<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:
<TABLE>
<S> <C>
[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-2.
</TABLE>
NATIONAL FUEL GAS COMPANY
- --------------------------------------------------------------------------------
(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 0-12.
(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
NATIONAL FUEL GAS COMPANY
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
FEBRUARY 26, 1998
<PAGE> 3
NATIONAL FUEL GAS COMPANY
10 LAFAYETTE SQUARE
BUFFALO, NEW YORK 14203
December 31, 1997
Dear Stockholder:
We are pleased to invite you to join us at the Annual Meeting of
Stockholders of National Fuel Gas Company. The meeting will be held at 10:00
A.M. Pacific Time on Thursday, February 26, 1998, in the
of the Mandalay Beach Resort, 2101 Mandalay Beach Road, Oxnard,
California 93035.
The matters on the agenda for the meeting are outlined in the enclosed
Notice of Meeting and Proxy Statement. In addition, officers of the Company will
review the past year, report current developments and answer questions from the
floor.
So that you may elect Company directors and secure the representation of
your interests at the Annual Meeting, we urge you to complete, sign and date
your proxy card, and mail it in the envelope provided or vote your shares by
telephone as described on the proxy/voting instruction card. The Proxies are
committed by law to vote your proxy as you designate.
If you plan to be present at the Annual Meeting, please check the "WILL
ATTEND MEETING" box on the proxy card. Whether or not you plan to attend, please
complete, sign, date and promptly return your proxy card or vote your shares by
telephone so that your vote may be counted. If you do attend and wish to vote in
person, you can revoke your proxy by giving written notice to the Secretary of
the meeting and/or the Trustees (as described on the first page of this Proxy
statement), and/or by casting your ballot at the meeting.
Coffee will be served at 9:30 A.M. The other directors and I look forward
to meeting you at that time.
In the meantime, please review the proxy statement and take advantage of
your right to vote.
Sincerely yours,
BERNARD J. KENNEDY
Chairman of the Board of Directors,
Chief Executive Officer and President
<PAGE> 4
NATIONAL FUEL GAS COMPANY
10 LAFAYETTE SQUARE
BUFFALO, NEW YORK 14203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 1998
To the Stockholders of National Fuel Gas Company:
Notice is hereby given that the Annual Meeting of Stockholders of National
Fuel Gas Company will be held at 10:00 A.M. Pacific Time on Thursday, February
26, 1998, in the of the Mandalay Beach Resort, 2101 Mandalay Beach
Road, Oxnard, California 93035. At the meeting, action will be taken with
respect to:
(1) The election of directors;
(2) The appointment of independent accountants;
(3) The approval of amendment of the Restated Certificate of
Incorporation to increase the amount of authorized common stock;
(4) The approval of amendment of the Restated Certificate of
Incorporation to revise the provisions relating to preferred
stock;
and such other business as may properly come before the meeting or any
adjournment thereof.
Stockholders of record at the close of business on December 29, 1997, will
be entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
ANNA MARIE CELLINO
Secretary
December 31, 1997
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, AND WHATEVER THE NUMBER OF SHARES
YOU OWN, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD. PLEASE USE THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. OR VOTE YOUR SHARES BY TELEPHONE AS DESCRIBED ON THE
PROXY/ VOTING INSTRUCTION CARD AND REDUCE NATIONAL FUEL GAS COMPANY'S EXPENSE IN
SOLICITING PROXIES.
<PAGE> 5
NATIONAL FUEL GAS COMPANY
10 LAFAYETTE SQUARE
BUFFALO, NEW YORK 14203
PROXY STATEMENT
This proxy statement is furnished to the holders of National Fuel Gas
Company ("Company") common stock ("Common Stock") in connection with the
solicitation of proxies on behalf of the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held on February 26, 1998, or
any adjournment thereof. This proxy statement and the accompanying proxy/voting
instruction card are first being mailed to stockholders on or about December 31,
1997.
All costs of soliciting proxies will be borne by the Company. Morrow & Co.,
Inc., 909 Third Avenue, New York, New York 10022, has been retained to assist in
the solicitation of proxies and will be compensated in the estimated amount of
$9,000 plus reasonable out-of-pocket expenses. In addition to solicitation by
that firm and by mail, a number of regular employees of the Company and its
subsidiaries may solicit proxies in person, by telephone or by other methods.
Only stockholders of record at the close of business on December 29, 1997,
will be eligible to vote at this meeting. As of that date, shares of Common
Stock were issued and outstanding.
Each share of Common Stock entitles the holder thereof to one vote with
respect to each matter that is subject to a vote at the meeting. All shares that
are represented by effective proxies received by the Company in time to be voted
will be voted at the meeting or any adjournment thereof. Where stockholders
direct how their votes shall be cast, shares will be voted in accordance with
such directions. Proxies submitted with abstentions and broker non-votes will be
included in determining whether or not a quorum is present. Abstentions and
broker non-votes will not be counted in tabulating the number of votes cast on
proposals presented to stockholders.
The proxy also confers discretionary authority to vote on all matters that
may properly come before the Annual Meeting of Stockholders, or any adjournment
thereof, respecting matters of which the Board is not currently aware but that
may be presented at the meeting, and respecting all matters incident to the
conduct of the meeting.
Any stockholder giving a proxy may revoke it at any time prior to the
voting thereof by mailing a revocation or a subsequent proxy to Anna Marie
Cellino at the above address, by filing written revocation at the meeting with
Mrs. Cellino, Secretary of the meeting, or by casting a ballot.
If you are or were a National Fuel employee and participate in its Employee
Stock Ownership Plans, Employees' Thrift Plan or Tax-Deferred Savings Plans, and
the accounts are registered in the same name, the proxy card will serve as a
voting instruction for the trustees of those Plans. Employee participants in the
Plan(s) may also provide those voting instructions by telephone. These
instructions may be revoked by written notice to The Chase Manhattan Bank,
Trustee for the Company's Employee Stock Ownership Plans, and the Employee's
Thrift Plan, or Vanguard Fiduciary Trust Company, Trustee for the Company's
Tax-Deferred Savings Plans, on or before February 20, 1998. Addresses are as
follows:
<TABLE>
<S> <C>
The Chase Manhattan Bank, N.A. Vanguard Fiduciary Trust Company
National Fuel Gas Company P.O. Box 2600
Midtown Station Valley Forge, PA 19482
P.O. Box 865
New York, NY 10138-0701
</TABLE>
Shares in these Plans are not voted unless voting instructions are
received.
Enclosed is a copy of the Company's Annual Report for the fiscal year ended
September 30, 1997, which includes financial statements.
<PAGE> 6
1. ELECTION OF DIRECTORS
Three directors are to be elected at this Annual Meeting. The nominees for
the three directorships are: Philip C. Ackerman, James V. Glynn and Bernard S.
Lee. All of the nominees are currently directors of the Company.
After the election of directors at the 1997 Annual Meeting, the Board of
Directors consisted of nine directors. On December 2, 1997, Luiz F. Kahl
resigned as a director of the Company. On December 11, 1997, James V. Glynn was
elected a director of the Company for a term to expire at the 1998 Annual
Meeting.
It is intended that the Proxies will vote for the election of Messrs.
Ackerman, Glynn and Lee as directors, unless they are otherwise directed by the
stockholders. Although the Board of Directors has no reason to believe that any
of the nominees will be unavailable for election or service, stockholders'
proxies confer discretionary authority upon the Proxies to vote for the election
of another nominee for director in the event any nominee is unable to serve or
for good cause will not serve. Messrs. Ackerman, Glynn and Lee have consented to
being named in this proxy statement and to serve if elected.
The affirmative vote of a plurality of the votes cast by the holders of
shares of Common Stock entitled to vote is required to elect each of the
nominees for director.
Set forth below is certain information concerning the three nominees for
election and the six directors of the Company whose terms will continue after
the 1998 Annual Meeting, including information with respect to their principal
occupations during the five years ended September 30, 1997, and certain other
positions held by them.
2
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
MESSRS. ACKERMAN, GLYNN AND LEE.
<TABLE>
<CAPTION>
NAME AND YEAR
BECAME A DIRECTOR
OF THE COMPANY AGE(1) PRINCIPAL OCCUPATION
- --------------------------------------- ------ ---------------------------------------------
<S> <C> <C>
</TABLE>
NOMINEES FOR ELECTION AS DIRECTORS
FOR THREE-YEAR TERMS TO EXPIRE IN 2001
<TABLE>
<S> <C> <C>
PHILIP C. ACKERMAN..................... 54 Senior Vice President of the Company since
1994 June 1989 and Vice President from 1980 to
1989. President of National Fuel Gas Distri-
bution Corporation(2) since October 1995 and
Executive Vice President from June 1989 to
October 1995, Executive Vice President of
National Fuel Gas Supply Corporation(2) since
October 1994. President of Seneca Resources
Corporation(2) from June 1989 to October
1996. President of Horizon Energy
Development, Inc.(2) since September 1995 and
certain other nonregulated subsidiaries of
the Company since prior to 1990.
JAMES V. GLYNN......................... 63 President since 1971 of Maid of the Mist
1997 Corporation, a scenic boat tour of the Amer-
ican and Canadian Falls, Niagara Falls, NY.
Vice Chairman of Niagara University Board of
Trustees; Director of M&T Bank, Greater
Buffalo Partnership, and First Empire State
Corporation.
BERNARD S. LEE, PH.D................... 63 President since prior to 1989 of the Insti-
1994 tute of Gas Technology, a not-for-profit
research and educational institution, Des
Plaines, Illinois. Director of NUI Corpora-
tion and Peerless Manufacturing Company.
</TABLE>
- ---------------
(1) As of February 26, 1998.
(2) Wholly owned subsidiary of the Company.
3
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND YEAR
BECAME A DIRECTOR
OF THE COMPANY AGE(1) PRINCIPAL OCCUPATION
- --------------------------------------- ------ ---------------------------------------------
<S> <C> <C>
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1999
<TABLE>
<S> <C> <C>
ROBERT T. BRADY........................ 57 Chairman of Moog Inc. since February 1996.
1995 President and Chief Executive Officer since
1988 and Director since 1981 of Moog Inc., a
manufacturer of motion control systems and
components. Director of Acme Electric
Corporation, Astronics Corporation, First
Empire State Corporation and Seneca Foods
Corporation.
WILLIAM J. HILL........................ 67 President of National Fuel Gas Distribution
1995 Corporation(2) from June 1989 until his
retirement in October 1995. Director of Reed
Manufacturing Company.
BERNARD J. KENNEDY..................... 66 Chairman of the Board of Directors of the
1978 Company since March 1989, Chief Executive
Officer since August 1988, President since
January 1987. Chairman of the Board of
Associated Electric & Gas Insurance Services
Limited. Director of American Precision
Industries Inc., Interstate Natural Gas
Association of America, Marine Midland Banks,
Inc., and Merchants Mutual Insurance Company.
</TABLE>
- ---------------
(1) As of February 26, 1998.
(2) Wholly owned subsidiary of the Company.
