<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Section 240.14a-12
New Jersey Resources Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
------------------------------------------------------------------------
(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
NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD
WALL, NEW JERSEY 07719
------------------------
PROXY STATEMENT AND
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 24, 2001
------------------------
The Annual Meeting (the "Meeting") of Shareholders of New Jersey Resources
Corporation (the "Company") will be held at 10:30 a.m., Wednesday, January 24,
2001, at the Robert B. Meyner Reception Center at the PNC Bank Arts Center, Exit
116 on the Garden State Parkway, Holmdel, New Jersey 07733, for the following
purposes:
1. To elect four directors to the Board of Directors.
2. To amend the Restricted Stock and Stock Option Program for Outside
Directors (the "Outside Directors Program") to: a) increase from 175,000 to
275,000 the number of shares of the Company's Common Stock authorized for
awards thereunder and, b) permit the Board of Directors of the Company to
amend, suspend or terminate the Outside Directors Program or any portion
thereof at any time, without a vote of shareholders, unless such a vote is
required by law.
3. To approve the action of the Board of Directors in retaining
Deloitte & Touche LLP as auditors for the fiscal year ending September 30,
2001.
4. To transact any other business that may properly be brought before
the Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 8, 2000,
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Meeting. Accordingly, only shareholders of record at the
close of business on that date will be entitled to vote at the Meeting.
A copy of the Company's Annual Report for fiscal 2000 is being mailed
concurrently with this proxy material to all shareholders of record.
A cordial invitation is extended to you to attend the Meeting. If you do
not expect to attend the Meeting, please vote by telephone, the Internet, or
sign, date and return the enclosed proxy promptly to the Secretary in the
enclosed envelope. Please refer to the enclosed Proxy Card for instructions
about the use of each of these options.
OLETA J. HARDEN
Secretary
Wall, New Jersey
December 18, 2000
<PAGE> 3
PROXY STATEMENT
------------------------
NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD
WALL, NEW JERSEY 07719
------------------------
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 24, 2001
This proxy statement sets forth certain information with respect to the
accompanying proxy to be used at the Annual Meeting (the "Meeting") of
Shareholders of New Jersey Resources Corporation (the "Company"), or at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. The Board of Directors of the Company
(the "Board") solicits this proxy and urges you to vote immediately.
The proxies hereby solicited vest in the proxy holders voting rights with
respect to the election of directors (unless the shareholder marks the proxy to
withhold that authority) and on all other matters voted upon at the Meeting. As
provided by New Jersey law, if you abstain from or withhold your vote (whether
directly or through your broker), your shares will not be included in the total
number of votes cast, and therefore will have no effect on the vote.
Whether you vote by telephone, Internet or by mail, you may later revoke
your proxy at any time before it is exercised by: (i) submitting a properly
signed proxy with a later date; (ii) voting by telephone or the Internet at a
later time, or (iii) voting in person at the Annual Meeting. See the enclosed
Proxy Card for instructions. This proxy statement and the accompanying proxy
materials are being mailed to shareholders on or about December 18, 2000.
PLACE OF ANNUAL MEETING
The Board has designated the Robert B. Meyner Reception Center at the PNC
Bank Arts Center, Exit 116 on the Garden State Parkway, Holmdel, New Jersey
07733, as the place of the Meeting. The Meeting will be called to order at 10:30
a.m., local time, on Wednesday, January 24, 2001.
VOTING OF SECURITIES AND SHAREHOLDER INFORMATION
Only holders of record of the Company's outstanding Common Stock at the
close of business on December 8, 2000 are entitled to notice of and to vote at
the Meeting. At the close of business on December 8, 2000, there were 17,638,097
outstanding shares of Common Stock. Each share is entitled to one vote. No
person, to the knowledge of the Company, held beneficially 5% or more of the
Company's Common Stock as of December 8, 2000.
The following table sets forth, as of December 8, 2000, the beneficial
ownership of equity securities of the Company of each of the directors and each
of the executive officers of the Company listed in the Summary
<PAGE> 4
Compensation Table below, and of all directors and executive officers of the
Company as a group. The shares owned by all such persons as a group constitute
approximately 2% of the total shares outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME TITLE OF SECURITY BENEFICIAL OWNERSHIP(1)(2)
---- ----------------- -------------------------------
<S> <C> <C> <C> <C>
Nina Aversano............................. Common Stock 5,437 shares -- Direct
Lawrence R. Codey......................... Common Stock 1,200 shares -- Direct
Leonard S. Coleman........................ Common Stock 10,567 shares -- Direct
Laurence M. Downes........................ Common Stock 121,433 shares -- Direct
1,920 shares -- Indirect
Joe B. Foster............................. Common Stock 10,002 shares -- Direct
2,000 shares -- Indirect
Hazel S. Gluck............................ Common Stock 10,488 shares -- Direct
James T. Hackett.......................... Common Stock 4,701 shares -- Direct
Oleta J. Harden........................... Common Stock 30,953 shares -- Direct
70 shares -- Indirect
Timothy C. Hearne......................... Common Stock 26,673 shares -- Direct
132 shares -- Indirect
Lester D. Johnson......................... Common Stock 11,441 shares -- Direct
Dorothy K. Light.......................... Common Stock 13,551 shares -- Direct
42 shares -- Indirect
Glenn C. Lockwood......................... Common Stock 40,067 shares -- Direct
Joseph P. Shields......................... Common Stock 23,447 shares -- Direct
10 shares -- Indirect
William H. Turner......................... Common Stock 953 shares -- Direct
Gary W. Wolf.............................. Common Stock 7,973 shares -- Direct
George R. Zoffinger....................... Common Stock 17,383 shares -- Direct
200 shares -- Indirect(3)
300 shares -- Indirect
All Directors and Executive Officers as a
Group................................... Common Stock 423,539 shares -- Direct
4,714 shares -- Indirect
</TABLE>
---------------
(1) Information as to the amount and nature of beneficial ownership not within
the knowledge of the Company, has been furnished by each individual.
(2) Includes shares subject to currently exercisable options or any options
exercisable within the next 60 days, deferred stock units ("Units") in the
Directors' fee deferral plan, and restricted stock units awarded pursuant to
the Long-Term Incentive Compensation Plan ("LTIP Units") as follows: Ms.
Aversano -- 3,500 options and 696 Units; Mr. Codey -- 0; Mr.
Coleman -- 9,500 options and 635 Units; Mr. Downes -- 107,723 options and
4,200 LTIP Units; Mr. Foster -- 4,500 options; Ms. Gluck -- 9,500 options
and 754 Units; Mr. Hackett -- 3,500 options and 911 Units; Mrs.
Harden -- 23,186 options and 400 LTIP Units; Mr. Hearne -- 20,311 options,
400 LTIP Units; Mr. Johnson -- 10,000 options and 213 Units; Mrs.
Light -- 8,500 options and 213 Units; Mr. Lockwood -- 33,733 options and 800
LTIP Units; Mr. Shields -- 19,600 options, 400 LTIP Units; Mr. Turner -- 253
Units; Mr. Wolf -- 7,500 options; Mr. Zoffinger -- 7,500 options and 1,655
Units; and all directors and executive officers as a group 336,738 options,
5,329 Units and 7,600 LTIP Units.
(3) Mr. Zoffinger disclaims beneficial ownership of these securities.
2
<PAGE> 5
ELECTION OF DIRECTORS
[ITEM (1) ON PROXY CARD]
ITEM 1
The Board of Directors currently consists of twelve members divided into
three classes with overlapping three-year terms. Four individuals have been
nominated for election as directors at the Meeting, each to serve for three-year
terms expiring 2004 and each until their respective successors are elected and
have qualified. Each of the nominees is now serving as a director of the
Company. Unless otherwise indicated on a proxy, the proxy holders intend to vote
the shares it represents for all of the nominees for election as directors.
The affirmative vote of a plurality of the shares of the Company's Common
Stock, present or represented by proxy and voted at the Meeting, is required for
the election of directors.
The votes applicable to the shares represented by proxies in the
accompanying form will be cast in favor of the nominees listed below. While it
is not anticipated that any of the nominees will be unable to serve, if any
should be unable to serve, the proxy holders reserve the right to substitute any
other person approved by the Board of Directors.
NOMINEE FOR ELECTION AS
DIRECTOR WITH TERMS EXPIRING IN 2004
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Codey photo] Retired. Formerly President & Chief Operating Officer, Public
Lawrence R. Codey Service Electric & Gas Company from September 1991 through
Director since May 2000 February 2000. Director, The Trust Company of New Jersey, a
Age 56 financial institution, United Water Resources, Inc., a utility
holding company with subsidiaries providing water and wastewater
services, Horizon Blue Cross Blue Shield of New Jersey, a health
care insurance provider and Sealed Air Corporation, a
manufacturer and seller of food and specialty packaging materials
and systems.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Downes photo] Chairman of the Board of Directors of the Company since September
Laurence M. Downes 1996 and President and Chief Executive Officer ("CEO") of the
Director since 1995 Company since July 1995; Director, New Jersey Manufacturers
Age 43 Insurance Company and the American Gas Association; Member, PNC
Bank, N.A., New Jersey Regional Advisory Council and Chairman,
Jersey Shore Partnership.(4)
[Foster photo] Chairman since 1989 and CEO from 1989 until January 2000,
Joe B. Foster Newfield Exploration Company, an oil and gas exploration company;
Director since 1994 Interim Chairman, President and CEO from January through August
Age 66 2000 and Director since 1990, Baker Hughes, Inc., an oil and gas
services company; Director, McDermott International, Inc., a
construction and engineering firm and past Chairman of the
National Petroleum Council.
