<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:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MOBILE GAS SERVICE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
MOBILE GAS SERVICE CORPORATION [BOARD OF DIRECTORS]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MOBILE GAS SERVICE CORPORATION
2828 DAUPHIN STREET
MOBILE, ALABAMA 36606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 26, 1996
To the Holders of Common Stock of
MOBILE GAS SERVICE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Mobile Gas
Service Corporation, an Alabama corporation, will be held in the Auditorium at
the principal office of the Company, 2828 Dauphin Street, Mobile, Alabama, on
Friday, January 26, 1996, at 10:00 o'clock a.m., Central Standard Time, for the
purpose of:
1. Considering and acting upon a proposal to amend the Restated Articles of
Incorporation of the Company to (a) provide that the number of Directors
shall be not less than nine nor more than twelve, as determined by the
Board of Directors; (b) classify the Board of Directors into three
classes, each class of which, after initial terms of one, two and three
years, will serve terms of three years, with one class being elected each
year; (c) provide that directors may be removed without cause only upon
the affirmative vote of at least 66 2/3% of the shares of capital stock of
the Company then entitled to be voted for the election of directors (the
"Voting Stock"); and (d) increase the vote required to amend, repeal, or
adopt any provision inconsistent with, the foregoing provisions to an
affirmative vote of at least 66 2/3% of the Voting Stock.
2. If the proposal set forth above is adopted, to elect a Board of eleven
(11) Directors to be divided into classes and to serve until their
successors are duly elected and shall have qualified; otherwise such
directors shall be elected to serve one-year terms until the next Annual
Meeting of the Stockholders of the Company and until their successors are
duly elected and shall have qualified.
3. Considering and acting upon such other and further business as may
properly come before the meeting or any and all adjournments thereof.
Further information regarding voting rights and the business to be transacted
at the meeting is given in the annexed Proxy Statement.
The Board of Directors has fixed the close of business on December 15, 1995, as
the record date for the determination of holders of the Common Stock of the
Company entitled to notice of and to vote at the Annual Meeting. Accordingly,
only holders of record of the Common Stock at the close of business on December
15, 1995 will be entitled to vote at the meeting.
By Order of the Board of Directors,
G. EDGAR DOWNING, JR.
Secretary
Mobile, Alabama
December 15, 1995
IMPORTANT: EVEN IF YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY, NO MATTER HOW SMALL YOUR
HOLDINGS, IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. NO POSTAGE IS
REQUIRED ON THE ENCLOSED PROXY IF MAILED WITHIN THE UNITED STATES.
<PAGE> 3
MOBILE GAS SERVICE CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished to the Stockholders of Mobile Gas Service
Corporation (the "Company") in connection with the solicitation of the enclosed
proxy for use at the Annual Meeting of Stockholders of the Company to be held
on January 26, 1996, or any adjournment or adjournments thereof. This Proxy
Statement, the accompanying form of Proxy and Notice of Annual Meeting of
Stockholders, and the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1995 are first being mailed to stockholders on or
about December 15, 1995.
PROXY AND SOLICITATION
The accompanying proxy is solicited on behalf of Mobile Gas Service Corporation
for use at the Annual Meeting of the Stockholders of the Company to be held in
the Auditorium at the principal office of the Company, 2828 Dauphin Street,
Mobile, Alabama, on January 26, 1996, at 10:00 o'clock a.m., Central Standard
Time, and at any and all adjournments thereof, for the purposes set forth in
the notice of the meeting annexed hereto and incorporated herein by this
reference.
All costs and expenses of soliciting proxies will be borne by the Company. The
Company's costs of solicitation will include reimbursement of brokers and other
persons for their expenses in sending proxy materials to their principals and
obtaining their proxies.
Stockholders who execute proxies retain the right to revoke them at any time
before they are voted by delivery of a written revocation to the Secretary of
the Company. A proxy when executed and not so revoked will be voted in
accordance therewith.
VOTING SECURITIES
As of December 15, 1995, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 3,213,394 shares of common
stock, $2.50 par value per share ("Common Stock"), of the Company outstanding,
with each share entitled to one vote. A majority in number of votes, present
in person or by proxy, constitutes a quorum for the transaction of business.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 1, 1995, information concerning
(i) beneficial ownership of Common Stock, the only class of voting securities
of the Company, by persons who are known by the Company to own beneficially
more than 5% of the Common Stock, and (ii) beneficial ownership of Common Stock
by all directors and executive officers of the Company as a group. Except as
noted below, the indicated owners have sole voting and investment power with
respect to shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address Amount Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
<S> <C> <C>
William J. Hearin 274,201 (1) 8.5%
304 Government Street
Mobile, Alabama 36630
All directors and executive 380,791 (1)(2) 11.9%
officers as a group (16 persons)
</TABLE>
(1) Includes 45,000 shares owned by the Chandler Charitable Trust, of
which Mr. Hearin is the Trustee. Mr. Hearin shares voting power as to 25,967
shares owned by his wife, Emily Staples Hearin, 42,000 shares owned by his
daughter, Ann Hearin, and 26,324 shares owned by his former spouse, Louise
Hearin.
(2) Includes [42,486] shares owned by spouses of Officers and Directors,
[4,627] shares owned jointly by Officers and Directors and their respective
spouses and [4,808] shares credited to Officers' accounts in the Employee
Savings Plan.
___________________________
PROPOSAL 1
PROPOSED AMENDMENT TO THE RESTATED
ARTICLES OF INCORPORATION OF THE COMPANY
The Board of Directors of the Company has determined by unanimous vote that an
amendment to the Company's Restated Articles of Incorporation is advisable and
has unanimously recommended that the Company's stockholders approve such
amendment. The proposed amendment to the Restated Articles of Incorporation
would adopt a new Article 6 to provide that the size of the Board of Directors
shall be not less than nine nor more than twelve directors, with the exact
number to be determined from time to time by the Board of Directors; classify
the Board of Directors into three classes, as nearly equal in number as
possible, each class of which, after initial terms of one, two and three years,
will serve terms of three years, with one class being elected each year;
provide that directors may be removed without cause only upon the affirmative
vote of at least 66 2/3% of the total number of votes entitled to be cast by
the holders of all of the shares of capital stock of the Company then entitled
to vote generally in the election of directors (the "Voting Stock"); and
increase the vote required to amend, alter, change or repeal, or to adopt any
provision inconsistent with, such Article 6 to an affirmative vote of at least
66 2/3% of the total number of votes entitled to be cast by the holders of all
shares of Voting Stock.
