<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:
[ ] 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
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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
<TABLE>
<S> <C>
(ENERGEN LOGO) ENERGEN CORPORATION
-----------------------------------------------------------
605 Richard Arrington Jr. Blvd. North
Birmingham, Alabama 35203-2707
(205) 326-2700
</TABLE>
December 21, 2000
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, Alabama on
Wednesday, January 24, 2001, at 9:30 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, 2000.
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 24, 2001
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 Richard Arrington, Jr. Blvd. North, Birmingham, Alabama, on
Wednesday, January 24, 2001, at 9:30 A.M., Central Standard Time, for the
following purposes:
1. To elect four directors to serve for a three-year term expiring in 2004
and one director to serve for a two-year term expiring in 2003; 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 6, 2000 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, 2000
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 24, 2001
------------------
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 Richard
Arrington, Jr. Blvd. North, Birmingham, Alabama, on Wednesday, January 24, 2001,
at 9:30 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, 2000.
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 for three-year
terms, with approximately one-third of the directors having terms expiring each
year. Four directors are to be elected to serve for a term of three years
expiring at the Annual Meeting of Shareholders to be held in 2004, and one
director is to be elected to serve for a term of two years expiring at the
Annual Meeting of Shareholders to be held in 2003. 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 EXPIRING IN 2004
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
DR. STEPHEN D. BAN................... Dr. Ban, 60, is the recent past President and Chief
Director since 1992 Operating Officer of Gas 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 1987, and served as
CEO until 2000. In that position he had overall
responsibility for GRI's multifaceted research and
development program in pursuit of new approaches to
natural gas supply, transmission, and end-use
technologies. Dr. Ban is also a director of UGI
Corporation, a Pennsylvania gas and electric utility and
national marketer of liquid propane. Dr. Ban has also
served on the Boards of the United States Energy
Association, the New England Gas Association, and
CALSTART, a nonprofit consortium dedicated to developing
advanced clean-fuel transportation systems.
JULIAN W. BANTON..................... Mr. Banton, 60, is Chairman of the Board, President and
Director since 1997 Chief Executive Officer of SouthTrust Bank, 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 Birmingham
Convention and Visitors Bureau. Mr. Banton is also a past
director of the Birmingham Branch of the Federal Reserve
Bank of Atlanta.
T. MICHAEL GOODRICH.................. Mr. Goodrich, 55, is President and Chief Executive Officer
Director since 2000 of BE&K, Inc., a privately owned engineering and
construction firm headquartered in Birmingham, Alabama. He
joined BE&K in 1972 as Assistant Secretary and General
Counsel and was named President in 1989, and in 1995 was
named to his current position. He is also a director of
First Commercial Bank and several subsidiary companies of
BE&K, Inc.
WM. MICHAEL WARREN, JR. ............. Mr. Warren, 53, 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, was elected Chief Executive Officer of
the Company in February, 1997, and was elected Chairman of
the Board in January, 1998. He is also a city director of
AmSouth Bank of Alabama and a member of the Board of
Trustees of Birmingham-Southern College.
</TABLE>
2
<PAGE> 6
NOMINEE FOR ELECTION AS DIRECTOR
FOR A TWO-YEAR TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
STEPHEN A. SNIDER.................... Mr. Snider, 53, is President and Chief Executive Officer of
Director since 2000 Universal Compression Holdings, Inc., a gas compressor
rental business headquartered in Houston, Texas. Mr.
Snider joined Tidewater Compression in 1975 as General
Manager of air compressor operations. In 1979, Mr. Snider
established Tidewater Compression's operations in the
northeastern United States. In 1981, he assumed
responsibility for the western United States operations of
Tidewater Compression. Mr. Snider left Tidewater in 1983
to own and operate businesses unrelated to the energy
industry. Mr. Snider returned to Tidewater Compression in
1991 as Senior Vice President of Compression. Tidewater
was sold in 1998 and the name of the company was changed
to Universal Compression Holdings, Inc. Mr. Snider was
named to his current position in 1994.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2002
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
J. MASON DAVIS, JR................... Mr. Davis, 65, 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, 60, is Chairman of Dunn Investment Company, the
Director since 1979 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, 67, 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 had completed 40 years of service
with Mobil.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2003
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
REX J. LYSINGER...................... Mr. Lysinger, 63, retired as Chairman of the Board effective
Director since 1979 January 1, 1998. He had held that position since 1982. He is
also a director of SouthTrust Corporation; a director of
Resource Management Service, Inc., a private timberland
investment and management company; President of the Public
Affairs Research Council of Alabama; and a member of the
Board of Trustees of Samford University in Birmingham,
Alabama.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND YEAR FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------------------------- ------------------------------------------
<S> <C>
DR. JUDY M. MERRITT.................. Dr. Merritt, 57, 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.