</TABLE>
---------------
<TABLE>
<C> <S>
(4) The Company and/or its subsidiaries maintain a banking relationship with PNC Bank, N.A.,
New Jersey, of which Mr. Downes is a member of the Regional Advisory Council. The Company
believes that all transactions with this bank were conducted at terms and rates no more
favorable than those available from other similarly situated commercial banks. The Company
and/or its subsidiaries have an insurance policy with New Jersey Manufacturers Insurance
Company of which Mr. Downes is a director. The Company believes that the policy held by it
are on terms and rates no more favorable than those available to other similarly situated
companies. In December 1997, Mr. Downes (along with three other current or former officers
of the Company) entered into a settlement with the Securities and Exchange Commission (the
"SEC") in which he consented, without admitting or denying the SEC's findings, to an
administrative order finding that he was a cause of the Company not fully complying with
section 13(a) of the Securities and Exchange Act of 1934, as amended, in connection with
the Company's reporting of certain 1992 Company subsidiary transactions. No fines or
monetary penalties were imposed upon him nor was his ability to act as an officer or
director of a public company otherwise limited.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Turner photo] Chairman, since September 1999, and President from August 1997 to
William H. Turner that time, PNC Bank, N.A., New Jersey and Northeast Region; Vice
Director since March 2000 Chairman and Director, Chemical Banking Corporation, from 1990 to
Age 60 1996; Director, Franklin Electronic Publishers, an electronics
reference products company, Standard Motor Products, Inc., an
automotive replacement parts company, and Volt Information
Sciences, Inc., a staffing services, telecommunications and
information solutions company; Chairman of the Board of Trustees,
NJN Foundation; Trustee, New Jersey State Chamber of Commerce,
Liberty Science Center and First Vice President, Atlantic Health
System.(5)
</TABLE>
DIRECTORS WITH TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Aversano photo] Retired as of December 2000. Formerly President, North America
Nina Aversano Global Service Provider Division, Lucent Technologies, a
Director since 1998 designer, developer and manufacturer of telecommunications
Age 55 systems, software and products, from 1993 through December 2000,
formerly AT&T Network Systems Division.
[Coleman photo] Senior Advisor since November 1999 and formerly President,
Leonard S. Coleman National League of Professional Major League Baseball Clubs from
Director since 1995 March 1994 to that time; Director, Avis, Inc., a car rental and
Age 51 leasing company, Cendant Corp., a hotel and real estate franchise
company, H. J. Heinz Company, a manufacturer and marketer of
processed food products, Omnicom Group, Inc., an advertising
holding company, Owens Corning Corp., a glass and plastics
manufacturing company and Radio Unica Communications Corp, a
radio network.
</TABLE>
---------------
<TABLE>
<C> <S>
(5) PNC Bank, N.A., New Jersey provides commercial banking services to the Company.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Johnson photo] Retired. Formerly Director from 1992 through 1995, Vice Chairman
Lester D. Johnson and Chief Financial Officer from January 1995 to December 1995,
Director since 1996 Executive Vice President and Chief Financial Officer from March
Age 68 1992 to December 1994, of Consolidated Natural Gas Company.
[Light photo] CEO, Alden Enterprises, LLC, since January 1996, a consulting
Dorothy K. Light company; Corporate Vice President and Secretary from June 1990 to
Director since 1990 July 1995, The Prudential Insurance Company of America;
Age 63 Chairperson, The Prudential Foundation from December 1992 to July
1995; Director, Utility Women's Leadership Conference; and
Trustee and Vice Chairman, Milkweed Editions, a publishing
company.
</TABLE>
DIRECTORS WITH TERMS EXPIRING IN 2003
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Gluck photo] President, The GluckShaw Group (formerly Policy Management &
Hazel S. Gluck Communications, Inc.) since April 1994, a government consulting
Director since 1995 and public relations firm; Director, New Jersey State Chamber of
Age 66 Commerce and Kidsbridge Cultural Center of Trenton; former
Commissioner, Port Authority of New York and New Jersey, New
Jersey Department of Transportation, New Jersey Transit and New
Jersey Department of Insurance.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
<C> <S>
[Hackett photo] Chairman, President and CEO, Ocean Energy Inc., formerly Seagull
James T. Hackett Energy Corporation, since 1998, an oil and gas exploration and
Director since 1999 production company; President-Energy Services Group, Duke Energy
Age 46 Corp. from 1997 to 1998; Executive Vice President, PanEnergy Corp
from 1996 to 1997; and Director, Ocean Energy Inc., Kaiser
Aluminum, Corp., a producer and fabricator of aluminum and
related products, and Temple-Inland, Inc., a holding company
engaged in wood, pulp, paper and fiber products, and financial
services.
[Wolf photo] Senior Partner, Cahill Gordon & Reindel, a law firm, for more
Gary W. Wolf than five years and Director, Southwestern Public Service
Director since 1996 Company, an electric utility company, from 1986 to October
Age 62 1997.(6)
[Zoffinger photo] President & CEO, Constellation Capital Corp., since March 1998, a
George R. Zoffinger financial services company; President & CEO, Value Property
Director since 1996 Trust, a publicly owned real estate investment trust from 1995 to
Age 52 February 1998; President and CEO, Constellation Bancorp from 1991
through 1994, a financial services company; Chairman and
Director, CoreStates New Jersey National Bank from 1994 through
1997; Director, Silverline Technologies, Inc., a software
company, Admiralty Bancorp, Commercial Federal Bancorp, MFN
Financial Corp., all financial services companies, New Jersey
Alliance for Action, and New Jersey World Trade Council; Trustee,
St. Peter's Medical Center, and Chairman, New Brunswick
Development Corporation.
</TABLE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During fiscal 2000, there were eight meetings of the Board of Directors.
Except for Ms. Aversano, each director attended at least 75% of the combined
meetings of the Board of Directors and the Committees on which he or she served
during the year.
---------------
<TABLE>
<C> <S>
(6) Cahill Gordon & Reindel represents the Company as legal counsel with respect to various
matters.
</TABLE>
7
<PAGE> 10
The Audit Committee consists of Nina Aversano, Lawrence R. Codey, James T.
Hackett, Lester D. Johnson (Committee Chair), Dorothy K. Light, William H.
Turner and Gary W. Wolf. Each member of the Audit Committee is independent, as
such term is defined in the New York Stock Exchange listing standards. The Audit
Committee met four times during fiscal 2000 for the purpose of overseeing
management's responsibilities for accounting, internal controls and financial
reporting. While not attempting to verify the results of any specific audit, the
Committee did satisfy itself, and ultimately the Board, that these functions are
being carried out responsibly. The Committee acts to assure itself of the
independence of the independent accountants by reviewing each non-audit service
rendered or to be rendered by the accountants. After meeting with the
independent accountants to review the scope of their examination, fees, and the
planned scope of future examinations, the Committee makes a recommendation to
the Board for the appointment of an independent accounting firm for the
following fiscal year. The Report of the Audit Committee (see below) and the
Audit Committee Charter (Appendix B) more fully describe the responsibilities
and the activities of the Audit Committee.
The members of the Corporate Governance Committee are Leonard S. Coleman,
Joe B. Foster, Hazel S. Gluck, Dorothy K. Light (Committee Chair) and Gary W.
Wolf. The purpose of the Committee is to assess Board composition, size,
additional skills and talents needed, and make recommendations to the Board
regarding those assessments. The Committee recommends to the Board the nominees
for election as directors, and considers performance of incumbent directors to
determine whether to nominate them for re-election. This Committee met three
times in fiscal 2000. The Corporate Governance Committee will consider qualified
nominations for directors recommended by shareholders. Recommendations should be
sent to New Jersey Resources Corporation, Office of the Secretary, 1415 Wyckoff
Road, P.O. Box 1464, Wall, New Jersey 07719. Any nomination for director should
be received by the Secretary on or before November 10, 2001.
The Executive Committee consists of Leonard S. Coleman, Laurence M. Downes,
Lester D. Johnson, Dorothy K. Light, Gary W. Wolf (Committee Chair), and George
R. Zoffinger. During the interval between meetings of the Board of Directors,
the Executive Committee is authorized under the Company's By-Laws to exercise
all the powers of the Board of Directors in the management of the Company,
unless specifically directed otherwise by the Board or otherwise proscribed by
law. This Committee did not meet during fiscal 2000.
The Financial Policy Committee, consisting of Lawrence R. Codey, Leonard S.
Coleman (Committee Chair), Hazel S. Gluck, James T. Hackett, Lester D. Johnson,
William H. Turner and George R. Zoffinger, met four times during fiscal 2000 to
review and make recommendations to the Board concerning financing proposals,
dividend guidelines, and other corporate financial and pension matters.
The Management Development and Compensation Committee, consisting of Nina
Aversano, Joe B. Foster, Lester D. Johnson, Dorothy K. Light and George R.
Zoffinger (Committee Chair), met twice during fiscal 2000 to oversee the
performance and qualifications of senior management, and to review and make
recommendations regarding the annual compensation and benefits of all elected
officers of the Company and its subsidiaries.
AUDIT COMMITTEE REPORT
The Board has adopted a written Charter of the Audit Committee (which is
attached to this proxy statement as Appendix B). In accordance with that
Charter, the Audit Committee assists the Board in fulfilling its responsibility
for oversight of the quality and integrity of the accounting, auditing and
financial
8
<PAGE> 11
reporting practices of the Company. During the fiscal year ended September 30,
2000, the Audit Committee met four times, and the Audit Committee Chairman, as
representative of the Audit Committee, discussed the interim financial
information contained in the quarterly earnings announcements with the Chief
Financial Officer and the independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on their independence consistent with Independence Standards Board
Standard No. 1 "Independence Discussions with Audit Committees," discussed with
the auditors relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence. The Audit Committee also
discussed with management, the internal auditors and the independent auditors
the quality and adequacy of the Company's internal controls and the internal
audit functions, organization, responsibilities, budget and staffing. The Audit
Committee reviewed with both the independent and the internal auditors their
audit plans, audit scope, and identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors
all communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Audit Committee also discussed the results of the
internal audit examinations.