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REASONS FOR AND CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
The Board of Directors is asking the Company's stockholders to consider and
adopt the proposed amendment in order to discourage certain types of
transactions which would involve an actual or threatened change of control of
the Company and to make it more difficult and time-consuming to change majority
control of the Board of Directors, thus reducing the vulnerability of the
Company to an unsolicited proposal for the takeover of the Company,
particularly a proposal that does not contemplate the acquisition of
substantially more than a simple majority of the Company's outstanding capital
stock. The proposed amendment does not impede an offer for at least 66 2/3% of
the outstanding capital stock of the Company.
In recent years, third parties often have accumulated substantial stock
positions in public companies as prelude to proposing a takeover or a
restructuring or sale of all or part of the company's assets or other similar
extraordinary corporate actions. Such actions are often undertaken by the third
party without advance notice to or consultation with management of the company,
and in many cases, the third party seeks representation on the company's board
of directors in order to increase the likelihood that its proposal will be
implemented by the company. If the company resists the efforts of the third
party to obtain representation on the board of directors, the third party may
commence a proxy contest to have its nominees elected to the board of directors
in place of management's nominees. In some cases, the third party may use the
threat of a proxy fight or a bid to acquire the company as a means of
attempting to force the company to repurchase the securities owned by the third
party at a substantial premium over market price.
The Board of Directors believes that the threat of removal of the Company's
management in situations of the type described above would severely impede
management's ability to negotiate effectively with potential purchasers. The
proposed amendment to the Restated Articles of Incorporation of the Company is
intended to discourage the use of the tactics described above or unilateral
attempts by persons to acquire control of the Company or to effect a change in
management of the Company. One purpose of the proposed amendment is to enhance
management continuity and to encourage any person seeking to gain control of
the Company to act through the Board of Directors in proposing any transaction
with the Company. If adopted, the proposed amendment would effectively reduce
the possibility that a third party could effect a sudden or surprise change in
control of the Company's Board of Directors and would help to assure fair
treatment of all stockholders in the event of an attempt to take over the
Company. Although it is not the purpose of the proposed amendments to ensure
that the Company remains independent, the amendments, if adopted, could
increase the likelihood that the Company would remain independent in the event
the Board of Directors were to consider an offer for the Company to be
inadequate or not in the best interests of the Company and its stockholders.
The Board of Directors recognizes that unilateral attempts to acquire or gain
control of the Company may not, in all instances, necessarily be detrimental to
the Company or its stockholders. However, the Board of Directors believes that
adoption of the proposed amendments will encourage prior consultation and
negotiation with the Board of Directors, will permit the Board of Directors to
evaluate the proposal of any third party or purchaser and to study alternative
proposals and will permit the Board of Directors to negotiate more effectively
with any proposed purchaser of the Company. The Board of Directors believes
that the benefits of seeking to protect its ability to negotiate more
effectively with proponents of an unfriendly or unsolicited proposal to take
over or restructure the Company outweigh the disadvantages of discouraging such
proposals.
The amendment, if adopted, could have the effect of discouraging a third party
from making a tender offer or otherwise attempting to obtain control of the
Company, even though such an attempt might be beneficial to the Company and its
stockholders. In addition, since the amendment is designed to discourage
accumulations of large blocks of the Company's stock by purchasers whose
objective is to have such stock
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repurchased by the Company at a premium, adoption of the amendment might reduce
the temporary fluctuations in the market price of the Company's stock that
might be caused by accumulations of large blocks of the Company's stock.
Accordingly, stockholders could be deprived of certain opportunities to sell
their stock at a temporarily higher market price.
The proposed amendment is not the result of any specific efforts of which the
Company is aware to accumulate the Company's Common Stock or to obtain control
of the Company, but rather is being recommended in order to ensure that the
Company is prepared for future exigencies and to ensure that stockholders of
the Company are treated fairly in the event of any future takeover effort. The
Board of Directors of the Company does not presently have any intention of
soliciting a vote of the stockholders for any additional proposals or
amendments designed to deter a possible takeover of the Company.
The Restated Articles of Incorporation and Bylaws of the Company presently do
not contain any provisions intended by the Company to have, or to the knowledge
of the Board of Directors having, an anti-takeover effect. However, under the
Restated Articles of Incorporation, the Company has authorized but not
outstanding or reserved approximately 720,000 shares of Common Stock. Although
the Board of Directors has no present intention to do so, shares of authorized,
unissued and unreserved Common Stock of the Company, within the limits imposed
by and subject to the requirements of applicable law, could be issued under
circumstances where a stockholder or stockholders would obtain sufficient voting
power to ensure that any proposal to remove directors, or to alter, amend,
change or repeal any of the provisions that will be added to the Restated
Articles of Incorporation by the proposed amendment would not receive the
66 2/3% vote required therefor by the proposed amendment.
DESCRIPTION OF THE PROPOSED AMENDMENT; SIZE OF BOARD OF DIRECTORS,
CLASSIFICATION OF THE BOARD OF DIRECTORS, REMOVAL OF DIRECTORS AND RELATED
MATTERS
This amendment, which adds a new Article 6 to the Restated Articles of
Incorporation, would (i) fix the size of the Board of Directors at not less
than nine nor more than twelve directors (the exact number of such directors to
be determined from time to time by resolution adopted by a majority of the
Board of Directors), (ii) classify the Board of Directors into three classes,
as nearly equal in number as possible, each of which, after initial terms of
one, two and three years, will serve for three years, with one class being
elected each year, (iii) provide that directors may be removed without cause
only upon the affirmative vote of 66 2/3% of the total number of votes entitled
to be cast by the holders of all shares of Voting Stock, and (iv) increase the
vote required to alter, amend, change or repeal the foregoing provisions, or to
adopt any provision inconsistent therewith, to an affirmative vote of 66 2/3%
of the total number of votes entitled to be cast by the holders of all shares
of Voting Stock.
