<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
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/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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ENERGEN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
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[ENGERGEN LOGO] ENERGEN CORPORATION
--------------------------------------------
2101 Sixth Avenue North
Birmingham, Alabama 35203
(205) 326-2700
</TABLE>
December 20, 1996
To Our Shareholders:
It is our pleasure to extend to you a cordial invitation to attend the
Annual Meeting of Shareholders of Energen Corporation. The Meeting will be held
at the principal office of the Company in Birmingham on Wednesday, January 22,
1997, at 10:00 A.M., Central Standard Time.
Details of the matters to be presented at this meeting are given in the
foregoing Secretary's formal Notice of the Annual Meeting and in the Proxy
Statement that follows.
We hope that you will be able to attend this meeting so that we may have
the opportunity of meeting with you and discussing the affairs of the Company.
However, if you cannot attend, we would appreciate your signing and returning
the enclosed Proxy as soon as convenient so that your stock may be voted.
We have enclosed a copy of the Company's Annual Report to Shareholders for
the year ended September 30, 1996.
Yours very truly,
/s/ Rex J. Lysinger
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
ENERGEN CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1997
To the Shareholders of
ENERGEN CORPORATION
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Energen Corporation will be held at the principal office of the
Company, 2101 Sixth Avenue North, Birmingham, Alabama, on Wednesday, January 22,
1997, at 10:00 A.M., Central Standard Time, for the following purposes:
1. To elect four directors to serve for a three-year term expiring in 2000;
2. To consider and take action on a proposal to increase the amount of
bonded indebtedness which the Company is authorized to incur, as more fully
described in the accompanying Proxy Statement;
3. To consider and take action on a proposal to amend the Energen
Corporation 1992 Long-Range Performance Share Plan, as more fully described in
the accompanying Proxy Statement; and
4. To transact such other business as may properly come before the Annual
Meeting.
Shareholders of record at the close of business on December 4, 1996 are
entitled to notice of and to vote upon all matters at the Annual Meeting. The
Annual Meeting may be adjourned from time to time without notice other than by
announcement at the meeting or any adjournments thereof, and any business for
which notice of the Annual Meeting is hereby given may be transacted at any such
adjournment.
By Order of the Board of Directors
DUDLEY C. REYNOLDS, Secretary
Birmingham, Alabama
December 20, 1996
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF ENERGEN CORPORATION
JANUARY 22, 1997
------------------
This Proxy Statement is being furnished by the Board of Directors of
Energen Corporation, an Alabama corporation (the "Company"), in connection with
the solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company to be held at the principal office of the Company, 2101 Sixth Avenue
North, Birmingham, Alabama, on Wednesday, January 22, 1997, at 10:00 A.M.,
Central Standard Time, and at any adjournment thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders of the Company. It is contemplated that the Proxy Statement and
accompanying form of proxy will be mailed to Shareholders of the Company on or
around December 20, 1996.
All properly completed proxies received by the Board of Directors of the
Company will be voted in accordance with the instructions appearing on such
proxy. In the absence of contrary instructions, the proxies received by the
Board of Directors will be voted FOR the election of all nominees for director
of the Company, FOR the proposal to increase the amount of bonded indebtedness
which the Company is authorized to incur and FOR the proposal to amend the
Energen Corporation 1992 Long-Range Performance Share Plan. A Shareholder who
has given a proxy may revoke it at any time prior to its exercise by written
notice of such revocation to the Secretary of the Company, by executing and
delivering to the Company a later dated proxy reflecting contrary instructions,
or by appearing at the Annual Meeting and taking appropriate steps to vote in
person.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting the Shareholders of the Company will consider and
take action on the following matters and on such other matters as may properly
come before the meeting:
<PAGE> 5
1. ELECTION OF DIRECTORS
Directors of the Company are elected on a staggered basis, with
approximately one-third of the directors being elected at each annual meeting
for three-year terms. Four directors are to be elected to serve for a term of
three years expiring at the Annual Meeting of Shareholders held in 2000. The
names of the nominees for director, as well as the names of those directors
continuing in office, are set forth in this Proxy Statement.
NOMINEES FOR ELECTION AS DIRECTORS
FOR A THREE-YEAR TERM TO EXPIRE 2000
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<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
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R.D. Cash................. Mr. Cash, 54, is Chairman of the Board, President
and Chief Executive Officer of Questar
Corporation, a holding company engaged, through
its affiliates, in the exploration for,
production and distribution of natural gas. Mr.
Cash joined Mountain Fuel Supply Company, now a
Questar subsidiary, as its President and Chief
Executive Officer in 1982. On Questar's
organization in 1984 he became its President and
Chief Executive Officer and in 1985 was named
Chairman of the Board. Mr. Cash is also a
director of Zions Bancorporation, Zions First
National Bank, Independent Petroleum Association
of America and the Salt Lake City Branch of the
Federal Reserve Bank of San Francisco. By
appointment of the Secretary of Energy, he
serves on the National Petroleum Council. Mr.
Cash is a member and past chairman of the
Institute of Gas Technology and the Pacific
Coast Gas Association.
Mr. Cash has served as a director of the Company
and Alabama Gas Corporation since November,
1996.
Rex J. Lysinger........... Mr. Lysinger, 59, is Chairman of the Board and
Chief Executive Officer of the Company and is a
director of each of the Company's subsidiaries.
He joined Alabama Gas Corporation in July, 1975
as a Vice President and was elected president in
1977. In 1981, Mr. Lysinger was named Chief
Executive Officer of the Company and its
subsidiaries and was named Chairman of the Board
effective October 1, 1982. He is also a director
of SouthTrust Bank of Alabama, N.A.; Associated
Electric & Gas Insurance Services Limited, a
mutual insurance company serving the United
States public utility indus-
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try; and a member of the Board of Trustees of
Samford University in Birmingham, Alabama.
Mr. Lysinger has served as director of the Company
since its formation in January, 1979 and has
served as a director of Alabama Gas Corporation
since January, 1977.
Dr. Judy M. Merritt....... Dr. Merritt, 53, is President of Jefferson State
Community College located in Birmingham, Alabama.
Dr. Merritt was named president in 1979 and with
the exception of a four year assignment at
Florida International University in Miami,
Florida from 1975 to 1979, has been associated
with Jefferson State and its predecessor since
1965. She is also a member of the Board of
Directors of SouthTrust Bank of Alabama, N.A.
Dr. Merritt has served as a director of the
Company and Alabama Gas Corporation since June,
1993.
Drayton Nabers, Jr. ...... Mr. Nabers, 56, is Chairman of the Board and Chief
Executive Officer and a director of Protective
Life Corporation and Chairman of the Board and a
director of Protective Life Insurance Company.
He joined Protective Life Insurance Company in
1979 as Senior Vice President, Operations, and
General Counsel and served in that capacity
until his election as President of Empire
General Life Insurance Company in 1980 and his
election as President and Chief Operating
Officer of Protective Life in August, 1982. He
became Chief Executive Officer of Protective
Life in 1992 and Chairman of the Board in 1994.
Mr. Nabers is also a member of the Board of
Directors of Alabama National Bancorporation.
Mr. Nabers has served as a director of the Company
and Alabama Gas Corporation since October, 1984.
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3
<PAGE> 7
DIRECTORS WHOSE TERM EXPIRES IN 1998
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<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
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Dr. Stephen D. Ban........ Dr. Ban, 56, is President and CEO of Gas Research
Institute (GRI), a not-for-profit cooperative
research organization of the natural gas
industry, headquartered in Chicago. He joined
GRI in 1981, was first elected president in
April, 1987, and has overall responsibility for
GRI's multifaceted research and development
program in gas technology development, including
research and development related to gas supply
and end-use technologies. In 1991, Dr. Ban was
elected a director of UGI Corporation, a
Pennsylvania gas and electric utility and
national marketer of propane. In 1994 he became
a director of CALSTART, Inc., a California
non-profit consortium dedicated to the
development of advanced transportation
technologies utilizing clean alternative fuels
and cooperative research and development. He is
also a member of the Natural Gas Council and the
Board of Directors of the United States Energy
Association.
Dr. Ban has served as director of the Company and
Alabama Gas Corporation since January, 1992.
George S. Shirley......... Mr. Shirley, 69, is retired City Board Chairman of
AmSouth Bank of Tuskaloosa, Tuscaloosa, Alabama,
with which he was associated from 1960 to 1994.
Mr. Shirley is also past president of the
Alabama Bankers Association, a former director
of the Birmingham Branch of the Federal Reserve
Bank of Atlanta and a member of the Board of
Trustees of the University of Alabama.
Mr. Shirley has served as a director of the
Company and Alabama Gas Corporation since
September, 1981.
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<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
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<S> <C>
Wm. Michael Warren, Jr.... Mr. Warren, 49, is President and Chief Operating
Officer of the Company and is a director of the
Company and each of its subsidiaries. He is also
President and Chief Executive Officer of Alabama
Gas Corporation and Taurus Exploration, Inc.,
the principal subsidiaries of the Company, and
President and Chief Operating Officer of certain
other Company subsidiaries. He joined Alabama
Gas Corporation in 1983 as Vice-President and
General Counsel and was elected President of
Alabama Gas Corporation in 1984. He was elected
President and Chief Operating Officer of the
Company in February, 1991 and was elected
President and Chief Executive Officer of Alabama
Gas Corporation and Taurus Exploration, Inc. in
September, 1995. He is also a city director of
AmSouth Bank of Alabama and a member of the
Board of Trustees of Birmingham-Southern
College.
Mr. Warren has served as a director of the Company
since January, 1986, and has served as a
director of Alabama Gas Corporation since
October, 1984.
</TABLE>
DIRECTORS WHOSE TERM EXPIRES IN 1999
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<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -------------------------- --------------------------------------------------
<S> <C>
J. Mason Davis, Jr........ Mr. Davis, 61, is a partner with the Birmingham,
Alabama law firm of Sirote & Permutt. He joined
the firm in 1984. Mr. Davis also serves as an
Adjunct Professor of Law at the University of
Alabama School of Law in Tuscaloosa, Alabama. He
is also Chairman of the Board of Directors of
Protective Industrial Insurance Company of
Alabama, Inc., based in Birmingham, Alabama.
Mr. Davis has served as a director of the Company
and Alabama Gas Corporation since September, 1992.