4
<PAGE> 9
<TABLE>
<CAPTION>
NAME AND YEAR
BECAME A DIRECTOR
OF THE COMPANY AGE(1) PRINCIPAL OCCUPATION
- --------------------------------------- ------ ---------------------------------------------
<S> <C> <C>
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<S> <C> <C>
EUGENE T. MANN......................... 67 Executive Vice President from 1986 until his
1993 retirement in August 1990 of Fleet Financial
Group, a diversified financial services
company, Providence, Rhode Island.
GEORGE L. MAZANEC...................... 61 Advisor to the Chief Operating Officer of
1996 Duke Energy Corporation, a diversified energy
company, since August 1997. Advisor to the
Chief Executive Officer of PanEnergy Corp
from October 1996 until August 1997; Vice
Chairman of PanEnergy from 1989 until October
1996; executive vice president of PanEnergy
and president and chief executive officer of
Texas Eastern Transmission Corporation from
1991 to 1993. Director of the Northern Trust
Bank of Texas, NA and TEPPCO, LP. Member of
the Management Committee of the Northern
Border Pipeline Company Partnership.
GEORGE H. SCHOFIELD.................... 67 Chairman of the Board of Directors from 1986
1990 until his retirement in March 1995, and Chief
Executive Officer from 1985 to October 1994,
of Zurn Industries, Inc., a provider of
products and services for water quality
control systems, Erie, Pennsylvania. Director
of The Goodyear Tire & Rubber Company.
</TABLE>
- ---------------
(1) As of February 26, 1998.
5
<PAGE> 10
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
During the Company's fiscal year ended September 30, 1997 ("fiscal 1997"),
there were five meetings of the Board of Directors. In addition, certain
directors attended meetings of standing or pro tempore committees. The entire
Board of Directors acts as a nominating committee. There are three standing
committees as described below.
Audit Committee. The Audit Committee held three meetings during fiscal
1997 in order to review the scope and results of the annual audit, to receive
reports of the Company's independent public accountants and chief internal
auditor, and to prepare a report of the committee's findings and recommendations
to the Board of Directors. The committee consists of Messrs. Hill, Glynn
(effective December 11, 1997), Lee and Schofield.
Compensation Committee. The Compensation Committee, all of the members of
which are non-employee independent directors, held three meetings during fiscal
1997 in order to review and determine the compensation of Company officers, to
receive reports and to award stock options, stock appreciation rights,
restricted stock and At Risk Awards. The committee administers the Company's
1983 Incentive Stock Option Plan, 1984 Stock Plan, 1993 Award and Option Plan,
1997 Award and Option Plan, and Annual At Risk Compensation Incentive Program.
The committee consists of Messrs. Brady, Mann, and Mazanec.
Executive Committee. The Executive Committee held no meetings during
fiscal 1997. The committee has and may exercise the authority of the full Board
except as prohibited by New Jersey corporate law (N.J.S.A. sec.14A:6-9). This
committee will also respond to questions of public policy. The committee
consists of Messrs. Brady, Hill, Kennedy, Mann and Mazanec (effective December
11, 1997).
During fiscal 1997, all incumbent directors attended at least 75% of the
aggregate of meetings of the Board and of the committees of the Board on which
they served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no "Compensation Committee interlocks" or "insider participation"
which the Securities and Exchange Commission (SEC) regulations would require to
be disclosed in this proxy statement.
DIRECTORS' COMPENSATION
The Retainer Policy for Non-Employee Directors (the "Retainer Policy")
which replaced the Retirement Plan for Non-Employee Directors (the "Directors'
Retirement Plan") was approved at the 1997 Annual Meeting of Stockholders.
Directors who are not officers do not participate in any of the Company's
employee benefit or compensation plans. Directors who are officers receive no
compensation for serving as directors. Non-employee directors are covered by the
new Retainer Policy.
Under the new policy, non-employee directors are paid an annual retainer of
$12,000 and 400 shares of Company Common Stock. Common stock issued to
non-employee directors under the Retainer Policy will be nontransferable until
the later of two years from issuance or six months after the recipient's
cessation of service as a director of the Company.
Non-employee directors are paid a fee of $1,000 for each Board meeting and
$800 for each Committee meeting attended ($500 if participating by telephone).
Non-employee directors are paid $500 for each special consultation as a director
that is with or at the request of the Company's chief executive officer.
Benefit accruals under the Directors' Retirement Plan ceased on December
31, 1996. All eligible non-employee directors would vest in their Directors'
Retirement Plan benefits at such time, and receive their accrued Directors'
Retirement Plan benefits under its current terms (normally at age 70). New
directors would not be eligible to receive benefits under that plan. Mr.
Rochwarger's plan benefit accruals continued until his retirement on February
20, 1997, and would be based upon the Company's current retainer policy for
non-employee directors.
6
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the best of the Company's knowledge, there are no beneficial owners of
5% or more of the Common Stock of the Company.
The following table sets forth for each current director, each nominee for
director and each of the executive officers named in the Summary Compensation
Table and for all directors and officers as a group, information concerning
beneficial ownership of Common Stock of the Company. Unless otherwise stated, to
the best of the Company's knowledge, each person has sole voting and investment
power with respect to the shares listed.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY OWNED PERCENT OF
AS OF SEPTEMBER 30, COMMON STOCK
NAME 1997 OWNED
- --------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Philip C. Ackerman(1)(2)(3)(4)........................... 342,362 *
Robert T. Brady.......................................... 400 *
James V. Glynn(6)........................................ 0 *
Richard Hare(1)(2)(3).................................... 194,032 *
William J. Hill(2)....................................... 95,211 *
Luiz F. Kahl(7).......................................... 1,103.2472 *
Bernard J. Kennedy(2)(3)................................. 646,014.4778 1.7
Bernard S. Lee........................................... 1,500 *
Eugene T. Mann........................................... 1,150 *
George L. Mazanec(8)..................................... 800 *
Joseph P. Pawlowski(1)(2)................................ 60,306.3237 *
George H. Schofield...................................... 2,736 *
Gerald T. Wehrlin(1)(2)(9)............................... 101,313 *
Directors and Officers as a Group (17
individuals)(10)(11)................................... 1,739,468.0644 4.6 %
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of issued and outstanding
Common Stock on September 30, 1997.
(1) Includes shares held in the Company's Thrift Plan, Employee Stock Ownership
Plan for Supervisory Employees ("ESOP") and Tax-Deferred Savings Plan for
Non-Union Employees ("TDSP"), respectively, as follows: Philip C. Ackerman,
3,599, 5,456 and 4,095 shares; Richard Hare, 0, 5,578 and 3,379 shares;
James A. Beck, 106, 0, and 805 shares; Joseph P. Pawlowski, 311, 2,116 and
1,633 shares; Gerald T. Wehrlin, 622, 4,018 and 2,875 shares; and all
current directors and officers as a group (17 individuals), 10,142, 26,286
and 24,502 shares. The beneficial owners of the shares have sole voting
power with respect to shares held in the Thrift Plan, ESOP and TDSP, but do
not have investment power respecting those shares until they are
distributed.
(2) Includes shares with respect to which each of the named individuals, and
all current directors and officers as a group (17 individuals), have the
right to acquire ownership within 60 days of September 30, 1997, through
the exercise of stock options granted under the 1983 Incentive Stock Option
Plan, the 1984 Stock Plan and the 1993 Award and Option Plan as follows:
435,000 shares for Mr. Kennedy, 257,500 shares for Mr. Ackerman, 107,500
shares for Mr. Hare, 34,200 shares for Mr. Beck, 60,000 shares for Mr.
Hill, 40,734 shares for Mr. Pawlowski, 74,000 shares for Mr. Wehrlin, and
1,177,465 shares for all current directors and officers as a group (17
individuals). Of the options for the 1,008,934 shares exercisable by
executive officers set forth above, none were exercisable at a price
7
<PAGE> 12
which was above the market value of the Company's Common Stock on September
30, 1997.
(3) Includes shares of restricted stock awarded in fiscal 1994 under the 1993
Award and Option Plan, certain restrictions on which had not lapsed as of
September 30, 1997, as follows: 43,644 shares for Mr. Kennedy, 19,350
shares for Mr. Ackerman, 17,968 shares for Mr. Hare, 1,000 shares for Mr.
Beck, and 113,962 shares for all current directors and officers as a group
(17 individuals). Owners of restricted stock have power to vote the shares,
but have no investment power with respect to the shares until the
restrictions lapse.
(4) Includes 500 shares held by Mr. Ackerman's wife in trust for her mother, as
to which shares Mr. Ackerman does not admit beneficial ownership, and 240
shares with respect to which Mr. Ackerman shares voting and investment
power with his wife.
(5) Includes 100 shares with respect to which Mr. Beck shares voting and
investment power with his wife.
(6) Mr. Glynn owned no shares on September 30, 1997, about two months before he
became a director. As of December 31, 1997, Mr. Glynn owned 200 shares.
(7) Mr. Kahl shares voting and investment power with his wife with respect to
all 803.2472 shares. Mr. Kahl was a director as of September 30, 1997, but
resigned on December 2, 1997.
(8) Includes 300 shares owned by Mr. Mazanec's wife as to which Mr. Mazanec
shares voting and investment power.
(9) Includes 2,600 shares owned by Mr. Wehrlin's wife as to which Mr. Wehrlin
shares voting and investment power.
(10) See notes (1) through (9) above.
(11) Includes 9,994 shares with respect to which one or another of the officers
of the Company, not including the executive officers named in the Summary
Compensation Table, shares voting and investment power with his wife.
8
<PAGE> 13
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
General
The Compensation Committee (the Committee) sets the base salaries of the
Company's executive officers, makes awards and sets goals for the Company's
executive officers and others under the Annual At Risk Compensation Incentive
Program (the "At Risk Program"), and makes awards to executive officers and
others under various compensation plans as described below. The Committee
consists exclusively of non-employee independent directors, appointed by
resolution of the entire Board of Directors. No member of the Committee is
permitted to receive any award under any plan administered by the Committee.
The Committee's objective is to set executive compensation at levels which
(i) are fair and reasonable to the stockholders, (ii) link executive
compensation to long-term and short-term interests of the stockholders, and
(iii) are sufficient to attract, motivate and retain outstanding individuals for
executive positions.
Fairness to the stockholders is balanced with the need to attract, retain
and motivate outstanding individuals by comparing the Company's executive
compensation with the compensation of executives at other companies in the
applicable labor market. The Committee sets the total direct compensation of the
executive officers at least annually with reference to an appropriate peer
group. The Committee's overall goal is to achieve above-average performance by
the Company and its executives by affording the executives the opportunity to
earn above-average direct compensation (base salary, annual at risk compensation
and long-term incentive compensation) for above-average performance. More
specifically, the various elements of direct compensation are intended to work
in concert so that each executive's compensation would be approximately at the
median (50th percentile) for median performance by the Company and the
executive, at the 75th percentile for 75th percentile-level performance by the
Company and the executive, and so forth. The actual amount of compensation
earned in a fiscal year depends on the performance of the Company and the
individual executive officer.
