SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
(Amendment No. 2)
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 240.14a-11(c) or
240.14a-12
National Gas & Oil Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14A-6(i)(4)
and O-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 O-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:
____________________________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-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:
___________________________________________
NATIONAL GAS & OIL COMPANY
Notice of Annual Meeting of Shareholders
To be Held May 18, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
NATIONAL GAS & OIL COMPANY, an Ohio Corporation (hereinafter referred to as
"Company"), has been called and will be held in the General Offices of the
Company at 1500 Granville Road, Newark, Ohio on May 18, 1995, at 10:00
A.M., local time, for the following purposes:
(1) To elect three directors to serve for a period of three years or
until their respective successors are duly elected and qualified.
(2) To consider and act upon a proposal to amend the Articles of
Incorporation to increase the maximum number of common shares which
the Company shall be authorized to have outstanding from 7,000,000
to 14,000,000.
(3) To ratify the appointment of Price Waterhouse LLP to audit the
financial statements of the Company and its subsidiaries for the
year ending December 31, 1995.
(4) To transact such other business as may properly come before the
meeting.
All of the above matters are more fully described in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on March 27,
1995, as the record date for determining the shareholders entitled to
notice of and to vote at the meeting and any adjournment thereof, and only
holders of Common Shares of the Company of record at the close of business
on such date will be entitled to notice thereof or to vote thereat.
If you cannot attend the meeting in person, please execute, date and
return the enclosed proxy in the envelope provided, with postage prepaid
for mailing within the United States.
By Order of the Board of Directors
John B. Denison
Secretary
Dated: April 10, 1995
NATIONAL GAS & OIL COMPANY
PROXY STATEMENT
APRIL 10, 1995
For Annual Meeting of Shareholders
To Be Held May 18, 1995
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of the Company of proxies from holders of the
outstanding Common Shares of NATIONAL GAS & OIL COMPANY for the annual
meeting of shareholders of the Company to be held in the General Offices of
the Company at 1500 Granville Road, Newark, Ohio 43055, on May 18, 1995,
at 10:00 A.M., local time, for the purposes set forth in the accompanying
notice of the meeting. The Company's telephone number is (614) 344-2102.
Any proxy delivered in the accompanying form may be revoked by the
person executing the same, in writing or in open meeting, at any time
before the authority hereby granted is exercised. Proxies received which
are properly executed will be voted at the meeting or any adjournment
thereof as specified therein by the shareholders, but if no specification
is made, such proxies will be voted for the election of the three nominees
for Director named herein, and for the ratification of Price Waterhouse LLP
as the Company's independent auditor.
If any other matters are properly brought before the meeting, or if a
nominee for election as a Director named in the proxy statement is unable
to serve or for good cause will not serve, the persons named in the proxy
or their substitutes will vote in accordance with their best judgment on
such matters or for such substitute nominee as the Directors may recommend.
The cost of solicitation of proxies will be borne by the Company.
Such solicitation will be made by mail and in addition may be made by
Officers and employees of the Company, personally or by telephone or
telegram. Forms of proxies and proxy materials may also be distributed
through brokers, custodians and other like parties to the beneficial owners
of shares. Proxy materials will be first sent to shareholders on or about
April 17, 1995.
Only the holders of Common Shares of record at the close of business
on March 27, 1995, which is the record date for the annual meeting of
shareholders fixed by the Board of Directors, are entitled to notice of and
to vote at the meeting or any adjournment thereof. On March 27, 1995, the
Company had outstanding 6,661,477 Common Shares, each share having one
vote.
Under Ohio law and the Company's Code of Regulations, the three
nominees receiving the greatest number of votes shall be elected as
directors. Shares as to which the authority to vote is withheld and broker
non-votes are not counted toward the election of the individual nominees
specified on the form of proxy. For purposes of determining whether a
majority vote has been obtained for the proposed Amendment to the Articles
of Incorporation or the ratification of independent accountants,
abstentions and broker non-votes will have the same effect as votes against
such proposals.