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<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -------------------------- --------------------------------------------------
<S> <C>
James S. M. French........ Mr. French, 56, is Chairman, President, Chief
Executive Officer, and a director of Dunn
Investment Company, the parent of a group of
companies in the construction industry and also
an investor in equity and income securities in
selected industries. Dunn was founded in 1878
and is headquartered in Birmingham. He joined
the firm in 1968 and became its President in
1974. He is also a director of Regions Financial
Corporation (formerly First Alabama Bancshares,
Inc.); Hilb, Rogal and Hamilton Company, a
network of insurance agencies; Protective Life
Corporation; and the subsidiaries of Dunn
Investment Company.
Mr. French has served as a director of the Company
since its formation in January, 1979 and has
served as a director of Alabama Gas Corporation
since April, 1978.
Wallace L. Luthy.......... Mr. Luthy, 63, retired effective December 31,
1995, as President and General Manager of Mobil
Natural Gas Inc., headquartered in Houston,
Texas. Mobil Natural Gas is a subsidiary of
Mobil Corporation and processes and markets
natural gas in the United States and Canada.
Upon his retirement, Mr. Luthy completed 40
years of service with Mobil.
Mr. Luthy has served as a director of the Company
and Alabama Gas Corporation since October, 1995.
</TABLE>
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company has established a standing Audit
Committee currently composed of four directors who are not officers of the
Company. The members of the Audit Committee are: James S.M. French (Chairman),
Stephen D. Ban, Wallace L. Luthy and Judy M. Merritt. The duties of the Audit
Committee are (1) to recommend to the Board of Directors a firm of independent
public accountants to serve as auditors, (2) to meet with representatives of the
auditors to review the planned scope of their audit and to review the results of
their examination, (3) to meet with representatives of the auditors and
management to discuss matters regarding the Company's accounting policies,
practices and related financial reporting, and the adequacy of the accounting
system and related internal accounting controls to safeguard corporate assets
and provide a basis for preparing materially reliable financial information, and
(4) to report to the Board of Directors the results of such meetings with such
recommendations as the Audit Committee deems appropriate. During the 1996 fiscal
year the Audit Committee held three meetings.
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<PAGE> 10
The Board of Directors of the Company has established an Officers Review
Committee currently consisting of three directors who are not officers of the
Company. The members of this Committee are: George S. Shirley (Chairman), J.
Mason Davis, Jr. and Drayton Nabers, Jr. The duties of the Officers Review
Committee are to study and make recommendations to the Board of Directors with
regard to executive succession and compensation paid to officers of the Company
and its subsidiaries. During the 1996 fiscal year, the Officers Review Committee
held five meetings.
The Board of Directors of the Company has established a Finance Committee
currently composed of four directors who are not officers of the Company. The
members of the Finance Committee are: J. Mason Davis, Jr. (Chairman), James S.M.
French, Wallace L. Luthy and George S. Shirley. The duties of the Finance
Committee are to review financial policy related to such matters as capital
structure and the issuance of securities necessary to finance the activities of
the Company. During the 1996 fiscal year, the Finance Committee held four
meetings.
The Board of Directors of the Company has established a Governance and
Nominations Committee currently composed of four directors who are not officers
of the Company. The members of the Governance and Nominations Committee are:
Drayton Nabers, Jr. (Chairman), Stephen D. Ban, James S. M. French and Judy M.
Merritt. The duties of the Governance and Nominations Committee are to review
and advise the Board of Directors on general governance and structure issues and
to review and recommend to the Board the term and tenure of Directors, consider
future Board members and recommend nominations to the Board. During the 1996
fiscal year, the Governance and Nominations Committee held three meetings.
During the 1996 fiscal year the Board of Directors of the Company met eight
times. All directors of the Company attended at least 75% of the meetings of the
Board of Directors and the committees of the Board of which they are members.
DIRECTORS' COMPENSATION
During the 1996 fiscal year, directors who are not officers were paid a
monthly retainer of $1,000. In addition, non-officer directors of the Company
and of its subsidiaries were paid a fee of $1,000 for each meeting attended,
including committee meetings.
The Energen Corporation 1992 Directors Stock Plan provides for an annual
grant and issuance of three hundred shares of Common Stock, following the last
day of the fiscal year ended September 30, 1992 and each fiscal year thereafter
so long as the plan remains in effect, to each non-employee director who is
serving as such on the last day of the Company's fiscal year and who has served
as such for at least six months. The size of this annual grant is subject to
adjustment in the event of a stock dividend, stock split or similar
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transaction. The plan also allows each non-employee director to elect to have
any part or all of the fees payable for services as a director of the Company
and its subsidiaries paid in shares of Common Stock.
The plan is administered by the Company's Board of Directors, whose members
are normally elected to three-year terms by the Shareholders. Although the plan
has no fixed duration, the Board of Directors or the Shareholders of the Company
may terminate the plan. The Board of Directors of the Company may also amend the
plan from time to time. However, Shareholder approval is required for any
amendment that materially increases the benefits accruing to participants in the
plan, materially increases the number of shares of Common Stock which may be
issued under the plan or materially modifies eligibility requirements. The
number of shares issued under this plan for fiscal year 1996 was .
Pursuant to the Director Fees Deferral Plan, members of the Board of
Directors who are not employees of the Company may elect to defer all or part of
their fees for services as a director. By written election delivered prior to
the end of a calendar year, a director may elect to defer the receipt of fees
payable in the following calendar year. Once made, the deferral election will
renew automatically from year to year unless revoked or changed by the filing of
a new election. The amount of any deferred fees are credited to an account on
the books of the Company on the date on which the fees would have first become
payable to the director. At the end of each calendar quarter until all deferred
amounts are distributed, the daily balance in a director's account will be
credited with interest based on the prime rate quoted at the beginning of the
quarter by AmSouth Bank of Alabama, Birmingham, Alabama. A director may not
defer fees past age 75, but he may elect to have fees paid in up to ten (10)
annual installments beginning with age 75. The amount deferred under this plan,
including interest, during 1996 was $ .
2. PROPOSAL TO INCREASE THE AMOUNT OF BONDED
INDEBTEDNESS WHICH THE COMPANY IS AUTHORIZED TO INCUR
The Constitution of the State of Alabama provides that bonded indebtedness
of an Alabama corporation may not be increased without the consent of the
holders of a majority of its outstanding stock. While such a requirement is not
unique to the State of Alabama, it does result in the board of directors of an
Alabama corporation having less flexibility than that enjoyed by the boards of
directors of corporations organized in states such as Delaware, which allow
boards of directors to authorize the incurrence of debt without prior
shareholder approval. One method of providing greater flexibility to the
directors of an Alabama corporation is to have the shareholders authorize a very
substantial amount of bonded indebtedness.
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By resolution adopted in connection with the organization of the Company,
the shareholders of the Company authorized the Company to incur bonded
indebtedness in an amount up to $75,000,000. That amount of bonded indebtedness
was authorized to be incurred at a time when the total consolidated
shareholders' equity of the Company was approximately $44,000,000.
As of September 30, 1996, the Company had consolidated shareholders' equity
of approximately $174,000,000 and outstanding bonded indebtedness of
approximately $72,000,000, utilizing substantially all of its bonded
indebtedness authorization. As a result, the Company is proposing a substantial
increase in the Company's authorized bonded indebtedness. Unlike the original
authorization which was expressed solely as a fixed amount, the proposed
authorization also includes an authorization for future increases as the
Company's shareholders' equity increases.
Accordingly, it is proposed that the shareholders authorize the Company to
incur bonded indebtedness at any time in an amount which, when added to bonded
indebtedness then outstanding, does not exceed the greater of (i) $750,000,000
or (ii) one hundred fifty percent (150%) of the total shareholders' equity of
the Company as reflected in the consolidated financial statements of the Company
as of the end of the Company's most recently completed fiscal quarter, as
evidenced by either the audited consolidated financial statements of the Company
with respect to its most recently completed fiscal year or in the quarterly
financial statements of the Company contained in its quarterly reports on Form
10-Q, provided, however, if consolidated financial statements as of the end of
the Company's most recently completed fiscal quarter are not available at the
time of incurring such bonded indebtedness, then such authorization shall be
based upon the consolidated financial statements of the Company as of the end of
the immediately prior fiscal quarter.
The Company has registered with the Securities and Exchange Commission (the
"SEC") for issuance an aggregate amount of up to $250,000,000 of securities of
the Company, which securities may be issued as Common Stock of the Company,
additional indebtedness of the Company (which may, for purposes of the
Constitution of the State of Alabama, constitute "bonded indebtedness") or a
combination thereof (the "Shelf Registration"). The Board of Directors of the
Company has authorized the issuance of, and the Company has issued, $40,000,000
of its Medium-Term Notes, Series A pursuant to the Shelf Registration, which
amount of indebtedness is included in the current outstanding amount of bonded
indebtedness described above. Upon approval of an increase in the amount of
bonded indebtedness which the Company is authorized to incur, the Company
expects to incur additional bonded indebtedness during fiscal year 1997 through
the issuance of additional Medium-Term Notes, Series A; however, the amount of
such additional indebtedness actually issued pursuant to the Shelf Registration
or otherwise and
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the time of such issuance will be determined from time to time by the Board of
Directors of the Company in its discretion.
VOTE REQUIRED; RECOMMENDATION
The vote of the holders of a majority of the outstanding shares of the
Company's Common Stock is necessary to approve this proposal. The Board of
Directors recommends that Shareholders vote FOR the approval of the proposal.
3. PROPOSAL TO AMEND THE ENERGEN CORPORATION
1992 LONG-RANGE PERFORMANCE SHARE PLAN
The Board of Directors of the Company, pursuant to a resolution adopted on
September 25, 1996, adopted certain amendments (the "Amendments") to the Energen
Corporation 1992 Long-Range Performance Share Plan (the "Plan") and has directed
the submission of the Amendments to the Shareholders for their approval. The
Amendments are administrative in nature and, as more fully described below,
generally (i) modify payout procedures following a participant's termination of
employment or a change in control of the Company; (ii) impose certain
consulting, non-compete and confidentiality conditions, and (iii) simplify the
procedure for future amendments of the Plan. The Amendments do not involve an
increase in the number of performance shares or shares of common stock
authorized for grant and issuance under the Plan.
The following summary of the principal features of the Plan and the
Amendments are in all respects subject to the specific provisions contained in
the Plan and the Amendments, copies of which are set forth as Appendices A and
B, respectively, hereto.
