<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
<TABLE>
<S> <C>
(ENERGEN LOGO) ENERGEN CORPORATION
-----------------------------------------------------------
605 21st Street North
Birmingham, Alabama 35203-2707
(205) 326-2700
</TABLE>
December 21, 1998
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 Annual Meeting will
be held at the principal office of the Company in Birmingham on Wednesday,
January 27, 1999, at 10:00 A.M., Central Standard Time.
Details of the matters to be presented at this meeting are given in the
Notice of the Annual Meeting and in the Proxy Statement that follow.
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, 1998.
Yours very truly,
(/s/ Wm. Michael Warren, Jr.)
--------------------------------------------
Chairman of the Board
<PAGE> 3
ENERGEN CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1999
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, 605 21st Street North, Birmingham, Alabama 35203-2707, on Wednesday,
January 27, 1999, at 10:00 A.M., Central Standard Time, for the following
purposes:
1. To elect three directors to serve for a three-year term expiring in
2002; and
2. To transact such other business as may properly come before the
Annual Meeting.
Shareholders of record at the close of business on December 9, 1998 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 21, 1998
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 27, 1999
------------------
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, 605 21st Street
North, Birmingham, Alabama 35203-2707, on Wednesday, January 27, 1999, 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 initially be mailed to
Shareholders of the Company on or around December 21, 1998.
All properly completed proxies received by the Board of Directors of the
Company will be voted in accordance with the instructions appearing on such
proxies. 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. 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 matter and on such other matters as may properly
come before the meeting:
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. Three directors are to be elected to serve for a term of
three years expiring at the Annual Meeting of Shareholders to be held in 2002.
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.
<PAGE> 5
NOMINEES FOR ELECTION AS DIRECTORS
FOR THREE-YEAR TERMS TO EXPIRE IN 2002
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
J. MASON DAVIS, JR................... Mr. Davis, 63, is a partner with the Birmingham, Alabama law
Director since 1992 firm of Sirote & Permutt, P.C. He joined that firm in 1984.
Mr. Davis also served as an Adjunct Professor of Law at
the University of Alabama School of Law in Tuscaloosa,
Alabama from 1972 to 1997. He is also Chairman of the
Board of Directors of Protective Industrial Insurance
Company of Alabama, Inc., based in Birmingham, Alabama.
JAMES S. M. FRENCH................... Mr. French, 58, is Chairman, President, Chief Executive
Director since 1979 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; Hilb, Rogal
and Hamilton Company, a network of insurance agencies;
Protective Life Corporation; and the subsidiaries of Dunn
Investment Company.
WALLACE L. LUTHY..................... Mr. Luthy, 65, retired effective December 31, 1995, as
Director since 1995 President and General Manager of Mobil Natural Gas Inc.,
headquartered in Houston, Texas. Mobil Natural Gas was a
subsidiary of Mobil Corporation and processed and marketed
natural gas in the United States and Canada. Upon his
retirement, Mr. Luthy completed 40 years of service with
Mobil.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
R.D. CASH............................ Mr. Cash, 56, is Chairman of the Board, President and Chief
Director since 1996 Executive Officer of Questar Corporation, a holding company
engaged, through its affiliates, in the exploration for,
and production and distribution of, natural gas. In 1982
Mr. Cash was elected President and Chief Executive Officer
of Mountain Fuel Supply Company, now a Questar subsidiary.
When Questar was formed in 1984, Mr. Cash became its
President and Chief Executive Officer, and in 1985 he was
named Chairman of the Board. Mr. Cash is also a director
of Zions Bancorporation; Zions First National Bank;
Associated Electric & Gas Insurance Services Limited, a
mutual insurance company serving the United States public
utility industry; and the Salt Lake City Branch of the
Federal Reserve Bank of San Francisco.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
REX J. LYSINGER...................... Mr. Lysinger, 61, retired as Chairman of the Board effective
Director since 1979 January 1, 1998. 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 Corporation; Associated
Electric & Gas Insurance Services Limited, a mutual
insurance company serving the United States public utility
industry; Resource Management Service, Inc., a private
timberland investment and management company; and Southern
Research Institute, a nonprofit scientific research
corporation headquartered in Birmingham, Alabama;
President of the Public Affairs Council of Alabama; and a
member of the Board of Trustees of Samford University in
Birmingham, Alabama.