The Audit Committee reviewed the audited financial statements of the
Company as of and for the fiscal year ended September 30, 2000 with management
and the independent auditors. Management has the responsibility for the
preparation of the Company's financial statements and the independent auditors
have the responsibility for the audit of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended September 30, 2000, for filing with the
Securities and Exchange Commission. The Audit Committee also recommended the
reappointment of the independent auditors and the Board concurred in such
recommendation.
Lester D. Johnson, Chairman
Nina Aversano
Lawrence R. Codey
James T. Hackett
Dorothy K. Light
William H. Turner
Gary W. Wolf
Dated: November 28, 2000
REMUNERATION OF DIRECTORS
Directors who are not officers of the Company or its subsidiaries are
compensated as follows: (1) an annual retainer of $14,800 of which $4,000 is
paid in Company common stock; (2) a fee of $800 for each Board and committee
meeting attended and (3) an annual retainer for each committee chairperson of
$5,000. Directors also receive a one-time award of 200 shares and options to
purchase 5,000 shares of the Company's
9
<PAGE> 12
common stock pursuant to the Outside Directors Restricted Stock and Stock Option
Program (the "Outside Directors Program"). An additional award of options to
purchase 1,500 shares of the Company's common stock is made annually. Directors
who are also officers of the Company or its subsidiaries do not receive
additional compensation for serving on the Board. All directors are reimbursed
for any out-of-pocket expenses incurred in attending Board or committee
meetings.
REMUNERATION OF EXECUTIVE OFFICERS
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The Management Development and Compensation Committee (the "Committee") of
the Board of Directors consists of five outside, non-employee directors. In
addition, as Chairman and Chief Executive Officer of the Company, Mr. Downes is
a non-voting, ex officio member of the Committee.
The Committee's executive compensation philosophy is designed to attract,
energize, reward and retain qualified executive personnel who will provide
superior results over the long-term and enhance the Company's position in a
highly competitive market. The Committee also administers awards under certain
of the Company's employee benefit plans. Accordingly, the Committee reviews the
performance of the officers of the Company and the Company's subsidiaries, and
makes recommendations to the Board with respect to the compensation and benefit
programs that are applicable to officers of the Company and/or its subsidiaries.
The Committee each year has utilized a national compensation consultant to
review competitive compensation levels of senior executives in the natural gas
industry. Through this process, the Committee identifies the competitive
compensation levels, both with respect to base salary and overall executive
compensation packages, at the Company's peers. Many, but not all of the
compensation peer companies are contained in the Company Peer Group used in the
performance graph on page 15.
The Committee compares this external data to the base salary and other
compensation provided to senior Company executives. In this fashion, the
Committee is able to assess and make recommendations to the Board with respect
to both individual compensation levels and target performance levels under the
Company's Officer Incentive Compensation Plan (the "Incentive Plan").
Compensation levels set for each executive officer are based upon
marketplace compensation information, the Committee's judgment and performance
against established goals. Individual performance is measured in several
specific areas, including the development and execution of annual operating
plans, strategic plans, leadership qualities, staff development, change in
leadership responsibilities and the individual's specific contributions to
corporate objectives which have a significant and positive impact on the
Company. Performance of the subsidiary companies is measured by comparing actual
achievements to financial and strategic objectives in their annual operating
plans. Company performance criteria is also measured yearly to ensure
consistency with the corporate vision, mission and strategies. In making
compensation decisions for 2000 the Committee reviewed executive accomplishments
in total energy deliveries, number of new customers, cost of adding a new
customer, earnings, expenses, return on equity, market share, operating and net
income and the Company's assumption of a leadership role in energy-related
businesses.
The Company has established three programs providing for direct
compensation of executive officers: the Base Salary Program, the Incentive Plan
and the Long-Term Incentive Compensation Plan (the "Long-Term Plan"). The
structure of the total executive compensation package is such that when the
Company achieves its target annual business objectives, the Company's senior
executives are expected to receive a level of
10
<PAGE> 13
compensation approximately equivalent to the median compensation paid to
executives among the Company's peers.
Each of these three programs is discussed in greater detail below.
BASE SALARY PROGRAM
In setting the base salary levels of each executive officer, the Committee
considers the base salaries of executive officers in comparable positions in
other similarly situated natural gas companies and companies of similar size in
other industries. In setting levels, the Company currently targets the 50th
percentile of the relevant labor market. The Committee also considers the
executive's experience level, time and placement in grade and the actual
performance of the executive (in view of the Company's needs and objectives).
Changes in compensation are directly dependent upon individual and Company
performance. Mr. Downes' calendar 2000 base salary is $375,000, well below the
median compensation for comparable companies.
INCENTIVE PLAN
Under the Incentive Plan, officers and certain key employees of the Company
and New Jersey Natural Gas Company, a wholly-owned subsidiary of the Company
("NJNG"), designated by the Committee, may receive additional cash compensation
based upon the Committee's thorough evaluation of the Company's performance
against a series of performance objectives. The Committee believes that variable
at-risk compensation, both annual and long-term, should make up a significant
part of an executive's compensation and that the amount of this compensation
component should increase with increasing levels of responsibility. Awards under
the Incentive Plan are based upon a percentage of the base salary of each
eligible Incentive Plan participant during the year. Threshold, target and
maximum incentive award levels are established annually by the Committee for
each award group.
Individual awards are payable based on the executive's attainment of a
portfolio of goals including earnings, customer satisfaction and leadership.
Incentive award levels provide payments that are at approximately the 60th
percentile of the market, which is competitive within the industry when
performance results are fully achieved.
The incentive awards to executive officers for achievements in fiscal 2000
(paid in fiscal 2001), including the incentive of $160,000 made to Mr. Downes,
reflect overall results that, in total, were at target for the Company.
LONG-TERM PLAN
The Long-Term Plan provides for the award of stock options, (the "Stock
Options"), performance units (the "Performance Units"), or restricted stock (the
"Restricted Stock") to designated employees. The Committee believes that
Performance Units, each unit of which is equal to a share of Common Stock, and
Restricted Stock awards provide executives a strong incentive to create earnings
that could be the foundation for the payment of dividends and as a focus on
stock price appreciation. As the value of the Company's stock is generally
considered the strongest indicator of overall corporate performance, awards of
Stock Options, which allow the executive to benefit by appreciation in stock
price at no direct cost to the Company, and the performance-based Performance
Units and Restricted Stock, provide strong incentives to executives by relating
a portion of their compensation to the future value of the Company's stock.
Additionally, the use of stock-based compensation encourages individuals to act
as owners/managers and is an important means of fostering a mutual interest
between management and shareholders.
11
<PAGE> 14
In 2000, the Committee awarded Mr. Downes 100,000 Stock Options pursuant to
the Long-Term Plan at an exercise price equal to fair market value at the time
of grant, with vesting accelerated upon achieving specific stock price hurdles.
The award made to Mr. Downes was calibrated using the Black-Scholes model equal
to the 60th percentile of the competitive market if all awards vest.
OTHER
Section 162(m) of the Internal Revenue Code (the "Code") provides that
executive compensation in excess of $1 million will not be deductible for
purposes of corporate income tax, unless it is performance-based compensation
and is paid pursuant to a plan meeting certain requirements of the Code. The
Committee intends to continue reliance on performance-based compensation
programs. The Committee expects that such programs will fulfill future corporate
business objectives. The Committee currently anticipates that, to the extent
practicable and in the Company's best interest, such programs will be designed
to satisfy the requirements of Section 162(m) with respect to the deductibility
of compensation paid. The Committee recognizes, however, that there may be
business considerations that dictate that compensation be paid that is not
deductible under Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
With the exception of Mr. Downes, who is a non-voting, ex officio member of
the Committee, no member of the Committee is a former or current officer or
employee of the Company or any of its subsidiaries, nor does any executive
officer of the Company serve as an officer, director or member of a compensation
committee of any entity one of whose executive officers or directors is a
director of the Company.
MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE :
<TABLE>
<S> <C>
George R. Zoffinger, Chair
Nina Aversano Lester D. Johnson
Joe B. Foster Dorothy K. Light
</TABLE>
12
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ---------------------
COMPENSATION PERFORMANCE
----------------- UNIT ALL OTHER
SALARY BONUS AWARD(S)** OPTIONS COMPENSATION***
NAME AND PRINCIPAL POSITION YEAR* ($) ($) (#) (#) ($)
--------------------------- ----- ------- ------- ----------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Laurence M. Downes.................... 2000 368,269 150,000 -- 100,000 3,400
Chairman, Chief Executive 1999 336,731 135,000 7,129 90,000 3,200
Officer and President 1998 293,984 108,030 -- -- 3,200
Glenn C. Lockwood..................... 2000 173,985 45,179 -- -- 5,038
Senior Vice President & 1999 162,550 47,093 2,018 30,000 4,877
Chief Financial Officer 1998 150,123 46,450 -- -- 4,503
Timothy C. Hearne..................... 2000 152,192 40,000 -- -- 4,566
Senior Vice President and Treasurer, 1999 149,337 31,064 1,541 10,000 4,480
NJR Service Corporation 1998 144,623 35,180 -- -- 4,338
Joseph P. Shields..................... 2000 147,846 48,000 -- -- 4,435
Senior Vice President, Energy 1999 139,612 48,065 1,259 20,000 4,188
Services, NJNG 1998 131,431 42,400 -- -- 3,942
Oleta J. Harden....................... 2000 148,115 40,000 -- -- 4,443
Senior Vice President, General 1999 141,673 31,298 1,355 10,000 4,250
Counsel & Secretary 1998 136,823 36,405 -- -- 4,104
</TABLE>
---------------
* For fiscal year ended September 30.