Under the applicable Ohio statute, if notice in writing is given by
any shareholder to the President, a Vice President, or Secretary of the
Company not less than forty-eight hours before the time fixed for holding a
meeting for the election of Directors that he desires the voting at such
election to be cumulative, and if an announcement of the giving of such
notice is made upon the convening of the meeting by the Chairman or
Secretary or by or on behalf of the shareholder giving such notice, then
each shareholder would have cumulative voting rights. If cumulative voting
is requested as herein described, each shareholder would have a number of
votes equal to the number of Directors to be elected (3) multiplied by the
number of shares owned by him and would be entitled to cast all his votes
for any one or more candidates as he sees fit.
Article Two, Section 2.03 of the Company's Code of Regulations
prescribes the method for a shareholder to nominate a candidate for
election to the Board of Directors. Generally, nominations, other than
those made by or on behalf of the existing Board of Directors of the
Company, for election at an annual meeting of shareholders must be made in
writing, delivered or mailed by first-class U.S. mail, postage prepaid, to
the Secretary of the Company on or before the later of (i) February 1
immediately preceding such annual meeting or (ii) the sixtieth (60th) day
prior to the first anniversary of the most recent annual meeting of
shareholders held for the election of Directors. Such nomination must set
forth (i) the name, age, business or residence address of each nominee,
(ii) the principal occupation or employment of each nominee, and (iii) the
number of Common Shares of the Company owned beneficially and/or of record
by each nominee and the length of time any such Common Shares have been so
owned. As of the date of this Proxy Statement, no persons have been so
nominated for election at this Annual Meeting.
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
those persons known to the management of the Company to be the beneficial
owners of more than 5% of the outstanding Common Shares of the Company as
of March 1, 1995.
Amount and Nature of Beneficial Ownership
Name and Address of Sole Voting & Shared Voting & Percent
Beneficial Owner Investment Power Investment Power of Class
The Trust Company of
New Jersey, Jersey
City, New Jersey 548,801(1) -0- 8.24%
(1) Information provided to the Company by The Trust Company of New
Jersey, which holds the shares as Trustee for two pension plans. The Trust
Company of New Jersey certifies the shares were acquired in the ordinary
course of business and were not acquired for the purpose of and do not have
the effect of changing or influencing the control of the issuer.
Dimensional Fund
Advisors Inc.
Santa Monica, California 365,317(2) -0- 5.48%
(2) Information provided to the Company by Dimensional Fund Advisors Inc.,
on Schedule 13G. Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial ownership of
365,317 shares of National Gas & Oil stock as of December 31, 1994, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors Inc. serves
as investment manager. Dimensional disclaims beneficial ownership of all
such shares.
THE BOARD OF DIRECTORS
Under the Company's Code of Regulations, the Board of Directors is
divided into three classes consisting of not less than three nor more than
four Directors each. The class to be elected in 1995 consists of three
Directors.
The following nominees are proposed for election as Directors to serve
for a period of three years or until their successors are elected and
qualified: David C. Easley, Patrick J. McGonagle and Graham R. Robb.
Messrs. Easley and Robb are incumbent Directors. Management does not
contemplate that any of the nominees named will be unable to serve.
In the event that one or more of the nominees named is unable or is
unwilling to accept, or is unavailable for, such election for any reason,
the persons named in the proxies received in the accompanying form or their
substitutes shall have authority, unless such authority is withheld, to
vote or refrain from voting according to their judgment for other indi
viduals as Directors in lieu thereof and in such cases, such proxies will
be voted for such substitute nominees as the Directors may recommend. If
Directors are to be elected by cumulative voting, the persons named in such
proxies shall have authority to distribute their votes among the nominees
as they shall determine in the exercise of their judgment.
NOMINEES FOR ELECTION AS DIRECTORS
David C. Easley - Age 52
Mr. Easley was elected President of the Precise Corporation, Racine,
Wisconsin, a manufacturer of high speed precision spindles for milling,
drilling and grinding in 1994. Previously, Mr. Easley was Executive Vice
President, a position he held in excess of five years. Mr. Easley is also
a Director of the Bank of Elmwood, Racine, Wisconsin and the Bardon Rubber
Products Co., Union Grove, Wisconsin. Mr. Easley has served as a Director
of the Company since 1986 and his term as a Director expires in 1995.