DR. JUDY M. MERRITT.................. Dr. Merritt, 55, is President of Jefferson State Community
Director since 1993 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, N.A.
DRAYTON NABERS, JR................... Mr. Nabers, 58, is Chairman of the Board, Chief Executive
Director since 1984 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.
</TABLE>
3
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
DR. STEPHEN D. BAN................... Dr. Ban, 58, is President and Chief Executive Officer of Gas
Director since 1992 Research Institute ("GRI"), a nonprofit 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 nonprofit
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 Board of Directors of the United States
Energy Association.
JULIAN W. BANTON..................... Mr. Banton, 58, is Chairman of the Board, President and
Director since 1997 Chief Executive Officer of SouthTrust Bank, N.A.,
headquartered in Birmingham, Alabama. He joined SouthTrust
in 1982, was named President in 1985 and in 1988 was named
to his current position. Prior to joining SouthTrust, Mr.
Banton was in charge of Corporate and International
Banking for Signet Bank in Richmond, Virginia. He is also
a director of SouthTrust Corporation; Brookwood Hospital;
Consumer Bankers Association; the Metropolitan Development
Board (Birmingham, Alabama); Birmingham Area Chamber of
Commerce; Inroads Development Program and the Alabama
School of Fine Arts. Mr. Banton is also a past director of
the Birmingham Branch of the Federal Reserve Bank of
Atlanta.
WM. MICHAEL WARREN, JR............... Mr. Warren, 51, is Chairman of the Board, President and
Director since 1986 Chief Executive Officer of the Company and is a director of
the Company and each of its 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, was
elected President and Chief Executive Officer of Alabama
Gas Corporation and Energen Resources Corporation in
September, 1995 and was elected Chief Executive Officer of
the Company in February, 1997. He is also a city director
of AmSouth Bank of Alabama and a member of the Board of
Trustees of Birmingham-Southern College.
</TABLE>
Each of the directors of the Company also serves as a director of Alabama
Gas Corporation and Energen Resources Corporation, the Company's principal
subsidiaries.
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: J. Mason Davis, Jr. (Chair),
R.D. Cash, James S. M. French, and Julian W. Banton. 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
4
<PAGE> 8
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 1998 fiscal year the Audit Committee held three
meetings.
The Board of Directors of the Company has established an Officers Review
Committee (the "ORC") currently composed of four directors who are not officers
of the Company. The members of the ORC are: Drayton Nabers, Jr. (Chair), Stephen
D. Ban, R.D. Cash, and Wallace L. Luthy. The duties of the ORC 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. The ORC also administers the Company's 1992 Long-Range Performance
Share Plan, 1988 Stock Option Plan, 1997 Deferred Compensation Plan and 1997
Stock Incentive Plan. During the 1998 fiscal year, the ORC held three meetings.
The Board of Directors of the Company has established a Finance Committee
currently composed of six directors who are not officers of the Company. The
members of the Finance Committee are: Wallace L. Luthy (Chair), Stephen D. Ban,
James S. M. French, Rex J. Lysinger, Judy M. Merritt, and Julian W. Banton. The
duties of the Finance Committee are to review financial policy, capital
structure, significant oil and gas property acquisitions and exploration
programs and the issuance of securities necessary to finance the activities of
the Company. During the 1998 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:
Judy M. Merritt (Chair), J. Mason Davis, Jr., Rex J. Lysinger, and Drayton
Nabers, Jr. 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. No formal
procedures whereby individual shareholders can submit recommendations of persons
to be considered for nomination as a director of the Company have been
instituted. However, the Governance and Nominations Committee would consider any
such recommendations made to it in writing on a timely basis. During the 1998
fiscal year, the Governance and Nominations Committee held one meeting.
During the 1998 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 1998 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 six hundred shares of Common Stock, following the last day
of each fiscal year 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
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 Directors Stock 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.
5
<PAGE> 9
Under the Company's 1997 Deferred Compensation Plan, members of the Board
of Directors may elect to defer part or all of their director fees and annual
and/or elective grants under the Directors Stock Plan. The 1997 Deferred
Compensation Plan is discussed below in greater detail under the caption "1998
Compensation Committee Report -- 1997 Deferred Compensation Plan."