SUMMARY OF PLAN FEATURES
The purpose of the Plan is to provide executive and key employees with an
opportunity to participate in the long-term growth and performance of the
Company through performance share awards. Each performance share entitles the
recipient to receive the equivalent in value of one share of the Company's
common stock provided that all conditions of payment, which are known as
performance conditions, have been satisfied at the end of the four-year period
that commences on the first day of the fiscal year in which an award is granted
(the "Award Period") or, under certain circumstances, at the end of a one, two,
or three-year period within the Award Period (the "Interim Period"). Awards are
payable in cash or a combination of cash and shares of the Company's Common
Stock.
The Plan is administered by the Officers Review Committee ("ORC") of the
Company's Board of Directors. Pursuant to performance condition guidelines
adopted by the ORC and currently in effect under the Plan, payment of a
performance share award is
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based on the Company's percentile ranking among a comparison group of forty
companies as measured for the applicable award period. The payout percentage for
one-half of the award is based on the Company's percentile ranking with respect
to total shareholder return and the payout percentage for the other one-half of
the award is based on the Company's percentile ranking with respect to average
return on equity ("ROE"). Subject to the discretion of the ORC to adjust for
extenuating circumstances, the payout percentage measured separately for each
one-half of the award is one hundred percent if the Company ranks at or above
the 75th percentile, fifty percent at the 50th percentile, and zero percent
below the 50th percentile, with interpolation between the 50th and 75th
percentiles.
The maximum number of performance shares which may be awarded under the
Plan is limited to an aggregate of 500,000. At the time it determines whether
the conditions for payment have been satisfied, the ORC also determines whether
the awards will be paid in cash or a combination of cash and shares of the
Company's Common Stock. No more than an aggregate of 350,000 shares of Common
Stock may be issued in payment of performance share awards, the remainder being
payable in cash. Performance shares awarded under the Plan which are not payable
at the end of the applicable award period, whether due to failure to meet
performance conditions or otherwise, become available for future awards under
the Plan.
If not sooner terminated, the Plan terminates on the date on which all of
the performance shares subject to award under the Plan have been paid, but no
grant of Awards may be made after September 30, 2001. Since its inception, a
total of 281,804 performance shares have been awarded, of which 47,984 have been
paid, 25,130 have been canceled or forfeited, and 208,690 remain outstanding.
Participants in the Plan are selected by the ORC from those fulltime salaried
employees of the Company and its subsidiaries who in the estimation of the ORC
have an opportunity to influence the long-term profitability of the Company. The
ORC may delegate to the Company's Chief Executive Officer the selection of
non-officer participants. There are currently 22 participants with outstanding
awards, all of whom are officers of the Company or one or more of its
subsidiaries.
SUMMARY OF PROPOSED AMENDMENTS
The Amendments are intended to modify the procedure for payment of
outstanding awards (i) when a participant's employment with the Company is
terminated prior to the end of an award period for reasons such as retirement,
death, or disability, and (ii) following a change in control of the Company as
defined in the Plan. As originally adopted, the Plan provides that in the event
of termination of employment as a result of death, disability, divestiture,
reduction in work force or retirement, payment of outstanding awards is computed
by first determining (based on the applicable performance conditions) the number
of performance shares such participant would have been paid if the award
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period had terminated on the last day of the most recently-ended fiscal quarter,
and second, multiplying such number by the ratio of the number of months worked
in the award period to the total number of months in the full award period.
Thus, awards are paid promptly following termination of employment based on
performance conditions measured at the end of the fiscal quarter prior to
termination of employment with the earned payout proportionately reduced to
reflect the early termination of the four-year award period. Following a change
in control of the Company, payment is generally calculated and promptly made in
a similar manner but without the proportionate reduction for early termination
of the award period. In addition, in the event of a change in control, for
purposes of evaluating any performance conditions involving the price of the
common stock or payment of dividends, stock is priced equal to its fair market
value based on the twenty trading days immediately preceding the date of such
change in control and the period for dividend measurement is extended to and
includes the day immediately prior to the date of the change in control.
Under the Amendments, termination of employment will not result in an
accelerated payout of performance shares. If the termination constitutes a
"qualified termination", then performance shares will remain outstanding to the
end of their original award period and subject to satisfaction of the applicable
performance conditions. Thus, following a qualified termination, participants
will not receive an accelerated payout but will retain the opportunity for full
payout at the end of the award period with such payout being fully at risk for
the performance of the Company during the entire award period.
The Amendments define "qualified termination" to mean termination of a
participant's employment with the Company which is (i) an involuntary
termination by the Company other than for cause; (ii) expressly agreed in
writing by the participant and the Company to constitute a qualified termination
for purposes of the Plan; (iii) a result of the death, disability, or retirement
of the participant; or (iv) a voluntary termination by the participant for good
reason. The term "good reason" means the occurrence subsequent to the grant of
an Award of a reduction in the participant's aggregate rate of monthly base pay
from the Company or the termination or materially adverse modification of the
Energen Annual Incentive Compensation Plan without substitution of new
short-term incentives providing comparable compensation opportunities for the
participant. In the event of any termination of employment other than a
qualified termination, the participant's outstanding performance shares are
forfeited.
With respect to a change in control, the Amendments authorize the ORC to
adopt such procedures as it deems appropriate including acceleration of payment
of part or all then outstanding awards, establishment and funding of a trust to
be held for payment of awards following a change in control, and modification of
performance conditions applicable to outstanding awards. All award payments made
subsequent to a change in control are to be paid in cash. Pursuant to such
authorization, but subject to approval of the
12
<PAGE> 16
Amendments by the Shareholders, the ORC has adopted certain change in control
procedures (the "Procedures"). Such Procedures provide that following a change
in control of the Company, outstanding performance shares will become
immediately payable to the extent that (i) performance conditions are satisfied
at the time of such change in control and (ii) such payment does not constitute
an excess parachute payment within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended.
All outstanding awards the payment of which is not accelerated following a
change in control, whether due to the above-described tax limitation or failure
to then meet performance conditions, remain outstanding for the balance of the
original award period. With respect to such continued awards, following a change
in control, the ROE performance condition is no longer applicable. Payout is
based 100% on the shareholder return condition. Performance of the trust fund
described below will serve as a measurement proxy for the Company's shareholder
return during the period subsequent to the change in control.
Under the Procedures, in the event of a change in control, the Company will
establish and fund a trust to provide for the payment of all then outstanding
Awards, the payment of which is not accelerated following such change in
control. If funding occurs prior to the change in control, the Company will
deposit with the trustee that number of shares of common stock equal to the
number of performance shares comprising the then outstanding awards. If funding
occurs contemporaneously with or subsequent to the change in control, the
Company will deposit into the trust those securities, cash and other assets into
which such common stock would have been converted upon the change in control if
outstanding at such time. The trustee will hold the trust assets in the form
deposited; provided that any cash received will be invested in the common stock
of the parent company of the surviving entity if publicly traded and, if not
publicly traded, then cash will be invested in a fund designed to track the
performance of the S&P 500 index. The trust assets will be subject to the claims
of creditors of the Company in the event of the Company's insolvency. At such
time as all awards have been paid or expired for failure to meet performance
conditions, the trust will terminate and any remaining trust assets will be
returned to the Company.
In addition to modifying Plan payout procedures, the Amendments provide
that payout subsequent to a termination of employment is conditioned upon the
participant's adherence to certain consulting, non-compete and confidentiality
obligations. The Amendments also revise the provisions of the Plan governing its
future amendment. As originally adopted, the Plan requires the approval of
certain amendments to the Plan by the Shareholders of the Company. This
provision is similar to provisions which were formerly contained in Rule 16b-3
under the Securities Exchange Act of 1934. These provisions have been deleted
from Rule 16b-3 and the Amendments make a comparable revision to the Plan. As
amended, the Plan allows the Board of Directors to make all future amendments
13
<PAGE> 17
to the Plan without approval by the Shareholders of the Company. Such amendments
would, however, be subject to the shareholder approval requirements of any then
applicable laws, regulations and stock exchange rules.
PLAN BENEFITS
The following payments were made under the Plan with respect to the
four-year award period ended September 30, 1996:
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND POSITION ($) UNITS(1)
------------------------------------------------ ------------ ---------
<S> <C> <C>
Rex J. Lysinger................................. $
Chairman of the Board and CEO
Wm. Michael Warren, Jr.......................... $
President and COO
G. C. Ketcham................................... $
Executive Vice President,
CFO & Treasurer
Dudley C. Reynolds.............................. $
General Counsel and Secretary
Gary C. Youngblood.............................. $
Executive Vice President and
COO of Alabama Gas Corporation
Executive Group................................. $
Non-Executive Director Group.................... $ -0- -0-
Non-Executive Officer Employee Group............ $ (2)
</TABLE>
- ---------------
(1) The number of units awarded under the Plan in the last fiscal year is
described more fully under the caption "Executive Compensation -- Table 3"
of the Proxy Statement below.
(2) Payments were made under the Plan as amended by the Amendments. If payments
had been made without regard to the Amendments, one of the non-executive
officers who retired effective September 30, 1996 would have received an
aggregate additional payout of $19,086 (774 units) with respect to Award
Periods ending September 30, 1997, 1998 and 1999. Under the Plan as
amended, the retired officer will receive aggregate future payouts ranging
from no payout to 4,840 units depending on the Company's performance during
the balance of the award periods and subject to the retiree's compliance
with the consulting non-compete and confidentiality conditions imposed by
the Amendments.
14
<PAGE> 18
VOTE REQUIRED; RECOMMENDATION
The vote of the holders of a majority of the outstanding shares of the
Company's Common Stock is necessary to approve adoption of the Amendments. The
Board of Directors recommends that the Shareholders vote FOR the approval of the
Amendments.
