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 ss.240.14a-11(c)
or ss.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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________________________________
(2) Form, Schedule or Registration Statement No.:________________________
(3) Filing Party:________________________________________________________
(4) Date Filed:__________________________________________________________
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NATIONAL GAS & OIL COMPANY
__________________
Notice of Annual Meeting of Shareholders
To be Held May 22, 1997
__________________
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 22, 1997, 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 ratify the appointment of Price Waterhouse LLP to audit the
financial statements of the Company and its subsidiaries for the
year ending December 31, 1997.
(3) 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 31, 1997,
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 1, 1997
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NATIONAL GAS & OIL COMPANY
__________________
PROXY STATEMENT
APRIL 1, 1997
__________________
For Annual Meeting of Shareholders
To Be Held May 22, 1997
__________________
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 22, 1997, 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 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 21, 1997.
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Only the holders of Common Shares of record at the close of business on
March 31, 1997, 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 31, 1997, the Company had
outstanding 7,049,150 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
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,
1997.
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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 673,108(1) -0- 9.55%
(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 421,302(2) -0- 5.98%
(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 421,302 shares of
National Gas & Oil stock as of December 31, 1996, 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 1997 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:
James H. Cameron, M. Howard Petricoff and William H. Sullivan, Jr.. Messrs.
Cameron, Petricoff and Sullivan 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 individuals as
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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
James H. Cameron - Age 60
Mr. Cameron is President of Cameron Drilling Co., Inc. an operating company
and producers of oil and gas, a position 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.
M. Howard Petricoff - Age 47
Mr. Petricoff is a partner in the law firm of Vorys, Sater, Seymour and
Pease, Columbus, Ohio, a position he has held in excess of five years. Mr.
Petricoff represents the Ohio Oil and Gas Association, oil and gas producers,
industrial firms and serves an appointment as Special Assistant Ohio Attorney
General for energy matters. Mr. Petricoff was elected as a Director of the
Company in August 1995 to fill an unexpired term and his term as a Director
expires in 1997.
William H. Sullivan, Jr. - Age 58
Mr. Sullivan was elected Chairman of the Board of National Gas & Oil
Company in May 1995. Additionally, 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.
DIRECTORS CONTINUING IN OFFICE
Alan A. Baker - Age 65
Mr. Baker is the retired chairman of Halliburton Energy Services, Houston,
Texas, having served with Halliburton for 41 years. Prior to being named
chairman in 1993, Mr. Baker was president and, in 1992, chairman and chief
executive officer of Halliburton Energy Services Group. Mr. Baker was elected as
a Director of the Company in August 1995 to fill an unexpired term and his term
as a Director of the Company expires in 1999.
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David C. Easley - 54
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 1998.
Richard O. Johnson - Age 68
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 term as a Director of the
Company expires in 1999.
Patrick J. McGonagle - Age 42
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 has served as a Director of the
Company since 1995 and his term as a Director expires in 1998.
Graham R. Robb - Age 67
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 1998.
Thomas E. Stewart - Age 46
Mr. Stewart is the Executive Vice President of the Ohio Oil and Gas
Association, a state-wide trade association serving the oil and gas industry, a
position he has held since September 1991. Mr. Stewart is a Registered
Legislative Agent representing the oil and gas industry before the state and
federal government and their respective agencies. Since 1985 Mr. Stewart also
has been the President of Stewart Drilling Co., Inc., Mt. Vernon, Illinois, a
family owned holding company for company held oil and gas working interests. Mr.
Stewart was elected as a Director at the 1996 Annual Meeting and his term as a
Director of the Company expires in 1999.
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CERTAIN RELATED PARTY TRANSACTIONS
In 1996, The Oxford Oil Company ("Oxford Oil"), which is owned by John W.
Straker, Jr., and which Mr. Graham R. Robb serves as Vice President and a
Director, received $3,007,821 for 1,011,908 Mcf for gas purchased by Producers
Gas Sales, Inc. ("Producers Gas"), a subsidiary of the Company, as agent for end
use natural gas customers. During 1996, Cameron Drilling Co., Inc., in which Mr.
Cameron is a partner and President, received $308,186 for 146,434 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 1996, Oxford Oil received $201,709 from NGO Development for joint
venture drilling programs and received $4,129 from NGO Development for joint
venture drilling program operating expenses. Oxford also received $12,570 for
4,262 Mcf for gas purchased by NGO Development.
All of the purchases and sales by the Company's subsidiaries were made on
terms as favorable as those available from independent third parties.
M. Howard Petricoff is a Partner of Vorys, Sater, Seymour and Pease, which
rendered legal services to the Company during 1996 in the amount of $62,179.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four (4) regular meetings during 1996. 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. Mr. William H. Sullivan, Jr., Chairman of the Board and Executive
Committee, is compensated at an annual rate of $40,000 for his services as
Chairman of the Board and Executive Committee.
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: William H. Sullivan, Jr.,
Chairman, James H. Cameron, and Graham R. Robb. The Committee held four (4)
meetings during 1996. Non-officer members of the Executive Committee receive
$500 per meeting attended for their services on the Executive Committee.