In addition to making deferrals of their compensation as directors under
the Company's 1997 Deferred Compensation Plan, members of the Board of Directors
who are not employees of the Company may elect to defer (without duplication)
all or part of their fees for services as a director of the Company and its
subsidiaries under the Company's Director Fees Deferral Plan, although no
current directors of the Company have done so under this plan. 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, 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. None of the current directors of
the Company have deferred any amounts under this plan.
6
<PAGE> 10
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 director or nominee for 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 9,
1998. 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)(2) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Stephen D. Ban............................................. 8,253 *
Julian W. Banton........................................... 1,150 *
R.D. Cash.................................................. 4,577 *
J. Mason Davis, Jr......................................... 6,545 *
James S. M. French......................................... 21,600 *
Geoffrey C. Ketcham........................................ 50,390 *
Wallace L. Luthy........................................... 54,500 *
Rex J. Lysinger............................................ 196,955 *
James T. McManus........................................... 69,125 *
Judy M. Merritt............................................ 3,396 *
Drayton Nabers, Jr......................................... 22,600 *
Dudley C. Reynolds......................................... 38,474 *
Wm. Michael Warren, Jr..................................... 195,083 *
Gary C. Youngblood......................................... 62,233 *
All directors and executive officers (16 persons).......... 776,550 2.63%
Energen Corporation Employee Savings Plan(3)............... 2,965,538 10.05%
</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. The shares of Common Stock do not include shares acquired through
dividend reinvestment subsequent to September 30, 1998. Dunn Investment
Company, of which Mr. French is President, Chief Executive Officer and a
director, owns 120,000 shares of Common Stock, which shares are not included
in the totals noted above. The shares of Common Stock shown above for
Messrs. Warren, Ketcham, Youngblood, McManus, Reynolds and the executive
officers of the Company include shares which are held for their respective
accounts under the Energen Corporation Employee Savings Plan as of September
30, 1998, described in note 3 below. Messrs. Lysinger, Warren, Ketcham,
Youngblood, McManus, Reynolds and all directors and executive officers as a
group hold presently exercisable options to acquire 103,916, 108,096,
19,233, 17,033, 56,533, 9,167 and 333,911 shares of Common Stock,
respectively, which amounts are included in the above table.
(2) The shares of Common Stock shown above do not include the following amounts
which have been credited to the Company Stock Accounts of the following
directors and executive officers under the Energen Corporation Deferred
Compensation Plan as of September 30, 1998: Davis, 1,486; Ketcham, 1,985;
Lysinger, 577; McManus, 5,832; Nabers, 655; Reynolds, 1,666; Warren, 15,669;
Youngblood, 22; all directors and executive officers as a group, 33,583.
(3) 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.
Except for the Company's Employee Savings Plan, the Company is not aware of
any person or group which beneficially owns more than 5% of the Company's Common
Stock.
7
<PAGE> 11
1998 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 and
its shareholders, customers, and 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 shareholders 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.
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.
LONG-TERM INCENTIVE COMPENSATION. The Company has in place its 1992
Long-Range Performance Share Plan, 1997 Stock Incentive Plan and 1988 Stock
Option Plan. The present policy of the ORC is to use the Performance Share Plan
as the primary vehicle to deliver long-term incentives supplemented in certain
circumstances by the 1997 Stock Incentive Plan. Options for substantially all
shares reserved for issuance under the 1988 Stock Option Plan have previously
been granted and the ORC does not expect to make further grants under this plan.
The purpose of each of these plans is to provide executives 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
8
<PAGE> 12
participant if the ORC has determined 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").
The ORC may, in its discretion, alter or amend performance conditions 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 with respect to total shareholder
return among a comparison group of companies as measured for the applicable
award or interim period. Subject to the discretion of the ORC to adjust for
extenuating circumstances, the payout percentage 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.
1997 STOCK INCENTIVE PLAN. The 1997 Stock Incentive Plan provides for the
grant of incentive stock options and non-qualified stock options with stock
appreciation rights and dividend equivalents, and for the grant of restricted
stock or a combination thereof to officers and key employees all as determined
by the ORC. If an option includes stock appreciation rights, 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 in effect on the first day
of the respective quarter.