The peer group consists of publicly-traded companies (not including the
Company) which are engaged in one or more of the Company's primary lines of
business (natural gas distribution, transmission, storage and production). There
are currently 16 companies in the peer group, which is subject to change from
time to time at the discretion of the Committee. The total market capitalization
of 14 of the 16 peer group companies, as of September 30, 1997, ranged from 19%
to 385% of the Company's total market capitalization. The other two peer group
companies had total market capitalization of 445% and 685% of the Company's
market capitalization, but were included because of other similarities to the
Company.
The Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies that would be included
in a peer group established to compare stockholder returns. Thus, the companies
in the compensation peer group are not the same as the companies reflected in
the indices displayed in the Comparison of Five-Year Cumulative Total Returns
graph included in this proxy statement on page .
The executive officers' compensation is linked to the long-term interests
of the stockholders by making a significant part of each executive officer's
potential compensation depend on the price of the Company's Common Stock on the
open market. The Committee awards stock appreciation rights (SARs) and options
to buy Company Common Stock, both of which have value only to the extent the
market price of the Company's Common Stock increases after the date of an award.
The Committee also has in the past awarded restricted stock, which increases or
decreases in value to the same extent as the Company's Common Stock. Dividends
are paid on restricted stock and on the shares held for employees (including
executive officers) in various employee benefit plans, so executive officers
benefit directly from dividends paid on the Company's Common Stock.
Linking the executive officers' compensation to the short-term interests of
the stockholders is done by making a significant and increasing part of each
executive officer's potential
9
<PAGE> 14
compensation for a fiscal year depend upon the achievement of specific goals
during that fiscal year, especially earnings per share. The At Risk Program is
described in more detail below. In addition to being fair to stockholders,
linking the executive officers' compensation to the success of the Company also
serves to attract, retain and motivate those officers, especially while the
Company continues to be successful.
The retention of officers is also accomplished by utilizing forms of
compensation which either increase in value, or only have value, if the
executive officer remains with the Company for specified periods of time. For
example, all options and SARs awarded to date remain exercisable for 10 years if
the executive officer remains with the Company. All restricted stock awards do
not completely vest in the executive officer unless he remains with the Company
for a specified number of years after the award. The Executive Retirement Plan
pays no benefits if the executive officer leaves the Company before age 55 and
has substantial reductions for retirement before age 65. An executive officer
also may forfeit a portion of the interest payable under the Deferred
Compensation Plan if he leaves the Company before age 55.
Specific components of executive officers' compensation earned or paid in
fiscal 1997 are discussed below. The Company's five most highly compensated
executive officers are identified on the Summary Compensation Table on page
, and are sometimes referred to as the "named executive officers".
Base Salary, Annual At Risk Incentive and Bonus
The fiscal 1997 base salaries of the named executive officers are shown on
the Summary Compensation Table on page 14 in the "Base Salary" column. Executive
officers' base salaries are set on a calendar year basis. So the first three
months of the executive officers' fiscal 1997 base salaries were set in December
1995 with the target At Risk Program awards for fiscal 1996, and the last nine
months of their fiscal 1997 base salaries were set in December 1996 with the
target At Risk Program awards for fiscal 1997.
As of December 1995, the Company's return on equity over the three most
recently completed years (1992-94) was at approximately the 70th percentile of
its peer group, and the Company's total return to shareholders was at
approximately the 50th percentile of the peer group. The Committee set the
calendar 1996 salary of Mr. Kennedy at 5% over the 75th percentile for his peer
group. The Committee set the base salary of Mr. Ackerman at 94% of the 75th
percentile for his peer group, and the base salary of Mr. Hare at 86% of the
75th percentile for his peer group. The Committee set the calendar 1996 base
salary plus target At Risk Program award of Mr. Kennedy at 69% of the 75th
percentile for his peer group, the calendar 1996 base salary plus target At Risk
Program award of Mr. Ackerman at 77% of the 75th percentile for his peer group,
and the calendar 1996 base salary plus target At Risk Program award of Mr. Hare
at 77% of the 75th percentile of his peer group.
As of December 1996, the Company's return on equity over the three most
recently completed years (1993-95) was at approximately the 65th percentile of
its peer group, and the Company's total return to shareholders was at
approximately the 47th percentile of the peer group. The Committee decided to
freeze the calendar 1997 base salaries of Messrs. Kennedy, Ackerman and Hare at
calendar 1996 levels, and provide opportunities to earn a greater portion of
their compensation as At-Risk Program awards. The Committee set the calendar
1997 base salary plus target At Risk Program award of Mr. Kennedy at 106% of the
75th percentile for his peer group, the calendar 1997 base salary plus target At
Risk Program award of Mr. Ackerman at 101% of the 75th percentile for his peer
group, the calendar 1997 base salary plus target At Risk Program award of Mr.
Hare at 77% of the 75th percentile of his peer group. The remaining named
executive officers were given the opportunity to earn At Risk Program Awards in
higher amounts than the previous year.
The Summary Compensation Table on page includes in the "LTIP [long-term
incentive plan] Payouts" column the amount earned by or paid to Messrs. Kennedy,
Ackerman and Hare in fiscal 1997 under the At Risk Program. These payments are
considered by the SEC to be "long-term" incentives because payments are based on
the rolling average of performance during the two fiscal years most recently
completed. The range of potential At Risk Program awards for
10
<PAGE> 15
fiscal 1997 for Messrs. Kennedy, Ackerman and Hare is set out in the Long-Term
Incentive Plan Table on page .
During the first quarter of fiscal 1997, the Committee set At Risk Program
goals and ranges of potential payments for Messrs. Kennedy, Ackerman and Hare
for fiscal 1997. These were intended, when taken together with base salaries, to
provide total direct cash compensation beginning at the median for median
performance and progressing upward from there so that, for example, 75th
percentile-level performance would generate 75th percentile-level compensation.
During the first quarter of fiscal 1998, the Committee (i) rated each of
these executive officer's fiscal 1997 performance against his fiscal 1997 At
Risk Program goals (principally earnings per share), and (ii) calculated an
initial At Risk Program payment to be made for fiscal 1997 to each executive
officer. For Messrs. Kennedy, Ackerman and Hare, the awards were based on the
average of their performance ratings for fiscal years 1996 and 1997. The
Committee reserved the right to make an additional award based on fiscal 1997
performance, after further reflection, to each of these three executive officers
later in 1998.
Mr. Kennedy was given the opportunity in December 1996 to earn a fiscal
1997 At Risk Program payment equal to 47% of his calendar 1997 base salary for
achieving target goals, and up to 99% of his calendar 1997 base salary for
substantially exceeding those goals. Mr. Ackerman was given the opportunity in
December 1996 to earn a fiscal 1997 At Risk Program payment equal to 50% of his
calendar 1996 base salary for achieving target goals, and up to 100% of his
calendar 1997 base salary for substantially exceeding those goals. Mr. Hare was
given the opportunity in December 1996 to earn a fiscal 1997 At Risk Program
payment equal to 30% of his calendar 1997 base salary for achieving target
goals, and up to 60% of his calendar 1997 base salary for substantially
exceeding those goals. At Risk Program goals for Messrs. Kennedy, Ackerman and
Hare were:
Mr. Kennedy, as Chief Executive Officer: a specified level of Company
earnings per share (weighted as 75% of the formula) and customer service/other
goals (weighted as 25% of the formula). Company earnings per share must reach
107% of the target to trigger the maximum annual incentive award to Mr. Kennedy
or any other executive officer. In addition, Mr. Kennedy's summary rating for
customer service/other goals would have to be "Substantially Exceeds
Expectations," to trigger the maximum award.
Mr. Ackerman, as President of the regulated utility business and chief
financial officer: a specified level of Company earnings per share (weighted as
45% of the formula), a specified level of net income for his subsidiaries
(weighted as 30% of the formula), and customer service/other goals (weighted as
25% of the formula to reflect the importance of utility ratepayer satisfaction).
Mr. Ackerman's subsidiaries would have to achieve 150% of the targeted net
income, and his summary rating for customer service/other goals would have to be
"Substantially Exceeds Expectations," to trigger the maximum award.
Mr. Hare, as President of the regulated interstate pipeline and storage
business: a specified level of Company earnings per share (weighted as 20% of
the formula), a specified level of net income for his subsidiary (weighted as
40% of the formula), and customer service/other goals (weighted as 40% of the
formula). Mr. Hare's subsidiary would have to achieve 115% of targeted net
income, and his summary rating for customer service/other goals would have to be
"Substantially Exceeds Expectations," to trigger the maximum award.
The fiscal 1996 base salaries of the other seven individuals who were
designated as executive officers in March 1996 were set by Messrs. Kennedy,
Ackerman and/or Hare on a calendar year basis in December 1994 and 1995. Base
salaries are intended to be competitive with salaries of comparable officers in
the Company's peer group.
Messrs. Pawlowski and Wehrlin were paid amounts as bonuses in December 1997
(for performance in fiscal 1997). These awards were based on the performance of
their respective subsidiaries and their respective areas of responsibility.
Messrs. Kennedy, Ackerman and/or Hare made recommendations for fiscal 1997 which
were accepted by the Committee.
11
<PAGE> 16
The Summary Compensation Table on page ( ) shows At Risk Program awards
and bonuses earned or paid in fiscal 1997 to the named executive officers. For
performance during fiscal years 1996 and 1997, Mr. Kennedy earned an At Risk
Program award equal to 50% of his calendar 1997 base salary, Mr. Ackerman earned
an At Risk Program award equal to 48% of his calendar 1997 base salary, and Mr.
Hare earned an At Risk Program award equal to 19% of his calendar 1997 base
salary. For performance in fiscal 1997, Mr. Pawlowski earned an incentive equal
to 27% of his calendar 1997 base salary, and Mr. Wehrlin earned an incentive
equal to 22% of his calendar 1997 base salary.
The Summary Compensation Table on page ( ) includes in the "Bonus" column
the amount earned by Messrs. Pawlowski and Wehrlin in fiscal 1997 under the At
Risk Program. These awards are considered by the SEC to be bonuses because they
are based on performance during a single fiscal year.
Stock Options, SARs and Restricted Stock
Stock options, stock appreciation rights (SARs) and restricted stock
represent the longer-term incentive and retention component of the executive
compensation package. One of the Committee's goals is to keep each executive
officer's total base salary, At Risk Program award and longer-term incentive at
approximately that percentile of the executive officer's peer group's
compensation which corresponds to the percentile of the Company's performance
versus its peer group.
The Company's total return to stockholders, with dividends reinvested in
stock, for the five-year period ended September 30, 1997 was at about the 65th
percentile of its peer group. For the one-year period ended September 30, 1997,
the Company was at about the 59th percentile.
Total direct compensation (base salary, At Risk Program award, options,
SARs and restricted stock) for each named executive officers was compared to the
total direct compensation of the equivalent officers in the peer group. The
fiscal 1997 total direct compensation of each of the Company's named executive
officers was at or below the average for the comparable executive officers in
the peer group, ranging from 14% to 59% below that average.