15
<PAGE> 19
SUMMARY OF SECURITY OWNERSHIP OF MANAGEMENT AND
EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANTS
The following table shows the shares of Common Stock of the Company
("Common Stock") beneficially owned by each nominee for director or director, by
each executive officer of the Company named in the Summary Compensation Table,
and by all directors and executive officers of the Company (including certain
executive officers of the Company's subsidiaries) as a group and by participants
in the Energen Corporation Employee Savings Plan as a group, as of December 4,
1996. Except as noted below, each such individual has sole voting power and sole
investment power with respect to such shares.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL NUMBER OF PERCENT
OR PERSONS IN GROUP SHARES(1) OF CLASS
--------------------------------------------- --------- --------
<S> <C> <C>
Stephen D. Ban............................... 3,300 *
R.D. Cash.................................... *
J. Mason Davis, Jr........................... 2,786 *
James S. M. French........................... *
Wallace L. Luthy............................. 16,400 *
Rex J. Lysinger.............................. 50,179 *
Geoffrey C. Ketcham.......................... 16,142 *
Judy M. Merritt.............................. 934 *
Drayton Nabers, Jr........................... 9,947 *
Dudley C. Reynolds........................... *
Harris Saunders, Jr.......................... *
George S. Shirley............................ 3,338 *
W. Robbins Taylor............................ *
Wm. Michael Warren, Jr....................... *
Gary C. Youngblood........................... 20,218 *
All directors and executive officers (15
persons)................................... %
Energen Corporation Employee Savings
Plan(2).................................... 1,330,763 %
</TABLE>
- ------------
* Less than one percent.
(1) The shares of Common Stock shown above include shares owned by wives and
children of directors as to which shares the directors disclaim any
interest. Dunn Investment Company, of which Mr. French is President, Chief
Executive Officer and a director, owns shares of Common Stock and
the Profit Sharing Trust of Standard/Taylor Industries, Inc., of which Mr.
Taylor is President and Chairman of the Board, owns shares of Common
Stock, which shares are not included in the totals noted above. The shares
of Common Stock shown above for Messrs. Lysinger, Warren, Ketcham,
Reynolds, Youngblood and the executive officers of the
16
<PAGE> 20
Company include shares which are held for their respective accounts under
the Energen Corporation Employee Savings Plan and the Restricted Stock
Incentive Plan, described in the Executive Compensation section. Messrs.
Lysinger, Warren, Ketcham, Reynolds, Youngblood and all executive officers
as a group hold presently exercisable options to acquire 51,958, 29,048,
2,950, 1,250, 1,850, and 95,656 shares of Common Stock, respectively, which
amounts are included in the above table.
(2) The Energen Corporation Employee Savings Plan is a qualified voluntary
contributory retirement plan, with an employee stock ownership feature. The
Vanguard Group, Inc. serves as trustee for the Plan and must vote the
shares held by the plan in accordance with individual participant
instructions. Both current and retired employees of the Company are
participants in the Plan.
1996 COMPENSATION COMMITTEE REPORT
The Officers Review Committee ("ORC") of the Board of Directors is
comprised entirely of outside Directors. The ORC is responsible for overseeing
and administering the Company's executive compensation program.
COMPENSATION POLICY
The executive compensation program of the Company is reviewed annually by
the ORC and is designed to serve the interests of the Company and its
shareholders by aligning executive compensation with shareholder objectives and
to encourage and reward management initiatives that will benefit the Company
itself, its shareholders, its customers, and its employees over the long term.
Specifically, the executive compensation program seeks to:
(i) implement compensation practices which allow the Company to
attract and retain highly qualified executives and maintain a competitive
position in the executive marketplace with employers of comparable size and
in similar lines of business;
(ii) enhance the compensation potential of executives who are in the
best position to contribute to the development and success of the Company
by providing the flexibility to compensate for individual contributions to
superior corporate performance as measured by specific objectives compared
against a peer group; and
(iii) directly align the interests of executives with the long-term
interests of stockholders through compensation opportunities in the form of
integrated short- and long-term incentive plans the payouts of which are
predominantly in the form of Common Stock.
17
<PAGE> 21
These objectives are met through a program comprised of salary annual cash
incentive awards, and long-term stock and performance share opportunities which
are dependent on meeting or exceeding carefully defined corporate, subsidiary
and individual objectives.
SALARY. As a matter of policy, the ORC administers annual salary levels
relative to the competitive marketplace as determined through the use of
available compensation surveys. Each year the ORC reviews the issue of
competitive pay and adjusts salary structures accordingly with the midpoint of
each pay range approximating the average of the market. The ORC then considers
salary adjustments for the Company's executive officers, including those named
in the Summary Compensation Table. Salary adjustments are designed to reflect
consideration of the performance of each executive over the prior compensation
period, recognition of individual contributions to overall Company performance,
internal comparability considerations, as appropriate, and the executive's
placement in the salary range.
ANNUAL INCENTIVES. Executives are eligible each year for cash incentive
awards based upon attaining financial and non-financial objectives relative to
pre-established performance targets. Incentive awards, if made, are based upon
the successful attainment of objective corporate performance criteria (expressed
in terms of such criteria as return on equity, net income, market yield,
customer service, productivity, finding costs and reserve additions) and, where
appropriate, subsidiary performance, as well as defined individual performance
criteria. Assuming corporate, subsidiary and individual objectives are met, the
incentive award is based upon a percentage of the salary earned by the
participant during the performance year. Distributions are made in cash provided
that certain officers may elect, subject to approval of the ORC, to receive part
or all of an award in the form of options issued under the Company's Stock
Option Plan.
LONG-TERM INCENTIVE COMPENSATION. Currently the Company has in place a
Performance Share Plan and a Stock Option Plan. By its terms, the Company's
Restricted Stock Incentive Plan terminated on January 31, 1994, subject to
outstanding award agreements. The Performance Share Plan and Stock Option Plan
may be used separately or in combination with one another at the discretion of
the ORC. As a matter of policy, however, the ORC is now using the Performance
Share Plan as the primary vehicle to deliver long-term incentives. The purpose
of the Performance Share Plan and the Stock Option Plan is to provide executive
and key employees an opportunity to participate in the long-term economic growth
and performance of the Company.
1992 LONG-RANGE PERFORMANCE SHARE PLAN. An award of Performance Shares
entitles a participant to be paid the equivalent in value of one share of Common
Stock for each Performance Share awarded to a participant if the ORC has
determined that all conditions of payment, which are known as performance
condition guidelines, have been satisfied at the end of the four-year period
that commences on the first day of the fiscal year
18
<PAGE> 22
in which an award is granted (the "Award Period") or, under certain
circumstances, at the end of a one, two, or three-year period within the Award
Period (the "Interim Period"). The ORC may, in its discretion, alter or amend
performance condition guidelines prior to granting any new awards and may pay a
participant in cash or a combination of cash and shares of Common Stock.
According to the performance condition guidelines that have been adopted by
the ORC and are currently in effect under the plan, payment of an award will be
based on the Company's percentile ranking among a comparison group of forty
companies as measured for the applicable Award or Interim Period. The payout
percentage for one-half of the award will be based on the Company's percentile
ranking with respect to total shareholder return, which is based on dividends
paid and changes in the market price of a company's common stock over a period
of time. The payout percentage for the other one-half of the award will be based
on the Company's percentile ranking with respect to Average ROE, which is based
on a company's average annual reported income or loss before extraordinary items
over average shareholders' equity. Subject to the discretion of the ORC to
adjust for extenuating circumstances, the payout percentage measured separately
for each one-half of the award will be 100% if the Company ranks at or above the
75th percentile, 50% at the 50th percentile and 0% below the 50th percentile
with interpolation between the 50th and 75th percentiles. A proposal to amend
the plan is described more fully under the caption "3. Proposal to Amend the
Energen Corporation 1992 Long-Range Performance Share Plan" of the Proxy
Statement above.
1988 STOCK OPTION PLAN. The Stock Option Plan provides for the grant of
incentive stock options, non-qualified stock options, stock appreciation rights
and dividend equivalents or a combination thereof to officers and key employees,
all as determined by the ORC. If an option includes stock appreciation rights
("SARs"), then the optionee may elect to cancel all or any portion of the option
then subject to exercise, in which event the Company's obligation in respect of
such option may be discharged by payment of an amount in cash equal to the
excess, if any, of the fair market value of the shares of Common Stock subject
to such cancellation over the option exercise price for such shares. If the
exercised option includes dividend equivalents, the optionee will in addition to
the shares of Common Stock purchased upon exercise receive additional
consideration in an amount equal to the amount of cash dividends which would
have been paid on such shares had they been issued and outstanding during the
period commencing with the option grant date and ending on the option exercise
date, plus an amount equal to the interest that such dividends would have earned
from the respective dividend payment dates if deposited in an account bearing
interest compounded quarterly at the announced prime rate of AmSouth Bank of
Alabama in effect on the first day of the respective quarter.
19
<PAGE> 23
OPERATING SUMMARY
As demonstrated in each of the plan descriptions provided, compensation in
all its forms is linked directly to objective performance criteria of both the
Company, subsidiaries where applicable, and the individual executive's
performance. By doing so, the ORC has created an environment which encourages
long-term decisions which will benefit the Company, its shareholders, customers,
and employees and at the same time allow those executives, managers, and other
key employees within the Company to share in the success of those decisions and
actions.
ISSUES INFLUENCING COMPENSATION DECISIONS DURING THE REPORTING YEAR (OCTOBER 1,
1995 TO SEPTEMBER 30, 1996)
Energen completed another successful year October 1, 1995 through September
30, 1996. Earnings of $21.5 million were achieved from current year operations
equal to $1.95 per share reflecting a 10% growth rate over the prior fiscal year
earnings of $1.77 per share. Energen was able to increase its cash dividend 3.4%
to $1.20. These successes were made possible by similar successes in major
corporate subsidiaries. In spite of its successful year, Energen's actual
performance against a comparison group of peer companies was below the 50th
percentile for the year. This less satisfactory peer group comparison in large
part reflects improved performance by peer companies with service territories
which experienced colder than normal weather. Energen's financial performance
did not benefit from such weather variations due to the weather normalization
feature of the utility's tariff. The ORC considered these and other factors in
funding the incentive program and adjusting salaries. Awards under the
Long-Range Performance Share Plan were made in accordance with plan guidelines.
Actual CEO compensation action taken included adjusting base salary to
$363,083 reflecting both market competitive salary levels and actual individual
performance during the 1995-96 performance year. An incentive award payable
$90,000 in cash was earned for the 1995-96 reporting year reflecting the
performance of the Company, its subsidiaries and the incumbent himself in
achieving the financial and business results of the Company. Performance share
awards were made using the same multiples as in the previous year as set forth
in the ORC's Policy Statement supporting the Plan. Awards are a function of an
executive's position in the Company. Actual payout is totally dependent on
obtaining performance levels in accordance with previously described guidelines.
The Officers Review Committee: George S. Shirley, Chairman
J. Mason Davis, Jr.
Drayton Nabers, Jr.