The Restated Articles of Incorporation of the Company do not presently deal
with the election of directors. The Bylaws of the Company now provide that all
directors are to be elected to the Company's Board of Directors annually for a
term ending at the next annual meeting of stockholders of the Company, and,
subject to the ability of the Board of Directors to amend the Bylaws and
establish a different number of directors, the Bylaws provide that the number
of directors shall be eleven. Proposed Article 6 of the Restated Articles of
Incorporation provides that the Board of Directors may establish the number of
directors at not less than nine nor more than twelve persons and provides that
the Board of Directors shall be divided into three classes of directors, each
class to be as nearly equal in number of directors as possible. If the proposed
amendment is adopted, the Company's directors will be divided into three
classes and three directors will be elected for a term expiring at the Annual
Meeting of Stockholders of the Company to be held in 1997, four directors will
be elected for a term expiring at the Annual Meeting of Stockholders of the
Company to be held in 1998, and the remaining four directors will be elected
for a term expiring at the Annual Meeting of Stockholders of
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<PAGE> 7
the Company to be held in 1999 (in each case, until their respective successors
are duly elected and qualified). Starting with the 1997 Annual Meeting of
Stockholders, one class of directors will be elected each year for a three-year
term.
The classification of directors will have the effect of making it more
difficult to change the composition of the Board of Directors. At least two
meetings of stockholders, instead of one, will be required to effect a change
in the control of the Board of Directors unless a stockholder controls 66 2/3%
or more of the total number of votes entitled to be cast by the holders of all
shares of Voting Stock. Although there have been no problems with respect to
continuity or stability of the Board of Directors in the past, the Board of
Directors believes that the longer time required to elect a majority of a
classified Board of Directors will help to ensure the continuity and stability
of the Company's management and policies in the future since a majority of the
directors, at any given time, will have prior experience as directors of the
Company. It also should be noted that the classification provision will apply
to every election of directors, whether or not a change in the Board of
Directors would be beneficial to the Company and its stockholders and whether
or not a majority of the Company's stockholders believes that such a change
would be desirable.
Under Alabama law, directors may be removed with or without cause by a vote of
the holders of a majority of the shares of capital stock then entitled to vote
in the election of directors. In addition, under Alabama law, an amendment to
the Restated Articles of Incorporation requires the approval of the holders of
a majority of the outstanding capital stock entitled to vote on the amendment
and the approval of the holders of a majority of the outstanding capital stock
of each class entitled to vote on the amendment as a class. Alabama law also
permits provisions in articles of incorporation that require a greater vote
than the vote otherwise required by law for any corporate action. As permitted
by these provisions of Alabama law, the proposed amendment would permit
directors to be removed without cause only if removal is approved by an
affirmative vote of 66 2/3% of the total number of votes entitled to be cast by
the holders of all shares of Voting Stock and would require the affirmative
vote of at least 66 2/3% of the total number of votes entitled to be cast by
the holders of all shares of Voting Stock to alter, amend, change or repeal, or
adopt any provision inconsistent with, the proposed amendment to the Restated
Articles of Incorporation discussed above. The requirement of an increased
stockholder vote is designed to prevent a stockholder with a majority of the
total number of votes entitled to be cast by the holders of all shares of
Voting Stock from avoiding the requirements of the proposed amendment by simply
removing a majority of the directors or repealing such amendment. The proposed
amendment will not affect the present right of the holders of a majority of
shares of capital stock then entitled to vote in the election of directors to
remove any director, or the entire Board of Directors, for cause.
The proposed amendment to the Restated Articles of Incorporation is intended to
enhance management continuity and stability by, among other things, ensuring
that a majority of the directors of the Company, at any given time, will have
had prior experience as directors of the Company. At the same time, the
proposed amendment will ensure that the Board of Directors will have an
opportunity to evaluate properly any proposal that might result in a change in
control of the Board of Directors, to consider appropriate alternatives to such
proposal and to respond in a manner that the Board of Directors believes is in
the best interest of the Company and its stockholders.
As indicated above, the proposed amendment would have the effect of requiring
at least two meetings of stockholders, instead of one meeting of stockholders,
to change control of the Board of Directors, even though the stockholders of
the Company desiring to change control of the Board of Directors might hold a
majority of the outstanding Voting Stock. Accordingly, the proposed amendments
could have the effect
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<PAGE> 8
of discouraging an investor from making a tender offer or otherwise attempting
to obtain control of the Board of Directors, even though either course of
conduct might be beneficial to the Company and its stockholders. As more fully
discussed above, the Board of Directors believes the proposed amendment would,
if adopted, effectively reduce the possibility that a third party could effect
a sudden or surprise change in majority control of the Company's Board of
Directors without the support of the incumbent Board of Directors. However,
adoption of the proposed amendment may have significant effects on the ability
of stockholders of the Company to change the composition of the incumbent Board
of Directors and to benefit from certain transactions that are opposed by the
incumbent Board of Directors. Accordingly, stockholders are urged to read
carefully the portions of the Proxy Statement that describe the amendment and
its purpose and effects, and Exhibit A, which is attached hereto and sets forth
the full text of the proposed amendment to the Restated Articles of
Incorporation.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE PROPOSED AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
RELATING TO THE SIZE OF THE BOARD OF DIRECTORS, THE CLASSIFICATION OF THE BOARD
OF DIRECTORS, THE INCREASED VOTE IN ORDER TO REMOVE DIRECTORS WITHOUT CAUSE
AND THE RELATED MATTERS DESCRIBED ABOVE.
VOTES REQUIRED FOR ADOPTION OF PROPOSED AMENDMENT
Under Alabama law, the approval of the proposed amendment to the Restated
Articles of Incorporation of the Company requires the affirmative vote of the
holders of 66 2/3% of the Voting Stock. The Company is informed that members
of the Board of Directors and officers of the Company, who hold or beneficially
own in the aggregate approximately 381,000 shares of Common Stock, or
approximately 11.9% of the Voting Stock, intend to vote such shares of Common
Stock in favor of the proposed amendment to the Restated Articles of
Incorporation of the Company.
___________________________
PROPOSAL 2
ELECTION OF DIRECTORS
Pursuant to the By-laws of the Company, the number of Directors of the Company
is eleven (11). The Articles of Incorporation and By-laws of the Company do
not provide for cumulative voting in the election of Directors.
Unless authority is withheld on a proxy, shares represented by the proxies
received by the Company will be voted for the election as Directors of the
eleven (11) nominees for Directors listed below. If the proposed amendment to
the Restated Articles of Incorporation described in Proposal 1 above is
approved, a classified Board of Directors will be elected as set forth below.
If the proposed amendment to the Restated Articles of Incorporation is not
approved, those persons elected will serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and
qualified. Proxies cannot be voted for more than eleven persons. Should any
nominee be unable or unwilling to accept election, which the
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Company has no reason to believe will be the case, the proxy will be voted for
a substitute nominee or nominees designated by the Company.