** Represents a share of Common Stock. Total includes 2,929, 1,218, 1,141, 859,
and 955 shares for Messrs. Downes, Lockwood, Hearne, and Shields and Ms.
Harden, respectively, that were earned on the 1997 award because the
Company's performance goal of total shareholder return over a three year
period was within the first quartile of its peer group.
*** Represents the Company's matching contributions under the Employee's
Retirement Savings Plan (the "Savings Plan").
13
<PAGE> 16
OPTION GRANTS IN 2000 FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- ------------ -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Laurence M. Downes..... 100,000* 81.5% 38.8125 01/26/10 2,440,879 6,185,703**
Glenn C. Lockwood...... -- -- -- -- -- --
Timothy C. Hearne...... -- -- -- -- -- --
Joseph P. Shields...... -- -- -- -- -- --
Oleta J. Harden........ -- -- -- -- -- --
</TABLE>
---------------
* Subject to the price of the Company's common stock at various times and
change of control, termination, and acceleration conditions, the options vest
no later than January 26, 2005.
** The stock options granted to Mr. Downes in fiscal 2000 would produce the
pre-tax gain of $6,185,703 shown in the table above only if the Company's
stock price rises to $100.67 per share before Mr. Downes exercises the stock
options. Based on the number of shares of Company stock outstanding at the
end of 2000, such an increase in the Company's stock price would produce a
corresponding aggregate pre-tax gain of approximately $1,100,000,000 for the
Company's shareholders. In other words, Mr. Downes' potential gain from stock
options granted in 2000 would equal one-half of one percent (.5%) of the
potential gain to all shareholders resulting from the assumed future stock
price increases.
AGGREGATED OPTION EXERCISES IN 2000 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
SHARES NUMBER OF OPTIONS
ACQUIRED ON UNEXERCISED OPTIONS
EXERCISE VALUE AT FISCAL YEAR-END AT FISCAL
REALIZED
(#) ($) (#) YEAR-END ($)
NAME
----- ---------- ------- ----------------- -----------
<CAPTION>
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
<S> <C> <C> <C> <C>
Laurence M. Downes............. 0 0 75,223/177,500 743,813/558,906
Glenn C. Lockwood.............. 0 0 23,483/25,250 213,186/118,375
Timothy C. Hearne.............. 0 0 16,145/9,166 167,961/49,106
Joseph P. Shields.............. 0 0 13,184/16,416 101,069/73,544
Oleta J. Harden................ 500 7,406 18,352/9,834 208,996/57,707
</TABLE>
14
<PAGE> 17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
<TABLE>
<CAPTION>
COMPANY PEER
THE COMPANY S&P UTILITIES S&P 500 GROUP**
----------- ------------- ------- ------------
<S> <C> <C> <C> <C>
9/95 100.00 100.00 100.00 100.00
9/96 114.12 107.44 153.03 113.48
9/97 139.05 122.83 214.86 132.54
9/98 159.87 159.35 234.24 157.80
9/99 187.48 157.56 299.26 148.81
9/00 198.79 227.71 338.92 169.18
</TABLE>
---------------
* Assumes $100 invested on September 30, 1995, in the Company stock, the S&P
Utilities Index, the S&P 500 Index and the Company Peer Group. Cumulative
total return includes reinvestment of dividends.
** The twenty-six companies in the Company Peer Group noted above are as
follows: AGL Resources, Inc., Atmos Energy Corporation, Cascade Natural Gas
Corporation, Chesapeake Utilities Corp., Conectiv, NiSource, Inc.,
Consolidated Edison Energy, Inc., Dominion Resources, Inc., Energy East
Corporation, Keyspan Energy Corp., Laclede Gas Co., Nicor, Inc., Northwest
Natural Gas Co., NUI Corporation, Oneok, Inc., PP&L Resources, Inc., Peoples
Energy Corporation, Piedmont Natural Gas Co., Inc., Public Service Enterprise
Group, Inc., RGS Energy Group, Scana Corp., SEMCO Energy, Inc., Sempra
Energy, South Jersey Industries, Inc., Vectren Corp., and Washington Gas
Light Co. The Company has decided to include the performance of the Company
Peer Group, because the Company Peer Group has a higher percentage of natural
gas utility and combination natural gas and electric utility companies
operating in the same region as the Company and having comparable size and
market capitalization to that of the Company, as compared with the S&P
Utilities Index.
15
<PAGE> 18
RETIREMENT PLANS
The following table sets forth estimated annual benefits payable upon
retirement (including amounts attributable to the Plan for Retirement Allowances
for Non-Represented Employees (the "Plan") and any other defined benefit
supplementary or excess pension award plans) in specified compensation and years
of service classifications, and assumes a reduction of approximately 10% which
is applied to married employees in order to provide the spouse a survivor's
annuity of 50% of the employee's reduced retirement benefit:
PENSION PLAN TABLE
YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
COMPENSATION 10 15 20 25 30 35 40 45
------------ ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$125,000............. $16,721 $ 25,081 $ 33,441 $ 41,801 $ 50,162 $ 58,522 $ 65,553 $ 72,584
150,000............. 20,433 30,650 40,866 51,083 61,299 71,516 79,953 88,391
175,000............. 24,146 36,218 48,291 60,364 72,437 84,509 94,353 104,197
200,000............. 27,858 41,787 55,716 69,645 83,574 97,503 108,753 120,003
225,000............. 31,571 47,356 63,141 78,926 94,712 110,497 123,153 135,809
250,000............. 35,283 52,925 70,566 88,208 105,849 123,491 137,553 151,616
275,000............. 38,996 58,493 77,991 97,489 116,987 136,484 151,953 167,422
300,000............. 42,708 64,062 85,416 106,770 128,124 149,478 166,353 183,228
325,000............. 46,421 69,631 92,841 116,051 139,262 162,472 180,753 199,034
350,000............. 50,133 75,200 100,266 125,333 150,399 175,466 195,153 214,841
375,000............. 53,846 80,768 107,691 134,614 161,537 188,459 209,553 230,647
400,000............. 57,558 86,337 115,116 143,895 172,674 201,453 223,953 246,453
425,000............. 61,271 91,906 122,541 153,176 183,812 214,447 238,353 262,259
450,000............. 64,983 97,475 129,966 162,458 194,949 227,441 252,753 278,066
475,000............. 68,696 103,043 137,391 171,739 206,087 240,434 267,153 293,872
500,000............. 72,408 108,612 144,816 181,020 217,224 253,428 281,553 309,678
525,000............. 76,121 114,181 152,241 190,301 228,362 266,422 295,953 325,484
550,000............. 79,833 119,750 159,666 199,583 239,499 279,416 310,353 341,291
575,000............. 83,546 125,318 167,091 208,864 250,637 292,409 324,753 357,097
600,000............. 87,258 130,887 174,516 218,145 261,774 305,403 339,153 372,903
</TABLE>
For the five executives named in the Summary Compensation Table,
compensation covered by the Plan equals their 5 year average Base Salary.
The number of years of credited service at normal retirement for the named
executive officers are as follows:
<TABLE>
<CAPTION>
YEARS OF
NAME CREDITED SERVICE
---- ----------------
<S> <C>
Laurence M. Downes..................................... 37
Glenn C. Lockwood...................................... 38
Oleta J. Harden........................................ 30
Timothy C. Hearne...................................... 36
Joseph P. Shields...................................... 39
</TABLE>
16
<PAGE> 19
Benefits are computed on a straight life, annuity basis. The benefits
listed in the above table are not subject to deduction for Social Security or
other amounts.
To the extent benefits that would otherwise be payable to an employee under
the Company's Savings Plan exceed the specified limits on such benefits imposed
by the Code, the Company intends to pay such excess benefits to the employee at
the time the employee receives payment under the Plan. These excess benefit
payments would be made from the general funds of the Company. As of September
30, 2000, two employees, Messrs. Downes and Lockwood, were eligible for excess
benefit payments.
The Company has supplemental retirement agreements ("Supplemental
Retirement Agreements") with Messrs. Downes, Lockwood, Hearne and Shields and
Ms. Harden and certain other officers not named in the Summary Compensation
Table, payable over a five-year period commencing with retirement at age 65. At
projected retirement, the total maximum amounts currently payable to Messrs.
Downes, Lockwood, Hearne and Shields and Ms. Harden under their respective
Supplemental Retirement Agreements would be $250,000 for Mr. Downes and $125,000
for each of the remaining four officers named in the Summary Compensation Table.
CHANGE OF CONTROL ARRANGEMENTS
Under the Long-Term Plan, in the event of a Change of Control (as defined
therein) of the Company, the Board may, among other things, accelerate the
entitlement to outstanding benefits awarded thereunder.
Pursuant to the Supplemental Retirement Agreements of Messrs. Downes,
Lockwood, Hearne and Shields and Ms. Harden, in the event of a change of control
of the Company, the right to the amounts payable to each of them thereunder
becomes immediately vested and such amounts are immediately payable in the event
of a subsequent termination of employment for any reason. Change of Control of
the Company is defined in the Supplemental Retirement Agreements as a reportable
change of control under the proxy rules of the SEC, including the acquisition of
a 30% beneficial voting interest in the Company, or a change in any calendar
year in such number of directors as constitutes a majority of the Board, unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the year.