20
<PAGE> 24
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Davis, a member of the Officers Review and Finance Committees, is a
partner in the law firm of Sirote & Permutt in Birmingham, Alabama, which
provides certain legal services to the Company. The Company's payments for such
legal services to Sirote & Permutt during fiscal year 1996 totaled approximately
$100,332 in fees and expenses. In the opinion of management, all such fees paid
to the firm were reasonable and were the same as those which would have been
charged by an unaffiliated third party for comparable services.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
fiscal year 1996 and the two prior fiscal years to the Company's Chief Executive
Officer and the Company's four other most highly compensated executive officers:
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS PAYOUTS
------------------------ ---------
ANNUAL COMPENSATION
-------------------------------------- RESTRICTED LONG-TERM
NAME AND INCENTIVE OTHER STOCK STOCK INCENTIVE ALL OTHER
PRINCIPAL SALARY COMPENSATION ANNUAL AWARD(S) OPTIONS/SAR PAYOUTS COMPENSATION
POSITION YEAR ($) ($) COMPENSATION ($)(1) (#) ($) ($)(2)
- -------------- ------- -------- ------------ ------------ ---------- ----------- --------- ------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- -------------- ------- -------- ------------ ------------ ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lysinger, Rex J. -- Chairman, and Chief Executive Officer
9/30/96 $363,083 $ 90,000 $263,520 $ 12,441
9/30/95 $343,394 $150,000 7,000 $186,073 $ 12,934
9/30/94 $328,083 $195,000 7,000 $ 12,436
Warren, Jr., Wm. Michael -- President and Chief Operating Officer
9/30/96 $283,250 $ 63,000 $152,280 $ 9,248
9/30/95 $264,273 $110,000 3,000 $111,219 $ 9,870
9/30/94 $252,916 $150,000 3,500 $ 11,532
Ketcham, Geoffrey C. -- Executive Vice President, Chief Financial Officer and Treasurer
9/30/96 $185,416 $ 40,000 $ 91,800 $ 9,283
9/30/95 $179,099 $ 85,700 $ 68,108 $ 9,339
9/30/94 $172,333 $113,400 $ 10,117
Youngblood, Gary C. -- Executive Vice President and Chief Operating Officer of Alabama Gas Corporation
9/30/96 $152,000 $ 32,000 $ 47,520 $ 9,795
9/30/95 $138,231 $ 54,200 $ 35,989 $ 8,905
9/30/94 $124,583 $ 65,800 $ 8,097
Reynolds, Dudley C. -- General Counsel and Secretary
9/30/96 $150,833 $ 32,000 $ 51,840 $ 9,039
9/30/95 $137,933 $ 48,900 $ 38,046 $ 7,211
9/30/94 $128,999 $ 66,000 $ 6,450
</TABLE>
21
<PAGE> 25
NOTES TO TABLE 1
(1) If applicable, column (f) represents the fair market value as of the date of
award of shares of restricted Common Stock granted pursuant to the
Restricted Stock Incentive Plan of Energen Corporation ("RSIP") adopted by
the Board of Directors on October 20, 1983 and approved by the Shareholders
on January 19, 1984. By its terms, the Plan terminated on January 1, 1994,
subject to outstanding award agreements and no new awards were made in
fiscal 1994.
As of September 30, 1996, the following individuals had restricted stock
grants which have not yet been released:
<TABLE>
<CAPTION>
AGGREGATE SHARES DOLLAR VALUE
TO BE RELEASED BASED ON 09/30/96
(SUBJECT TO PERFORMANCE CLOSING PRICE
NAME ACHIEVEMENT) ($24.00)
------------------------------ ----------------------- -----------------
<S> <C> <C>
Lysinger, Rex J............... 0 0
Warren, Jr. Wm. Michael....... 1,302 $31,248
Ketcham, Geoffrey C........... 867 $20,808
Reynolds, Dudley C............ 798 $19,152
Youngblood, Gary C............ 400 $ 9,600
</TABLE>
The executives are entitled to the payment of dividends as they are declared
and paid and shares will vest under the plan over a six year period
beginning with the completion of three years from date of grant provided
specific defined corporate, subsidiary, and individual performance levels
are achieved. In addition to the above terms, the restricted stock
generally becomes immediately vested upon a change of control event.
(2) The amounts shown represent contributions made by the Company to its defined
contributions Plans on behalf of each executive officer.
22
<PAGE> 26
TABLE 2
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ON EXERCISE VALUE REALIZED (#)(2) (#)(3)
NAME (#) ($)(1) (D) (E)
------- ----------- -------------- --------------------------- ---------------------------
YEAR (A) (B) (C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------- ------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 Lysinger -- -- 51,958 0 $ $ 0
1996 Warren -- -- 29,048 0 $ $ 0
1996 Ketcham -- -- 2,950 0 $ $ 0
1996 Reynolds -- -- 1,250 0 $ $ 0
1996 Youngblood -- -- 1,850 0 $ $ 0
</TABLE>
- ---------------
(1) Market value of underlying securities at time of exercise minus the exercise
price.
(2) In addition, on November 22, 1995, the Board granted Messrs. Lysinger and
Warren stock options for 7000 and 3000 shares, respectively, in partial
payment of their incentive awards for the 1994-95 performance year. These
options are immediately exercisable and have an exercise price of $22.125
per share.
(3) Market value of underlying securities at year-end market price (September
30, 1996) of $24.00 per share minus the exercise price.
TABLE 3
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
NUMBER OF SHARES OTHER PERIOD ------------------------------
UNITS OR UNTIL MAXIMUM
OTHER RIGHTS MATURATION OR THRESHOLD TARGET ($ OR
NAME (#) PAYOUT ($ OR #) ($ OR #) #)
--------------- ---------------- --------------- --------- -------- -------
YEAR (A) (B) (C) (D) (E) (F)
- --------------- --------------- ---------------- --------------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
1996 Lysinger 12,280 10/95 to 10/99 3,070 N/A 12,280
1996 Warren 7,590 10/95 to 10/99 1,897 N/A 7,590
1996 Ketcham 4,180 10/95 to 10/99 1,045 N/A 4,180
1996 Reynolds 3,170 10/95 to 10/99 792 N/A 3,170
1996 Youngblood 3,170 10/95 to 10/99 792 N/A 3,170
</TABLE>
NOTES TO TABLE 3
The 1992 Long-Range Performance Share Plan (the "Plan") and a proposal to
amend the Plan are described more fully under the caption "3. Proposal to Amend
the Energen Corporation 1992 Long-Range Performance Share Plan" of the Proxy
Statement above.
23
<PAGE> 27
RETIREMENT INCOME PLAN
Officers of the Company are covered by the Energen Corporation Retirement
Income Plan, a defined benefit plan covering substantially all employees of the
Company. The amount of contributions made by the Company to the plan is not
reflected in the Compensation Table, since the amount of the contribution with
respect to a specified person is not and cannot readily be separately or
individually calculated by the regular actuaries for the plan.
Benefits under the plan are based on years of service at retirement and on
"Final Earnings," the average base compensation for the highest sixty
consecutive months out of the final 120 months of employment. (This compensation
consists only of base salary and excludes remuneration in the form of
contributions to other benefit plans or any other form of compensation such as
any compensation received under the Annual Incentive Compensation Plan or
Restricted Stock Incentive Plan.) Normal or delayed retirement benefits are
payable upon retirement on the first day of any month following attainment of
age 65 and continuing for life, subject to an annual cost-of-living increase of
up to three percent.
The Company has entered into retirement supplement agreements (Supplemental
Agreements) with certain officers. Generally, each such agreement provides that
the employee will receive, upon normal retirement (which under the Supplemental
Agreement is defined as retirement on the first day of any month following
attainment of age 60), a supplemental retirement benefit equal to the difference
between 60% of the employee's compensation determined as of the employee's
normal retirement date and the employee's normal retirement benefit (including
social security benefit). For purposes of the Supplemental Agreements
compensation is determined based on a formula taking into account the average of
the highest 36 months of base salary during the five years prior to retirement
plus the average of the three highest annual incentive awards for the five full
fiscal years preceding the earlier of retirement or the officer's 61st birthday.
The following table presents estimated annual benefits payable from both
the plan and the supplemental agreements upon normal or delayed retirement to
persons in specified compensation and years-of-service classifications. Benefits
payable to an employee under the plan are subject to limits imposed by Section
415 of the Internal Revenue Code. As of September 30, 1996, no employees of the
Company would have been entitled to payments
24
<PAGE> 28
for benefits in excess of the Section 415 limits. The amounts shown are subject
to deduction for applicable Social Security benefits at age 62.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- ------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000........... $ 81,000 $108,000 $108,000 $108,000 $108,000 $108,000
$150,000........... $ 97,200 $129,600 $129,600 $129,600 $129,600 $129,600
$175,000........... $113,400 $151,200 $151,200 $151,200 $151,200 $151,200
$200,000........... $129,600 $172,800 $172,800 $172,800 $172,800 $172,800
$225,000........... $145,800 $194,400 $194,400 $194,400 $194,400 $194,400
$250,000........... $162,000 $216,000 $216,000 $216,000 $216,000 $216,000
$300,000........... $194,400 $259,200 $259,200 $259,200 $259,200 $259,200
$400,000........... $259,200 $345,600 $345,600 $345,600 $345,600 $345,600
$450,000........... $291,600 $388,800 $388,800 $388,800 $388,800 $388,800
$500,000........... $324,000 $432,000 $432,000 $432,000 $432,000 $432,000
</TABLE>
The amount of base compensation and the years of service credited under the
plan for individuals shown in the Compensation Table are as follows: Mr.
Lysinger, $363,000, 21 years; Mr. Warren, $283,000, 13 years; Mr. Ketcham,
$185,000, 15 years; Mr. Reynolds $151,000, 16 years; and Mr. Youngblood
$152,000, 27 years.
SEVERANCE COMPENSATION AGREEMENTS
The Company has entered into severance compensation agreements with Messrs.
Lysinger, Warren, Ketcham, Youngblood and Reynolds, as well as nine other
officers not named in the Summary Compensation Table. Generally, each such
agreement provides that if, within thirty-six months following a
change-in-control of the Company, the employee's employment in terminated in a
qualified termination, then the Company shall make a lump sum payment to the
employee equal to a percentage of the employee's annual base salary in effect
immediately prior to the change-in-control, plus that percentage of the
employee's highest additional cash compensation for the three fiscal years
immediately prior to the fiscal year during which the change-in-control occurs.