DRAYTON NABERS, JR................... Mr. Nabers, 60, 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>
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
Audit Committee
The Board of Directors of the Company has established a standing Audit
Committee currently composed of five directors who are not officers of the
Company and are independent as defined by the listing standards of the New York
Stock Exchange. The members of the Audit Committee are: J. Mason Davis, Jr.
(Chair), Julian W. Banton, James S. M. French, T. Michael Goodrich and Stephen
A. Snider. During the 2000 fiscal year the Audit Committee held four meetings.
2000 AUDIT COMMITTEE REPORT
In compliance with the requirements of the New York Stock Exchange (NYSE),
the Audit Committee of Energen Corporation adopted a formal written charter
approved by the Board of Directors on April 26, 2000, a copy of which is
attached to this Proxy Statement as Appendix A, which outlines the Audit
Committee's responsibilities and how it carries out those responsibilities. In
connection with the performance of its responsibility under its charter, the
Audit Committee has:
- Reviewed and discussed the audited financial statements of the Company
with management;
- Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (required
communication by external auditors with audit committees);
- Received from the independent auditors disclosures regarding the
auditors' independence required by Independence Standards Board Standard
No. 1 and discussed with the auditors the auditors' independence; and
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<PAGE> 8
- Recommended, based on the review and discussion noted above, to the Board
of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended September 30,
2000 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
J. Mason Davis, Jr., Chair
Julian W. Banton
James S. M. French
T. Michael Goodrich
Stephen A. Snider
Officers Review Committee
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, Julian W. Banton 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 2000 fiscal year, the ORC held two meetings.
Finance Committee
The Board of Directors of the Company has established a Finance Committee
currently composed of seven directors who are not officers of the Company. The
members of the Finance Committee are: Wallace L. Luthy (Chair), Stephen D. Ban,
Julian W. Banton, James S. M. French, T. Michael Goodrich, Rex J. Lysinger and
Judy M. Merritt. 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 2000 fiscal year, the Finance Committee
held one meeting.
Governance and Nominations Committee
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 2000
fiscal year, the Governance and Nominations Committee held one meeting.
During the 2000 fiscal year the Board of Directors of the Company met six
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 2000 fiscal year, directors who are not officers were paid a
monthly retainer of $1,250. In addition, non-officer directors of the Company
and of its subsidiaries were paid a fee of $1,250 for each meeting attended.
Non-officer directors were paid a fee of $1,000 per committee meeting attended.
5
<PAGE> 9
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.
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 "2000
Compensation Committee Report -- 1997 Deferred Compensation Plan."