Patrick J. McGonagle - Age 40
Mr. McGonagle is President and Chief Executive Officer of National Gas
& Oil Company and its operating subsidiaries, positions he has held since
February 19, 1993. Previously, Mr. McGonagle was Vice President and
General Counsel for a period in excess of five years. Mr. McGonagle is
standing for election for the first time.
Graham R. Robb - Age 65
Mr. Robb is the Vice President and a Director of The Oxford Oil
Company, Zanesville, Ohio, producers of oil and gas. Mr. Robb is a Past
President of the Ohio Oil and Gas Association, a statewide association
serving the oil and gas industry. Mr. Robb has served as a Director of the
Company since 1992 and his term as Director expires in 1995.
DIRECTORS CONTINUING IN OFFICE
James H. Cameron - Age 58
Mr. Cameron is a partner in Cameron Brothers, producers of oil and
gas, and is also President of Cameron Drilling Co., Inc. an operating
company, positions he has held in excess of five years. Mr. Cameron has
served as Director of the Company or its predecessor since 1978 and his
term as a Director of the Company expires in 1997.
Edwin L. Heminger - Age 68
Mr. Heminger is Chairman of the Board of Directors of The Findlay
Publishing Company, Findlay, Ohio, a newspaper publishing company owned by
the Heminger family, and Chairman of the Board of the White River
Broadcasting Company, Inc. of Columbus, Indiana, a wholly owned subsidiary
of The Findlay Publishing Company. Mr. Heminger has held his current
positions for periods in excess of five years. Mr. Heminger is a Director
of the Miami River Broadcasting Co., the Blanchard River Broadcasting Co.,
and the Celina Financial Corporation and its affiliated companies, Celina,
Ohio. Mr. Heminger has served as a Director of the Company since 1984 and
his present term expires in 1996.
Richard O. Johnson - Age 66
Mr. Johnson is the President and majority shareholder of J.J. Agro,
Inc., which was formed on April 25, 1991 and is located in Zanesville,
Ohio. Mr. Johnson, in excess of five years, has been the President and
majority stockholder of Clay City Beverages, Inc., a Pepsi Cola bottler and
distributor in Zanesville, Ohio. The Pepsi Cola bottler and distributor
assets were sold by Clay City Beverages on April 25, 1991. J.J. Agro is
invested in various businesses, including restaurant, agriculture and oil
and gas production and development. Mr. Johnson is a Director of the First
National Bank of Zanesville, Ohio, and Muskingum Livestock Sales Company of
Zanesville, Ohio. Mr. Johnson has served as a Director of the Company
since 1984 and his present term expires in 1996.
Mason B. Starring, III - Age 71
Mr. Starring is general partner of Mason B. Starring & Co., a venture
capital limited partnership, a position he has held in excess of five
years. Mr. Starring has served as Director of the Company or its
predecessor since 1980 and his term as a Director of the Company expires in
1997.
William H. Sullivan, Jr. - Age 56
Mr. Sullivan is the Senior Partner of Waterland Operating Company,
Rowayton, Connecticut, a real estate investment company, and is Senior
Partner of Monmouth Ocean Realty Trust, a R.E.I.T. located in Rowayton,
Connecticut, positions he has held in excess of five years. Mr. Sullivan
has served as a Director of the Company or its predecessor since 1978 and
his term as a Director of the Company expires in 1997.
RETIRING DIRECTOR
J.W. Straker - Age 73
Mr. Straker is Chairman of the Board of National Gas & Oil Company and
its operating subsidiaries. Mr. Straker has served as Director of the
Company or its predecessor since 1971 and his term as Director of the
Company expires in 1995. As required by the Code of Regulations, Mr.
Straker will retire from the Board at the Annual Meeting.
CERTAIN RELATED PARTY TRANSACTIONS
Mr. Straker's brother, C.E. Straker, is President of Buckeye Supply
Company, Zanesville, Ohio ("Buckeye Supply"). During 1994, Buckeye Supply
received $227,426 from National Gas & Oil Corporation ("National Gas"), a
subsidiary of the Company, for pipe, materials and supplies used in
National Gas' construction, operation and maintenance activities. During
1994, NGO Development Corporation ("NGO Development"), a subsidiary of the
Company, purchased pipe, material and supplies for $69,310 from Buckeye
Supply.