The following information is a brief account of the business experience of each
nominee during the past five years, and of Common Stock beneficially owned by
each nominee as of December 1, 1995, based on information received from the
respective nominees.
<TABLE>
<CAPTION>
First
Became a No. of Shares
Name of Nominee, Age, Principal Occupation During Past Five Years, Director Beneficially Percent
and Other Directorships (1) Owned (2) of Class
------------------------------------------------------------------ ------------ ----------------- --------
<S> <C> <C> <C>
NOMINEES TO SERVE UNTIL ANNUAL
MEETING OF STOCKHOLDERS IN 1997:
JOHN C. HOPE, III, 46, was appointed Chairman and Chief 1993 2,000 *
Executive Officer of Whitney Bank of Alabama and Executive
Vice President of Whitney Holding Corporation in November,
1994. Previously, he served as Executive Vice President and Regional
Executive of AmSouth Bank, Mobile, Alabama. (3) (5)
S. FELTON MITCHELL, JR., 51, is President of S. Felton Mitchell, Jr., P.C., 1993 2,100 *
a law practice, and sole proprietor of S. Felton Mitchell, Jr., CPA, an
accounting practice. He is President of The Vibroplex(R) Co., Inc., a
manufacturer of amateur radio equipment. He serves as Director of QMS,
Inc., Mobile, Alabama. (3) (4) (7)
THOMAS B. VAN ANTWERP, 45, has been Zoned Group Advertising Manager, 1993 1,780(8) *
Syracuse Newspapers, Syracuse, New York, since February 1, 1993, and was
previously Executive-in-Training at The Mississippi Press, Pascagoula,
Mississippi. He serves as Director of Merchants & Marine Bank, Pascagoula,
Mississippi.
(4) (5) (14)
NOMINEES TO SERVE UNTIL ANNUAL
MEETING OF STOCKHOLDERS IN 1998:
JOHN S. DAVIS, 53, was appointed President and Chief Executive Officer of 1995 3,794(9) *
the Company in January, 1995, having been appointed Executive Vice President
and Chief Operating Officer of the Company in July, 1994. Previously, he
served as independent consultant and Chairman of Davis-Shows Motors, Inc.
from 1991 to 1994, and served as President of United Gas Pipe Line Company
from 1989 to 1991.
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C> <C>
WALTER L.HOVELL, 67, served as President and Chief Executive Officer of the 1975 32,212(10) *
Company from March, 1984 to January, 1995. He serves as Director of The
Bank of Mobile, Mobile, Alabama. (3) (6) (7)
G. MONTGOMERY MITCHELL, 67, retired in 1993 as Senior Vice President and 1993 2,000(11) *
Director of Stone & Webster Management Consultants, Inc., Houston, Texas.
He serves as Director of Energy West, Inc., Great Falls, Montana. (4) (6)
F. B. MUHLFELD, 75, retired in 1986 as Vice Chairman of the 1986 1,750 *
Board of Stone & Webster, Incorporated, New York, New York. He had been
with the Stone & Webster organization for more than 40 years and had served
as Vice Chairman for more than 5 years. (4) (6)
NOMINEES TO SERVE UNTIL ANNUAL
MEETING OF STOCKHOLDERS IN 1999:
WILLIAM J. HEARIN, 86, Chairman of the Board of the Mobile Press Register, 1960 274,201(12) 8.5%
Mobile, Alabama and The Mississippi Press, Pascagoula, Mississippi. He
serves as Chairman of the Board of the Company. He serves as Director of The
Bank of Mobile, Mobile, Alabama. (3) (5) (7)
JOSEPH G. HOLLIS, JR., 72, retired in 1992 as Chairman of the Board of 1959 19,000 *
Johnson Hardware Company, Inc., Newnan, Georgia. (4) (5)
GAYLORD C. LYON, 73, is President of Gaylord C. Lyon & Company, Inc., a real 1973 14,000(13) *
estate appraisal and property management company, Mobile, Alabama. (3) (6)
E.B. PEEBLES, JR., 77, retired in December, 1984 as Chairman of Ryan-Walsh 1978 16,703 *
Stevedoring Company, Inc., Mobile, Alabama, and Senior Vice President of
Dravo Corporation, Pittsburgh, Pennsylvania. He serves as Chairman and
Chief Executive Officer of Senior Bowl Association, Mobile, Alabama. (3) (5)
</TABLE>
* Less than one percent.
(1) Each director has served continuously since the dates indicated.
(2) Except as noted, the indicated owners have sole voting and dispositive
power with respect to shares beneficially owned.
(3) Member of Executive Committee.
(4) Member of Audit Committee.
(5) Member of Compensation and Planning Committee.
(6) Member of Risk Management Committee.
(7) Member of Retirement Board Committee.
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(8) Includes 1,317 shares owned jointly with Mr. Van Antwerp's spouse with whom
he shares voting and dispositive power, and 40 shares held in each of two
accounts by Mr. Van Antwerp as custodian for two children under the New
York Uniform Transfers to Minors Act, as to which he has voting and
dispositive power.
(9) Includes 55 shares held in the Company's 401(K) plan.
(10) Includes 12,501 shares owned by Mr. Hovell's spouse, as to which he
disclaims beneficial ownership, and 7,321 shares held in his Individual
Retirement Account, over which shares he has sole voting power.
(11) All shares are owned jointly with Mr. Mitchell's spouse with whom he shares
voting and dispositive power.
(12) Includes 45,000 shares owned by the Chandler Charitable Trust, of which
Mr. Hearin is the trustee. Mr Hearin shares voting power as to 25,967
shares owned by his wife, Emily Staples Hearin, 42,805 shares owned by his
daughter, Ann Hearin, and 26,324 shares owned by his former spouse, Louise
Hearin.
(13) Includes 3,475 shares owned by Mr. Lyon's spouse.
(14) Mr. Van Antwerp is the stepson of Mr. Hearin.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Director Compensation, Committees and Attendance. The Board of Directors of
the Company had six meetings during the last fiscal year. Effective January 1,
1995, quarterly fees paid to non-employee members of the Board of Directors,
other than members of the Executive Committee, are $3,250 per quarter;
quarterly fees paid to Executive Committee members are $3,750 per quarter.