6
<PAGE> 10
SUMMARY OF SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
MANAGEMENT AND EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANTS
The following table shows the shares of Common Stock of the Company
("Common Stock") beneficially owned by (i) each person (including each "group"
as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) who is known by the Company to be the
beneficial owner of more than five percent (5%) of the Company's outstanding
Common Stock as of September 30, 2000, (ii) each director or nominee for
director, (iii) each executive officer of the Company named in the Summary
Compensation Table, and (iv) all directors and executive officers of the Company
(including certain executive officers of the Company's subsidiaries) as a group,
as of December 6, 2000. The table also shows the shares of Common Stock
beneficially owned by participants in the Energen Corporation Employee Savings
Plan as a group as of September 30, 2000. Except as noted below, each such
individual has sole voting power and sole investment power with respect to such
shares. The final column indicates Common Stock share equivalents held under the
Energen Corporation Deferred Compensation Plan as of September 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF CLASS SHARE EQUIVALENTS
NAME OF INDIVIDUAL BENEFICIALLY BENEFICIALLY UNDER
OR PERSONS IN GROUP OWNED(1) OWNED(2) DEFERRED PLAN(3)
------------------- ------------ ------------ -----------------
<S> <C> <C> <C>
Stephen D. Ban................................... 10,072 * --
Julian W. Banton................................. 2,150 * 1,264
J. Mason Davis, Jr. ............................. 7,021 * 4,350
James S. M. French............................... 22,800 * --
T. Michael Goodrich.............................. 1,200 * --
Geoffrey C. Ketcham.............................. 54,933 * 11,001
Wallace L. Luthy................................. 54,500 * 2,120
Rex J. Lysinger.................................. 78,164 * 618
James T. McManus................................. 46,407 * 10,222
Judy M. Merritt.................................. 4,835 * --
Drayton Nabers, Jr. ............................. 24,248 * 3,547
Dudley C. Reynolds............................... 61,190 * 1,851
Stephen A. Snider................................ 1,000 * --
Wm. Michael Warren, Jr. ......................... 231,831 * 70,382
Gary C. Youngblood............................... 68,280 * 11,730
All directors and executive officers (17
persons)....................................... 721,038 2.35% 127,054
Energen Corporation Employee Savings Plan(4)..... 3,098,676 10.12% --
</TABLE>
------------
* Less than one percent.
(1) The shares of Common Stock shown above include shares owned by wives and
children of directors, as well as shares held in trust, 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, 2000. Dunn Investment Company, of which Mr. French is Chairman
and a director, owns 120,000 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, 2000, described in note 4 below. Messrs. Warren, Ketcham, Youngblood,
McManus, Reynolds, Lysinger and all directors and executive officers as a
group hold presently exercisable options to acquire 129,000, 18,183, 15,542,
15,544, 20,000, 28,000 and 247,869 shares of Common Stock, respectively,
which amounts are included in the above table.
(2) The percentage of Common Stock beneficially owned does not include shares of
Common Stock credited to Company Stock Accounts under the Energen
Corporation Deferred Compensation Plan.
(3) Represents shares of Common Stock credited to Company Stock Accounts under
the Energen Corporation Deferred Compensation Plan as of September 30, 2000.
The value of Company Stock Accounts tracks the performance of the Common
Stock, with reinvestment of accrued dividends. The Company Stock Accounts
have no voting rights.
7
<PAGE> 11
(4) 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.
2000 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. In the case of certain executives, including those listed in the Summary
Compensation Table, the awards are based upon attaining preestablished earnings
per share growth targets. In the case of other executives, the awards are based
on such earnings per share growth targets, as well as other corporate
performance criteria and individual performance criteria. Assuming applicable
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
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<PAGE> 12
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 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
9
<PAGE> 13
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 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 presently 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
in an amount 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 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,
1999 TO SEPTEMBER 30, 2000)
Energen completed another successful year on September 30, 2000. Earnings
of $53 million were achieved from current year operations equal to $1.75 per
diluted share, reflecting a 27% growth rate over the prior fiscal year earnings
of $1.38 per diluted share. Energen was able to increase its annual cash
dividend 3% to $0.68 and had a total shareholder return of 52%. 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.
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 $380,000
effective November 1, 1999, reflecting efforts to meet market levels. The
compensation philosophy for the Chief Executive Officer position will continue
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, restricted stock and performance shares.
Mr. Warren's incentive award of $342,000 payable in cash was earned for the
1999-2000 reporting year, reflecting the performance of the Company, its
subsidiaries, and the incumbent himself in achieving the financial and business
results of the Company. Restricted stock was granted in accordance with plan
provisions and the stated compensation philosophy. Performance share awards were
made based on a percentage of salary with the applicable percentage being a
function of an executive's position with the Company. Actual payout is dependent
on obtaining performance levels in accordance with previously described
guidelines.