1988 STOCK OPTION PLAN. The 1988 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. As noted above, options previously have
been granted with respect to substantially all shares available for issuance
under the 1988 Plan. 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 in effect on
the first day of the respective quarter.
1997 DEFERRED COMPENSATION PLAN. Under the Company's 1997 Deferred
Compensation Plan, officers may elect to defer part or all of any one or more of
the following items of compensation to the extent such item of compensation is
applicable to the officer: (a) base salary; (b) annual incentive compensation
plan awards; (c) grants under the 1988 Stock Option Plan; (d) awards under the
1997 Stock Incentive Plan; and (e) awards under the 1992 Long-Range Performance
Share Plan. Amounts deferred by a participant under the Deferred Compensation
Plan are credited to one of two separate accounts maintained for a participant,
a Company stock account or an investment account. The value of a participant's
Company stock account tracks the performance of the Company Common Stock,
including reinvestment of dividends. At distribution, the participant's Company
stock account is payable in the form of shares of Company Common Stock. The
value of a participant's investment account tracks the performance of certain
Frank Russell Trust Company mutual
9
<PAGE> 13
funds. At distribution, the participant's investment account is payable in cash.
The Company has established a trust with Frank Russell Trust Company and has
funded the trust, and plans to continue funding the trust, in a manner that
generally tracks participants' accounts under the Deferred Compensation Plan.
Although there is generally no requirement that the trust be so funded or
invested, if a change in control of the Company occurs, the trust must be funded
equal to the aggregate value of the participants' accounts at the time of the
change of control. While intended for payment of benefits under the Deferred
Compensation Plan, the trust assets remain subject to the claims of the
Company's creditors.
OPERATING SUMMARY
As demonstrated in the plan descriptions provided, compensation 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,
1997 TO SEPTEMBER 30, 1998)
Energen completed another successful year October 1, 1997 through September
30, 1998. Earnings of $36.2 million were achieved from current year operations
equal to $1.25 per share, reflecting an 8.7% growth rate over the prior fiscal
year earnings of $1.15 per share. Energen was able to increase its cash dividend
3.3% to $0.625 and had a total shareholder return of 10.4%. These successes were
made possible by similar successes in major corporate subsidiaries. The ORC
considered these and other factors in funding the incentive program, adjusting
salaries, and approving payouts under the Long-Range Performance Share Plan and
1997 Stock Incentive Plan. Specifically, the ORC considered Energen's total
shareholder return and earnings results for the fiscal year and evaluated the
Company's return on equity performance against the peer group using comparable
accounting methods.
Wm. Michael Warren, Jr. was elected Chief Executive Officer in February,
1997 and became Chairman of the Board effective January 1, 1998. As reported in
last year's Proxy Statement, Mr. Warren's base salary was adjusted to $335,000
in March, 1997 and such salary is expected to remain in effect at that level for
thirty-two months. The compensation philosophy for the Chief Executive Officer
position is to place a greater percentage of the total compensation package "at
risk" through the annual cash incentive plan and through the Company's stock
performance by awards of stock options and performance shares. Mr. Warren's
incentive award of $247,600 payable in cash was earned for the 1997-98 reporting
year, reflecting the performance of the Company, its subsidiaries, and the
incumbent himself in achieving the financial and business results of the
Company. Stock options were granted in accordance with plan provisions and the
stated compensation philosophy. Performance share awards were made based on a
percentage of salary with the applicable percentage being a function of an
executive's position with the Company. Actual payout is dependent on obtaining
performance levels in accordance with previously described guidelines.