Directors also receive $500 per Board meeting attended. The maximum aggregate
of fees payable to any director for service on the Board of Directors and its
committees is $16,000 per fiscal year, except that the maximum annual fee
payable to Executive Committee members is $18,000. Prior to January 1, 1995,
fees paid to non- employee members of the Board of Directors generally were
$300 per quarter. In addition, Executive Committee members received $2,800 per
quarter, Audit Committee, Compensation and Planning Committee, and Risk
Management Committee members received $2,500 per quarter, and Retirement Board
Committee members received $125 per quarter, all of such fees being subject to
maximum amounts payable to any director for service on the Board and its
committees of $14,200 per fiscal year, except that such maximum was $14,700 for
Executive Committee members. Directors who are also employees of the Company
do not receive fees for service on the Board of Directors or its committees.
There are five standing committees of the Board, which are the Executive
Committee, Audit Committee, Compensation and Planning Committee, Risk
Management Committee and Retirement Board Committee. The Company does not have
a nominating committee.
The Executive Committee, which met two times during the last fiscal year,
exercises all the powers of the Board of Directors in the management of the
business and affairs of the Company between meetings of the Board of Directors,
except as restricted by the By-laws of the Company. Action by the Executive
Committee is reported at the meeting of the Board next succeeding such action.
The Audit Committee, which met twice during the last fiscal year, recommends
to the Board the independent auditors and reviews recommendations made by the
auditors. The committee meets with the auditors to review the scope of the
audit to be conducted and afterwards to receive the report of such audit with
recommendations, and advises the Board with respect thereto. The Company's
independent public accountants have free access to the Audit Committee and meet
with the committee with and without Management present. Members of the Audit
Committee are all non-employee Directors,
The Compensation and Planning Committee, which met five times during the
last fiscal year, reviews and makes recommendations to the Board establishing
salaries and other compensation for the officers of the
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<PAGE> 12
Company. This committee also reviews the Employees' Retirement Plan of the
Company and makes recommendations to the Board concerning changes in the Plan.
Members of the Compensation and Planning Committee are all non-employee
Directors.
The Risk Management Committee, which met one time during the last fiscal
year, is responsible for reviewing risk management policies and programs
throughout the Company to assure that they are appropriate to the short and
long term objectives of the Company. The Committee also advises the Board of
Directors of the effectiveness of these policies and programs.
The Retirement Board Committee, which met six times during the last fiscal
year, is responsible for the general administration of the Employee Savings
Plans and the Voluntary Employees' Beneficiary Association Plans, as well as
the Retirement Plan, all being Plans of the Company.
Insurance. The Company provides accidental death and dismemberment
insurance of $200,000 for each Director and $100,000 for the spouse of each
Director. Premium cost for the fiscal year for such coverage was $1,260 for
all directors not serving as officers. The Company is not designated as the
beneficiary under the policy.
REPORTS UNDER SECTION 16 OF THE SECURITIES AND EXCHANGE ACT
The following person, who was a director of the Company during the fiscal
year ended September 30, 1995, filed late a report required by Section 16(a) of
the Securities and Exchange Act of 1934: Mr. Hearin filed one late report on
Form 4 with respect to shares of Common Stock acquired by his wife. In making
this disclosure, the Company has relied on written representations by or on
behalf of its directors and executive officers and copies of reports filed.
EXECUTIVE COMPENSATION
The following table contains information with respect to compensation paid
or set aside by the Company for services in all capacities during fiscal years
1993, 1994 and 1995 to Messrs. Hovell and Davis, each of whom served as the
Company's Chief Executive Officer during a portion of fiscal year 1995, and to
the two other executive officers of the Company and its subsidiaries whose
aggregate salary and bonus exceeded $100,000 for fiscal year 1995.
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<PAGE> 13
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ----------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) OPTIONS (#) (7) ($)
--------------------------- ---- ---------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Walter L. Hovell 1995 75,628 16,506(2) 192,782(8)
President and Chief Executive 1994 169,999 4,576(3) 129(9)
Officer until January 27, 1995 1993 167,500 4,064(3) 129(9)
John S. Davis
President and Chief Executive 1995(1) 181,667 4,337(4) 30,000 129(9)
Officer
Gerald S. Keen 1995 113,333 3,361(5) 15,000 129(9)
Vice President - Operations 1994 103,333 3,100(5) 129(9)
1993 93,000 2,790(5) 129(9)
W. G. Coffeen, III 1995 108,333 3,218(6) 15,000 129(9)
Vice President - Marketing 1994 98,833 2,965(6) 129(9)
1993 92,333 2,770(6) 129(9)
</TABLE>
(1) Mr. Davis was appointed President and Chief Executive Officer of the
Company effective January 27, 1995.
(2) Includes $1,964 contributed to Mr. Hovell's account in the Employee
Savings Plan for the 1995 fiscal year; $52 paid to Mr. Hovell with respect to
incentive units granted under the Company's Incentive Compensation Plan; $7,250
paid to Mr. Hovell and $4,750 deferred for his account for directors fees
earned after January 27, 1995; and $2,490 credited by the Company for 1995 to a
deferred account pursuant to a deferred compensation agreement, see "Deferred
Compensation Agreement; Transactions upon Retirement of Mr. Hovell" below.
(3) Includes $4,576 and $4,064 contributed to Mr. Hovell's account in the
Employee Savings Plan in the 1994 and 1993 fiscal years, respectively, and
$36,090 and $15,948 contributed to Mr. Hovell's deferred compensation account
for the 1994 and 1993 fiscal years, respectively.
(4) Includes $1,187 contributed to Mr. Davis' account in the Employee Savings
Plan for the 1995 fiscal year, and $3,150 paid to Mr. Davis in 1995 pursuant to
incentive units granted under the Company's Incentive Compensation Plan.
(5) Includes $3,256, $3,100 and $2,790 contributed to Mr. Keen's account in
the Employee Savings Plan for the 1995, 1994 and 1993 fiscal years,
respectively, and $105 paid to Mr. Keen in 1995 pursuant to incentive units
granted under the Company's Incentive Compensation Plan.
(6) Includes $3,113, $2,965 and $2,770 contributed to Mr. Coffeen's account in
the Employee Savings Plan for the 1995, 1994 and 1993 fiscal years,
respectively, and $105 paid to Mr. Coffeen in 1995 pursuant to incentive units
granted under the Company's Incentive Compensation Plan.
(7) No option awards were made prior to fiscal year 1995.
(8) Includes $12,000 paid to Mr. Hovell for consulting services after January
27, 1995; $10,653 paid to Mr. Hovell and $170,000 credited to his deferred
compensation account in connection with his retirement as
11
<PAGE> 14
described in "Deferred Compensation Agreement; Transactions upon Retirement of
Mr. Hovell" below; and $129 in insurance premiums paid by the Company.