OFFICERS REVIEW COMMITTEE
Drayton Nabers, Jr., Chair
Stephen D. Ban
Julian W. Banton
Wallace L. Luthy
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
fiscal year 2000 and the two prior fiscal years to the Company's Chief Executive
Officer and the Company's four other most highly compensated executive officers:
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- --------------------------- ---------
OTHER RESTRICTED LONG-TERM
NAME AND INCENTIVE ANNUAL STOCK STOCK INCENTIVE ALL OTHER
PRINCIPAL SALARY COMPENSATION COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($) ($)(4)
------------------------ ------- ------- ------------ ------------ ---------- -------------- --------- ------------
(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
9/30/00 376,250 342,000.. 1,255 100,375 633,043 78,626
9/30/99 335,000 255,600 139,213 296,912 20,643
9/30/98 335,000 247,600 60,000 248,937 22,166
Ketcham, Geoffrey C. -- Executive Vice President, Chief Financial Officer and Treasurer
9/30/00 238,333 180,000 589 239,434 41,012
9/30/99 218,500 139,500 7,500 163,517 14,153
9/30/98 201,250 125,000 40,000 142,772 13,161
Youngblood, Gary C. -- President and Chief Operating Officer of Alabama Gas Corporation
9/30/00 237,917 180,000 989 28,219 181,388 53,413
9/30/99 212,917 136,300 7,500 124,007 17,354
9/30/98 189,167 120,000 40,000 82,366 11,467
McManus, James T. -- President and Chief Operating Officer of Energen Resources Corporation
9/30/00 237,500 180,000 322 37,625 163,853 26,384
9/30/99 207,500 133,100 7,500 104,447 11,025
9/30/98 179,167 150,000 40,000 65,169 10,212
Reynolds, Dudley C. -- General Counsel and Secretary
9/30/00 179,333 135,000 383 181,388 23,787
9/30/99 170,755 109,000 124,007 10,618
9/30/98 164,417 102,000 20,000 82,366 9,749
</TABLE>
NOTES TO TABLE 1
(1) Represents special payments for reimbursement of tax costs due to life
insurance premiums under special life insurance benefits which serve as
offsets to retirement income benefits pursuant to the Supplemental
Agreements (see "Retirement Income Plan").
(2) As of September 30, 2000, Mr. Warren holds a total of 12,900 restricted
shares valued at $383,775; Mr. Youngblood holds a total of 1,500 restricted
shares valued at $44,625; and Mr. McManus holds a total of 2,000 restricted
shares valued at $59,500. Mr. Warren has deferred receipt of his shares
under the Energen Corporation 1997 Deferred Compensation Plan. The
restricted shares will vest as follows: Mr. Warren -- 2,466 shares in
fiscal 2001, 7,967 shares in fiscal 2002 and 2,467 shares in fiscal 2003;
Mr. Youngblood -- 500 shares in fiscal 2003, 500 shares in fiscal 2004 and
500 shares in fiscal 2005; and Mr. McManus -- 666 shares in fiscal 2003, 667
shares in fiscal 2004 and 667 shares in fiscal 2005. Dividends are paid on
restricted stock.
(3) Stock options have been adjusted to reflect the two-for-one split of the
Company's Common Stock effected on March 2, 1998.
(4) (i) Includes the following amounts representing the estimated term component
of the premium paid and the estimated interest cost to the Company for
fiscal 2000 resulting from premium payments for life insurance benefits
under the Energen Corporate Officer Split Dollar Life Insurance Plan: Mr.
Warren $49,797, Mr. Ketcham $22,679, Mr. Youngblood $29,081, Mr. McManus
$10,860, and Mr. Reynolds $10,241. This plan serves as an offset to an
existing supplemental retirement plan (see "Retirement Income Plan").
11
<PAGE> 15
(ii) Includes the following amounts representing the estimated term
component of the premium paid and the estimated interest cost to the
Company for fiscal 2000 resulting from premium payments for life insurance
benefits under the Energen Corporation Split Dollar Life Insurance Plan
which is offered to certain employees and officers in lieu of the Company's
group life insurance plan: Mr. Warren $5,713, Mr. Ketcham $2,727, Mr.
Youngblood $4,454, Mr. McManus $1,601, and Mr. Reynolds $1,819.