The Officers Review Committee: Drayton Nabers, Jr., Chair
Stephen D. Ban
R.D. Cash
Wallace L. Luthy
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
fiscal year 1998 and the two prior fiscal years to the Company's Chief Executive
Officer and the Company's four other most highly compensated executive officers:
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------------- ---------
RESTRICTED LONG-TERM
NAME AND INCENTIVE OTHER STOCK STOCK INCENTIVE ALL OTHER
PRINCIPAL SALARY COMPENSATION ANNUAL AWARD(S) OPTIONS/SARS(1) PAYOUTS COMPENSATION
POSITION YEAR ($) ($) COMPENSATION ($) (#) ($) ($)(2)
- - ----------------------- ------- -------- ------------ ------------ ---------- --------------- --------- ------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- - ----------------------- ------- -------- -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warren, Jr., Wm. Michael -- Chairman, President and Chief Executive Officer
9/30/98 335,000 247,600 60,000 248,937 22,166
9/30/97 316,833 180,000 56,000 216,482 14,793
9/30/96 283,250 63,000 156,468 9,248
Ketcham, Geoffrey C. -- Executive Vice President, Chief Financial Officer and Treasurer
9/30/98 201,250 125,000 40,000 142,772 13,161
9/30/97 191,817 96,000 124,011 11,556
9/30/96 185,416 40,000 94,325 9,283
Youngblood, Gary C. -- President and Chief Operating Officer of Alabama Gas Corporation
9/30/98 189,167 120,000 40,000 82,366 11,467
9/30/97 166,667 85,000 67,740 10,385
9/30/96 152,000 32,000 48,827 9,795
McManus, James T. -- President and Chief Operating Officer of Energen Resources Corporation
9/30/98 179,167 150,000 40,000 65,169 10,212
9/30/97 152,416 110,000 50,000 54,837 9,053
9/30/96 127,000 32,000 44,388 7,609
Reynolds, Dudley C. -- General Counsel and Secretary
9/30/98 164,417 102,000 20,000 82,366 9,749
9/30/97 157,500 75,000 69,890 9,270
9/30/96 150,833 32,000 53,266 9,039
</TABLE>
NOTES TO TABLE 1
(1) All stock options were adjusted to reflect the two-for-one split of the
Company's Common Stock effected on March 2, 1998.
(2) The amounts shown represent contributions made by the Company to its defined
contribution plans on behalf of each executive officer.
11
<PAGE> 15
TABLE 2
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS EXERCISE
OPTIONS/ GRANTED TO OR GRANT DATE
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#) FISCAL YEAR ($/SH) DATE ($)(1)
(A) (B) (C) (D) (E) (F)
- - ---------------------- ------------ -------------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Warren 20,000 5.93% 18.25 11/25/98 98,800
20,000 5.93% 18.25 11/25/99 98,800
20,000 5.93% 18.25 11/25/00 98,800
Ketcham 13,333 3.96% 18.25 11/25/98 65,865
13,333 3.96% 18.25 11/25/99 65,865
13,334 3.96% 18.25 11/25/00 65,870
Youngblood 13,333 3.96% 18.25 11/25/98 65,865
13,333 3.96% 18.25 11/25/99 65,865
13,334 3.96% 18.25 11/25/00 65,870
McManus 13,333 3.96% 18.25 11/25/98 65,865
13,333 3.96% 18.25 11/25/99 65,865
13,334 3.96% 18.25 11/25/00 65,870
Reynolds 6,667 1.98% 18.25 11/25/98 32,935
6,667 1.98% 18.25 11/25/99 32,935
6,666 1.98% 18.25 11/25/00 32,930
</TABLE>
NOTES TO TABLE 2
(1) Reflects Black-Scholes valuation of $4.94 per share. For purposes of this
valuation, the following assumptions were used: dividend yield of 3.49%,
expected volatility of 31.313%, risk-free interest rate of 4.56% and a
seven-year time of exercise.
TABLE 3
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ACQUIRED (#) ($)(2)
ON EXERCISE VALUE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) (D) (E)
--------------------- ----------- -------------- --------------------------- ---------------------------
(A) (B) (C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warren -- -- 70,096 104,000 610,101 221,000
Ketcham -- -- 5,900 40,000 62,688 30,000
Youngblood -- -- 3,700 40,000 39,313 30,000
McManus -- -- 27,200 80,000 212,188 190,000
Reynolds -- -- 2,500 20,000 26,563 15,000
</TABLE>
NOTES TO TABLE 3
(1) Market value of underlying securities at time of exercise minus the exercise
price.
(2) Market value of underlying securities at year-end market price (September
30, 1998) of $19.00 per share minus the exercise price.