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The Audit Committee, comprised of outside Directors elected annually, met
four (4) 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 James H. Cameron, Chairman, David C. Easley,
Richard O. Johnson and Thomas E. Stewart, 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: Richard O. Johnson, Chairman, Alan
A. Baker and M. Howard Petricoff, who are elected annually by the Board. The
Retirement/Employee Benefits Committee held three (3) meetings in 1996.
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: David C. Easley, Chairman, Alan A. Baker and Graham R.
Robb, is elected annually by the Board. The Incentive/Compensation Committee met
three (3) times in 1996. 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, David C. Easley and M. Howard Petricoff. 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 1996. Investment considerations
during 1996 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 1996, 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.
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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, 1997:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
Sole Voting & Shared Voting & Percent
Name Investment Power Investment Power of Class
________________ ________________ ________________ ________
Alan A. Baker 352 1,060 (1)
James H. Cameron 153,100 97,224 3.55%
David C. Easley 6,394 -0- (1)
Richard O. Johnson 161,535 -0- 2.29%
Patrick J. McGonagle 2,195 42 (1)
M. Howard Petricoff 954 1,829 (1)
Graham R. Robb 4,710 -0- (1)
Thomas E. Stewart 1,030 -0- (1)
William H. Sullivan, Jr 102,770 30,778 1.89%
All Directors, nominees
and Executive Officers
as a group (14 persons) 439,958 132,801 8.13%
_________________
(1) Less than 0.2%
(2) Owned by Mr. Cameron's wife or in a family partnership.
(3) Does not include 325,995 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 1,740 shares held in trust under the Company's Salary Deferral
Plan.
(5) Shares held in trust under the Company's Salary Deferral Plan.
(6) Includes shares held by Mr. Sullivan as Guardian for his brother.
(7) Includes shares held by Mr. Sullivan as Trustee for various members of his
family, or Mr. Sullivan's wife.
(8) Includes 892 shares held in trust under the Company's Salary Deferral Plan.
(9) Includes 1,868 shares held in trust under the Company's Salary Deferral
Plan.
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EXECUTIVE COMPENSATION
The following table sets forth, for the three years ended December 31,
1996, 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 $100,000 in 1996.
SUMMARY COMPENSATION TABLE
Annual Compensation
All Other
Name and Compensation
Principal Position Year Salary($) Bonus($)(2) ($)(3)
- - ------------------ ---- --------- ----------- --------
Patrick J. McGonagle 1996 115,754 22,569 237
President & CEO 1995 111,666 15,077 266
1994 105,903 21,100 244
(1) 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 1996, 1995 and 1994. (See "Compensation
Committee Report on Executive Compensation").
(2) The amount reported represents the premiums paid by the Company during 1996,
1995 and 1994, respectively, with respect to term life insurance for the benefit
of Mr. McGonagle.
Retirement Plans
During 1996, 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 at least 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 11 years
of service credited to him under the Retirement Plan.
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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 7 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 1996, 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
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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.
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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%) or five
percent (5%) 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
David C. Easley, Chairman, Alan A. Baker, 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 $3,007,821 for 1,011,908 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 received $201,709 from NGO
Development for a joint venture drilling program and received $4,129 from NGO
Development for joint venture drilling program operating expenses.
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, 1991, 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 23 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 23
companies included in the Natural Gas Index.
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<PAGE>
CUMULATIVE TOTAL RETURN
The Natural S&P
Company Gas Index 500
------- --------- ----
1991 $100 $100 $100
1992 $120 $120 $108
1993 $160 $141 $118
1994 $171 $129 $120
1995 $140 $162 $165
1996 $137 $200 $203
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Price Waterhouse LLP served as the Company's independent certified public
accountants for the fiscal year ended December 31, 1996. 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, 1996, 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 recommendation 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, 1997, and recommends that the appointment of Price Waterhouse be ratified by
the shareholders.
SHAREHOLDERS PROPOSALS
Proposals submitted by shareholders for inclusion in the 1997 proxy
materials must be received by the Company not later than December 17, 1997.
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<PAGE>
1996 ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1996, 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
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<PAGE>
PROXY
NATIONAL GAS & OIL COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Alan A. Baker, David C. Easley and Richard O.
Johnson, 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 22, 1997, 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
marked to the contrary nominees listed
below). below.
For a term of three years: JAMES H. CAMERON, M. HOWARD PETRICOFF AND
WILLIAM H. SULLIVAN, JR..
(INSTRUCTION: To withhold authority to vote for any individual nominee print
that nominees's name below.)
_______________________________________
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, 1997.
____ FOR ____ AGAINST ____ ABSTAIN
(Please date and sign on reverse side)
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<PAGE>
MANAGEMENT RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2. THIS PROXY, IF RECEIVED
PRIOR TO THE MEETING PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NOT
OTHERWISE SPECIFIED, THE PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2. 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: _________________________________, 1997
______________________________________________
(Signature of Stockholder)
______________________________________________
(Signature of Stockholder)
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