(iii) Except as noted above, the amounts shown represent contributions made
by the Company to its defined contribution plans on behalf of each
executive officer.
TABLE 2
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ACQUIRED (#) ($)(2)
ON EXERCISE VALUE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) (D) (E)
------------------------ ----------- -------------- --------------------------- ---------------------------
(A) (B) (C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------ ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warren 45,096 542,315 109,000 20,000 1,535,938 230,000
Ketcham 10,394 118,933 23,420 19,586 269,330 225,239
Youngblood 13,700 152,644 17,914 19,586 218,355 225,239
McManus 25,956 329,089 51,958 19,586 711,267 225,239
Reynolds 2,500 27,813 13,332 6,668 153,318 76,682
</TABLE>
NOTES TO TABLE 2
(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, 2000) of $29.75 per share minus the exercise price.
TABLE 3
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 28,570 10/1/99 to 9/30/03 14,285 N/A 28,570
Ketcham 8,150 10/1/99 to 9/30/03 4,075 N/A 8,150
Youngblood 8,150 10/1/99 to 9/30/03 4,075 N/A 8,150
McManus 8,150 10/1/99 to 9/30/03 4,075 N/A 8,150
Reynolds 6,120 10/1/99 to 9/30/03 3,060 N/A 6,120
</TABLE>
The 1992 Long-Range Performance Share Plan, under which the grants listed
in Table 3 above were made, is described more fully under the caption "2000
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.
12
<PAGE> 16
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, 2000, 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 ten full
fiscal years preceding the earlier of retirement or the officer's 61st birthday.
Benefits under the Supplemental Agreements are subject to offset for
Company-sponsored officer life insurance program cash values exceeding premiums
paid under the Energen Corporation Officers Split Dollar Life Insurance Plan.
The Summary Compensation Table includes the value of benefits to the named
officers attributable to Company paid premiums for the officer life insurance
program.
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........................... $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90,000
$175,000........................... $105,000 $105,000 $105,000 $105,000 $105,000 $105,000
$200,000........................... $120,000 $120,000 $120,000 $120,000 $120,000 $120,000
$225,000........................... $135,000 $135,000 $135,000 $135,000 $135,000 $135,000
$250,000........................... $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
$300,000........................... $180,000 $180,000 $180,000 $180,000 $180,000 $180,000
$400,000........................... $240,000 $240,000 $240,000 $240,000 $240,000 $240,000
$450,000........................... $270,000 $270,000 $270,000 $270,000 $270,000 $270,000
$500,000........................... $300,000 $300,000 $300,000 $300,000 $300,000 $300,000
$600,000........................... $360,000 $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 Summary Compensation Table are as follows: Mr.
Warren, $425,000, 17 years; Mr. Ketcham, $260,000, 19 years; Mr. Youngblood
$260,000, 31 years; Mr. McManus $260,000, 15 years and Mr. Reynolds $200,000, 20
years.
13
<PAGE> 17
SEVERANCE COMPENSATION AGREEMENTS
The Company has entered into severance compensation agreements with Messrs.
Warren, Ketcham, Youngblood, McManus and Reynolds, as well as twenty-one 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. Under certain circumstances, the payment may be applicable to a
termination which occurs during the period leading up to a change in control.
For purposes of establishing the applicable percentage of an employee's annual
salary and additional cash compensation, the Company has established a four-tier
structure in which tier-one employees receive 300% of such compensation,
tier-two employees receive 200% of such compensation, tier-three employees
receive 150% of such compensation and tier-four employees receive 100% 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 tier-two, tier-three or
tier-four employees. The agreements also provide (i) the continuance of certain
insurance and other employee benefits for a period of twenty-four months
following any such termination of employment and (ii) that if the executive
receives payments that would be subject to the tax imposed by Section 4999 of
the Internal Revenue Code, the executive shall be entitled to receive an
additional payment in an amount necessary to put the executive in the same
after-tax position as if such tax had not been imposed. For purposes of the
agreements, (i) the term "qualified termination" means a termination 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
"cause" generally means failure to substantially perform duties, misconduct
injurious to the Company or conviction of a felony, and (iii) the term "good
reason" generally means a reduction in the position, duties, responsibilities,
status or benefits of the employee's job. For purposes of tier-one, tier-two or
tier-three employee agreements, the term "qualified termination" also includes
any voluntary termination by the executive during the thirty-day period
immediately following the first anniversary of a change in control.