In 1994, The Oxford Oil Company ("Oxford Oil"), which is owned by Mr.
Straker's son, John W. Straker, and which Mr. Robb serves as Vice President
and a Director, received $2,537,282 for 1,154,843 Mcf for gas purchased by
Producers Gas Sales, Inc. ("Producers Gas"), a subsidiary of the Company,
as agent for end use natural gas customers. Mr. Straker's son-in-law, J.S.
Henderson, is the President and owner of Hopewell Oil and Gas Development
Company ("Hopewell"), a producer of oil and gas. During 1994, Hopewell
received $1,752,867 for 788,050 Mcf for gas purchased by Producers Gas as
agent for end use natural gas customers. During 1994, Cameron Brothers and
Cameron Drilling Co., Inc. ("Cameron Brothers"), in which Mr. Cameron is a
partner and President, received $499,527 for 222,388 Mcf for gas purchased
by Producers Gas as agent for end use natural gas customers. The
Company's purchased gas terms are approved by the Executive Committee and
Board of Directors and are consistent for all like gas producers.
During 1994, Cameron Brothers contributed $34,191 to NGO Development
for a joint venture drilling program and received $28,475 from NGO
Development for joint venture drilling program operating expenses. During
1994, Oxford Oil contributed $98,145 to NGO Development for a joint venture
drilling program and received $39,561 from NGO Development for joint
venture drilling program operating expenses.
All of the purchases and sales by the Company's subsidiaries were made
on terms as favorable as those available from independent third parties.
Mr. J.W. Straker does not maintain any financial interest or operational
involvement in Buckeye Supply, Oxford Oil or Hopewell.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four (4) regular meetings during 1994.
Each member of the Board of Directors who is not an Officer of the Company
receives $1,500 for each meeting attended. Directors who are also Officers
of the Company do not receive any fee for services performed as Directors
or
as members of the Committees of the Board. All Directors are reimbursed
expenses for attended meetings.
The Company maintains an Executive Committee which acts for and on
behalf of the Board of Directors in the management, business and affairs of
the Company during intervals between meetings of the Board of Directors.
The Executive Committee, elected annually, is also responsible for capital
expenditure, business development and nominating activities of the Board.
The Executive Committee is comprised of three (3) Directors: J. W. Straker,
Chairman, James H. Cameron, and Graham R. Robb. The Committee held three
(3) meetings during 1994. Non-officer members of the Executive Committee
receive $500 per meeting attended for their services on the Executive
Committee.
The Audit Committee, comprised of outside Directors elected annually,
met two (2) times with representatives of Price Waterhouse LLP to review
accounting and auditing matters. The Committee has the responsibilities of
recommending the selection of the independent auditors for each year;
consulting with the independent auditors regarding the scope and plan of
audit, adequacy of internal controls, fees, non-audit services performed
and reporting such findings to the Board of Directors. Members are Mason
B. Starring, III, Chairman, David C. Easley, Edwin L. Heminger, and William
H. Sullivan, Jr., each of whom is compensated at the rate of $800 per
meeting attended.
The Employees' Retirement Plan, Salary Deferral Plan and Group Medical
and Dental Welfare Plan are administered by the Retirement/Employee
Benefits Committee comprised of three (3) Directors: James H. Cameron,
Chairman, David C. Easley and Richard O. Johnson, who are elected annually
by the Board. The Retirement/Employee Benefits Committee held three (3)
meetings in 1994. Non-officer members are compensated at the rate of $500
per meeting attended.
The Incentive/Compensation Committee administers the salary
administration program, management and employee incentive programs and the
Company Contribution Plan. (See "Executive Compensation" below.) The
Committee, comprised of three (3) outside Directors: Richard O. Johnson,
Chairman, Edwin L. Heminger and Graham R. Robb, is elected annually by the
Board. The Incentive/Compensation Committee met one (1) time in 1994. Non-
officer members are compensated at the rate of $500 per meeting attended.
The Finance Committee is comprised of three (3) Directors: William H.
Sullivan, Jr., Chairman, Mason B. Starring, III and J.W. Straker. The
Committee, elected annually, is responsible for the Company's Investment
Program administration, investment of Company assets and the funding of
business development activities and did not meet in 1994. Investment
considerations during 1994 were considered by the full Board of Directors
at their regular meetings and through phone conversations with committee
members. Non-officer members are compensated at the rate of $500 per
meeting attended.