(9) Consists of insurance premiums paid by the Company.
The following table and notes provide information on option grants to the
executive officers named in the Summary Compensation Table above to whom grants
were made in fiscal year 1995.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
----------------------------------------------------------------------- ----------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration Grant Date
Name Granted(2) Fiscal Year (3) Per share Date Present Value
---- ---------- ----------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
John S. Davis 30,000 28.6% $21.125 8/20/2006 $129,900
Gerald S. Keen 15,000 14.3% 21.125 8/20/2006 64,950
W.G.Coffeen,III 15,000 14.3% 21.125 8/20/2006 64,950
</TABLE>
(1) The Company has used the Black-Scholes Option Valuation model adjusted for
dividends to determine grant date present value of the options. The Company
does not advocate or necessarily agree that the Black-Scholes model properly
reflects the value of an option. The assumptions used in calculating the
option value are as follows: a risk-free interest rate of 6.56%, the rate
applicable to a ten-year treasury security at the time of the award; a
dividend yield of 5.30%, the yield at the time the option award was made;
volatility of 0.247, calculated using daily stock returns for the twelve
month period preceding the option award; a stock price at date of grant of
$21.13; and a ten-year stock option term. No adjustments were made for
forfeitures or vesting restrictions on exercise.
(2) Options are granted with an exercise price equal to market value on the date
of the grant and are exercisable in cumulative 25% increments at the end of
each of the four years following the date of grant, subject to the condition
that no option may be exercised later than ten years after the date of the
grant.
(3) The Company granted options representing 105,000 shares to employees during
fiscal year 1995.
12
<PAGE> 15
The following table and notes provide information on the value of
unexercised options at September 30, 1995 held by the executive officers named
in the Summary Compensation Table above.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR(1)
AND 1995 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised in-the-
Name and Position Options at 9/30/95 (#) Money Options at 9/30/95 ($)(2)
----------------- --------------------------- -------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John S. Davis 0 30,000 0 0
Gerald S. Keen 0 15,000 0 0
W.G. Coffeen, III 0 15,000 0 0
</TABLE>
(1) No options were exercised during the 1995 fiscal year.
(2) The ultimate realization of value on the exercise of such options is
dependent upon the market price of Common Stock at the time of exercise.
Calculations are based on the $21.00 closing price of Common Stock on the
last trading day of the fiscal year.
Employees' Retirement Plan. The Employees' Retirement Plan is a defined
benefit plan which covers all full-time employees upon attainment of age 21 and
completion of one year of service. Benefits are generally based on various
percentages of regular basic compensation for each year of the individual's
service, but if the resulting benefit is greater, is based upon average
compensation during the last five years of employment proportionately reduced
for years of service less than twenty and reduced by 70% of Social Security
benefits. Participants are vested after five years of continuous service and
are eligible for early retirement at or after age 55 with ten years of credited
service.
The full cost of the Plan is paid by the Company. Amounts accrued pursuant
to the Plan for the accounts of the individuals named in the Summary
Compensation Table above cannot be readily calculated. The estimated annual
retirement benefit, based on current remuneration and assuming retirement at
age 65, of Mr. Davis, Mr. Keen and Mr. Coffeen are $42,444, $32,003 and
$53,438, respectively. Years of service now credited under the Plan for Mr.
Davis, Mr. Keen and Mr. Coffeen are .25, 5 and 8 years, respectively. The
estimated annual benefits are net of any reductions for Social Security
benefits or other offset amounts.
Employee Savings Plan. The Employee Savings Plan is a qualified voluntary
contributory retirement plan under Section 401(k) of the Internal Revenue Code
established by the Company on September 1, 1988. Eligibility requirements are
one year of employment and 21 years of age. Eligible employees can invest up
to 10% of their base salary in the plan. Employee contributions vest
immediately and can be allocated among a money market fund, bond fund, or
equities fund, as directed by the employee. The Company makes a contribution,
equal to 50% of an
13
<PAGE> 16
employee's contribution, but not more than 3% of the employee's base salary.
Company contributions are invested in the Company's Common Stock and are vested
at 20% for each year of an employee's service. A participant's account will be
distributed following termination of employment. Participants may withdraw
their contributions or borrow from their accounts subject to certain
conditions. Company contributions for the 1995, 1994 and 1993 fiscal years for
each of Mr. Hovell, Mr. Davis, Mr. Keen and Mr. Coffeen are included in the
Summary Compensation Table above.
Deferred Compensation Agreement; Transactions upon Retirement of Mr. Hovell.
The Company's deferred compensation agreement with Mr. Hovell, which provided
that the Company would credit certain amounts to a deferred account for his
benefit, was amended in connection with his retirement on January 27, 1995 to
permit the Board of Directors to make discretionary awards to Mr. Hovell's
compensation account. The agreement provides that the total amount credited to
his deferred account will be paid to him in equal monthly installments over a
ten-year period following his retirement. In connection with his retirement and
in consideration of Mr. Hovell's past services to the Company, the Board of
Directors credited $170,000 to his deferred account and awarded him 20,000
incentive units under the Company's Incentive Compensation Plan. Any amounts
payable under the agreement are in addition to employee benefits payable under
the Employees' Retirement Plan. Amounts credited to the deferred account for
the 1995, 1994 and 1993 fiscal years for Mr. Hovell are included in the Summary
Compensation Table above. The Company also entered into a consulting agreement
with Mr. Hovell effective after his retirement, which provides for compensation
to be paid by the Company for consulting services rendered by Mr. Hovell.
Consulting fees paid by the Company for the 1995 fiscal year are included in the
Summary Compensation Table above.
Agreements with Mr. Davis. In connection with Mr. Davis' employment by the
Company in 1994, the Company entered into an October 7, 1994 letter agreement
with Mr. Davis which provides, among other things, for the Company to enter
into an unfunded and unsecured deferred compensation agreement with Mr. Davis
substantially in accordance with a proposal provided by consultants retained by
the Company. A final deferred compensation agreement between the Company and
Mr. Davis has not yet been completed. The letter agreement also provides
that, if the employment of Mr. Davis is involuntarily terminated for other than
good cause before July 1, 1997, Mr. Davis will receive severance benefits equal
to one year of his then-current salary, payable at the rate of 1/12 thereof per
month for twelve consecutive months, subject to all applicable state and
federal withholding requirements. In connection with his employment, Mr. Davis
was granted 3,000 incentive units under the Company's Incentive Compensation
Plan.