For purposes of establishing the applicable percentage of an employee's annual
salary and additional cash compensation, the Company has established a
three-tier structure in which tier-one employees receive 250% of such
compensation, tier-two employees receive 200% of such compensation and
tier-three employees receive 150% of such compensation. For purposes of
severance compensation calculations, Messrs. Lysinger, Warren and Ketcham are
considered tier-one employees, Messrs. Youngblood and Reynolds are considered
tier-two employees and the remainder of the employees with whom the Company has
entered into severance compensation agreements are considered either tier-two or
tier-three employees.
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<PAGE> 29
The agreements also provide for the continuance of certain insurance and other
employee benefits for a period of twenty-four months following any such
termination of employment. For purposes of the agreements, (i) the term
"qualified termination" means a termination during a window period other than
for cause, death or disability and a termination other than during a window
period by the Company other than for cause, by the employee for good reason or
by written agreement to such effect between the employee and the Company, (ii)
the term "window period" means the thirty-day period immediately following the
first anniversary of a change-in-control, (iii) the term "cause" generally means
failure to substantially perform duties, misconduct injurious to the Company or
conviction of a felony, and (iv) the term "good reason" generally means a
reduction in the position, duties, responsibilities, status or benefits of the
employee's job.
26
<PAGE> 30
PERFORMANCE GRAPH
ENERGEN CORPORATION -- COMPARISON OF FIVE-YEAR
CUMULATIVE SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
40 COMPANY
MEASUREMENT PERIOD ENERGEN COR- S&P 500 IN- PEER GROUP
(FISCAL YEAR COVERED) PORATION DEX INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 106 111 109
1993 152 125 138
1994 145 130 116
1995 148 169 132
1996 172 203 167
</TABLE>
Note: Total shareholder return includes reinvested dividends.
The forty companies in the peer group index noted above are as follows:
Nor-Am Energy Corporation (formerly Arkla, Inc.), Atlanta Gas Light Company,
Atmos Energy Corporation, Bay State Gas Company, Brooklyn Union Gas, Cascade
Natural Gas Corp., Colonial Gas Company, Connecticut Energy Corporation,
Connecticut Natural Gas Corp., Consolidated Natural Gas Company, Eastern
Enterprises, Enserch Corporation, Equitable Resources, Inc., Indiana Energy,
Inc., KN Energy Inc., Laclede Gas Company, MCN Corporation, National Fuel Gas
Company, New Jersey Resources Corp., Nicor Inc., North Carolina Natural Gas
Corp., Northwest Natural Gas Company, NUI Corporation, Oneok Inc., Pacific
Enterprises, Pennsylvania Enterprises, Inc., Peoples Energy Corporation,
Piedmont Natural Gas Co., Inc., Providence Energy Corporation, Public Service of
North Carolina Inc. Questar Corporation, South Jersey Industries, Inc.,
Southeastern Michigan Gas Enterprises, Inc., Southwest Gas Corporation,
Southwestern Energy Company, UGI Corporation, United Cities Gas Company,
Washington Energy Company, Washington Gas Light Company and Wicor, Inc.
27
<PAGE> 31
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand examined the financial statements of the
Company for the fiscal year ended September 30, 1996, and the Board of Directors
intends to continue the services of this firm for the fiscal year ending
September 30, 1997. A representative of Coopers & Lybrand will be present at the
Annual Meeting and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of Shareholders intended for inclusion in next year's proxy
statement must be received by the Company no later than August , 1997.
GENERAL INFORMATION
Shareholders of record at the close of business on December 4, 1996 are
entitled to vote upon all matters at the Annual Meeting. As of the close of
business on December 4, 1996 there were outstanding shares of Common
Stock, each share of which is entitled to one vote on all matters to be
considered at the Annual Meeting.
Pursuant to Section 10-2B-2.25 of the Code of Alabama 1975, as amended, and
the Company's bylaws, a majority of the Common Stock shares entitled to vote,
represented in person or by proxy, will constitute a quorum at a meeting of the
Shareholders. Section 10-2B-7.28 of the Code of Alabama 1975, as amended,
requires that each of the nominees to be elected to the Board of Directors,
receive the affirmative vote of the majority of the votes cast by the holders of
shares of Common Stock represented at the Annual Meeting as part of the quorum.
Section 10-2B-7.25 of the Code of Alabama 1975, as amended, requires, for the
approval of the proposed amendment for the Plan, the affirmative vote of the
holders of a majority of the outstanding shares of the Company's Common Stock
casting votes for or against approval of the proposed amendment to the Plan at a
meeting of shareholders at which a quorum is present. In neither the case of the
election of directors nor consideration of the proposed amendment to the Plan
does the vote include shares which abstain from voting on a matter or which are
not voted on such matter by a nominee because such nominee is not permitted to
exercise discretionary voting authority and the nominee has not received voting
instructions from the beneficial owner of such shares. Generally, brokers who
act as nominees will be permitted to exercise discretionary voting authority
where they have received no instructions in uncontested elections for directors
where the brokers have complied with Rule 451 concerning the delivery of proxy
materials to beneficial owners of the Company's Common Stock held by such
brokers. Section 234 of the Constitution of Alabama of 1901, as amended,
requires,
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<PAGE> 32
for the approval of the proposal to increase the amount of bonded indebtedness
which the Company is authorized to incur, the affirmative vote of the holders of
a majority of the outstanding shares of the Company's Common Stock.
In case any person named herein for election as a director is not available
when the election occurs, proxies in the accompanying form may be voted for a
substitute as well as for the other persons named herein.
So far as the Board of Directors of the Company now knows, no business
other than that referred to above will be acted upon at the Annual Meeting. The
persons named in the Board of Directors' proxy may, in the absence of
instruction to the contrary, vote upon all matters presented for action at the
Annual Meeting according to their best judgment.
The costs of soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to the use of the mails, proxies may be
solicited by personal interview or by telephone and telegraph. Brokerage houses
and other custodians and fiduciaries will be requested to forward at the
Company's expense soliciting materials to the beneficial owners of stock held of
record by them. The Company has also engaged Georgeson & Co. of New York to
assist in the solicitation of proxies of brokers and financial institutions and
their nominees. This firm will be paid a fee of $7,500, including out-of-pocket
expenses.
ENERGEN CORPORATION
/s/ Rex J. Lysinger
Chairman of the Board
and Chief Executive Officer
Birmingham, Alabama
December 20, 1996
29
<PAGE> 33
APPENDIX A
ENERGEN CORPORATION
1992 LONG-RANGE PERFORMANCE SHARE PLAN
(AS IN EFFECT PRIOR TO ADOPTION OF THE PROPOSED AMENDMENTS TO
THE PLAN SET FORTH IN APPENDIX B)
1. PURPOSE
The purpose of the Energen Corporation 1992 Long-Range Performance Share
Plan (the "Plan") is to further the long-term growth in profitability of the
Corporation by offering long-term incentives in addition to current compensation
to those key executives who will be largely responsible for such growth.
2. DEFINITIONS
(a) "Award" means Performance Shares awarded to a Participant pursuant to
the terms of the Plan.
(b) "Award Period" means the 4-year period (Energen fiscal years)
commencing with the first day of the fiscal year in which the applicable Award
is granted, except as otherwise determined by the Committee at the time of grant
and subject to the other provisions of this Plan.
(c) "Board of Directors" means the Board of Directors of Energen.
(d) "Cause". Termination of employment by the Corporation for "Cause" shall
mean termination based on any of the following:
(1) The willful and continued failure by a Participant to
substantially perform such participant's duties with the Corporation (other
than any such failure resulting from such participant's incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the Participant specifically identifying the
manner in which such Participant has not substantially performed such
Participant's duties;
(2) The engaging by a Participant in willful, reckless or grossly
negligent misconduct which is demonstrably injurious to the Corporation
monetarily or otherwise; or
(3) The conviction of a Participant of a felony.
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(e) "Change in Control" means:
(1) The acquisition by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding for
this purpose, any employee benefit plan of Energen or any of its
Subsidiaries which acquires beneficial ownership of voting securities of
Energen), of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of 25% or more of either the then outstanding shares of
Common Stock or the combined voting power of Energen's then outstanding
voting securities, in one transaction or a series of transactions;
(2) Individuals who, as of November 27, 1991, constitute the Board of
Directors (the "Continuing Directors") cease for any reason to constitute
at least a majority of the Board of Directors, provided that any person
becoming a director of Energen subsequent to November 27, 1991, whose
election, or nomination for election by Energen's stockholders, was
approved by a vote of at least a majority of the Continuing Directors
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
solicitation with respect to the election or removal of directors of
Energen, as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) shall be, for purposes of the Plan, considered as though such
person were a Continuing Director; or
(3) (i) The occurrence of a merger, consolidation or reorganization of
Energen in which, as a consequence of the transaction, either the
Continuing Directors do not constitute a majority of the directors of the
continuing or surviving corporation or any person, entity or "group",
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act,
controls 25% or more of the combined voting power of the continuing or
surviving corporation; (ii) the occurrence of any sale, lease or other
transfer, in one transaction or a series of transactions, of all or
substantially all of the assets of Energen; or (iii) the adoption by
Energen of a plan for its liquidation or dissolution.
(f) "Chief Executive Officer" means the chief executive officer of Energen.
(g) "Committee" means the Officers Review Committee of the Board of
Directors or such other committee of two or more directors as may be determined
by the Board of Directors, provided that in all events each member of the
Committee shall be a "disinterested person" within the meaning of Rule
16b-3(c)(2) under the Exchange Act.
(h) "Common Stock" means the Common Stock, par value $0.01 per share, of
Energen.
(i) "Corporation" means Energen and its Subsidiaries.
(j) "Employee" means any person (including any officer or director)
employed by the Corporation on a fulltime salaried basis.
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<PAGE> 35
(k) "Energen" means Energen Corporation, an Alabama Corporation.
(l) "Exchange Act" means the Securities Exchange Act of 1934.
(m) "Fair Market Value" means the average of the daily closing prices for a
share of stock for the 20 trading days ending on the fifth business day prior to
the date of payment of Performance Shares for an Award Period or an Interim
Period, as the case may be, on the Composite Tape for the New York Stock
Exchange -- Listed Stocks, or, if the stock is not listed on such Exchange, on
the principal United States securities exchange registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on which the stock is
listed, or, if the stock is not listed on any such Exchange, the average of the
daily closing bid quotations with respect to a share of the stock for such 20
trading days on the National Association of Securities Dealers, Inc., Automated
Quotations System or any system then in use, or, if no such quotations are
available, the fair market value of a share of stock as determined by a majority
of the Board of Directors; provided, however that if a Change in Control shall
have occurred, then such determination shall be made by a majority of the
Continuing Directors.