During 1994, each Director attended at least 75% of the total of the
meetings of the Board of Directors and any committee on which such Director
served.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company shares beneficially owned by the Directors of the Company and by
all Directors, nominees for election as Directors and Executive Officers as
a group as of March 1, 1995:
Amount and Nature of Beneficial Ownership
Sole Voting & Shared Voting & Percent
Name Investment Power Investment Power of Class
James H. Cameron 141,115 90,688( 2) 3.48%
David C. Easley 6,030(3) -0- (1)
Edwin L. Heminger 8,377 -0- (1)
Richard O. Johnson 151,264 -0- 2.27%
Patrick J. McGonagle 1,996(4) 38(5) (1)
Graham R. Robb 3,469 -0- (1)
Mason B. Starring, III 12,301 4,917(6) 0.26%
J. W. Straker 120,565(7) 7,231(8) 1.92%
William H. Sullivan, Jr. 97,058(9) 23,978(10) 1.82%
All Directors, nominees
and Executive Officers
as a group (14 persons) 560,471(11) 133,858(12) 10.42%
(1) Less than 0.2%
(2) Owned by Mr. Cameron's wife or in a family partnership.
(3) Does not include 306,546 shares as to which Mr. Easley holds a proxy
to vote, which shares are beneficially owned by a family partnership
in which Mr. Easley's wife is a partner.
(4) Includes 1,566 shares held in trust under the Company's Salary
Deferral Plan.
(5) Shares held in trust under the Company's Salary Deferral Plan.
(6) Held by Mr. Starring's wife.
(7) Includes shares held in trust for the benefit of Mr. Straker's
daughters.
(8) Shares held by Mr. Straker's wife.
(9) Includes shares held by Mr. Sullivan as Guardian for his brother.
(10) Includes shares held by Mr. Sullivan as Trustee for various members of
his family, or Mr. Sullivan's wife.
(11) Includes 7,963 shares held in trust under the Company's Salary
Deferral Plan.
(12) Includes 3,228 shares held in trust under the Company's Salary
Deferral Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the three years ended December 31,
1994, compensation paid by the Company to Patrick J. McGonagle, President
and Chief Executive Officer of the Company. No other Executive Officer of
the Company earned compensation in excess of $100,000 in 1994.
SUMMARY COMPENSATION TABLE
Annual Compensation
All Other
Name and Compensation
Principal Position Year Salary($) Bonus($)(2) ($)(3)
Patrick J. McGonagle 1994 105,903 21,100 244
President & CEO(1) 1993 79,951 100 126
1992 73,600 10,381 110
(1) Mr. McGonagle became President and CEO of the Company effective
February 19, 1993. Previously, Mr. McGonagle was Vice President and
General Counsel, the position on which the 1992 compensation is based.
(2) Cash bonuses paid under the Management Incentive Plan and Company
Contribution Plan are calculated and paid in the year immediately
following the year in which such bonuses are earned. Bonuses are
included in the table for the year in which they are earned. Each
year's bonus includes a $100 bonus paid to all employees of the Company.
Distribution of a bonus to Mr. McGonagle was from the Management
Incentive Plan in 1992 and 1994. (See "Compensation Committee Report on
Executive Compensation"). The 1992 amount includes a one-time stock bonus
of 500 shares of the Company's common stock.
(3) The amount reported represents the premiums paid by the Company during
1994, 1993 and 1992, respectively, with respect to term life insurance
for the benefit of Mr. McGonagle.
Retirement Plans
During 1993, the Company maintained several qualified and non-
qualified defined contribution and defined benefit plans for the benefit of
employees of the Company and its operating subsidiaries. The plans are
open to all eligible, full-time employees who are 21 years of age and have
completed one (1) year of service.
Employees' Retirement Plan - The Company through its subsidiaries
maintains a Retirement Plan for all eligible, full-time employees. The
Retirement Plan is a defined benefit plan based on the total compensation
paid to an employee throughout his employment as a participant of the Plan.
Retirement benefits are accrued on an annual basis for all participating
employees at a rate of 1.90% of total compensation. For Mr. McGonagle,
retirement benefits are accrued based upon salary and bonus paid each year.