12
<PAGE> 16
TABLE 4
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL ------------------------------
OTHER RIGHTS MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (#) PAYOUT (#) (#) (#)
- - ----------------------- ----------------- ------------------ --------- -------- -------
(A) (B) (C) (D) (E) (F)
- - ----------------------- ----------------- ------------------ --------- -------- -------
<S> <C> <C> <C> <C> <C>
Warren 18,390 10/1/97 to 9/30/01 9,195 N/A 18,390
Ketcham 7,960 10/1/97 to 9/30/01 3,980 N/A 7,960
Youngblood 7,480 10/1/97 to 9/30/01 3,740 N/A 7,480
McManus 7,090 10/1/97 to 9/30/01 3,545 N/A 7,090
Reynolds 6,500 10/1/97 to 9/30/01 3,250 N/A 6,500
</TABLE>
The 1992 Long-Range Performance Share Plan, under which the grants listed
in Table 4 above were made, is described more fully under the caption "1998
Compensation Committee Report -- 1992 Long-Range Performance Share Plan" of the
Proxy Statement above.
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 Summary 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
annual or long-term incentives.) 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. 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, 1998, no employees of the Company would have been entitled to payments for
benefits in excess of the Section 415 limits.
The Company has entered into retirement supplement agreements
("Supplemental Agreements") with certain officers, including each of the persons
named in the Summary Compensation Table. 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.
13
<PAGE> 17
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. 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>
$150,000........................... $67,500 $90,000 $90,000 $90,000 $90,000 $90,000
$175,000........................... $78,750 $105,000 $105,000 $105,000 $105,000 $105,000
$200,000........................... $90,000 $120,000 $120,000 $120,000 $120,000 $120,000
$225,000........................... $101,250 $135,000 $135,000 $135,000 $135,000 $135,000
$250,000........................... $112,500 $150,000 $150,000 $150,000 $150,000 $150,000
$300,000........................... $135,000 $180,000 $180,000 $180,000 $180,000 $180,000
$400,000........................... $180,000 $240,000 $240,000 $240,000 $240,000 $240,000
$450,000........................... $202,500 $270,000 $270,000 $270,000 $270,000 $270,000
$500,000........................... $225,000 $300,000 $300,000 $300,000 $300,000 $300,000
$600,000........................... $270,000 $360,000 $360,000 $360,000 $360,000 $360,000
</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. Warren,
$335,000, 15 years; Mr. Ketcham, $201,250, 17 years; Mr. Youngblood $189,167, 29
years; Mr. McManus $179,167, 13 years and Mr. Reynolds $164,417, 18 years.
SEVERANCE COMPENSATION AGREEMENTS
The Company has entered into severance compensation agreements with Messrs.
Lysinger, Warren, Ketcham, Youngblood, McManus and Reynolds, as well as seven
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 (as defined in the agreements), the employee's employment
is 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 300% 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. Warren, Ketcham, McManus,
Youngblood and Reynolds are considered tier-one 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. The
agreements also provide for (i) an additional payment, if necessary, to
reimburse the executive for any additional tax (other than normal federal, state
and local income taxes) incurred as a result of any benefits received in
connection with the change in control and (ii) 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.
14
<PAGE> 18
PERFORMANCE GRAPH(1)
ENERGEN CORPORATION -- COMPARISON OF FIVE-YEAR
CUMULATIVE SHAREHOLDER RETURNS
(PERFORMANCE GRAPH)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500 PEER
(FISCAL YEAR COVERED) INDEX ENERGEN GROUP(2)
<S> <C> <C> <C>
1993 100 100 100
1994 104 96 84
1995 135 97 95
1996 162 113 121
1997 227 174 142
1998 248 192 144
</TABLE>
NOTES TO PERFORMANCE GRAPH
(1) Total shareholder return includes reinvested dividends.
