of
Messrs. Avis, Boxley, Ellett, Layman, and Smith. This Committee meets as
necessary to consider and make recommendations to the Board of Directors
concerning the salaries of certain executive officers and management employees
of the Company. This Committee met once during the 2000 fiscal year.
Meetings of the Board and Committees
The Board of Directors met thirteen times during the 2000 fiscal year.
Each of the incumbent members of the Board attended in fiscal year 2000 at least
75 percent of the aggregate of the total number of meetings of the Board and the
total number of meetings held by all Committees of the Board on which each
served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and any persons who own more than
10% of the Company's common stock, to file reports of ownership and changes in
ownership of Company common stock with the Securities and Exchange Commission.
Based on its review of the copies of such forms furnished to it and written
representations from certain reporting persons that no other reports are
required, the Company believes that in fiscal 2000, one report relating to one
transaction for John B. Williamson and one report relating to one transaction
for Lynn D. Avis were filed late.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Deloitte & Touche LLP as independent accountants
to audit the financial statements of the Company for the fiscal year ending
September 30, 2001. Deloitte and Touche LLP has served in this capacity since
fiscal 1998. A representative of such firm is expected to attend the annual
meeting to answer appropriate questions from shareholders and to make a
statement if he or she so desires.
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting of Shareholders other than the election of directors. However, if any
other matters properly come before the meeting, proxies received pursuant to
this solicitation will be voted thereon in the discretion of the proxyholder.
13
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SHAREHOLDERS PROPOSALS
Proposals of shareholders intended to be presented at Resources' 2002
Annual Meeting must be received by Resources' Corporate Secretary at its office,
519 Kimball Avenue, N.E., Roanoke, Virginia 24016, no later than August 17, 2001
in accordance with Rule 14a-8 of the Exchange Act of 1934, in order to be
considered for inclusion in the Company's Proxy Statement relating to that
meeting.
Resources' Bylaws limit the business that may be transacted at a
meeting of shareholders to that specified in the notice of the meeting, those
otherwise properly presented by the Board of Directors and those presented by a
shareholder of record of Resources who provided notice in writing to the
President not less than sixty days nor more than ninety days prior to the
meeting. Proposals not meeting the requirements of the Bylaws will not be
entertained at the shareholders' meeting.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the
form of proxy and Proxy Statement will be paid by Resources. Resources will
request banks and brokers to solicit their customers who beneficially own common
stock of Resources listed in the names of nominees and will reimburse said banks
and brokers for the reasonable out-of-pocket expense of such solicitation. In
addition to the use of the mails, solicitation may be made by employees of
Resources by any and all means available. Resources does not expect to pay any
compensation for the solicitation of proxies.
By Order of the Board of Directors.
JOHN B. WILLIAMSON, III
President and CEO
December 19, 2000
Resources' Annual Report on Form 10-K for the year ended September 30,
2000 is available without charge to any shareholder requesting the same. Written
requests should be addressed to the attention of Mr. Roger L. Baumgardner,
Secretary, RGC Resources, Inc., P.O. Box 13007, Roanoke, Virginia 24030.
14
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Exhibit A
RGC RESOURCES, INC.
AUDIT COMMITTEE CHARTER
Role, Composition and Assurance of Independence
The Audit Committee of the Board of Directors assists the Board in fulfilling
its responsibility for the safeguarding of assets and oversight to the quality
and integrity of the accounting, auditing and reporting practices of the Company
and such other duties as directed by the Board. The membership of the Committee
shall consist of at least three directors who are generally knowledgeable in
financial and auditing matters, including at least one member with accounting or
related financial management expertise. Each member shall be free of any
relationship that, in the opinion of the Board, would interfere with their
individual exercise of independent judgment. The Committee is expected to
maintain free and open communication, including the use of executive sessions
with the independent accountants and management of the Company. In discharging
this oversight role, the Committee is empowered to investigate any matter
brought to its attention, with the power to retain outside counsel or other
experts if needed. This charter shall be reviewed annually for any needed
revisions or updates.
Primary Responsibilities
The Audit Committee's primary responsibilities include:
o Recommendation to the Board for the selection and retention of the
independent accountant who audit the Company's financial statements. In
so doing, the Committee will discuss and consider the auditors written
affirmation that the auditor is in fact independent, will discuss the
nature and rigor of the audit process, receive and review all reports
and will provide to the independent accountant full access to the
Committee to report on any and all matters appropriate.
o Review of the Company's financial statements with management and the
independent auditor. The review will include discussions regarding
quality of earnings; including, but not limited to, discussions of the
following areas: significant items subject to estimate, consideration
of the suitability of accounting principles, review of highly
judgmental areas, audit adjustments whether or not recorded and such
other inquiries or specific questions as may be deemed appropriate by
the Committee members.
o Discussion with management and the auditors of the quality and adequacy
of the Company's internal controls.
o Discussion with management of the status of pending litigation,
taxation matters and other areas of oversight related to the legal and
compliance areas as may be deemed appropriate.
o Reporting on Audit Committee activities to the full Board and issuance
annually of a summary report of the Committee's activities and
findings.
A1
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Other Responsibilities
The Audit Committee will also periodically or as needed:
o Review and recommend updates to the Company's Corporate and Control
Policies as adopted by the Board of Directors.
o Review the Company's legal compliance matters and/or pending
litigation.
o Evaluate the ethical conduct of Company activities.
o Evaluate the issue of internal audit needs.
o Evaluate any disagreements that may arise between the independent
accountants and management or any difficulties encountered by
independent accountants during the process.
o Review and evaluate management's corrective plans for management
letter findings.
o Review the use of financial instruments including hedges and
derivatives.
o Review any material changes in Company accounting practices and the
implication of FASB or SEC pronouncements on the Company's financial
reporting.
o Other matters as may be delegated by the Board or as may be deemed
necessary consistent with this Charter.
A2
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[PROXY CARD APPEARS HERE]
P R O X Y
RGC RESOURCES, INC.
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints John H. Parrott and W. Bolling Izard, or either
of them, with full power of substitution, to vote all common stock of RGC
Resources, Inc. held of record by the undersigned as of November 17, 2000, at
the Annual Meeting of Shareholders of RGC Resources, Inc. to be held on January
22, 2001, and at any adjournments thereof, as follows:
1. ELECTION OF CLASS A DIRECTORS (Serving until 2004 Annual Meeting):
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the all nominees listed below
contrary below)
Abney S. Boxley, III, S. Frank Smith, John B. Williamson, III
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below:
(Over)
<PAGE>
2. Upon such other business as may properly come before the meeting and any
adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
SPECIFIED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE
VOTED FOR NO. 1 ABOVE.
The undersigned hereby acknowledges receipt of the Proxy
Statement dated December 19, 2000.
Dated:
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Signature of Shareholder
Please sign your name(s) exactly as shown imprinted hereon.
Executors, administrators, trustees and other fiduciaries,
and persons signing on behalf of corporations or
partnerships, should so indicate when signing.
(This proxy is revocable at any time prior to exercise
hereof.)