The sum of annual accruals represents the employee's annual normal
retirement (age 65) benefit. Mr. McGonagle has nine years of service
credited to him under the Retirement Plan.
The following table shows the estimated annual straight life benefit
payable at normal retirement based on an average annual compensation over a
certain number of years of service. The amounts listed in the table are
not subject to any reduction for Social Security benefits.
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION 20 25 30 35 40
$ 25,000 $ 9,500 $11,875 $14,250 $16,625 $ 19,000
$ 50,000 $19,000 $23,750 $28,500 $33,250 $ 38,000
$ 75,000 $28,500 $35,625 $42,750 $49,875 $ 57,000
$100,000 $38,000 $47,500 $57,000 $66,500 $ 76,000
$125,000 $47,500 $59,375 $71,250 $83,125 $ 95,000
$150,000 $57,000 $71,250 $85,500 $99,750 $114,000
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, this Report
and the graph set forth on page 14 shall not be incorporated by reference
into any such filings.
Compensation Philosophy and Components of Compensation
The Company's compensation program is administered by the
Incentive/Compensation Committee (the "Committee") of the Board of
Directors. The Committee, which is comprised of three (3) non-employee
directors, generally makes all decisions on compensation paid to the
Company's employees, including the executive officers. All decisions by
the Committee relating to the compensation of the Company's executive
officers are reviewed and given final approval by the full Board of
Directors. During 1994, no decisions of the Committee were modified or
rejected in any material way by the full Board.
The goal of the Committee in establishing the compensation of the
Company's executive officers is to reward individual contributions and
achievements and above-average Company performance. In so doing, the
Committee believes that the Company will be able to attract and retain
exceptional executive talent and create a performance-oriented environment
that will motivate executives to achieve Company and individual goals.
In 1992 the Company retained an independent compensation consultant to
assess the Company's compensation program and to compare the Company's
compensation against that of other companies in the natural gas industry.
The independent consultant recommended, and the Board of Directors
approved, a compensation program comprised of base salary and incentive
compensation. Beginning in 1992, the base salary component of any
executive's compensation, including Mr. McGonagle's compensation, is
determined in accordance with a Salary Administration Plan which
categorizes employees, including executive officers, into relative job
positions. The category into which any particular job position is
classified is determined based upon competitive levels, organizational
structure and reporting relationships, the nature of each position and the
perceived internal value of each position. Each category is assigned a
salary range containing a minimum, midpoint and maximum salary figure. It
is anticipated that the minimum, midpoint and maximum salary figures will
be adjusted periodically to reflect, for example, competitive trends in the
industry, changes in the Company's organization and Company fiscal
performance. The level of compensation earned by each employee within the
range of that employee's job category will vary depending upon the level of
experience and individual performance of the employee.
In 1992, the incentive component of compensation was determined under
a Management Incentive Plan (the "Incentive Plan") pursuant to which
managers and executive officers received bonuses based upon the Company's
return on assets ("ROA") and return on equity ("ROE"). Beginning in 1993,
only the ROE component will be used in the determination of the bonus
amount. Objectives of the Incentive Plan include providing Company
shareholders with a reasonable return on their investment, tying
remuneration more closely to Company performance and enhancing overall
competitiveness of compensation at the Company in a variable instead of
fixed manner. Participation in the Incentive Plan is limited to those
individuals who significantly affect the operating results of the Company,
as recommended by the CEO.
Specific awards under the Incentive Plan are calculated by means of a
formula which targets consolidated ROE. The target for ROE is recommended
to the Committee by the CEO, taking into account the fiscal structure of
the Company, economic and industry conditions, anticipated performance,
shareholder value and competitive industry practices. Actual ROE is to be
determined by the Company's independent auditors. No incentive
compensation will be awarded unless the ROE target has been satisfied,
which was the case in 1993.
The formula established from the target is then applied to each
participant's base salary. Officers, including Mr. McGonagle, are eligible
to receive a maximum incentive award of twenty percent (20%) of base
salary, depending on organizational performance. Other participants
generally are eligible to receive a maximum incentive award of ten percent
(10%) of base salary contingent on organizational performance.