(n) "Interim Period" means a 1, 2 or 3 year period within an Award Period
for which the Committee determines that there shall be Interim Periods.
(o) "Officer" means any Employee of the Corporation who is an "officer" of
the Corporation within the meaning of Rule 16a-1(f) under the Exchange Act as
well as any Employee who has an officer title with the Corporation.
(p) "Participant" means an Employee who is selected by the Committee to
receive an Award under the Plan.
(q) "Performance Share" means the equivalent of one share of Common Stock.
(r) "Subsidiary" means any corporation, the majority of the outstanding
voting stock of which is owned, directly or indirectly, by Energen.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. No member of the Committee
shall be eligible to participate in the Plan while serving as a member of the
Committee. Subject to the provisions of the Plan, the Committee shall have the
exclusive authority to select the Employees who are to participate in the Plan,
to determine the Award to be made to each Employee selected to participate in
the Plan, and to determine the conditions subject to which Awards will become
payable under the Plan; provided, however, that, subject to the provisions of
Section 5(a) hereof, the Committee may delegate to the Chief Executive Officer
the authority to select and make Awards to certain Employees.
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<PAGE> 36
The Committee shall have full power to administer and interpret the Plan
and to adopt such rules and regulations consistent with the terms of the Plan as
the Committee deems necessary or advisable in order to carry out the provisions
of the Plan. Except as otherwise provided in the Plan, the Committee's
interpretation and construction of the Plan and of any conditions applicable to
Performance Share Awards shall be conclusive and binding on all persons,
including the Corporation and all Participants.
The Plan shall be unfunded. Benefits under the Plan shall be paid from the
general assets of the Corporation.
4. PARTICIPATION
Subject to the provisions of Section 5(a) hereof, Participants in the Plan
shall be selected by the Committee or the Chief Executive Officer from those
Employees of the Corporation, who, in the estimation of the Committee or the
Chief Executive Officer, have an opportunity to influence the long-term
profitability of the Corporation.
5. PERFORMANCE SHARE AWARDS
(a) The Committee,or the Chief Executive Officer upon delegation of
authority by the Committee, may from time to time select employees to receive
Awards under the Plan. An Employee may be granted more than one Award under the
Plan. In its discretion at the time of grant, the Committee may determine that
an Interim Period or Interim Periods should be established for payment with
respect to Awards. Whenever Interim Periods are established, the terms and
conditions with respect to payment after the end of such Interim Period shall be
those set by the Committee. The Committee shall make all Awards to Officers. The
Committee may, in its discretion, authorize a total number of Performance Shares
to be awarded to non-Officer Employees and delegate to the Chief Executive
Officer the authority to select such Employees, to determine the number of
Performance Shares to be awarded to such Employees and to establish Interim
Periods with respect to Awards to such Employees. The Chief Executive Officer
shall promptly make a written report to the Committee setting forth the name and
positions of the Employees receiving such Awards and the number of Performance
Shares awarded to each such employee.
(b) An Award shall not entitle a Participant to receive any dividends or
dividend equivalents on Performance Shares; no Participant shall be entitled to
exercise any voting or other rights of a stockholder with respect to any Award
under the Plan; and no Participant shall have any interest in or rights to
receive any shares of Common Stock prior to the time when the Committee
determines the form of payment of Performance Shares pursuant to Section 6.
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<PAGE> 37
(c) Payment of an Award to any Participant shall be made in accordance with
Section 6 and shall be subject to such conditions for payment as the Committee
may prescribe at the time the Award is made.
(d) Each Award shall be made in writing and shall set forth the terms and
conditions set by the Committee for payment of such Award.
6. PAYMENT OF PERFORMANCE SHARE AWARDS
Each Participant granted an Award shall be entitled to payment on account
thereof as of the close of the Award Period applicable to such Award, but only
if the Committee has determined that the conditions for payment of the Award set
by the Committee have been satisfied. Participants granted Awards with Interim
Periods shall be entitled to partial payment on account thereof as of the close
of the Interim Period, but only if the Committee has determined that the
conditions for partial payment of the Award set by the Committee have been
satisfied. Performance Shares paid to a Participant for an Interim Period need
not be repaid to the Corporation, notwithstanding that, based on the conditions
set for payment at the end of the Award Period, such Participant would not have
been entitled to payment of any portion of such Award. Any Performance Shares
paid to a Participant for the Interim Period during an Award Period shall be
deducted from the Performance Shares to which such Participant is entitled at
the end of the Award Period.
At the time it determines whether the conditions for payment have been
satisfied, the Committee, in its discretion, shall determine whether the Awards
will be paid all in cash, or in some combination of cash and shares of Common
Stock, except and provided that the Committee must pay in cash an amount equal
to the federal, state and other taxes which the Corporation is required to
withhold, and further provided that payment in shares of Common Stock shall be
subject to the aggregate share limitation set forth in Section 11. The
Corporation shall deduct from the cash portion of all Awards any federal, state
and other taxes required by law to be withheld with respect to such Awards.
Payment of Awards shall be made by the Corporation as promptly as possible
after the determination by the Committee that payment has been earned and upon a
date fixed by the Committee to permit calculation of Fair Market Value of the
Common Stock. The portion of the Award paid in Common Stock shall be equal to
the number of Performance Shares being paid in Common Stock, and the balance
shall be an amount of cash equal to the Fair Market Value of the remaining
Performance Shares to be paid.
7. DEATH OR DISABILITY
If, prior to the close of the Award Period with respect to an Award, a
Participant's employment terminates by reason of death, or total and permanent
disability (as deter-
A-5
<PAGE> 38
mined under Energen's Retirement Income Plan), payment of such Award shall be
made as promptly as possible after death or the date of determination of total
and permanent disability, computed as follows: First, determine (based on the
conditions set by the Committee for payment of Awards for the subject Award
Period) the number of Performance Shares that would have been paid if the
subject Award Period had ended at the close of the last whole fiscal quarter
prior to the date of death or determination of disability. Then, multiply the
above-determined number by a fraction, the numerator of which is the number of
months during the subject Award Period that the Participant was an active
Employee, and the denominator of which is the number of months in the Award
Period; and this product shall be reduced by any Performance Shares paid to such
Participant with respect to an Interim Period during the Award Period.
8. DIVESTITURE; REDUCTION IN WORK FORCE
If, prior to the close of the Award Period with respect to an Award, a
Participant's employment terminates by reason of involuntary termination
resulting from (i) the divestiture by the Corporation of one or more of its
business segments or a significant portion of the assets of a business segment,
or (ii) a significant reduction by the Corporation in its salaried work force,
payment of the Participant's Award shall be computed in the same manner as in
Section 7, as if such Participant had died or become totally and permanently
disabled on the date of such termination.
9. TERMINATION AFTER EARLY RETIREMENT DATE
If, prior to the close of the Award Period with Respect to an Award, a
Participant's employment terminates, other than for Cause, on or after such
Participant's early retirement date (as determined under the Energen Corporation
Retirement Income Plan), payment of the Participant's Award shall be made as
promptly as possible after such termination and the amount of such payment shall
be computed in the same manner as in Section 7, as if such Participant had died
or become totally and permanently disabled on the date of such termination.
10. TERMINATION PRIOR TO EARLY RETIREMENT DATE, TERMINATION FOR CAUSE
If, prior to the close of the Award Period with respect to an Award, a
Participant's employment terminates for any reason other than those set out in
Sections 7 and 8 prior to the early retirement date described in Section 9, and
in all cases involving termination for Cause regardless of timing, any unpaid
portion of such Participant's Award shall be forfeited.
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<PAGE> 39
11. LIMITATION ON AWARDS
The maximum number of Performance Shares which may be awarded under the
Plan shall not exceed an aggregate of 500,000 (except as adjusted in accordance
with Section 17) and no more than an aggregate of 350,000 shares of Common Stock
(similarly adjusted in accordance with Section 17) shall be issued in payment of
Performance Share Awards, the remainder being payable in cash. Any Performance
Shares awarded under the Plan which are not payable upon expiration or
termination of the applicable Award Period, for whatever reason, shall thereupon
become available again for award under the Plan.
12. TERM OF THE PLAN
The Plan shall be effective October 1, 1991, subject to the approval of the
Plan by the stockholders of Energen at the Annual Meeting of Stockholders to be
held January 22, 1992. Awards may be granted under the Plan by the Committee
prior but subject to such stockholder approval. The Board of Directors may
terminate the Plan at any time. If not sooner terminated, the Plan terminates on
the date on which all of the Performance Shares subject to award under the Plan
have been paid, but no grant of Awards may be made after September 30, 2001 No
such termination shall adversely affect any right or obligation with respect to
an Award theretofore made.
13. CANCELLATION OF PERFORMANCE SHARES
With the written consent of a Participant holding Performance Shares
granted to such Participant under the Plan, the Committee may cancel such
Performance Shares. In the event of any such cancellation, all rights of the
former holder of such cancelled Performance Shares in respect of such cancelled
Performance Shares under the Plan or otherwise shall terminate.
14. NO ASSIGNMENT OF INTEREST
The interest of any person in the Plan shall not be assignable, either by
voluntary assignment or by operation of law, and any assignment of such
interest, whether voluntary or by operation of law, shall render the Award void.
Amounts payable under the Plan shall be transferable only by will or by the laws
of descent and distribution.
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<PAGE> 40
15. EMPLOYMENT RIGHTS
An Award made under the Plan shall not confer any right on the Participant
to continue in the employ of the Corporation or limit in any way the right of
the Corporation to terminate such Participant's employment at any time.
16. EXPENSES
The expenses of administering the Plan shall be borne by the Corporation.