In deciding to award options, SARs or restricted stock, the Committee also
takes into account both subjective (non-quantifiable) factors and quantifiable
factors, such as the executive officer's performance of his assigned goals under
the At Risk Program. Options, SARs and restricted stock are each longer-term
incentives designed to create an identity of interest between executives and
stockholders and to orient executives to the long-term interests of the Company.
For several years, each executive officer has received regular awards under
these programs according to policies designed to provide long-term opportunities
which are in a consistent range as a percentage of cash compensation (base
salary plus At Risk Program payments) considering stock price, dividend yield
and market-to-book ratio.
During fiscal 1997, the Committee awarded to each executive officer options
to buy stock in the future at the market price on the award date. The Committee
also awarded to Messrs. Kennedy, Ackerman and Hare an equal number of SARs with
the same exercise price, and awarded 5,601 shares of restricted stock to Mr.
Kennedy. None of the options or SARs awarded can be exercised for one year after
the award date, and all of them expire no later than 10 years after the award
date. Awards to the named executive officers are shown on the Option/SAR Grants
in Fiscal 1997 table on page .
Benefits Based on Retirement or Death, or Under Plans
Benefits payable under the Retirement Plan, the Executive Retirement Plan,
the split-dollar whole-life insurance program and the Deferred Compensation Plan
are based on retirement or death. Estimated benefits payable under the
Retirement Plan are shown in the pension plan table on page . Company payments
under the insurance programs are shown as part of "All Other Compensation" on
the Summary Compensation Table on page .
Other benefits available under established plans which apply to all
supervisory employees include the Company's contributions of Common Stock to the
Tax-Deferred Savings Plan (a
12
<PAGE> 17
401(k) plan) to match a portion of each executive's contributions, and the
Company's payments related to the Employee Stock Ownership Plan for Supervisory
Employees, and the Deferred Compensation Plan. Neither the Company nor the
Committee made any material changes in any of these plans, nor any material
changes in any of the "miscellaneous minor perquisites and personal benefits"
discussed in footnote 1 of the Summary Compensation Table.
Compensation of Chief Executive Officer
The bases for Mr. Kennedy's fiscal 1997 base salary and At Risk Program
award, including the Committee's goals and methodology, are discussed earlier in
this report under the heading Base Salary and Annual At Risk Incentive. The
bases for Mr. Kennedy's other fiscal 1997 long-term incentive awards are
discussed earlier in this report under the heading Stock Options, SARs and
Restricted Stock.
Specifically, the average total direct compensation of chief executive
officers of peer group companies was $5,074,556. Mr. Kennedy's actual 1997 total
direct compensation was 32% below the peer group average.
Policy With Respect to Qualifying Compensation Paid to Executive Officers For
Deductibility Under Section 162(m) of the Internal Revenue Code
The Committee intends that, whenever reasonably possible, compensation paid
to its managers, including its executive officers, should be deductible for
federal income tax purposes. Compensation paid under the At Risk Program
qualifies as performance-based compensation under Section 162(m) of the Internal
Revenue Code. The Committee may vote to award compensation, especially to a
chief executive officer, that is not (or may not be) fully deductible, if the
Committee determines that such award is consistent with its philosophy and in
the best interests of the Company and its stockholders.
COMPENSATION COMMITTEE
George L. Mazanec, Chairman
Robert T. Brady
Eugene T. Mann
13
<PAGE> 18
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information with respect to compensation
paid by the Company and its subsidiaries for services rendered during the last
three fiscal years to the Chief Executive Officer and each of the four other
most highly compensated executive officers for the fiscal year ended September
30, 1997 (the "named executive officers"). Messrs. Pawlowski and Wehrlin were
not executive officers before fiscal 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------
---------------------------------- SECURITIES PAYOUTS
OTHER ANNUAL RESTRICTED UNDERLYING -------- ALL OTHER
NAME AND PRINCIPAL FISCAL BASE COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARDS(2) SARS (#) PAYOUTS SATION(3)
- ---------------------------- ------ --------- ------- ------------ ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard J. Kennedy.......... 1997 $ 848,150 $ 0 0 $250,995(4) 300,000 $424,000 $ 221,909
Chairman of the Board 1996 839,400 0 0 169,600(5) 150,000 373,200 206,106
of Directors, Chief......... 1995 788,150 0 0 0 150,000 315,000(6) 152,430
Executive Officer
and President
Philip C. Ackerman.......... 1997 470,000 0 0 0 160,000 225,000 92,542
Senior Vice President of 1996 470,000 0 0 47,000(5) 70,000 141,000 82,209
the Company and 1995 365,612 0 0 0 70,000 65,000(6) 77,680
President of certain
subsidiaries
Richard Hare................ 1997 370,000 0 0 0 100,000 70,000 74,797
President of National 1996 370,000 0 0 0 60,000 63,000 76,024
Fuel Gas Supply 1995 365,612 0 0 0 60,000 63,000(6) 68,344
Corporation
Joseph P. Pawlowski......... 1997 220,750 60,000 0 0 22,000 0 42,072
Treasurer of the 1996 212,000 62,000(7) 0 0 20,000 0 48,239
Company and Senior Vice
President of National
Fuel Gas Distribution
Corporation
Gerald T. Wehrlin........... 1997 220,750 50,000 0 0 22,000 0 43,028
Controller of the 1996 212,000 62,000(7) 0 0 20,000 0 44,177
Company and Senior Vice
President of National
Fuel Gas Distribution
Corporation
</TABLE>
- ---------------
(1) Excludes perquisites or personal benefits because, for each executive
officer, the cost to the Company of all such items was less than $50,000 and
less than 10% of that executive's base salary and bonus, if any, for each
fiscal year listed.
(2) At September 30, 1997 (based on the closing market stock price of $44.00),
the number and market value of all unvested shares of restricted stock held
by each of the named executive officers were as follows: for Mr. Kennedy,
43,644 shares, $1,920,336; for Mr. Ackerman, 19,350 shares, $851,400; and
for Mr. Hare, 17,968 shares, $790,592. Dividends are paid on all shares of
restricted stock. On each of January 2, 1998, 1999, 2000 and 2001, some
restrictions on some of the shares of restricted stock held by each
individual lapse as follows: Mr. Kennedy, 9,784 shares; Mr. Ackerman, 4,550
shares; and Mr. Hare, 4,492 shares. Some restrictions on 4,150 shares of Mr.
Kennedy's restricted stock expire on the earlier of three months after
retirement or December 13, 1999. Some restrictions on 1,150 shares of Mr.
Ackerman's restricted stock expire December 13, 1999. The only restriction
which would not lapse as described above is the requirement that restricted
stock may not be transferred until the earliest of (a) six years from the
date the other restrictions lapse; (b) the recipient's attainment of age 65;
or (c) the recipient's death.
(3) In fiscal 1997, the Company paid, contributed or accrued for Messrs.
Kennedy, Ackerman, Hare, Pawlowski and Wehrlin $0, $8,543, $8,543, $6,400
and $8,364 respectively, under the Tax-Deferred Savings Plan; $75,593,
$29,098, $18,106, $2,453 and $2,146, respectively, under a provision of the
Deferred Compensation Plan and Board resolutions which pays all participants
a sum intended to replace amounts which they will not receive as Company-
matching contributions under the Tax-Deferred Savings Plan as a result of
tax law limits or
14
<PAGE> 19
other tax considerations; $0, $8,795, $9,003, $4,241 and $6,436,
respectively, under a program that passes through to employees the Company's
tax savings associated with payment of dividends on Employee Stock Ownership
Plan shares; $29,978, $11,452, $10,367, $10,884 and $11,621, respectively,
as above-market interest under the Deferred Compensation Plan (which amount,
in the case of Mr. Ackerman, could be forfeited); and $116,338, $34,654,
$28,778, $18,094 and $14,461, respectively, as the dollar value of split-
dollar or other life insurance benefits paid for by the Company.
(4) Represents the market value as of the date of award (December 11, 1997) of
shares of restricted stock for performance in fiscal 1997. These shares were
not outstanding at Fiscal year-end 1997, but the number of unvested shares
and fair market value at September 30, 1997 ($44.00 per share) would have
been 5,601 shares totalling $246,444.
(5) Represents the market value as of the date of award (December 13, 1996) of
shares of restricted stock for performance in fiscal 1996.
(6) Includes amounts awarded in April 1996 (after publication of the fiscal 1995
proxy statement) for performance in fiscal 1994-95 as follows: Mr. Kennedy,
$79,000; Mr. Ackerman, $16,000; Mr. Hare, $16,000.
(7) Includes both (i) bonus earned in fiscal 1995 but paid in fiscal 1996
($22,000) and (ii) bonus earned in fiscal 1996 but paid in fiscal 1997
($40,000).
STOCK OPTION GRANT TABLE
The following table sets forth information with respect to options to
purchase shares of Common Stock and stock appreciation rights (SARs) awarded
during fiscal 1997 to the named executive officers pursuant to plans approved by
the Company's stockholders.
OPTION/SAR GRANTS IN FISCAL 1997 (1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS/SARS IN FISCAL PRICE PER EXPIRATION PRESENT
NAME GRANTED(#) YEAR SHARE($/SH) DATE VALUE($)(2)
- ----------------------------- --------------- ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Bernard J. Kennedy........... 150,000 options 15.6% $ 36.75 10/2006 $ 957,000
150,000 SARs 15.6% 36.75 10/2006 957,000
Philip C. Ackerman........... 80,000 options 8.3% 36.75 10/2006 510,400
80,000 SARs 8.3% 36.75 10/2006 510,400
Richard Hare................. 50,000 options 5.2% 36.75 10/2006 319,000
50,000 SARs 5.2% 36.75 10/2006 319,000
Joseph P. Pawlowski.......... 22,000 options 2.3% 41.625 4/2007 188,320
Gerald T. Wehrlin............ 22,000 options 2.3% 41.625 4/2007 188,320
</TABLE>
- ---------------
(1) The options and SARs shown on this table were granted under the 1993 Award
and Option Plan and the 1997 Award and Option Plan and can be exercised at
any time during the nine years preceding the expiration date if the holder
remains with the Company. These options and SARs terminate upon termination
of employment, except that upon termination of employment for any reason
other than discharge for cause or voluntary resignation prior to age 60,
most of such options and SARs may be exercised within five years after
termination of employment. Payment of the exercise price may be in cash or
by tendering shares of Company Common Stock.