The Company also has in effect a Company Contribution Plan
("Contribution Plan") designed to recognize overall performance of all
eligible, full-time employees of the Company and its operating
subsidiaries. The Contribution Plan is administered by the Committee, the
members of which, with the Board of Directors, determine annually the
amount of the total cash contribution to be distributed to eligible
employees in the following year. The amount to be distributed each year is
based upon corporate performance and is at the sole discretion of the Board
of Directors. It is the intention of the Committee that no employee
receive in any one year awards under both the Incentive Plan and the
Contribution Plan. Therefore, any individual who is a participant in both
plans will receive an award under the plan that provides for the greater
award to that individual in that year.
COMPENSATION COMMITTEE
Richard O. Johnson, Chairman, Edwin L. Heminger, Graham R. Robb
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robb serves as Vice President and a Director of The Oxford Oil
Company. The Oxford Oil Company received $2,537,282 for 1,154,843 Mcf for
gas purchased by Producers Gas Sales, Inc., a subsidiary of the Company, as
agent for end use natural gas customers. In addition, Oxford Oil
contributed $98,145 to NGO Development for a joint venture drilling program
and received $39,561 from NGO Development for joint venture drilling
program operating expenses.
PROPOSAL FOR AMENDMENT OF THE ARTICLES OF INCORPORATION
TO INCREASE THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK
At a meeting held November 17, 1994, the Board of Directors declared
it advisable and desirable that the authorized number of common shares be
increased from 7,000,000 to 14,000,000, and that a proposal to amend the
Articles of Incorporation to accomplish this purpose be submitted for
consideration and action at the Annual Meeting of Shareholders to be held
May 18, 1995. If the proposed increase in the authorized number of common
shares is to be approved, it will be necessary for the holders of at least
a majority of the outstanding common shares to vote in favor of the
proposed amendment. The proposed amendment would amend Article Fourth of
said Articles to read as follows:
FOURTH: The authorized number of shares of the corporation
shall be 14,100,000 of which 14,000,000 shall be common shares,
each with a par value of $1.00, and 100,000 shall be serial
preferred shares, each without par value. Except to the extent
that the voting rights of the shares of any class are increased,
limited, or denied by an amendment to the Articles adopted by the
shareholders of the corporation, and except as provided in script
issued in lieu of a certificate for a fraction of a share, each
outstanding share regardless of class shall entitle the holder
thereof to one vote on each matter properly submitted to the
shareholders for their vote, consent, waiver, release, or other
action, subject to any provisions of the Ohio Revised Code with
respect to cumulative voting.
The Company presently is authorized to have outstanding 7,000,000
common shares, of which 6,819,400 shares were issued and outstanding or
held in the Treasury on March 27, 1995. The purpose of the proposal is to
permit the Company to retain flexibility with respect to possible future
stock dividends, acquisitions, raising additional capital and for such
other purposes as may, in the future, be determined by the Board of
Directors. It is not anticipated that further authorization for the
issuance of the securities by a vote of security holders will be solicited
prior to such issuance. The terms of issuance of the securities will be
fixed by the Board of Directors. There is presently no plan, arrangement
or understanding for the issuance of the additional number of shares to be
authorized by this proposal.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500, AND
NATURAL GAS (DIVERSIFIED) INDUSTRY INDEX
The following graph sets forth a comparison of five year cumulative
total return among the common shares of the Company, the S&P 500 Index and
the Edward D. Jones, & Co. Natural Gas (Diversified) Industry Index (the
"Natural Gas Index") for the fiscal years indicated. Information reflected
on the graph assumes an investment of $100 on December 31, 1989 in each of
the common shares of the Company, the S&P 500 and the Natural Gas Index.
Cumulative total return assumes reinvestment of dividends. The Natural Gas
Index represents stock price performance of twenty-one natural gas
companies chosen by Edward D. Jones & Co. having at least thirty percent
but not more than ninety percent of their operating revenues from the
distribution of natural gas. The Company is among the twenty-one companies
included in the Natural Gas Index.