The Company has entered into agreements with each of the five executives
named in the Summary Compensation Table that provide each such executive certain
rights in the event that his or her employment with the Company is terminated
within three years following the occurrence of a Change of Control (i) by the
Company without "Cause" (i.e., conviction of a felony, gross neglect, willful
malfeasance or willful gross misconduct which has had a material adverse effect
on the Company or repeated material willful violations of the executive's duties
which result in material damage to the Company) or (ii) by the executive for
"Good Reason" (e.g., due to a material breach of the agreement by the Company,
including, without limitation, a material adverse change in executive's position
or responsibilities or a reduction of the executive's compensation). Subject to
the limitation described below, upon either such termination of employment, the
executive will receive three times, in the case of Mr. Downes, and two times, in
all other cases, the sum of (x) his or her then annual base salary and (y) the
average of his or her annual bonuses with respect to the last three calendar
years ended prior to the Change of Control. The agreements further provide that,
if any such executive is subject to the so-called "golden parachute" excise tax
imposed under Section 4999 of the Code, the Company shall make an additional
payment to the executive in an amount sufficient to place the executive in the
same after-tax position as if no such excise taxes had been imposed. For
purposes of these agreements, a "Change of Control" generally means (i) the
acquisition by any person of beneficial ownership of securities representing
17
<PAGE> 20
25% or more of the combined voting power of the Company's securities; (ii)
within any 24-month period, the persons who were directors of the Company
immediately before such period (the "Incumbent Directors") and directors whose
nomination or election is approved by two-thirds of the Incumbent Directors and
directors previously approved by the Incumbent Directors ceasing to constitute a
majority of the Board or (iii) the shareholders of the Company approve a merger,
consolidation, share exchange, division, sale or other disposition of all or
substantially all of the assets of the Company, as a result of which the
shareholders of the Company immediately prior to such event do not hold,
directly or indirectly, a majority of the Voting Power (as defined in such
agreements) of the acquiring or surviving corporation.
PROPOSED AMENDMENT TO THE RESTRICTED
STOCK AND STOCK OPTION PROGRAM FOR OUTSIDE DIRECTORS
[ITEM (2) ON PROXY CARD]
ITEM 2
On January 11, 1995, the Board of Directors adopted the Outside Directors
Program which was subsequently approved by the shareholders at the March 8, 1995
Shareholders Meeting. On November 29, 2000, the Board of Directors adopted,
subject to the approval of the shareholders at the Meeting, amendments to the
Company's Outside Directors Program. The text of the Outside Directors Program
as proposed to be amended is set forth in Appendix A.
Under the Outside Directors Program, 175,000 shares previously were
authorized for issuance to all outside directors of the Company. The proposed
amendments would increase from 175,000 to 275,000 the number of shares of the
Company's Common Stock authorized for awards under the Outside Directors Program
(there are, as of the date of this Statement, 16,650 of the previously
authorized 175,000 shares still available for issuance). Additionally, under the
proposed changes, the Board of Directors would be permitted to amend, suspend or
terminate the Outside Directors Program or any portion thereof at any time,
without a vote of stockholders, unless any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
common stock may be listed requires shareholder approval, or the amendment would
have a material effect on any previously granted award.
DESCRIPTION OF THE OUTSIDE DIRECTORS PROGRAM
GENERAL
The purpose of the Outside Directors Program is to enable the Company to
attract and retain persons of outstanding competence to serve on the Board of
Directors and strengthen the link between the Directors and Company shareholders
by paying Outside Directors a portion of their compensation in Company common
stock and options to purchase common stock ("Awards"). The Outside Directors
Program is summarized below.
PARTICIPATION
Members of the Board of Directors who are not employees of the Company or
any of its subsidiaries ("Outside Directors") are eligible to participate in the
Outside Directors Program. Eleven members of the Board are currently Outside
Directors.
18
<PAGE> 21
ADMINISTRATION
The Outside Directors Program will be administered by an Administrative
Committee ("Committee") consisting of the Chief Executive Officer of the Company
and two other officers of the Company or its subsidiaries designated by the
Chief Executive Officer. In the absence of such designation, the other members
of the Committee will be the Chief Financial Officer and the Secretary of the
Company.
SHARES SUBJECT TO THE PROGRAM
Under the Outside Directors Program, each Outside Director receives
automatic grants of common stock of the Company and options to purchase common
stock of the Company, as described below. The total number of shares of Common
Stocks ("Shares") available for Awards under the Outside Directors Program is
175,000 subject to adjustment in the event of a merger, consolidation, stock
split, stock dividend or other recapitalization ("Recapitalization"). Shares
consist of previously authorized and unissued shares or treasury shares. Any
Shares (i) awarded under the Outside Directors Program with respect to which the
restrictions set forth below have not lapsed and which have thus been forfeited
and (ii) subject to the unexercised portion of an option granted under the
Outside Directors Program which expires or terminates without being exercised,
are available for Awards under the Outside Directors Program. As of the date of
this Statement, 16,650 of the previously authorized 175,000 shares are still
available for issuance. IF THE PROPOSED AMENDMENTS ARE ADOPTED THE NUMBER OF
SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE OUTSIDE
DIRECTORS PROGRAM WOULD BE INCREASED BY 100,000 TO 275,000 SHARES, OF WHICH
116,650 WILL REMAIN AVAILABLE.
TYPES OF AWARDS
Each Outside Director automatically receives on the date of election or
appointment to the Board 200 shares of the Company's Common Stock ("Restricted
Stock"). Each grant of Restricted Stock vests ratably and becomes exercisable in
50 share increments on each anniversary of the grant date thereof. Except in
cases of accelerated vesting as discussed below, termination of service of an
Outside Director for any reason results in forfeiture of all Shares not then
vested; provided, however, that on the date of an Outside Director's death or
resignation due to a disability or retirement, all Shares of Restricted Stock
for which the vesting restrictions have not lapsed will immediately become fully
vested.
In addition, each Outside Director automatically receives options to
purchase 5,000 shares of the Company's Common Stock on the date of their
election or appointment ("Initial Options"). Each Initial Option vests ratably
and becomes exercisable in 1,000 share increments on each anniversary of the
grant date thereof. In addition, commencing with the first anniversary of an
Initial Option grant to an Outside Director and annually thereafter, each
Outside Director automatically receives an additional option to purchase 1,000
shares of the Company's Common Stock, such options to be fully exercisable on
the first anniversary of their respective dates of grant ("Annual Options"). The
Supplemental Stock Option Program For Outside Directors increased this amount to
1,500 options. The exercise price for all options is the fair market value of
the Shares, subject to such option on the grant date thereof. Initial Options
and Annual Options expire ten years from their dates of grant, subject to
earlier expiration under certain circumstances when an optionee ceases to be an
Outside Director. Options are not transferable except under certain limited
circumstances. Restricted Stock and Shares underlying options are subject to
adjustment in the event of a Recapitalization.
ACCELERATED VESTING
In the event of a dissolution or liquidation of the Company or a merger or
consolidation of the Company in which the Company is not the surviving
corporation, Awards of Restricted Stock which have not yet vested
19
<PAGE> 22
and any unexercised options granted prior to the date of dissolution,
liquidation, merger or consolidation will automatically become vested and
exercisable, respectively, immediately prior to such date.
In the event of a "change in control" of the Company, as defined, any
Awards of Restricted Stock which have not vested and any unexercised options
granted prior to the date of such event will immediately become vested and
exercisable, respectively, immediately prior to such date. At the optionee's
request, however, the Committee will purchase any unexercised options for the
fair market value of the stock underlying such options on the date immediately
preceding a change in control.
In addition, the Committee may in its discretion accelerate the vesting of
Restricted Stock and options where it deems it appropriate in the event of
extraordinary circumstances.
TERMINATION AND AMENDMENT
Currently, the Board may terminate the Outside Directors Program at any
time. The Board may also amend the Outside Directors Program, except that any
amendment which would material1y increase the benefits accruing to Outside
Directors Program, increase the number of Shares which may be issued under the
Outside Directors Program, or materially modify the eligibility requirements of
the Outside Directors Program, will require the approval of the shareholders,
and provided further, that any such action may not adversely affect any Outside
Director's rights under the Outside Directors Program with respect to Awards
which were made prior to such action. IF THE PROPOSED OUTSIDE DIRECTORS PROGRAM
AMENDMENT IS ADOPTED, SHAREHOLDER APPROVAL NO LONGER WILL BE REQUIRED BEFORE THE
BOARD OF DIRECTORS MAY AMEND, SUSPEND OR TERMINATE THE OUTSIDE DIRECTORS
PROGRAM, UNLESS ANY FEDERAL OR STATE LAW OR REGULATION, OR THE RULES OF ANY
STOCK EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON WHICH THE COMMON STOCK MAY BE
LISTED REQUIRES SHAREHOLDER APPROVAL, OR THE AMENDMENT WOULD HAVE A MATERIAL
EFFECT ON ANY PREVIOUSLY GRANTED AWARD. SHAREHOLDER APPROVAL WOULD ALSO BE
REQUIRED BEFORE EXISTING STOCK OPTIONS MAY BE REPRICED, REPLACED, OR REGRANTED
THROUGH CANCELLATION, OR THE OPTION PRICE LOWERED ON PREVIOUSLY GRANTED OPTIONS,
OTHER THAN IN CONNECTION WITH THE CUSTOMARY ANTI-DILUTION ADJUSTMENTS.
GRANT INFORMATION
During fiscal 2000, options to purchase a total of 23,500 shares of Common
Stock were awarded under the Outside Directors Program to all Outside Directors
of the Company.