(2) This column shows the hypothetical value of these options and SARs according
to a binomial option pricing model which is a modification of the
Black-Scholes option pricing model. The weighted average of the assumptions
used in this model for the two sets of options granted in fiscal 1997 were:
quarterly dividend yield of 1.1247%, an annual expected return of 14.77%, an
annual standard deviation (volatility) of 16.41%, a risk-free rate of 6.38%,
and an expected term before exercise of 5 years. Whether the assumptions
used will prove accurate cannot be known at the date of grant. The model
produces a value
15
<PAGE> 20
based on freely tradable securities, which the options and SARs are not. The
holder can derive a benefit only to the extent the market value of Company
Common Stock is higher than the exercise price at the date of actual
exercise.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
The following table sets forth as to each named executive officer
information with respect to stock option and SAR exercises during fiscal 1997
and the number and value of unexercised options and SARs at September 30, 1997.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1997
AND OPTION/SAR VALUES ON SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
UNDERLYING OPTIONS/SARS AT FY-END(#) AT FY-END($)(2)
OPTIONS/SARS VALUE --------------------------- ---------------------------
NAME EXERCISED(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Kennedy.............. 50,200 $1,419,930 880,000 0 $11,135,625 $ 0
Philip C. Ackerman.............. 10,500 447,978 515,000 0 6,827,188 0
Richard Hare.................... 55,000 836,667 270,000 0 3,126,250 0
Joseph P. Pawlowski............. 38,417 410,390 40,734 22,000 404,290 52,250
Gerald T. Wehrlin............... 5,801 112,396 74,000 22,000 1,002,688 52,250
</TABLE>
- ---------------
(1) Market value of stock at exercise less exercise price or base price.
(2) Market value of stock at fiscal year-end less exercise price or base price.
LONG-TERM INCENTIVE PLAN AWARD TABLE
The following table sets forth information with respect to long-term
incentive plan awards made during fiscal 1997 to the named executives pursuant
to the At Risk Program.
LONG-TERM INCENTIVE PLAN -- AWARDS IN FISCAL 1997
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(1)
PERFORMANCE PERIOD -------------------------------
NAME UNTIL MATURATION THRESHOLD TARGET MAXIMUM
- ------------------------------------ --------------------- --------- -------- --------
<S> <C> <C> <C> <C>
Bernard J. Kennedy.................. 2 years ended 9/30/97 $ 0 $400,000 $840,000
Philip C. Ackerman.................. 2 years ended 9/30/97 0 235,000 470,000
Richard Hare........................ 2 years ended 9/30/97 0 111,000 222,000
</TABLE>
- ---------------
(1) This table describes the sole At Risk Program opportunity which was made to
executive officers in fiscal 1997 based on the rolling two-year average of
performance in fiscal 1996 and fiscal 1997. The actual amounts awarded and
paid for fiscal 1997 under the At Risk Program are shown in the Summary
Compensation Table on page in the LTIP Payouts column.
16
<PAGE> 21
CORPORATE PERFORMANCE GRAPH
The following graph compares the yearly cumulative stockholder return on
the Company's Common Stock against the cumulative total return of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500") and the Standard & Poor's
Utilities Index ("S&P Utilities") for a period of five years commencing
September 30, 1992, and ended September 30, 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS*
FISCAL YEARS 1993 -- 1997
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P UTILITIES S&P 500 NATIONAL FUEL
<S> <C> <C> <C>
1992 100 100 100
1993 124 113 146
1994 107 117 126
1995 137 152 128
1996 147 183 172
1997 168 257 214
</TABLE>
* Assumes $100.00 invested on September 30, 1992, and reinvestment of dividends.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Mr. Kennedy entered into an employment agreement with the Company on
September 17, 1981, which was most recently extended as of September 19, 1996.
The agreement is effective until September 1, 1999, subject to earlier
termination in the event of his death or disability. The agreement preserves, as
a minimum level of compensation, monthly compensation levels as are in effect
from time to time.
Messrs. Ackerman, Hare, Pawlowski, and Wehrlin entered into agreements with
the Company dated May 1, 1992, and Mr. Beck entered into an agreement with the
Company dated March 16, 1995, that are to become effective in the event of a
defined change of control of the Company. They preserve as a minimum, for the
three years following such change of control, the annual salary levels and
employee benefits as are then in effect for these executives and provide that,
in the event of certain terminations of employment, these executives shall
receive severance payments up to 2.99 times their respective annual base
salaries prior to termination,
17
<PAGE> 22
plus continuation of certain employee benefits for three years or receipt of the
value of such benefits, minus amounts earned through other employment over such
three-year period.
RETIREMENT BENEFITS
The Company's Retirement Plan is a noncontributory, defined-benefit pension
plan covering substantially all employees of the Company and its subsidiaries.
In general, the Retirement Plan provides a lifetime annuity at age 65 to a
retired employee in an annual amount equal to 1 1/4% of "final average salary"
up to $7,800 plus 1 1/2% of "final average salary" in excess of $7,800,
multiplied by years of service rendered after becoming covered by the Retirement
Plan, to a maximum of 40 years. For most employees, "final average salary" for
purposes of the Retirement Plan basically is the average of an employee's annual
base salary for the 60 highest consecutive months out of the last 120 months of
employment.
Normal retirement is at age 65. Early retirement with unreduced benefits is
available to all employees at age 60. Early retirement, in many cases with
reduced benefits, is available at age 55 to all employees that have at least 10
years of vesting service. Generally, retirement benefits under the Retirement
Plan are not subject to reduction for Social Security benefits or other offset
amounts.
The Company's Executive Retirement Plan is a noncontributory,
defined-benefit pension plan that covers most executive officers and most other
officers of the Company and its subsidiaries. The Executive Retirement Plan
provides retirement benefits to eligible officers in the same form as, and in
addition to, basic retirement benefits provided them under the Retirement Plan.
It restores benefit reductions, if any, under the Retirement Plan caused by
participation in the Deferred Compensation Plan and provides retirement benefits
to such officers without regard to the Internal Revenue Code dollar ceilings and
other limits that reduce many officers' Retirement Plan benefits. In general,
the Executive Retirement Plan would provide supplemental benefits in the form of
a monthly 50% joint and survivor life annuity payment (i.e., a lifetime annuity)
beginning at age 65 to a retiring eligible officer and surviving spouse. (The
retiree may instead elect other forms of annuity, such as a single life annuity,
but the Company estimates that the executive officers will elect the 50% joint
and survivor annuity.) Based on that estimate, and assuming that the officer and
his spouse are the same age, such officer's annual annuity payment will be equal
to 87.3% of the sum of (a) 1.97% times the first 30 years of service, plus (b)
1.32% times the next 10 years of service, multiplied by (c) "final average
salary," as defined below; this product will then be offset by Retirement Plan
benefits and a portion of Social Security benefits to be received. A surviving
spouse of a retiree would receive 50% of the above-described annual annuity
payment under the Executive Retirement Plan, as well as under the Retirement
Plan. Reduced benefits are available for eligible officers who retire prior to
age 65 and as early as age 55, provided they have at least five years of
service. The Executive Retirement Plan also has a lump sum payout provision. The
only eligible people who retired in fiscal 1996 elected not to take this benefit
in a lump sum.
"Final average salary" for purposes of the Executive Retirement Plan
basically is the average of an employee's annualized cash compensation for the
60 months during the 10 years prior to retirement which produces the highest
average. Under the Executive Retirement Plan, "annual cash compensation"
consists of base salary plus cash payments, if any, earned under the At Risk
Program or other lump sum benefit package.
The following table shows annual 50% joint and survivor life annuity total
benefits payable under the Retirement Plan plus the Executive Retirement Plan to
eligible officers retiring currently at the normal retirement age of 65 with a
spouse of the same age. Forms of benefit
18
<PAGE> 23
payment other than the 50% joint and survivor life annuity, or retirement prior
to age 65, would result in different annual benefits to eligible officers.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
FIVE-YEAR FOR YEARS OF BENEFIT SERVICE CREDITED(1)
FINAL AVERAGE -----------------------------------------------
SALARY(2)(3) 25 30 35 40
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 300,000 $125,030 $150,036 $166,530 $183,024
600,000 254,016 304,819 338,599 372,378
900,000 383,001 459,602 510,667 561,732
1,200,000 511,987 614,385 682,735 751,086
1,500,000 640,973 769,168 854,803 940,439
1,827,774
</TABLE>
- ---------------
(1) The service credited for retirement benefit purposes to the officers named
in the Summary Compensation Table, as of September 30, 1997, is as follows:
Mr. Kennedy, 39 years, 1 month; Mr. Ackerman, 29 years, 2 months; Mr. Hare,
22 years; Mr. Pawlowski, 22 years, 1 month; Mr. Wehrlin, 21 years, 1 month.
(2) Compensation covered for retirement benefit purposes is more than the
amounts appearing in the three "annual compensation" columns of the Summary
Compensation Table on page ( ), because of the inclusion of At Risk Program
awards, some restricted stock and other lump sum benefit payment.
Accordingly, the covered current compensation as of September 30, 1997, is
as follows: Mr. Kennedy, $1,523,145; Mr. Ackerman, $695,000; Mr. Hare,
$440,000; Mr. Pawlowski, $280,750; and Mr. Wehrlin $270,750.
(3) Benefits described in this table reflect the partial offset for Social
Security benefits described above.
2. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the 1998 Annual Meeting, stockholders will be asked to appoint Price
Waterhouse LLP as independent accountants for the Company's fiscal year ending
September 30, 1998 ("fiscal 1998"). If appointed, Price Waterhouse LLP will
examine the financial statements of the Company and its subsidiaries and report
upon the annual consolidated financial statements for fiscal 1998.
Representatives of that firm have regularly attended the Company's annual
meetings and one is expected to attend this year. This representative shall have
the opportunity to make a statement, if he or she desires, and is expected to be
available to respond to questions.
The affirmative vote of a majority of the votes cast with respect to the
appointment of independent accountants by the holders of shares of Common Stock
entitled to vote is required for the appointment of Price Waterhouse LLP as
independent accountants. If the necessary votes are not received, or if Price
Waterhouse LLP declines to accept or otherwise becomes incapable of accepting or
exercising the appointment, or its services are otherwise discontinued, the
Board of Directors will appoint other independent accountants. Unless they are
otherwise directed by the stockholders, the Proxies intend to vote for the
appointment of Price Waterhouse LLP as independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS APPOINTMENT.
3. THE APPROVAL OF AMENDMENT
OF THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AMOUNT OF AUTHORIZED COMMON STOCK
The Board of Directors has proposed and declared advisable an amendment
(the "Common Stock Amendment") to Article FOURTH of the Company's Restated
Certificate of Incorporation, as amended (the "Certificate"), to increase the
number of authorized shares of common stock, par value $1.00 per share (the
"Common Stock"), from One Hundred Million (100,000,000) shares of Common Stock
to Two Hundred Million (200,000,000) shares of Common Stock (the
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"Common Stock Proposal"). The Board of Directors recommends that the Company's
stockholders approve the Common Stock Amendment by voting FOR Proposal .
If the proposed Common Stock Amendment is adopted by the affirmative vote
of a majority of the votes cast by the holders of the outstanding shares of the
Company's Common Stock entitled to vote at the Company's Annual Meeting, the
proposed Common Stock Amendment will become effective upon the filing of a
certificate of amendment with the Secretary of State of the State of New Jersey,
which is expected to occur shortly after such stockholder approval. A copy of
the proposed Common Stock Amendment is attached as Appendix A hereto and the
following description is qualified in its entirety by reference thereto.