14
<PAGE> 18
PERFORMANCE GRAPH(1)
ENERGEN CORPORATION -- COMPARISON OF FIVE-YEAR
CUMULATIVE SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
S&P 500 INDEX ENERGEN PEER GROUP(2)
------------- ------- -------------
<S> <C> <C> <C>
1994 100 100 100
1995 130 102 111
1996 156 118 139
1997 219 182 164
1998 239 201 166
1999 306 223 177
</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 (1995-1998), Cascade Natural Gas Corp., Colonial Gas Company
(1995-1998), Connecticut Energy Corporation (1995-1999), Consolidated
Natural Gas (1995-1999), CTG Resources Inc. (1995-1999), Eastern
Enterprises, Enserch Corporation (1995-1996), Equitable Resources, Inc.,
Indiana Energy, Inc. (1995-1999), 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. (1995-1996), North
Carolina Natural Gas (1995-1998), Northwest Natural Gas Company, NUI
Corporation, ONEOK, Inc., Pacific Enterprises (1995-1996), Pennsylvania
Enterprises, Inc. (1995-1999), Peoples Energy Corporation, Piedmont Natural
Gas Co., Inc., Providence Energy Corporation, Public Service of North
Carolina (1995-1999), Questar Corporation, SEMCO Energy Inc., South Jersey
Industries, Inc., Southern Union Company (1997-1999), Southwest Gas
Corporation, Southwestern Energy Company, UGI Corporation, United Cities Gas
Company (1995-1996), Washington Gas Light Company, Washington Energy Company
(1995-1996), WICOR, Inc. (1995-1999), and Yankee Energy System (1997-1999).
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP examined the financial statements of
the Company for the fiscal year ended September 30, 2000, and the Board of
Directors intends to continue the services of this firm for the fiscal year
ending September 30, 2001. 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, 2001. In
addition, if a shareholder fails to notify the Company on or before November 6,
2001 of a proposal which such shareholder intends to present at the Company's
January 2002 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 2002 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 6, 2000 are
entitled to notice of and to vote upon all matters at the Annual Meeting. As of
the close of business on December 6, 2000 there were outstanding 30,629,917
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 6, 2000.
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 Warrant, Jr.)
Chairman of the Board
Birmingham, Alabama
December 21, 2000
16
<PAGE> 20
APPENDIX A
ENERGEN CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
AUDIT COMMITTEE PURPOSE
The Audit Committee has been established by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities. The Committee
reviews and monitors the Company's financial reporting process and systems of
internal controls on behalf of the Board and serves as a liaison with the
Company's independent auditors and internal auditors. In discharging its
oversight role, the Committee is empowered to investigate any matter brought to
its attention with full access to all books, records, facilities and personnel
of the Company and the power to retain outside counsel, auditors or other
experts for this purpose.
AUDIT COMMITTEE MEMBERSHIP
The Audit Committee shall consist of not less than three (3) members of the
Board to be appointed by the Board of Directors who shall also designate the
Chairman of said Committee. Each Audit Committee member shall serve only after
the Board of Directors has determined that the director does not have a business
relationship with the Company which interferes with the director's exercise of
independent judgement. Each member of the Audit Committee shall have a basic
understanding of financial accounting and be able to interpret and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise, as the Board
interprets such qualifications in its business judgement. No person who is an
officer of the Corporation, or has been an officer during the past three (3)
years, shall be a member of the Audit Committee. Directors employed as an
executive of another corporation where any of the Company's executives serve on
that corporation's compensation committee may not serve on the Audit Committee.