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented by proxy, and voted at the Meeting
is required for the approval of this item.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE PROPOSED AMENDMENT TO THE OUTSIDE DIRECTORS PROGRAM
20
<PAGE> 23
APPOINTMENT OF AUDITORS
[ITEM (3) ON PROXY CARD]
ITEM 3
It is intended that the shares represented by the proxy holders will be
voted for approval of the appointment of Deloitte & Touche LLP (unless otherwise
indicated on proxy) as independent public accountants (auditors) to report to
the shareholders on the financial statements of the Company for the fiscal year
ending September 30, 2001. Each professional service performed by Deloitte &
Touche LLP during fiscal 2000 was approved in advance or was subsequently
approved and the possible effect on the auditors' independence was considered by
the Audit Committee. The Audit Committee has recommended, and the Board of
Directors has approved, the appointment of Deloitte & Touche LLP subject to the
approval of the shareholders at the Meeting. Although submission of the
appointment of independent public accountants to shareholders is not required by
law, the Board of Directors, consistent with its past policy, considers it
appropriate to submit the selection of auditors for shareholder approval.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting with the opportunity to make a statement if they desire to do so and to
be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented by proxy, and voted at the Meeting
is required for the approval of this item. The Board has not determined what
action it would take if the shareholders do not approve the selection of
Deloitte & Touche LLP, but would reconsider its selection in light of the
shareholders' action.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPOINTMENT OF DELOITTE & TOUCHE LLP
OTHER MATTERS
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Except for the following, the Company believes that all such filing
requirements applicable to its officers and directors (the Company not being
aware of any ten percent holder) were complied with during fiscal 2000. Gary W.
Wolf, a director of the Company, failed to include in the filed Form 5 for
fiscal 1999 an annual award of options pursuant to the Outside Directors
Program.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies, including clerical work, printing, and
postage will be paid by the Company. Proxies may be solicited personally, or by
mail, telephone, facsimile, or telegraph, by officers and other regular
employees of the Company, but the Company will not pay any compensation for such
solicitations. In addition, the Company has agreed to pay Corporate Investor
Communications a fee of $6,500
21
<PAGE> 24
plus reasonable expenses for proxy solicitation services. The Company will also
reimburse brokers and other persons holding shares in their names or in the
names of nominees for their expenses for sending material to beneficial owners
and obtaining their proxies.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2002 Annual
Meeting must be received by the Company on or before August 25, 2001 to be
considered for inclusion in the Company's Proxy Statement and for consideration
at that meeting. Shareholders submitting such proposals are required to be the
beneficial owners of shares of the Company's Common Stock amounting to at least
$2,000 in market value and to have held such shares for at least one year prior
to the date of submission. Shareholder proposals submitted to the Company
outside the processes of Rule 14a-8 of the Exchange Act (i.e., the procedures
for placing a shareholder proposal in the Company's proxy materials) with
respect to the Company's 2002 annual meeting of shareholders will be considered
untimely if received by the Company after November 7, 2001. Accordingly, the
proxy with respect to the Company's 2002 annual meeting of shareholders will
confer discretionary authority to vote on any shareholder proposals received by
the Company after such date.
OTHER BUSINESS
The Board does not know of any other business that may be brought before
the Meeting. However, if any other matters should properly come before the
Meeting or at any adjournment thereof, it is the intention of the persons named
in the accompanying proxy to vote on such matters as they, in their discretion,
may determine.
By Order of the Board of Directors
OLETA J. HARDEN
Secretary
Dated: December 18, 2000
22
<PAGE> 25
APPENDIX A
NEW JERSEY RESOURCES CORPORATION
RESTRICTED STOCK AND STOCK OPTION PROGRAM
FOR OUTSIDE DIRECTORS
(AS AMENDED, EFFECTIVE JANUARY 1, 2001)
1. PURPOSE. The purpose of this Restricted Stock and Stock Option Program
for Outside Directors ("Program") is to enable New Jersey Resources Corporation
("NJR") to attract and retain persons of outstanding competence to serve on its
Board of Directors and strengthen the link between the Directors and NJR
shareholders by paying such persons a portion of their compensation in NJR
common stock and options to purchase such stock (collectively, "Awards").
2. DEFINITIONS.
(a) The terms "Outside Director" or "Participant" mean a member of the
Board of Directors of NJR who is not an employee (within the meaning of the
Employee Retirement Income Security Act of 1974) of NJR or any of its
Subsidiaries. A Director of NJR who is also an employee of NJR or any of its
Subsidiaries shall become eligible to participate in the Program and shall be
entitled to receive Awards hereunder upon the termination of such employment.
(b) The term "Subsidiary" shall mean any corporation 50% or more of the
outstanding common stock of which is owned, directly or indirectly, by NJR.
(c) The term "Service" shall mean service as an Outside Director.
(d) The term "Disability" means a permanent and total disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(e) The term "Retirement" shall mean normal retirement as an Outside
Director at age 70.
(f) The term "Committee" shall mean the Administrative Committee
established pursuant to Section 11 hereof.
3. ELIGIBILITY. All Outside Directors of NJR shall be eligible to receive
Awards hereunder.
4. SHARES SUBJECT TO THE PROGRAM. Subject to adjustment in accordance with
Section 9 hereof, the total number of shares of Restricted Stock, as defined
herein and shares of common stock underlying Options, as defined herein, which
may be granted under the Program is 275,000 ("Shares"). The Shares shall be
either previously authorized and unissued shares or treasury shares. Any Shares
(i) awarded under the Program with respect to which the restrictions set forth
in Section 5(c) hereof have not lapsed and which have thus been forfeited and
(ii) subject to the unexercised portion of any Option granted under the Program
which expires or terminates without being exercised shall again be available for
Awards under the Program.
5. RESTRICTED STOCK AWARDS.
(a) Grants. Subject to the maximum number of Shares available under the
Program, Outside Directors who are elected or appointed to the Board of
Directors shall automatically receive an Award of 200 Shares on the date of such
Outside Director's initial election or appointment to the Board of Directors.
(Shares that are the subject of such Awards are referred to herein as
"Restricted Stock").
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(b) Certificates. Subject to the provisions of Sections 5(c) and 7 hereof,
certificates representing Restricted Stock may be issued in the name of the
respective Participants. During the period of time such Restricted Stock is
subject to the restrictions set forth in Section 5(c) hereof, any such
certificates shall be endorsed with a legend to that effect, and shall be held
by NJR. Alternatively, NJR may hold a global certificate representing all shares
of Restricted Stock subject to such restrictions. The Participant shall,
nevertheless, have all other rights of a shareholder of NJR, including the right
to vote and the right to receive all cash dividends paid and other distributions
made with respect to such Restricted Stock. Subject to the requirements of
applicable law, certificates representing Restricted Stock shall be delivered to
the Participant within 30 days after the lapse of the restrictions to which they
are subject.
(c) Restrictions/Vesting. Subject to Sections 9 and 10 hereof, Restricted
Stock Awards shall vest as follows:
(i) Provided that the grantee of such Award is then serving as an
Outside Director of NJR, 50 of the Shares that are the subject of each
Restricted Stock Award will vest on each of the first, second, third and
fourth anniversaries of the date of grant of the Award. Except as provided
in Sections 5(c)(ii) and 10 hereof, termination of Service of a Participant
for any reason, shall result in forfeiture of all Shares that have not
vested as of the date of such termination;
(ii) Notwithstanding the provisions of Section 5(c)(i) above, on the
date of a Participant's death or resignation from the Board due to a
Disability, or a Participant's Retirement, all Shares issued as Restricted
Stock with respect to which the restrictions set forth herein have not yet
lapsed shall nevertheless immediately become fully vested.
(d) Transferability. During the period commencing on the grant date of a
Restricted Stock Award and ending on the date of termination of the Outside
Director's Service, death or Disability, such Restricted Stock may not be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed of other
than to NJR pursuant to Section 7 hereof.
6. STOCK OPTION AWARDS.
(a) Grants. Subject to the maximum number of Shares available under the
Program, each Outside Director, on the date of such Outside Director's initial
election or appointment to the Board shall automatically receive an Option to
purchase 5,000 Shares ("Initial Option"). Commencing with the first anniversary
of the grant of an Initial Option to an Outside Director and annually
thereafter, each such Outside Director shall automatically receive an additional
Option to purchase 1,500 Shares ("Annual Option") (Initial Options and Annual
Options are referred to as "Options").
(b) Option Terms. Each Option and the issuance of Shares thereunder shall
be subject to the following terms:
(i) Option Agreement. Each Option shall be evidenced by an option
agreement ("Agreement") duly executed on behalf of NJR. Each Agreement
shall comply with and be subject to the terms and conditions of the
Program. Any Agreement may contain such other terms, provisions and
conditions not inconsistent with the Program as may be determined by the
Committee.
(ii) Option Exercise Price. The Option exercise price shall be the
fair market value of the Shares subject to the Option on the date of grant
thereof. For purposes of the Program, "fair market value" shall be the
closing sale price for NJR common stock on the date of grant on the New
York Stock Exchange
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Consolidated Tape as reported in The Wall Street Journal, or, if NJR common
stock was not traded on that day, on the next preceding day on which common
stock of NJR was so traded.
(c) Exercisability; Vesting. Subject to paragraph (e) immediately below
and Sections 9 and 10 hereof, each Initial Option shall become exercisable with
respect to 1,000 of the Shares subject thereto on each of the first, second,
third, fourth and fifth anniversaries of the date of grant of the Initial
Option, provided that the Participant optionee ("Optionee") has continued to
serve as an Outside Director until such anniversary date. Annual Options shall
vest and be fully exercisable on the first anniversary of their respective dates
of grant. (The exercise date of each Initial and Annual Option is referred to as
the "Exercise Date.") No portion of an Option shall be deemed vested until its
Exercise Date.
(d) Time and Manner of Exercise of Option.
(i) From and after its Exercise Date, an Option may be exercised in
whole or in part at any time and from time to time; provided, however, that
only whole Shares will be issued pursuant to the exercise of any Option.