17. DILUTION AND OTHER ADJUSTMENTS
If Energen shall at any time issue any shares of Common Stock (i) in
subdivision of outstanding shares of Common Stock, by reclassification or
otherwise, or (ii) for a stock dividend, the number of Performance Shares which
previously have been awarded to Participants and which may be awarded under the
Plan shall be increased proportionately; and in like manner, in case of any
combination of shares of Common Stock, by reclassification or otherwise, the
number of Performance Shares which previously have been awarded to Participants
and which may be awarded under the Plan shall be reduced proportionately. If
Energen shall at any time declare and pay an extraordinary dividend in cash or
property (other than a stock dividend with respect to the Common Stock referred
to in clause (ii), above), the number of Performance Shares which previously
have been awarded to Participants shall be increased in such manner as the
Committee shall determine to be fair under the circumstances of such
extraordinary dividend; provided, however, that if a Change in Control shall
have occurred, such determination shall be made by a majority of the Continuing
Directors.
18. CHANGE IN CONTROL
If Energen is the subject of a Change in Control, all outstanding Awards
shall be paid as soon after the date of such Change in Control as practicable.
Payment of the Awards shall be based on satisfaction of the applicable
performance conditions measured as if all Award Periods had ended at the close
of the last whole fiscal quarter prior to the date of the Change in Control,
provided that for purposes of any performance conditions involving the price of
the Common Stock or payment of dividends, stock shall be priced equal to its
Fair Market Value based on the twenty trading days immediately preceding the
date of such Change in Control and the period for dividend measurement shall
extend to and include the day immediately prior to the date of the Change in
Control.
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<PAGE> 41
19. AMENDMENT OF THE PLAN
The Board of Directors may amend or suspend the Plan at any time; provided,
however, that no amendment may, without stockholder approval, materially
increase the benefits accruing to participants under the Plan, materially
increase the number of Performance Shares which may be awarded or the number of
shares of Common Stock which may be issued under the Plan, or materially modify
the requirements as to eligibility for participation in the Plan, increase the
total number of Performance Shares which may be awarded under the Plan or change
the definition of Performance Share and provided further, that no provision of
the Plan relating to a Change in Control nor any definition of any defined term
used in any such provision may be amended or suspended after the occurrence of a
Change in Control. No such amendment or suspension shall adversely affect any
right or obligation with respect to an Award theretofore made, including,
without limitation, the right to receive payment of Awards in accordance with
Section 18.
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<PAGE> 42
APPENDIX B
PROPOSED AMENDMENTS
OF
ENERGEN CORPORATION
1992 LONG-RANGE PERFORMANCE SHARE PLAN
The Energen Corporation 1992 Long-Range Performance Share Plan (the "Plan")
is amended as follows:
A. Section 2(h) of the Plan is amended to read in its entirety as follows:
(h) "Common Stock" means the Common Stock, par value $0.01 per share,
of Energen as such stock may be reclassified, converted or exchanged by
reorganization, merger or otherwise.
B. Section 2(r) of the Plan is redesignated as Section 2(s) and a new
Section 2(r) is added to the Plan reading in its entirety as follows:
(r) "Qualified Termination" means termination of a Participant's
employment with the Corporation which is:
(i) An involuntary termination by the Corporation other than for
Cause;
(ii) Expressly agreed in writing by the Participant and the
Corporation to constitute a Qualified Termination for purposes of this
Plan;
(iii) A result of the death, Disability or Retirement of the
Participant;
(iv) A voluntary termination by the Participant for Good Reason.
The term "Good Reason" means with respect to an Award and a Participant,
the occurrence subsequent to the grant of such Award of (A) a reduction
in the Participant's aggregate rate of monthly base pay from the
Corporation or (B) the termination or materially adverse modification of
the Energen annual Incentive Compensation Plan without substitution of
new short-term incentives providing comparable compensation
opportunities for the Participant.
C. Sections 7 and 8 of the Plan are amended to read in their entirety as
follows:
7. TERMINATION OF EMPLOYMENT
Except in the case of a Qualified Termination if, prior to the close of the
Award Period with respect to an Award, a Participant's employment terminates,
then any unpaid portion of such Participant's Award shall be forfeited. In the
case of a Qualified Termination, the
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<PAGE> 43
Participant shall remain entitled to payout of any outstanding Awards at the end
of the applicable Award Period in accordance with the terms of this Plan
including without limitation applicable performance conditions.
8. CONSULTING, NON-COMPETE AND CONFIDENTIALITY
A Participant's entitlement, if any, to payout of Awards subsequent to
termination of employment shall continue so long as the Participant is in
compliance with the following requirements. Failure to comply shall result in
forfeiture of all then outstanding Awards.
(a) Consulting Services. For a period of three years following the
termination of the Participant's employment with the Corporation ("Date of
Termination"), Participant will fully assist and cooperate with Corporation
and its representatives (including outside auditors, counsel and
consultants) with respect to any matters with which the Participant was
involved during the course of employment with Corporation, including being
available upon reasonable notice for interviews, consultation, and
litigation preparation. Except as otherwise agreed by Participant,
Participant's obligation under this Section 8(a) shall not exceed 80 hours
during the first year and 20 hours during each of the following two years.
Such services shall be provided upon request of the Corporation but
scheduled to accommodate Participant's reasonable scheduling requirements.
Participant shall receive no additional fee for such services but shall be
reimbursed all reasonable out-of-pocket expenses.
(b) Non-Compete. For a period of twelve months following the Date of
Termination, the Participant shall not Compete, (as defined below) or
assist others in Competing with the Corporation. For purposes of this
Agreement, "Compete" means (i) solicit in competition with Alabama Gas
Corporation ("Alagasco") any person or entity which was a customer of
Alagasco at the Date of Termination; (ii) offer to acquire any local gas
distribution system in the State of Alabama; or (iii) offer to acquire any
coalbed methane interest in the State of Alabama. Employment by, or an
investment of less than one percent of equity capital in, a person or
entity which Competes with the Corporation does not constitute Competition
by Participant so long as Participant does not directly participate in,
assist or advise with respect to such Competition.
(c) Confidentiality. Participant agrees that at all times following
the Date of Termination, Participant will not, without the prior written
consent of Energen, disclose to any person, firm or corporation any
confidential information of Corporation which is now known to Participant
or which hereafter may become known to Participant as a result of
Participant's employment or association with Corporation, unless such
disclosure is required under the terms of a valid and effective subpoena or
order issued by a court or governmental body; provided, however, that the
foregoing
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shall not apply to confidential information which becomes publicly
disseminated by means other than a breach of this Agreement.
D. The text of Sections 9 and 10 of the Plan is deleted, and such sections
are not renumbered.
E. Section 18 of the Plan is amended to read in its entirety as follows:
18. CHANGE IN CONTROL
The other provisions of the Plan notwithstanding, (i) the Committee is
authorized to specify such procedures as it may deem appropriate in connection
with a Change in Control of Energen, including without limitation acceleration
of payment of part or all of outstanding Awards, the establishment and funding
of a trust to be held for the payment of Awards following such Change in
Control, and the modification of performance conditions applicable to
outstanding Awards and (ii) all Award payments made subsequent to a Change in
Control shall be paid in cash.
F. Section 19 of the Plan is amended to read in its entirety as follows:
19. AMENDMENT OF THE PLAN
The Board of Directors may amend or suspend the Plan at any time. No such
amendment or suspension shall adversely affect any right or obligation with
respect to an Award theretofore made, including, without limitation, the right
to receive payment of Awards in accordance with Section 18 and procedures
adopted thereunder (subject, however, to the right of the Committee to amend or
suspend such Section 18 procedures prior to the occurrence of a Change in
Control).
B-3
<PAGE> 45
APPENDIX C
PROXY -- ENERGEN CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENERGEN CORPORATION
The undersigned, revoking all proxies heretofore given with respect to the
shares represented hereby, hereby appoints REX J. LYSINGER and DUDLEY C.
REYNOLDS, or either of them acting in the absence of the other, with full power
of substitution, proxies to represent the undersigned at the Annual Meeting of
Shareholders of Energen Corporation, to be held on January 22, 1997 at 10:00
a.m., Central Standard Time, at the principal office of the Company in
Birmingham, Alabama, and at any adjournments thereof (the "Meeting"),
respecting the shares of Common Stock which the undersigned would be entitled
to vote if then personally present, as follows:
This proxy should be mailed in the enclosed addressed envelope (no postage
required if mailed in the United States). To assure the necessary representation
at the Meeting, please date and sign this proxy and mail it to the Company
promptly. Please mail your proxy to the Company even though you plan to attend
the Meeting. If you vote in person at the Meeting, your Proxy will not be used.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
ENERGEN CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [/]
[ ]
<TABLE>
<CAPTION>
FOR all VOTE
nominees listed WITHHELD
(except as from all
indicated below) nominees FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: [ ] [ ] 3. Proposal to amend the Energen Corpor- [ ] [ ] [ ]
Nominees--For three year term ending 2000: ation 1992 Long-Range Performance Share
R.D. Cash, Rex J. Lysinger, Dr. Judy M. Merritt Plan as described in the Proxy Statement
and Drayton Nabers, Jr. of the Company dated December 20, 1996.
(To withhold authority to vote for any 4. In their discretion, to vote upon such other matters as
individual nominee, write that nominee's may properly come before the Meeting.
name in the space provided below.)
________________________________________
FOR AGAINST ABSTAIN
2. Proposal to increase the amount of [ ] [ ] [ ]
bonded indebtedness which the
Company is authorized to incur as
described in the Proxy Statement of
the Company dated December 20, 1996.
All as more fully set forth in the Proxy Statement received by the
undersigned. (THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC
INDICATION ABOVE. IN THE ABSENCE OF SUCH INDICATION, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES, FOR THE PROPOSAL TO INCREASE THE AUTHORIZED
BONDED INDEBTEDNESS OF THE COMPANY AND FOR THE PROPOSAL TO AMEND THE 1992
LONG-RANGE PERFORMANCE SHARE PLAN.)
DATED_________________________________________________, 19__
____________________________________________________________
____________________________________________________________
Signature(s) of Shareholder(s)
(Please sign exactly as name appears below.)
</TABLE>
<PAGE> 46
[ENERGEN LOGO]
2101 Sixth Avenue North
Birmingham, Alabama 35203
(205) 326-2700
- ---------------------------------------------------
[ENERGEN LOGO]
ENERGEN CORPORATION
NOTICE OF THE ANNUAL
MEETING OF SHAREHOLDERS
JANUARY 22, 1997
AND
PROXY STATEMENT
- ---------------------------------------------------
IMPORTANT
-- Please sign and return your proxy in the enclosed envelope
-- In this way you will be represented at the meeting
-- If you attend the meeting you may, if you wish, withdraw your proxy and
vote in person
- ---------------------------------------------------