AUDIT COMMITTEE RESPONSIBILITIES
In consultation with management, the independent auditors and the internal
auditors, the Audit Committee shall review the Company's accounting policies,
practices and related financial reporting process and systems of internal
controls. The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for planning and
carrying out the audit of those financial statements. In carrying out its
oversight responsibilities, the Committee is not providing any expert or special
assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work. Responsibilities of the Audit
Committee include:
- Reviewing the planned scope of audit examinations and the resulting
reports prepared by independent and internal audits together with
management's response and follow up to these reports;
- Discussing with the independent auditors the quality of the Company's
accounting principles and underlying estimates in its financial
statements. Prior to filing Form 10-Q with the Securities and Exchange
Commission, discussing any matters identified during the interim review
which would need to be communicated by the independent auditors. The
Chairman of the Committee may represent the Committee for purposes of
this quarterly review;
- Reviewing and discussing the audited financial statements with management
and representatives of the auditors. (Committee shall recommend to the
Board, based on the review and discussion noted above, whether the
audited financial statements be included in the Company's annual report
on Form 10-K);
- Reviewing the independence and performance of the independent auditors.
The Audit Committee shall satisfy itself as to the outside auditors'
independence by formal written statements and discussing with the auditor
any relationships that may impact auditor objectivity and independence.
The ultimate
A-1
<PAGE> 21
accountability of the outside auditor is to the Board and Audit
Committee. Annually recommend to the Board the appointment of the
independent auditors and, where appropriate, replacement of the
independent auditors;
- Reviewing with the Company's counsel any legal matters that could have a
significant effect on the financial statements;
- Annually prepare a report to shareholders to be included in the Company's
proxy statement disclosing as appropriate Audit Committee activities;
- Annually reassess the adequacy of the Audit Committee charter and report
on its review to the Board.
A-2
<PAGE> 22
(ENERGEN LOGO)
ENERGEN CORPORATION
605 RICHARD ARRINGTON, JR. BLVD. NORTH
BIRMINGHAM, ALABAMA 35203-2707
(205) 326-2700
<PAGE> 23
-------------------------------------------------------------------------------
Please mark your
[X] votes as in this
example.
-------------------------------------------------------------------------------
Nominees:
For three-year term ending 2004: 03. T. Michael Goodrich
01. Stephen D. Ban 04. Wm. Michael Warren, Jr.
02. Julian W. Banton
For two-year term ending 2003:
05. Stephen A. Snider
<TABLE>
<CAPTION>
FOR WITHHELD FOR ALL NOMINEES
ALL FOR ALL (except as noted
NOMINEES NOMINEES below)
<S> <C> <C> <C> <C>
1. Election of 2. In their discretion, to vote upon such other
Directors. [ ] [ ] [ ] matters as may come before the Annual Meeting.
</TABLE>
(To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.)
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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.)
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SIGNATURE(S) DATE
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FOLD AND DETACH HERE
ENERGEN LOGO
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, JANUARY 24, 2001, AT 9:30 A.M. CST
ENERGEN CORPORATION HEADQUARTERS
605 RICHARD ARRINGTON, JR. BLVD N
(NORTHEAST CORNER OF 21ST STREET AND 6TH AVENUE NORTH)
BIRMINGHAM, ALABAMA
<PAGE> 24
PROXY -- ENERGEN CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 24, 2001
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 24, 2001 at
9:30 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:
SEE REVERSE
SIDE
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FOLD AND DETACH HERE
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.
DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
Energen Corporation offers shareholders and other investors the
opportunity to purchase Energen common stock directly, without incurring fees
and commissions. This plan is offered through a prospectus available from the
Plan Administrator, First Chicago Trust Company of New York, Division of
EquiServe, by calling 1-800-946-4316 or 1-800-654-3206. Enrollment material
also is available on the World Wide Web at HTTP://WWW.EQUISERVE.COM.
SHAREHOLDER ASSISTANCE: 1-888-764-5603
This automated voice response system is available 24 hours a day, seven
days a week for the convenience of Energen Corporation shareholders.
Customer service representatives are available from 8:30 a.m. to 7:00 p.m.
Eastern time, Monday through Friday, to assist shareholders with account
balances, dividend information, transfer instructions, and sale or
certificate information.
ENERGEN ON THE WEB
Interested parties with Internet access may review Energen corporate
information, including news releases and annual reports, on Energen's home
page at WWW.ENERGEN.COM.