(ii) Subject to Section 7 hereof, any Option may be exercised by
giving written notice, signed by the person exercising the Option, stating
the number of Shares with respect to which the Option is being exercised,
accompanied by payment in full for such Shares. Payment may be made in
whole or in part in (i) cash or (ii) shares of NJR common stock which
shares shall be valued at the closing sale price of NJR common stock on the
New York Stock Exchange Consolidated Tape as reported in The Wall Street
Journal for the trading date immediately preceding the date on which such
notice of exercise is given. The notice of exercise shall be irrevocable.
The Committee may provide for other methods of payment, including through
broker-assisted same day transactions.
(e) Terms of Options. Each Option shall expire ten (10) years from the
date of grant, but shall be subject to earlier expiration under the following
circumstances:
(i) In the event that an Optionee ceases to be an Outside Director for
any reason other than the Optionee's death or resignation from the Board
due to a Disability, Retirement, a Merger or Consolidation event (as
provided in Section 10(a)), or a "Change in Control" (as hereinafter
defined), the Options granted to such Optionee shall automatically expire
ninety (90) days following the date such Optionee ceases to be an Outside
Director.
(ii) In the event of an Optionee's death, Disability or Retirement, a
Merger or Consolidation event (as provided in Section 10(a)), or a "Change
in Control" (as hereinafter defined), all Options granted to such Optionee
shall immediately vest and become exercisable and shall then expire three
years after the date of the Optionee's death, resignation from the Board
due to a Disability, Retirement or "Change in Control", as the case may be.
In the event of the Optionee's death, the Options held by such Optionee may
be exercised by the Optionee's legal representatives or the estate, by any
person or persons whom the Optionee shall have designated in writing on
forms prescribed by and filed with NJR or, if no such designation has been
made, by the person or persons to whom the Optionee's rights have passed by
will or the laws of descent and distribution.
(f) Transferability. During an Optionee's lifetime, an Option may be
exercised only by the Optionee or the Optionee's legal representative. Options
granted under the Program and the rights and privileges conferred thereby shall
not be subject to execution, attachment or similar process and may not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or the laws of descent and
distribution or a "qualified domestic relations order" as defined in the
Internal Revenue
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<PAGE> 28
Code of 1986 ("Code") or the Employee Retirement Income Security Act ("ERISA")
except that, to the extent permitted by applicable law and Rule 16b-3 under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Committee may permit an Optionee to designate in writing during the
Optionee's lifetime a beneficiary to receive and exercise Options in the event
of the Optionee's death, as provided in Section 6(e)(ii) hereof. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option under
the Program or of any right or privilege conferred thereby, contrary to the
provisions of the Program, or the sale or levy or any attachment or similar
process upon rights and privileges conferred hereby, shall be null and void.
(g) Optionee's or Successor's Rights as Shareholder. Neither an Optionee
nor an Optionee's successors in interest shall have any rights as a shareholder
of NJR with respect to any Shares subject to an Option granted to such person
until such person becomes a holder of record of such Shares.
(h) Representations and Warranties. Each Participant shall represent and
warrant to and agree with NJR that he or she (i) takes any Shares acquired upon
the exercise of Options for investment only and not for purposes of sale or
other disposition and will also take for investment only and not for purposes of
sale or other disposition any rights, warrants, shares, or securities which may
be issued on account of ownership of such Shares, and (ii) will not sell or
transfer any such Shares or any rights, Shares, or securities issued on account
of the Shares awarded or any Shares received upon exercise of any such rights or
warrants except in accordance with (A) an effective registration statement under
the Securities Act of 1933 or (B) an opinion of counsel for NJR (or of other
counsel acceptable to NJR) that such Shares, rights, warrants, or other
securities may be disposed of without registration under the Securities Act of
1933.
7. PAYMENT OF TAXES. If required to do so by applicable law, Participants
shall pay to NJR, in cash, any federal, state or local taxes of any kind
required by law to be withheld with respect to any Shares which (a) shall have
vested in accordance with Section 5(c)(i) hereof on the vesting date thereof and
(b) are acquired upon the exercise of Options on the date such Options are
exercised. NJR, to the extent permitted or required by law, shall have the right
to deduct from any payment of any kind otherwise due to a Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to any vested Shares or to the delivery of common stock issued pursuant
to the exercise of Options under the Program. Subject to Committee approval, a
Participant may elect to (i) apply a portion of fees earned in respect of his or
her Service as an Outside Director or (ii) deliver shares of NJR common stock to
satisfy, in whole or in part, the amount NJR is required to withhold for taxes
in connection with a vesting of Shares or an exercise of an Option under the
Program. Such election must be made on or before the date the amount of tax to
be withheld is determined, and if applicable, subject to rules, regulations and
interpretations of the Commission or the Commission Staff under Section 16(b) of
the Exchange Act. Once made, the election shall be irrevocable. The withholding
tax obligation that may be paid by the delivery of shares may not exceed NJR's
minimum federal, state and local withholding tax obligations in connection with
Shares vested or Options exercised. The value of any NJR shares to be delivered
will be based on the closing sale price of NJR common stock on the New York
Stock Exchange Consolidated Tape on the trading date last preceding the date the
amount of tax to be withheld is determined as reported in The Wall Street
Journal.
8. LIMITATION AS TO DIRECTORSHIP. Neither the Program nor the granting of
any Awards hereunder nor any other action taken pursuant to the Program shall
constitute or be evidence of any agreement or understanding, express or implied,
that a Participant has a right to continue as a Director for any period of time.
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9. RECAPITALIZATIONS. If as a result of stock dividend, stock split,
recapitalization (or other adjustment in the stated capital of NJR), or as the
result of a merger, consolidation, or other reorganization, the common stock of
NJR is increased, reduced, or otherwise changed, the appropriate number of
Shares of Restricted Stock available and to be awarded and the aggregate number
of Shares for which Options may be granted, the number of Shares covered by each
automatic grant and each outstanding Option and exercise price per Share shall
be appropriately adjusted, and if by virtue thereof a Participant shall be
entitled to new or additional or different Restricted Stock Awards or Options,
such Restricted Stock or Options to which the Participant shall be entitled
shall be subject to the same terms, conditions, and restrictions herein
contained relating to the original date and terms and conditions governing
Awards of Restricted Stock or Options. In the event that warrants or rights are
awarded with respect to Restricted Stock awarded hereunder, and the recipient
exercises such rights or warrants, the Restricted Stock or securities issuable
upon such exercise shall likewise be subject to the same terms, conditions, and
restrictions herein contained relating to the original Restricted Stock.
10. ACCELERATION OF VESTING OF RESTRICTED STOCK AWARDS AND STOCK OPTIONS.
(a) Merger or Consolidation. Subject to the provisions of Section 6(e)
hereof, in the event of a dissolution or a liquidation of NJR or a merger or
consolidation of NJR in which NJR is not the surviving corporation, any
Restricted Stock Awards which have not vested and any unexercised Options
granted prior to the date of such dissolution, liquidation, merger or
consolidation shall automatically become vested and exercisable, respectively,
immediately prior to such date.
(b) Change in Control. Subject to the provisions of Section 6(e) hereof,
in the event of a Change in Control of NJR, as hereinafter defined, any
Restricted Stock Awards which have not vested and any unexercised Options
granted prior to the date of such event shall automatically become vested and
exercisable, respectively, immediately prior to such date; provided, however,
that upon an Optionee's request, the Committee shall provide for the purchase of
any such unexercised Options for an amount of cash equal to the amount which
would have been realized if such Option were exercised and sold on the date
immediately preceding a Change in Control at the reported closing price per
share of NJR common stock on such day (or, if there was no closing price on such
day, the closing price on the immediately preceding day). The Committee may, in
its discretion, include such further provisions and limitations in any Agreement
entered into with respect to an Option as it may deem equitable and in the best
interests of NJR.
A "Change in Control" shall be deemed to have occurred if (a) absent prior
approval by the Board of Directors, thirty (30%) percent or more of NJR's
outstanding securities entitled to vote in elections of Directors shall be
beneficially owned, directly or indirectly, by any person, entity or group; or
(b) individuals currently constituting the Board of Directors (or the successors
of such individuals nominated by a Board of Directors on which such individuals
or such successors constituted a majority) cease to constitute a majority of the
Board of Directors.
(c) Other. Notwithstanding anything to the contrary contained in the
Program, the Committee shall have discretion to accelerate the vesting of
Restricted Stock and Options awarded to an Outside Director on such terms and
conditions as the Committee may deem appropriate in the event of extraordinary
circumstances.
11. ADMINISTRATIVE COMMITTEE. The Committee shall have full power and
authority to construe and administer the Program. Any action taken under the
provisions of the Program by the Committee arising out of or in connection with
the administration, construction, or effect of the Program or any rules adopted
thereunder shall, in each case, lie within the discretion of the Committee and
shall be conclusive and binding upon NJR and upon all Participants, and all
persons claiming under or through any of them. The Committee
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<PAGE> 30
shall have as members the Chief Executive Officer of NJR and two other officers
of NJR or its Subsidiaries designated by the Chief Executive Officer. In the
absence of such designation, the other members of the Committee shall be the
Chief Financial Officer and the Secretary of NJR.
12. APPROVAL; EFFECTIVE DATE. The Program was approved by the shareholders
of NJR at the March 8, 1995 Shareholders Meeting and was effective on the same
date.
13. AMENDMENT. The Program may be amended, suspended or terminated by the
Board without the consent of shareholders, unless any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the common stock may be listed requires shareholder approval, or the
amendment would have a material effect on any previously granted award. Without
the prior approval of the Company's shareholders, options issued under any of
the Company's existing stock options will not be repriced, replaced, or
regranted through cancellation, or by lowering the option exercise price of a
previously granted award other than in connection with the customary
anti-dilution adjustments.