CUMULATIVE TOTAL RETURN
The Natural S&P
Company Gas Index 500
1989 $100 $100 $100
1990 $118 $ 95 $ 97
1991 $126 $ 95 $126
1992 $152 $112 $136
1993 $201 $130 $150
1994 $216 $118 $152
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Price Waterhouse LLP served as the Company's independent certified
public accountants for the fiscal year ended December 31, 1994. Its
representatives are expected to be present at the Annual Meeting and will
have an opportunity to make a formal statement and be available to respond
to appropriate questions.
On the recommendation of the Audit Committee and ratification by the
shareholders, the Company's Board of Directors appointed Price Waterhouse
LLP as auditors for the fiscal year ended December 31, 1994, and audit and
non-audit services during the year were approved by the Audit Committee,
which considered the effect of the performance of such services on the
independence of said firm.
The Company's Board of Directors has proposed that the ratification of
the appointment of the independent certified public accountants for the
current fiscal year be submitted to the shareholders. On the recommenda
tion of the Company's Audit Committee, the Board of Directors appointed
Price Waterhouse LLP as independent certified public accountants for the
fiscal year ending December 31, 1995, and recommends that the appointment
of Price Waterhouse be ratified by the shareholders.
SHAREHOLDERS PROPOSALS
Proposals submitted by shareholders for inclusion in the 1996 proxy
materials must be received by the Company not later than December 19, 1995.
1994 ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December
31, 1994, has been sent to shareholders; said Annual Report and the
financial statements contained therein are not, and are not in any respect
intended to be, part of the proxy soliciting material.
THE COMPANY WILL ALSO PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO,
TO EACH SHAREHOLDER WHOSE PROXY IS SOLICITED HEREBY, UPON WRITTEN REQUEST
OF SUCH SHAREHOLDER TO JOHN B. DENISON, SECRETARY, AT NATIONAL GAS & OIL
COMPANY, 1500 GRANVILLE ROAD, P. O. BOX 4970, NEWARK, OHIO 43058-4970.
JOHN B. DENISON
Secretary
PROXY
NATIONAL GAS & OIL COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints J.W. Straker, Richard O. Johnson and Edwin
L. Heminger, or any of them with full power of substitution in each,
proxies to vote (including authority to vote cumulatively) and act with
respect to all Common Shares of the undersigned in NATIONAL GAS & OIL
COMPANY, an Ohio Corporation, at the Annual Meeting of its shareholders to
be held in the General Offices of the Company at 1500 Granville Road,
Newark, Ohio, on May 18, 1995, at 10:00 A.M., local time, and at any and
all adjournments thereof in accordance with the following instructions:
1. THE ELECTION OF _____FOR all nominees _____WITHHOLD AUTHORITY
DIRECTORS listed below (except as to vote for all nominees
marked to the contrary listed below.
below).
For a term of three years: DAVID C. EASLEY, PATRICK J. McGONAGLE and GRAHAM
R. ROBB.
(INSTRUCTION: To withhold authority to vote for any individual nominee
print that nominees's name below.)
2. PROPOSAL to amend the Articles of Incorporation to increase the
maximum number of common shares which the Company shall be authorized to
have outstanding from 7,000,000 to 14,000,000.
_____FOR _____AGAINST _____ABSTAIN
2. PROPOSAL for the ratification of the appointment of Price Waterhouse
LLP to audit the financial statements of the Company and its subsidiaries
for the year ending December 31, 1995.
_____FOR _____AGAINST _____ABSTAIN
(Please date and sign on reverse side)
C-1
MANAGEMENT RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3. THIS PROXY, IF
RECEIVED PRIOR TO THE MEETING PROPERLY EXECUTED, WILL BE VOTED AS SPECI
FIED. IF NOT OTHERWISE SPECIFIED, THE PROXY WILL BE VOTED "FOR" PROPOSALS
1, 2 AND 3. IF ANY OTHER MATTERS ARE BROUGHT BEFORE THE MEETING, OR IF A
NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE
TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PERSONS NAMED IN THIS PROXY
OR THEIR SUBSTITUTES WILL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT ON
SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE AS THE DIRECTORS MAY RECOMMEND.
IMPORTANT: Please sign exactly as your names appear on this Proxy. Where
shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If signer is a corporation, execute in full corporate name
by authorized officer.
Date: _________________1995
(Signature of Stockholder)
(Signature of Stockholder)