Appendix B hereto shows how the current Article FOURTH of the Certificate would
change if the Common Stock Amendment is approved by the Company's stockholders.
As of December 29, 1997, shares of Common Stock were outstanding
and additional shares of Common Stock in an aggregate amount of approximately
were reserved for issuance and remained unissued under the Company's
Dividend Reinvestment Plan, Customer Stock Purchase Plan and Shareholder Rights
Plan and under various long-term incentive and benefit plans, leaving
approximately shares of authorized but unissued Common Stock
unreserved and available for issuance. If this Common Stock Proposal is approved
by the stockholders, the Company will have 200,000,000 shares of authorized
Common Stock.
Other than with respect to the shares of Common Stock reserved for issuance
as set forth above, the Board of Directors has no present plans with respect to
the issuance of any material amount of additional shares of Common Stock.
However, the Company periodically reviews various transactions that could result
in the issuance of additional shares of Common Stock.
The adoption of this Proposal will not in itself result in the immediate
issuance of any additional shares of Common Stock. The increase in the
authorized number of shares is intended to provide sufficient authorized but
unissued shares for stock dividends and stock splits, for use in connection with
acquisitions, for financing transactions and for other corporate purposes.
Approval of Proposal will permit the Board of Directors to issue such
additional shares without further approval of stockholders and upon such terms
and at such times as it may determine unless stockholder approval is required by
applicable law or stock exchange requirements. Holders of the Company's
securities have no preemptive rights to subscribe to the Company's securities.
The additional shares of Common Stock proposed to be authorized could be
issued to a holder who might vote against a proposed merger or sale of assets or
other corporate transaction and therefore would be available for use to impede
or discourage an attempted takeover of the Company.
VOTE NEEDED FOR APPROVAL OF ADDITIONAL SHARES OF COMMON STOCK
Approval of this proposal requires the affirmative vote of a majority of
the votes cast by the holders of the shares outstanding and entitled to vote on
this proposal. An abstention or failure to vote (including a broker non-vote)
will have no effect on the outcome of the vote.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors believes that adoption of this Proposal is in the
best interests of the Company and its stockholders and recommends that the
stockholders vote FOR Proposal , and the accompanying proxy will be so
voted, unless a contrary specification is made.
THE BOARD RECOMMENDS A VOTE FOR THIS AMENDMENT.
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4. THE APPROVAL OF AMENDMENT
OF THE RESTATED CERTIFICATE OF INCORPORATION
TO REVISE THE PROVISIONS RELATING TO PREFERRED STOCK
The Board of Directors has proposed and declared advisable amendments (the
"Preferred Stock Amendments") to Article FOURTH, Article FIFTH and Article SIXTH
of the Company's Certificate to authorize Ten Million (10,000,000) shares of a
new class of preferred stock, par value $1.00 per share (the "New Preferred
Stock"). The Preferred Stock Amendments would also eliminate the Company's
existing authorized Three Million Two Hundred Thousand (3,200,000) shares of
preferred stock, par value $25 per share (the "Old Preferred Stock"), and all
provisions related thereto. There are currently no issued and outstanding shares
of Old Preferred Stock. In addition, the Preferred Stock Amendments make certain
changes to references to Article FOURTH in other Articles in the Certificate.
The Board of Directors recommends that the Company's stockholders approve the
Preferred Stock Amendments by voting FOR Proposal .
If the proposed Preferred Stock Amendments are adopted by the affirmative
vote of a majority of the votes cast by the holders of the outstanding shares of
the Company's Common Stock entitled to vote at the Company's Annual Meeting, the
proposed Preferred Stock Amendments will become effective upon the filing of a
certificate of amendment with the Secretary of State of the State of New Jersey,
which is expected to occur shortly after such stockholder approval. A copy of
the Preferred Stock Amendments is attached as Appendix A hereto and the
following description is qualified in its entirety by reference thereto.
Appendix B hereto shows how the current Article FOURTH, Article FIFTH and
Article SIXTH of the Certificate would change if the Preferred Stock Amendments
are approved by the Company's stockholders.
This proposal would add to Article FOURTH of the Certificate provisions
authorizing the issuance of 10,000,000 shares of the New Preferred Stock while
eliminating provisions authorizing and concerning the Old Preferred Stock. These
new provisions would provide that if any series of the New Preferred Stock is
created in the manner hereinafter described and the shares of such series are
given the right to vote, each holder of shares of such series would be entitled
to one vote for each outstanding share of such series of New Preferred Stock
held by such holder. Certain provisions of the Certificate currently restrict
dividends and other distributions on Common Stock, the incurrence by the Company
of additional unsecured debt and certain other actions, so long as any shares of
the Old Preferred Stock are outstanding. These provisions would be eliminated if
Proposal is adopted. However, as described below, the Board of Directors
would be authorized, by the terms of the proposed Preferred Stock Amendments, to
impose similar restrictions in connection with any series of the New Preferred
Stock that the Board of Directors may create.
In addition, the new provisions would permit the Board of Directors to
issue the New Preferred Stock from time to time without the necessity of further
action or authorization by the Company's stockholders (unless otherwise required
by applicable law or stock exchange requirements) in one or more series and with
such powers, designations, preferences and relative, participating, optional or
other special rights and qualifications as the Board of Directors may, in its
discretion, subject to such powers, designations, preferences, rights and
qualifications as are contained in the Certificate, determine, including, but
not limited to (a) the distinctive designation of such series and the number of
shares to constitute such series; (b) the dividends, if any, for such series,
and whether such dividends, if any, shall be cumulative and/or participating;
(c) the circumstances and conditions, if any, under which holders of the shares
of such series would be entitled to exercise voting rights including, for
example, (i) whether the holders of the shares of such series would be entitled
to elect directors of the Company (including whether such holders would be
entitled, in the event of a default in the payment of dividends to such holders,
to elect a majority of such directors), (ii) whether the holders of the shares
of such series would be entitled to vote upon any amendments to provisions of
the Certificate relating to such series and (iii) whether any such voting rights
would be exercisable by such holders together with the voting rights of the
holders of shares of Common Stock or by a separate class vote; (d) the terms and
conditions, if any, upon which shares of such stock may be converted into or
exchanged for shares of stock of any other class
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or any other series of the same class or any other securities or assets
(including the conversion or exchange price and including whether such
conversion or exchange shall be at the election of the Company or the holders of
such shares); (e) the right or obligation, if any, of the Company to redeem
shares of such series and the terms and conditions of such redemption (including
whether such redemption shall be at the election of the Company or the holders
of such shares); (f) the retirement or sinking fund provisions, if any, of
shares of such series and the terms and provisions relative to the operation
thereof; (g) the amount, if any, which the holders of the shares of such series
shall be entitled to receive in case of a liquidation, dissolution, or winding-
up of the Company; (h) the limitations and restrictions, if any, upon the
payment of dividends or the making of other distributions on, and upon the
purchase, redemption, or other acquisition by the Company of, the Company's
Common Stock; and (i) the conditions or restrictions, if any, upon the creation
of indebtedness or upon the issuance of any additional stock of the Company.
The Board of Directors believes that availability of the New Preferred
Stock will give the Company necessary flexibility with respect to possible
acquisitions, financing transactions and other general corporate requirements.
The Company anticipates using New Preferred Stock when it is not opportune to
issue Common Stock or debt due to prevailing market conditions or as may be
needed to meet Company capital structure requirements. The Company has not had
preferred stock outstanding since 1986. The New Preferred Stock would be
available for issuance, on such terms as the Board of Directors determines,
without further action by the stockholders unless such action is required by
applicable law or stock exchange requirements. The Company is currently
authorized to issue 3,200,000 shares of Old Preferred Stock, none of which are
issued and outstanding. If this Proposal is approved by the stockholders, the
Company will no longer be authorized to issue Old Preferred Stock and will be
authorized to issue 10,000,000 shares of New Preferred Stock. The Company has no
present plans, agreements or commitments for the issuance of the New Preferred
Stock.
The actual effect of the authorization of the New Preferred Stock upon the
rights of the holders of Common Stock cannot be stated until the Board of
Directors determines the respective rights of the holders of one or more series
of the New Preferred Stock. Such effects, however, might include (a)
restrictions on dividends on Common Stock if dividends on the New Preferred
Stock are in arrears; (b) dilution of the voting power of the Common Stock; (c)
restrictions on the rights of the holders of Common Stock to share in the
Company's assets upon liquidation due to satisfaction of any liquidation
preference granted to the New Preferred Stock; and (d) dilution of rights of the
holders of Common Stock to share in the Company's assets upon liquidation if the
New Preferred Stock is participating with respect to distributions upon such
liquidation.
Under certain circumstances, the relative rights, powers, preferences and
limitations determined by the Board of Directors in connection with the issuance
of shares of the New Preferred Stock could discourage third parties seeking to
effect a takeover or otherwise gain control of the Company. For example, the
shares of New Preferred Stock could be issued to purchasers who might support
the Board of Directors in opposing a hostile takeover bid or could be used in
connection with adopting another shareholder rights plan. The issuance of shares
of New Preferred Stock could also have the effect of diluting the stock
ownership and voting power of a third party seeking to effect a merger, sale of
assets, or similar transaction. In the event and to the extent the proposed
amendment could facilitate such actions, it could serve to perpetuate incumbent
management and directors. The Board of Directors is not aware, however, of any
specific effort or plan to accumulate the Company's securities or to obtain
control of the Company by means of a merger, tender offer, solicitation in
opposition to management, or otherwise.
The Company already has a number of defensive provisions in its
Certificate, including a classified Board of Directors, certain fair price and
supermajority Board of Directors voting provisions for business combinations
with a 5% or greater stockholder, and a prohibition against taking stockholder
action in certain situations without the use of a mailed proxy statement. The
Company also currently has a shareholder rights plan, the effect of which may be
to discourage attempts to gain control of the Company without the approval of
the Board of Directors. This
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rights plan would not be affected by the proposed authorization of shares of New
Preferred Stock.
VOTE NEEDED FOR APPROVAL OF THE NEW CLASS OF PREFERRED STOCK
Approval of this proposal requires the affirmative vote of a majority of
the votes cast by the holders of the shares outstanding and entitled to vote on
this proposal. An abstention or failure to vote (including a broker non-vote)
will have no effect on the outcome of the vote.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors believes that adoption of this Proposal is in the
best interests of the Company and its stockholders and recommends that the
stockholders vote FOR Proposal , and the accompanying proxy will be so
voted, unless a contrary specification is made.
THE BOARD RECOMMENDS A VOTE FOR THIS AMENDMENT.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. Directors, officers and
greater-than-10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on review
of information furnished to the Company, reports filed through the Company and
written representations that no Forms 5 were required, the Company believes that
all Section 16(a) filing requirements applicable to its directors, officers and
greater-than-10% beneficial owners were complied with during fiscal 1997.