14. EXPENSES OF THE PROGRAM. All costs and expenses of the adoption and
administration of the Program shall be borne by NJR and none of such expenses
shall be charged to any Participant.
15. COMPLIANCE WITH RULE 16B-3. It is the intention of NJR that the
Program comply in all respects with Rule 16b-3 under Section 16(b) of the
Exchange Act and that Participants remain disinterested persons ("disinterested
persons") for purposes of administering other employee benefit plans of NJR and
having such other plans be exempt from Section 16(b) of the Exchange Act.
Accordingly, if any Program provision is later found not to be in compliance
with Rule 16b-3 or if any Program provision would disqualify Program
Participants from remaining disinterested persons, that provision shall be
deemed null and void, and in all events the Program shall be construed in favor
of its meeting the requirements of Rule 16b-3.
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<PAGE> 31
APPENDIX B
AUDIT COMMITTEE CHARTER
The By-Laws of New Jersey Resources Corporation (together with its
subsidiaries, the "Company") in Article IV, Section 2 require the Board of
Directors ("Board") to appoint an Audit Committee (the "Committee") composed of
at least three independent directors. The By-Laws also require the Committee to
(1) make recommendations to the Board with respect to the retention of the
Company's independent auditors; (2) review the plan and scope of annual and
other independent audits; (3) consult with the independent auditors regarding
audit results and financial statements (including compliance with disclosure
requirements); (4) oversee the adequacy of the system of internal accounting
control; and (5) oversee the effectiveness of the internal audit function
(including reviewing and consulting with the internal auditors with respect to
internal audit results and recommendations).
The Board, acting in accordance with the By-laws and in furtherance
thereof, has adopted this Audit Committee Charter:
GENERAL
The Committee shall be appointed by the Board on an annual basis, and the
Board shall designate a Chairperson from among its members. In accordance with
the rules of the New York Stock Exchange ("NYSE"), and the Composition/Expertise
and Independence Requirements thereof:
Each member shall be financially literate or must become financially
literate within a reasonable time after being appointed to the Committee.
In addition, one member shall have accounting or related financial
expertise. The Board shall determine whether the members meet these
criteria.
Each member, as determined by the Board, shall be independent from
management and the Company. Specifically, (a) a director who is an employee
of the Company or an immediate family member of an executive officer of the
Company may not be a member and may not become a member until three years
after termination of such employment relationship (unless otherwise
permitted by the rules of the NYSE); (b) a director who has a business
relationship with the Company may not be a member unless the Board
determines that such relationship does not interfere with such director's
exercise of independent judgment; and (c) a director who is an executive
officer of another corporation which has a Company executive officer on its
compensation committee may not be a member of the Committee.
The head of the Internal Auditing Department of the Company ("Audit
Manager") shall report directly to the Chief Executive Officer of the Company
and to the Committee. The Committee shall have direct access to the independent
auditors.
MEETINGS
The Committee shall hold at least three regular meetings a year, and any
additional meetings that may be requested by a Committee member, the Board, the
Chief Executive Officer or the independent auditors. In addition to Committee
members, meetings shall normally be attended by representatives of the
independent auditors; the Chief Executive Officer, the Chief Financial Officer
and the Chief Accounting Officer of the Company; the Treasurer of New Jersey
Natural Gas Company; and the Audit Manager. Other persons, including officers
and employees of the Company, may be asked to attend at the Committee's
discretion. The
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<PAGE> 32
Secretary of the Company shall attend the meetings of the Committee to record
the minutes thereof. For a portion of each meeting, the Committee shall meet
separately with the independent auditors and the Audit Manager. Non-members may
be excused from any meeting, or portion of any meeting, of the Committee upon
the request of the Committee Chairperson.
INDEPENDENT AUDITORS
The independent auditors are ultimately accountable to the Board and the
Committee acting on behalf of the Board. The Board and the Committee have the
authority and responsibility to select, evaluate and, where appropriate, replace
the independent auditors (or to nominate the independent auditors to be proposed
for shareholder approval).
The Committee shall:
Discuss with management and recommend to the Board the selection or
replacement by the Board of the independent auditors; review with the
independent auditors, prior to their audit, the scope of their examination;
review the anticipated level of non-audit services to be provided by
independent auditors and consider the possible effect, if any, of these
services on the independence of the independent auditors; and review with
the independent auditors the estimated fees to be paid for the work
performed.
Ensure that the independent auditors submit on a periodic basis a
formal written statement delineating all relationships between the
independent auditors and the Company; discuss with the independent auditors
any such relationships or any services that may impact on the objectivity
and independence of the independent auditors and take appropriate action in
response to such report to satisfy itself of such independence.
Discuss with the independent auditors such other matters and take such
other action, including discussions with respect to the independent
auditors' responsibility under generally accepted auditing standards;
significant accounting policies; proposed audit adjustments not recorded,
if any; unusual transactions; significant audit adjustments; other
information in documents containing audited financial statements;
disagreements of the independent auditors with management; the Company's
consultation with other accountants; major issues discussed with management
prior to retention of the independent auditors; and difficulties
encountered in performing an audit.
Make such recommendations to the Board as the Committee deems
appropriate with respect to the inclusion of the audited financial
statements in the Company's Annual Report on Form 10-K for the last fiscal
year for filing with the Commission.
FINANCIAL STATEMENT MATTERS
The Committee shall:
Oversee the quarterly and annual reporting of the Company by reviewing
the work of management and the independent auditors.
Review and discuss with management and the independent auditors all
annual and other audited financial statements.
Review with management and the independent auditor changes in
accounting principles and reporting standards that have, or may in the
future have a significant impact on the financial statements of the
Company.
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<PAGE> 33
Receive from management, on a timely basis, advice of significant
current financial reporting issues and practices.
Discuss with management and the independent auditors their qualitative
judgments about the appropriateness of accounting policies, principles and
financial disclosure practices used or proposed to be adopted.
OTHER MATTERS
The Committee shall:
Oversee the internal audit function of the Company including (a) the
planned scope of the internal audit work, (b) findings of the internal
auditors and related management actions, (c) the adequacy of the staffing
of the internal audit function, (d) the adequacy and effectiveness of the
internal accounting controls and compliance with the Foreign Corrupt
Practices Act, (e) the adequacy, effectiveness and compliance with the Code
of Conduct of the Company and (f) the effectiveness of the electronic data
processing procedures and controls and related security programs; and (g)
review the independent auditors' letter to management, and other comments,
if any, regarding the system of internal accounting controls and review any
management response thereto.
Prepare a report to shareholders as required by the Securities and
Exchange Commission to be included in the proxy statement.
Review and reassess the adequacy of this Charter and the Internal
Audit Department Charter on an annual basis.
Review such other matters as the Committee shall determine from time
to time, within the scope of its responsibilities, and make such
recommendations to the Board with respect thereto as the Committee deems
appropriate.
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<PAGE> 34
DETACH HERE
PROXY
NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD, WALL, NJ 07719
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Oleta J. Harden, with full power of
substitution, proxy to represent the undersigned at the Annual Meeting of
Shareholders of New Jersey Resources Corporation to be held at 10:30 a.m.,
local time, on Wednesday, January 24, 2001 at the Robert B. Meyner Reception
Center at the PNC Bank Arts Center, Exit 116 on the Garden State Parkway,
Holmdel, New Jersey 07733 and at any adjournment thereof, and thereat to vote
all of the shares of stock which the undersigned would be entitled to vote,
and, if applicable, hereby directs the trustee(s) of the employee benefit
plan(s) shown on the reverse side of this card to vote the shares of stock
allocated to the account of the undersigned.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE> 35
New Jersey Resources Corporation
1415 Wyckoff Road
Wall, NJ 07719
- -------------------- -------------------
| Vote by Telephone | | Vote by Internet |
- -------------------- -------------------
It's fast, convenient, and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed
1-877-PRX-VOTE (1-877-779-8683). and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and
Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). For http://www.eproxyvote.com/njr
shareholders residing outside the United
States call collect on a touch-tone phone 3. Enter your 14-digit Voter
1-201-536-8073. Control Number located on
your Proxy Card above your
3. Enter your 14-digit Voter Control Number name.
located on your Proxy Card above your name.
4. Follow the instructions
4. Follow the recorded instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/njr
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
NJR67A DETACH HERE
Please mark
[X] votes as in
this example.
Unless otherwise Indicated, this proxy will be voted "FOR" all nominees for
election as directed and "FOR" the proposals referred to herein.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. Election of Directors 2. To amend the Ristricted Stock and
Nominees: (01) Lawrence R. Codey, Stock Option Program for Outside
(02) Laurence M. Downes, Directors (the "Outside Directors
(03) Joe B. Foster, Program") to: a) increase from
(04) William H. Turner 175,000 to 275,000 the number of
shares of the Company's Common Stock
FOR [ ] [ ] WITHHELD FROM ALL authorized for awards thereunder and
ALL NOMINEES b) permit the Board of Directors of
NOMINEES the Company to amend, suspend or
terminate the Outside Directors
Program or any portion thereof
at any time, without a vote of
shareholders, unless such a vote is
required by law.
[ ]
-----------------------------------
For all nominees except as note above FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve the retention of
Deloitte & Touche, LLP as auditors
for the fiscal year ending
September 30, 2001.
4. To transact any other business
that may properly be brought
before the meeting or any
adjournment or adjournments
thereof.
In case of joint owners, each owner
should sign. When signing in a
fiduciary or representative capacity,
please give full title as such.
Proxies executed by a corporation
should be signed in full corporate
name by duly authorized officer.
Date: Signature: Date:
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