Insurance. The Company provides accidental death and dismemberment insurance
of $200,000 for each officer and $100,000 for the spouse of each officer. The
Company is not designated as the beneficiary under the policy. Premium cost
for such insurance for each of Mr. Hovell, Mr. Davis, Mr. Keen and Mr. Coffeen
is included in the Summary Compensation Table above.
Other Compensation. The Company provides certain facilities and services to
various officers to assist them in performing their corporate responsibilities
and duties in connection with business of the Company, such as automobiles and
club memberships. The Summary Compensation Table does not include the value of
such facilities and services which might be deemed attributable to personal use
by the recipient, because the cost to the Company of such personal benefits
with respect to any executive officer named in the Summary Compensation Table
did not exceed the lesser of $50,000 or 10 percent of the compensation reported
with respect to such executive officer.
COMPENSATION AND PLANNING COMMITTEE REPORT
The Compensation and Planning Committee (the "Committee") is currently
comprised of five outside directors: Mr. Hearin, Mr. Hollis, Mr. Hope, Mr.
Peebles and Mr. Van Antwerp. Based upon recommendation of the Chief Executive
Officer, it reviews and makes recommendations to the Board with respect to
salaries and other
14
<PAGE> 17
compensation for officers of the Company. Decisions by the Committee with
respect to Compensation of the Company's executive officers, including the
Chief Executive Officer, are reviewed and approved by the Board.
Historically, executive compensation was paid primarily as salary, with
compensation also being paid pursuant to deferred compensation agreements with
respect to certain officers. The Company also makes contributions to executive
officers under the Company's Employee Savings Plan and Employee Retirement Plan
on the same basis as with other employees. In fiscal year 1995, the Committee
retained William M. Mercer, Inc. ("Mercer") to undertake a comprehensive review
of compensation and benefits provided by the Company. Based on a report and
recommendation made by Mercer, the Committee adopted a compensation philosophy
in March, 1995 which included the following five principles:
1. Objectives: The Company's two primary compensation objectives are to
provide a competitive compensation package that will enable the Company to
attract and retain a highly-qualified executive team, and to provide a
significant amount of variable compensation that is contingent upon
objectively-measured performance, so as to align executive interests with
those of customers and stockholders.
2. Competitiveness: Compensation comparisons will be made against
similar-size public utilities on a national basis, to allow the Company to
compete nationally for top executive talent. Competitive levels of four
compensation components will be measured:
* Base salary, to be targeted above the median for the peer group, with the
primary consideration being external market levels and secondary
consideration being internal equity concerns.
* Annual incentives, to be targeted at the median, to motivate and reward
accomplishment of key corporate priorities and objectives.
* Long-term incentives, to be targeted below the median, so that total
target compensation (base salary plus annual incentives plus long-term
incentives) would equal median total compensation for peer group executives.
* Benefits and perquisites, to be targeted at the low end of the competitive
range, so as to provide reasonable levels of security and protection but to
not emphasize this component of the total compensation package.
3. Leverage: Annual and long-term incentives are to have significate upside
and downside variability so as to create a strong relationship of the level
of total executive compensation and the level of performance achieved.
4. Basis for measurements: Annual and incentive plans are to emphasis
teamwork, and are to be based primarily on corporate performance, but will
provide latitude to reward individual performance and contributions. Annual
incentives are to reflect a balance between shareholder and customer
interests, and between financial and operation goals, with financial
objectives weighted more heavily with respect to senior executives, and
operational goals being more heavily weighted at lower executive levels.
Long-term incentives are to focus on stockholder interests and are to be
tied, in part, to performance of the Company's stock.
15
<PAGE> 18
5. Stock ownership: The executive compensation program is intended to
facilitate senior executives acquiring an equity stake in the Company, to
increase the alignment between executive interests and stockholders.
The Committee's compensation philosophy is being gradually implemented by the
Committee. Because the stockholders of the Company had approved the Mobile
Gas Service Corporation 1992 Stock Option Plan in January 1993, the Committee
was able to make awards under that plan consistent with the foregoing
compensation philosophy. Under the Stock Option Plan 150,000 shares of the
Company's common stock had been reserved for issuance, and stock options
with respect to 105,000 shares were granted during fiscal year 1995.
Because the Committee's bases for determining compensation for executive
officers, including the chief executive officer, were largely subjective, there
was no mathematical relationship between the corporate performance of the
Company and executive compensation for 1995.
William J. Hearin Joseph G. Hollis E. B. Peebles, Jr.
John C. Hope, III Thomas B. Van Antwerp
Compensation Committee Interlocks and Insider Participation
Mr. Hearin, who is a member of the Compensation and Planning Committee,
serves as Chairman of the Board of the Company, but receives no compensation
for services as Chairman of the Board of the Company.
16
<PAGE> 19
MOBILE GAS SERVICE CORPORATION STOCK PERFORMANCE GRAPH
The following graph compares the value of $100 invested on October 1, 1990 in
the Company's Common Stock, the NASDAQ Market Index and the Media General Gas
Utilities Industry Group Index (the "Media General Gas Index"), assuming
reinvestment of dividends. The Media General Gas Index, published as Industry
Group Index No. 602 by Media General Financial Services of Richmond, Virginia,
consists of 59 gas utilities including the Company.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
COMPANY 1990 1991 1992 1993 1994 1995
MOBILE GAS SERVICE 100 124.39 158.47 224.53 203.83 202.59
NASDAQ MARKET INDEX 100 107.30 109.51 138.61 125.09 132.42
MG GROUP INDEX 100 134.19 131.96 171.62 181.61 220.50
17
<PAGE> 20
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has served as independent public
accountants to audit the Company's financial statements for the past eight
years. Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement, if they
so desire, and will be available to respond to appropriate questions. The
Board of Directors is currently requesting proposals from a number of
independent public accountants for fiscal year 1996 and has not yet selected
accountants for the current fiscal year.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. Should a stockholder intend to present a proposal at next year's
Annual Meeting, it must be received by the Secretary of the Company (at 2828
Dauphin Street, Mobile, Alabama 36606) no later than August 19, 1996, in order
to be included in the Company's proxy statement and form of proxy relating to
that meeting.
POSSIBLE ADJOURNMENT OF MEETING
In case the requisite vote to elect the nominees for Directors proposed by
the Company cannot be obtained at the date set for the meeting, it is the
intention of the Company, if it seems advisable to do so at the time, to
adjourn the meeting to permit the solicitation of additional proxies.