OTHER BUSINESS
The Board of Directors does not know of any business that will be presented
for consideration at the meeting except as set forth above. However, if any
other business is properly brought before the meeting, or any adjournment
thereof, the Proxies will vote in regard thereto according to their discretion.
PROPOSALS OF SECURITY HOLDERS
Proposals that security holders intend to present at the 1999 Annual
Meeting of Stockholders must be received at the principal offices of the Company
no later than September 2, 1998, in order to be considered for inclusion in the
Company's proxy statement and proxy for that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
ANNA MARIE CELLINO
Secretary
December 31, 1997
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APPENDIX A
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APPENDIX A
I. Article Fourth of the Restated Certificate of Incorporation of National
Fuel Gas Company is hereby amended in its entirety to read as follows:
FOURTH: The total authorized capital stock of this corporation shall
consist of Ten Million (10,000,000) shares of Preferred Stock having the par
value of One Dollar ($1.00) per share and Two Hundred Million (200,000,000)
shares of Common Stock having the par value of One Dollar ($1.00) per share.
The designations and relative rights, powers, preferences and limitations
of the different classes of capital stock of this corporation, are as follows:
1. CHARACTERISTICS OF COMMON STOCK AND PREFERRED STOCK
The Board of Directors shall have the authority to amend this Certificate
of Incorporation from time to time to divide the shares of the Preferred Stock
into one or more series and to determine the designation, the number, and the
special and relative rights, powers, preferences and limitations of the shares
of each series so created. For illustrative purposes only, the foregoing power
of the Board of Directors shall include, but shall not be limited to, the
determination of the following terms:
(a) the maximum number of shares to constitute each such series, which
may subsequently be increased or decreased (but not below the number of
shares of such series then outstanding) by resolution of the Board of
Directors, the distinctive designation thereof and the stated value thereof
if different from the par value thereof;
(b) whether the shares of each such series shall have voting rights
and, if such shares are given voting rights, the terms of such voting
rights, subject to the provisions of paragraph 7 hereof;
(c) the dividend rate or rates, if any, on the shares of each such
series or the manner in which such rate or rates shall be determined, the
conditions and dates upon which such dividends shall be payable, the
preference or relation that such dividends shall bear to the dividends
payable on any other class or classes or any other series of capital stock
(including whether such dividends shall be participating or
non-participating with respect to any other class or classes or any other
series of capital stock), whether such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which any such
dividends shall be cumulative;
(d) whether the shares of each such series shall be subject to
redemption, and, if made subject to redemption, the time or times, price or
prices and other terms, limitations, restrictions or conditions of such
redemption, including whether such redemption shall be made at the election
of the corporation or the holders of such shares;
(e) the relative amounts, and the relative rights or preferences, if
any, of payment in respect of shares of each such series which the holders
of shares of each such series shall be entitled to receive upon the
voluntary or involuntary liquidation, dissolution or winding-up of the
corporation, including whether such rights shall be limited or
participating with respect to shares of any other class or classes or any
other series of capital stock upon the voluntary or involuntary
liquidation, dissolution or winding up of the corporation;
(f) whether or not the shares of each such series shall be subject to
the operation of a retirement or sinking fund and, if so, the terms and
provisions relative to the operation of such retirement or sinking fund;
(g) whether or not the shares of each such series shall be convertible
into, or exchangeable for, shares of any other class or classes or any
other series of capital stock, or other securities, whether or not issued
by the corporation, and if so convertible or exchangeable, the price or
prices or the rate or rates of conversion or exchange, the method, if any,
of adjusting any such price or prices or rate or rates and whether such
shares shall
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be convertible or exchangeable at the election of the corporation or the
holders of such shares;
(h) the limitations and restrictions, if any, to be effective while
any shares of each such series are outstanding, upon the payment of
dividends or the making of other distributions on, and upon the purchase,
redemption or other acquisition by the corporation of, the Common Stock or
any other class or classes or any other series of capital stock of the
corporation ranking junior to the shares of such series either as to
dividends or upon liquidation, dissolution or winding-up of the
corporation;
(i) the conditions or restrictions, if any, to be effective while any
shares of each such series are outstanding, upon the creation of
indebtedness of the corporation or upon the issuance of any additional
stock (including additional shares of such series or of any other class)
ranking on a parity with or prior to the shares of such series as to
dividends or distribution of assets upon liquidation, dissolution or
winding-up of the corporation; and
(j) any other preference, relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions
thereof, as shall not be inconsistent with law, this Article FOURTH or any
amendment creating such series.
Each share of Common Stock shall be equal in all respects to every
other share of the Common Stock. The Common Stock shall be subject to the
express terms of the Preferred Stock and any series thereof.
2. DIVIDENDS ON PREFERRED STOCK
No holder of outstanding shares of any series of the Preferred Stock shall
be entitled to receive any dividends thereon other than the dividends provided
therefor pursuant to paragraph 1 hereof.
3. REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If, on or before the redemption date with respect to any shares of any
series of Preferred Stock that are subject to redemption, as fixed or determined
pursuant to paragraph 1 hereof, this corporation shall deposit with a bank,
trust company or other financial institution monies necessary for the redemption
of such shares, then, notwithstanding that any certificate for such shares so
redeemed shall not have been surrendered for cancellation, from and after such
redemption date, all rights and preferences with respect to such shares so
redeemed shall forthwith on such redemption date cease and terminate, except
only the right of the holders thereof to receive, out of the monies so
deposited, the amount payable upon redemption of such shares, without interest.
Any such monies so deposited by this corporation and unclaimed at the end of six
(6) years from such redemption date shall be repaid to this corporation upon its
request, after which repayment the holders of the shares so called for
redemption shall look only to this corporation for the payment thereof.
Nothing herein contained shall limit any legal right of this corporation to
purchase or otherwise acquire any shares of the Preferred Stock to the extent
permitted by law. All or any shares of Preferred Stock at any time redeemed,
purchased or otherwise acquired by this corporation may thereafter, in the
discretion of the Board of Directors, be reissued or otherwise disposed of at
any time or from time to time, to the extent and in the manner now or hereafter
permitted by law.
4. DIVIDENDS ON COMMON STOCK
Subject to the rights and preferences of each series of Preferred Stock, as
determined pursuant to paragraph 1 hereof, such dividends (payable in cash,
stock or otherwise) as may be determined by the Board of Directors may be
declared and paid on the Common Stock, but only out of funds legally available
for the payment of such dividends.
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5. DISTRIBUTIONS ON COMMON STOCK
In the event of any liquidation, dissolution or winding up of this
corporation, and subject to the rights and preferences of each series of
Preferred Stock, as determined pursuant to paragraph 1 hereof, all assets and
funds of this corporation remaining after paying or providing for the payment of
all creditors of this corporation shall be divided among and paid to the holders
of the Common Stock according to their respective shares.
6. PREEMPTIVE RIGHTS
No holder of shares of any stock of this corporation of any class now or
hereafter authorized shall have any right as such holder to purchase, subscribe
for or otherwise acquire any shares of stock of this corporation of any class
now or hereafter authorized, or any securities convertible into or exchangeable
for any such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase or otherwise acquire any such shares, whether
such shares, certificates, securities, warrants or other instruments be unissued
or issued and thereafter acquired by this corporation and whether such shares
and other instruments be issued for cash, property, services, or by way of
dividends or otherwise.
7. VOTING RIGHTS
At all meetings of the stockholders of this corporation, the holders of
shares of Common Stock shall be entitled to one vote for each share of Common
Stock held by them respectively except as otherwise expressly provided herein.
The holders of shares of Preferred Stock shall have no right to vote and shall
not be entitled to notice of any meeting of stockholders of this corporation nor
to participate in any such meeting except as otherwise expressly provided herein
or in any amendment creating a series of Preferred Stock and except for those
purposes, if any, for which said rights cannot be denied or waived under
mandatory provisions of law that shall be controlling. If, and to the extent
that, the shares of any series of Preferred Stock are provided voting rights in
accordance with the provisions hereof, including the provision of such voting
rights in any amendment creating such series, each holder of shares of such
series of Preferred Stock shall be entitled to one vote for each outstanding
share of such series of Preferred Stock held by such holder.
8. RECLASSIFICATION, ETC.
From time to time, and without limitation of other rights and powers of
this corporation as provided by law, this corporation may reclassify its capital
stock and may create or authorize one or more classes or kinds of stock ranking
prior to or on a parity with or subordinate to the Preferred Stock or may
increase the authorized amount of the Preferred Stock or of the Common Stock or
of any other class of stock of this corporation or may amend, alter, change or
repeal any of the rights, privileges, terms and conditions of shares of the
Preferred Stock or of any series thereof then outstanding or of shares of the
Common Stock or of any other class of stock of this corporation, upon such vote,
given at a meeting called for that purpose, of its stockholders then entitled to
vote thereon as may be provided by law; provided that the consent of the holders
of shares of the Preferred Stock (or of any series thereof) required by the
provisions of any amendment creating any series of Preferred Stock or by
applicable law, if any such consent be so required, shall have been obtained;
and provided further that the rights, privileges, terms and conditions of shares
of Common Stock shall not be subject to amendment, alteration, change or repeal
without such vote (given by written consent, or by vote at a meeting called for
that purpose), of the holders of Common Stock as may be provided by law.
9. CONSIDERATION FOR SHARES
To the extent permitted by law, this corporation may, at any time, and from
time to time, issue and dispose of any of the authorized and unissued shares of
the Preferred Stock and Common Stock for such consideration as may be fixed by
the Board of Directors, or as may be determined in accordance with a general
formula established by the Board of Directors, or at not less than such minimum
consideration as the Board of Directors may authorize.
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II. Paragraph 4(k) of Article FIFTH of the Restated Certificate of
Incorporation of the National Fuel Gas Company is hereby amended in its entirety
to read as follows:
(k) "Subsidiary" shall mean any corporation a majority of the voting shares
of which are at the time owned by this corporation or by other subsidiaries of
this corporation or by this corporation and other subsidiaries of this
corporation.
III. The phrase "voting separately as a class, pursuant to paragraph 10 of
Article FOURTH hereof" in the first paragraph of Article SIXTH of the Restated
Certificate of Incorporation of National Fuel Gas Company is hereby deleted and
replaced by the words "voting separately from the Common Stock as provided in
any amendment creating any series of Preferred Stock".
IV. The last paragraph of Article SIXTH of the Restated Certificate of
Incorporation of National Fuel Gas Company is hereby amended in its entirety to
read as follows:
Notwithstanding the foregoing and except as otherwise provided by law,
whenever the holders of shares of Preferred Stock shall have the right, voting
separately from the Common Stock, to elect directors of this corporation, the
number, election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms and provisions of any
amendment creating any series of Preferred Stock; and such directors so elected
shall not be divided into classes pursuant to this Article SIXTH. During the
prescribed term of office of any such directors, the Board of Directors shall
consist of such directors in addition to the number of directors determined as
provided in the first paragraph of this Article SIXTH.