(2) The Peer Group Index includes the companies listed below. Except as
otherwise indicated by reference to specific years of inclusion, each
company is included for each fiscal year. Changes reflect removal of a
company's stock from public trading and additions to replace removed
companies: AGL Resources, Inc., Atmos Energy Corporation, Bay State Gas
Company, Cascade Natural Gas Corp., Colonial Gas Company, Connecticut Energy
Corporation, Consolidated Natural Gas, CTG Resources Inc., Eastern
Enterprises, Enserch Corporation 1994-1996, Equitable Resources, Inc.,
Indiana Energy, Inc., K N Energy, Inc., Keyspan Energy Corp., Laclede Gas
Company, MCN Energy Group, National Fuel Gas Corporation, New Jersey
Resources Corp., NICOR Inc., NorAm Energy Corp. (1994-1996), North Carolina
Natural Gas, Northwest Natural Gas Company, NUI Corporation, ONEOK, Inc.,
Pacific Enterprises (1994-1996), Pennsylvania Enterprises, Inc., Peoples
Energy Corporation, Piedmont Natural Gas Co., Inc., Providence Energy
Corporation, Public Service of North Carolina, Questar Corporation, SEMCO
Energy Inc., South Jersey Industries, Inc., Southern Union Company
(1997-1998), Southwest Gas Corporation, Southwestern Energy Company, UGI
Corporation, United Cities Gas Company (1994-1996), Washington Gas Light
Company, Washington Energy Company (1994-1996), WICOR, Inc., and Yankee
Energy System (1997-1998).
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP examined the financial statements of
the Company for the fiscal year ended September 30, 1998, and the Board of
Directors intends to continue the services of this firm for the fiscal year
ending September 30, 1999. A representative of PricewaterhouseCoopers LLP will
be present at the Annual Meeting, will have an opportunity to make a statement
if he or she desires to do so and will be available to respond to appropriate
questions.
15
<PAGE> 19
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in next year's proxy
statement must be received by the Company no later than August 23, 1999. In
addition, if a shareholder fails to notify the Company on or before November 6,
1999 of a proposal which such shareholder intends to present at the Company's
January 2000 Annual Meeting other than through inclusion of such proposal in the
Company's proxy materials for the meeting, then, if such proposal is presented
at the January 2000 Annual Meeting, management proxies may use their
discretionary voting authority with respect to such proposal.
GENERAL INFORMATION
Shareholders of record at the close of business on December 9, 1998 are
entitled to notice of and to vote upon all matters at the Annual Meeting. As of
the close of business on December 9, 1998 there were outstanding 29,502,530
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.
In the case of the election of directors, the vote does not 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 New York Stock Exchange Rule 451 concerning the delivery of proxy
materials to beneficial owners of the Company's Common Stock held by such
brokers.
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 vote upon all other matters
presented for action at the Annual Meeting according to their best judgment if
the Company did not have notice of such matters on or before November 4, 1998.
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, plus out-of-pocket
expenses.
ENERGEN CORPORATION
(/s/ Wm. Michael Warren, Jr.)
------------------------------------------
Chairman of the Board
Birmingham, Alabama
December 21, 1998
16
<PAGE> 20
[ENERGEN LOGO]
ENERGEN CORPORATION
605 21ST STREET NORTH
BIRMINGHAM, ALABAMA 35203-2707
(205) 326-2700
<PAGE> 21
APPENDIX
PROXY -- ENERGEN CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1999
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 WM. MICHAEL WARREN, JR. 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 (the "Company"), to be held on
January 27, 1999 at 10:00 a.m., Central Standard Time, at the principal office
of the Company in Birmingham, Alabama, and at any adjournments thereof (the
"Annual Meeting"), respecting the shares of Common Stock which the undersigned
would be entitled to vote if then personally present, as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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 Annual 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 Annual Meeting. If you vote in person at the Annual
Meeting, your Proxy will not be used.
ENERGEN CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [/]
[ ]
FOR all VOTE
nominees listed WITHHELD
(except as from all
indicated below) nominees
1. ELECTION OF DIRECTORS: [ ] [ ]
Nominees--For three year term ending 2002:
J. Mason Davis, Jr., James S.M. French,
and Wallace L. Luthy.
(To withhold authority to vote for any
individual nominee, write that nominee'
name in the space provided below.)
- - -----------------------------------------
2. In their discretion, to vote upon such
other matters as may properly come
before the Annual Meeting.
All as such items or proposals are more fully set forth in the Company's Proxy
Statement with respect to the Annual Meeting received by the undersigned. (THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATIONS ABOVE. IN THE
ABSENCE OF SUCH INDICATIONS, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES.
DATED , 19
------------------------------- -----------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Signature(s) of Shareholder(s)
Please sign exactly as name appears below.)