Accordingly, the enclosed form of proxy authorizes a vote in favor of
adjournment. The Annual Meeting may be adjourned from time to time without
other notice than by verbal announcement at the meeting of any adjournment, and
any business for which notice of the Annual Meeting is hereby given may be
transacted at any such adjournment.
OTHER INFORMATION
As of this date, the Company does not know of any other business to be
presented at the meeting. However, the enclosed proxy gives discretionary
authority to the proxy holders named therein should any other matters be
presented to the meeting and it is the intention of such proxy holders to take
such action in connection therewith as shall be in accordance with their best
judgment.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the period ended
September 30, 1995, including the financial statements and the schedules
thereto, will be provided without charge, upon receipt of a written request
addressed to Charles P. Huffman, Vice President, Chief Financial Officer and
Treasurer, Mobile Gas Service Corporation, P.O. Box 2248, Mobile, Alabama
36652.
Please sign, date, and return the enclosed proxy promptly in the enclosed
envelope on which no postage stamp is necessary if mailed in the United States.
MOBILE GAS SERVICE CORPORATION
By G. EDGAR DOWNING, JR.
Secretary
Mobile, Alabama
Dated December 15, 1995
18
<PAGE> 21
EXHIBIT A
ARTICLE 6
(a) All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation managed under the direction of,
a board of directors, which shall consist of not less than nine nor more than
twelve persons. The exact number of directors within the minimum and maximum
limitation specified in the preceding sentence shall be fixed from time to time
by the board of directors pursuant to a resolution adopted by a majority of the
entire board of directors. Until otherwise changed in accordance with this
Article 6, the number of directors shall be eleven. At the annual meeting of
shareholders of the Corporation held in 1996, the directors shall be divided
and classified into three classes, as nearly equal in number as possible, with
the term of office of the first class of directors to expire at the annual
meeting of shareholders of the Corporation to be held in 1997, the term of
office of the second class of directors to expire at the annual meeting of
shareholders of the Corporation to be held in 1998, and the term of office of
the third class of directors to expire at the annual meeting of shareholders of
the Corporation to be held in 1999. At each annual meeting of shareholders of
the Corporation following such initial classification and election, except as
provided below in this Article 6 in the case of electing a successor to a
director elected by the board of directors to fill a vacancy occurring in the
membership of the board of directors, directors elected to succeed those
directors whose terms expire at such annual meeting shall be elected for a term
of office to expire at the third succeeding annual meeting of shareholders of
the Corporation after their election.
(b) Any vacancy occurring in the board of directors, including by reason
of an increase in the number of directors, may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
board of directors. A director so elected to fill a vacancy shall be elected
to serve until the next annual meeting of shareholders, at which time a
director shall be elected to fill the unexpired portion of the term of office
of the director whose successor was elected by the remaining directors. No
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
<PAGE> 22
(c) Notwithstanding the foregoing provisions of this Article 6, any
director whose term of office has expired shall continue to hold office until
his successor shall be elected and qualify.
(d) Directors may be removed from office at any time, without cause, but
only by the affirmative vote of at least sixty-six and two-thirds percent (66
2/3%) of the total number of votes entitled to be cast by the holders of all of
the shares of capital stock of the Corporation then entitled to vote generally
in the election of directors. The holder of each share of capital stock
entitled to vote thereon shall be entitled to cast the same number of votes as
the holder of such shares is entitled to cast generally in the election of each
director. Directors may be removed from office at any time, with cause, in the
manner provided by law.
(e) Notwithstanding any other provisions of these Restated Articles of
Incorporation or the Bylaws of the Corporation, the affirmative vote of at
least sixty-six and two-thirds percent (66 2/3%) of the total number of votes
entitled to be cast by the holders of all of the shares of capital stock of the
Corporation then entitled to vote generally in the election of directors shall
be required to amend, alter, change or repeal, or to adopt any provision as
part of these Restated Articles of Incorporation inconsistent with, this
Article 6.
2
<PAGE> 23
PROXY MOBILE GAS SERVICE CORPORATION PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, JANUARY 26, 1996
The undersigned hereby appoints John S. Davis and G. Edgar Downing,
Jr., and each of them as proxies, each with power of substitution and
revocation, to vote as proxies at the Annual Meeting of Stockholders of Mobile
Gas Service Corporation to be held in the Auditorium of the Company at 2828
Dauphin Street, Mobile, Alabama, on Friday, January 26, 1996, at 10:00 a.m.,
Central Standard Time, or at any adjournment or adjournments thereof, according
to the number of votes that the undersigned would be entitled to cast if
personally present.
1. PROPOSAL TO AMEND RESTATED ARTICLES OF INCORPORATION OF MOBILE
GAS SERVICE CORPORATION as described in the Company's Proxy
Statement dated December 15, 1995 (Management favors a vote
"FOR")
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS (Management favors a vote "FOR")
Nominees: John S. Davis, William J. Hearin, Joseph G. Hollis,
Jr., John C. Hope, III, Walter L. Hovell, Gaylord C. Lyon, S.
Felton Mitchell, Jr., G. Montgomery Mitchell, F.B. Muhlfeld,
E.B. Peebles, Jr., Thomas B. Van Antwerp
[ ] FOR all nominees listed (except as indicated below)
(To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
---------------------------------------------------------------
---------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
3. In their discretion, the Proxies are authorized to vote upon
such other and further business as may come before the meeting
or any and all adjournments thereof, and upon matters that the
Company did not know were going to be brought before the
meeting or any adjournment because they has not become known a
reasonable time before the solicitation.
The shares represented by this proxy will be voted in the manner
directed herein by the undersigned stockholder. IF NO SPECIFIC DIRECTION IS
GIVEN, THE SHARES WILL BE VOTED "FOR" PROPOSAL 1 AND "FOR" ALL NOMINEES. Said
proxies, or either one of them, are authorized, in their or his discretion, to
vote the shares of the undersigned in favor of an adjournment or adjournments
of said meeting for the purpose of allowing time for additional solicitation of
proxies.
--------------------------- -----------
--------------------------- -----------
Stockholder Signature(s) Date
(Please sign exactly as the name appears
hereon. If stock not required if mailed
Please date, sign, and mail in the United States is held in the name
this Proxy in the envelope provided. of joint owners, each should sign.
Postage not required if mailed Attorneys, Executors, Administrators,
in the United States. etc. should so indicate.)