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APPENDIX B
This Appendix B, when printed and mailed to Stockholders, will have language
struck through to indicate it is being deleted from the certificate of
incorporation. The strike-throughs do not transmit via EDGAR. Paper copies with
strike-throughs have been provided to the SEC staff and are available from the
Company. The deleted language would be apparent by comparing Appendix A and
Appendix B.
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<PAGE> 34
APPENDIX B
I. Changes to Article FOURTH of the Restated Certificate of Incorporation
of National Fuel Gas Company:
FOURTH: The total authorized capital stock of this Corporation corporation
shall consist of Three Ten Million Two Hundred Thousand (3,200,000)(10,000,000)
shares of Preferred Stock having the par value of Twenty-Five Dollars ($25) One
Dollar ($1.00) per share and One Two Hundred Million (100,000,000)(200,000,000)
shares of Common Stock having the par value of One Dollar ($1.00) per share.
The designations and relative rights, powers, preferences and limitations
of the different classes of capital stock of this corporation, are as follows:
1. CHARACTERISTICS OF COMMON STOCK AND PREFERRED STOCK.
The Board of Directors shall have the authority to amend this Certificate
of Incorporation from time to time to divide the shares of the Preferred Stock
may be divided into and issued in into one or more series, from time to time, as
herein provided. Each series shall be designated so as to distinguish the shares
thereof from and to determine the designation, the number, and the special and
relative rights, powers, preferences and limitations of the shares of all other
series. All shares of the Preferred Stock of all series shall be of equal rank
and all shares of any particular series of the Preferred Stock shall be
identical except as to each series so created. For illustrative purposes only,
the foregoing power of the Board of Directors shall include, but shall not be
limited to, the determination of the following terms:
(a) the maximum number of shares to constitute each such series, which may
subsequently be increased or decreased (but not below the number of shares of
such series then outstanding) by resolution of the Board of Directors, the
distinctive designation thereof and the stated value thereof if different from
the par value thereof;
(b) whether the shares of each such series shall have voting rights and, if
such shares are given voting rights, the terms of such voting rights, subject to
the provisions of paragraph 7 hereof;
(c) the dividend rate or rates, if any, on the shares of each such series
or the manner in which such rate or rates shall be determined, the conditions
and dates upon which such dividends shall be payable, the preference or relation
that such dividends shall bear to the dividends payable on any other class or
classes or any other series of capital stock (including whether such dividends
shall be participating or non-participating with respect to any other class or
classes or any other series of capital stock), whether such dividends shall be
cumulative or noncumulative, and if cumulative, the date or dates from which any
such dividends thereon shall be cumulative as provided in paragraph 2 hereof.
The;
(d) whether the shares of the Preferred Stock of different each such series
shall be subject to redemption, and, if made subject to redemption, the time or
times, may vary as to the following terms, which shall be fixed in the case of
each series, at any time prior to the issuance of the shares thereof, in the
manner provided in paragraph 7 hereof;
(a) The annual dividend rate or rates for the particular series and the date
from which dividends shall be cumulative on all shares of such series issued on
or prior to the record date for the first dividend for such series;
(b) The redemption price or prices and other terms, limitations, restrictions or
conditions of such redemption, including whether such redemption shall be made
at the election of the corporation or the for the particular series;
(c) The terms and amount or amounts per share for the particular series payable
to the holders thereof upon any of such shares;
(e) the relative amounts, and the relative rights or preferences, if any,
of payment in respect of shares of each such series which the holders of shares
of each such series shall be entitled to receive upon the voluntary or
involuntary liquidation, dissolution or winding-up of
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this the corporation, which may be different for including whether such rights
shall be limited or participating with respect to shares of any other class or
classes, or any other series, of capital stock upon the voluntary and or
involuntary liquidation, dissolution or winding up, but the amount payable to
the Holders or any particular of the corporation;
(f) whether or not the shares of each such series upon any voluntary
liquidation, dissolution or winding up shall always be equal shall be subject to
the operation of a retirement or sinking fund and, if so, then current
redemption price for shares of that series;
(d) The terms and amount of any sinking fund provided for the purchase or
redemption of shares of the particular series except to the extent fixed in
paragraph 3 below; and the terms and provisions relative to the operation of
such retirement or sinking fund;
(e) The conversion, participating or(g) whether or not the shares of each
such series shall be convertible into, or exchangeable for, shares of any other
class or classes or any other series of capital stock, or other securities,
whether or not issued by the corporation, and if so convertible or exchangeable,
the price or prices or the rate or rates of conversion or exchange, the method,
if any, of adjusting any such price or prices or rate or rates and whether such
shares shall be convertible or exchangeable at the election of the corporation
or the holders of such shares;
(h) the limitations and restrictions, if any, to be effective while any
shares of each such series are outstanding, upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of, the Common Stock or any other class or
classes or any other series of capital stock of the corporation ranking junior
to the shares of such series either as to dividends or upon liquidation,
dissolution or winding-up of the corporation;
(i) the conditions or restrictions, if any, to be effective while any
shares of each such series are outstanding, upon the creation of indebtedness of
the corporation or upon the issuance of any additional stock (including
additional shares of such series or of any other class) ranking on a parity with
or prior to the shares of such series as to dividends or distribution of assets
upon liquidation, dissolution or winding-up of the corporation; and
(j) any other preference, relative, participating, optional or other
special rights, and the qualifications, limitations (including refunding
limitations) or restrictions thereof, if any, of the particular as shall not be
inconsistent with law, this Article FOURTH or any amendment creating such
series.
Each share of the Common Stock shall be equal in all respects to every
other share of the Common Stock. The Common Stock shall be subject to the
express terms of the Preferred Stock and any series thereof.
2. DIVIDENDS ON PREFERRED STOCK.
The holders No holder of outstanding shares of each any series of the
Preferred Stock shall be entitled in preference to the holders of the Common
Stock to receive, but only when and as declared by the Board of Directors, out
of funds legally available for the payment of dividends, dividends, at the
annual dividend rate for the particular series fixed therefor, payable quarterly
on January 15, April 15, July 15, and October 15 of each year. The dividends on
all shares of all series of Preferred Stock shall be cumulative. No dividends
shall be declared on any series of the Preferred Stock for any dividend period
unless there shall be declared on all shares of all series of the Preferred
Stock, at the time outstanding, dividends in the same proportion to the sum
which would be payable on said shares if all dividends were paid in full. In
case of all shares of each particular series, the dividends on shares of such
series shall be cumulative,
(a) if issued on or prior to the record date for the first dividend on the
shares of such series, then from the date for the particular series fixed
therefor as herein provided;
(b) if issued during the period commencing after the record date for a dividend
on shares of such series and terminating at the close of the payment date for
such dividend, then from such dividend payment date; or
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(c) otherwise from the dividend payment date next preceding the date of issue of
such shares;
so that unless dividends on all outstanding shares of each series of the
Preferred Stock shall have been paid or declared and set apart for payment for
all past dividend periods, no dividends shall be paid or declared and no other
distribution shall be made (other than dividends or distributions payable in
Common Stock) on the Common Stock, and no Common Stock shall be Purchased or
otherwise acquired for value by this corporation. Any accumulation of dividends
on the Preferred Stock shall not bear interest. The holders of the Preferred
Stock of any series shall not be entitled to receive any dividends thereon other
than the dividends referred to in this provided therefor pursuant to paragraph 2
1 hereof.
3. REDEMPTION AND REPURCHASE OF PREFERRED STOCK.
This corporation, by action of its Board of Directors, may redeem the whole
or any part of any series of the Preferred Stock, at any tine or from time to
time (subject to any terms of a particular series restricting refunding or
redemption thereof at the redemption price of the shares of the particular
series fixed therefor as herein provided, which shall include unpaid accumulated
dividends, if any, to the date of such redemption. Notice of every such
redemption shall, at least thirty (30) days and not more than ninety (90) days
prior to the date fixed for such redemption, be mailed to the holders of record
of the shares of the Preferred Stock so to be redeemed, at their respective
addresses as the same shall appear on the books of this corporation; but, no
failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
the Preferred Stock so to be redeemed. In case of the redemption of a part only
of any series of the Preferred Stock at the time outstanding, this corporation
shall select by lot or pro rata, in such manner as the Board of Directors may
determine, the shares so to be redeemed. The Board of Directors shall have full
power and authority, subject to time limitations and provisions herein
contained, to prescribe the manner in which and the terms and conditions upon
which the If, on or before the redemption date with respect to any shares of any
series of the Preferred Stock shall be redeemed from time to time. If on or
before the that are subject to redemption date specified in such notice all
funds necessary for such redemption shall have been set apart by, as fixed or
determined pursuant to paragraph 1 hereof, this corporation, separate and aside
from its other funds, shall deposit with a bank, trust company or other
financial institution monies necessary for the account of the holders of the
shares to be redeemed, so as to De and continue to be available therefor
redemption of such shares, then, notwithstanding that any certificate for such
shares so called for redemption redeemed shall not have been surrendered for
cancellation, from and after the date fixed for such redemption, the shares
represented thereby shall no longer be deemed outstanding, and date, all rights
and preferences with respect to such shares so called for redemption redeemed
shall forthwith on such redemption date cease and terminate, except only the
right of the holders thereof to receive, out of the funds monies so set apart
deposited, the amount payable upon redemption thereof, without interest,
provided, however, that this corporation may, after giving notice of any such
redemption as hereinbefore provided or after giving to the bank or trust company
hereinafter referred to irrevocable authorization to give such notice, and, at
any time prior to the reception date specified in such notice, deposit, for the
account of the holders of the shares to be redeemed, funds necessary for such
redemption with a bank or trust company doing business in the Borough of
Manhattan, City and State of New York, designated in such notice of reception,
and, upon such deposit all shares with respect to which such deposit shall have
been made shall no longer be deemed to be outstanding, and all rights and
preferences with respect to such shares so called for redemption shall forthwith
cease and terminate, except only the right of the holders thereof to receive,
out of the funds so deposited, from and after the date of such deposit, the
amount payable upon the redemption thereof, without interest, provided further
that notice of such right shall be included in the notice of redemption
hereinabove provided for. Any monies of such shares, without interest. Any such
monies so deposited by this corporation pursuant to this paragraph 3 and
unclaimed at the end of six (6) years from the date fixed for such redemption
date shall be repaid to this corporation upon its request, after which repayment
the holders of the shares so called for redemption shall look only to this
corporation for the payment thereof.
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If at any time this corporation shall have failed to pay dividends in full
on any outstanding shares of the Preferred Stock, thereafter and until dividends
in full on all shares of the Preferred Stock outstanding shall have been paid,
or declared and set apart for payment, for all past quarterly dividend periods,
this corporation shall not redeem any shares of the Preferred Stock (except by
redemption of all of the shares of the Preferred Stock outstanding) and shall
not purchase or otherwise acquire for value any shares of the Preferred Stock or
make any payment, or set aside any funds for payment, into a sinking fund, if
any, for the purchase or redemption of any shares of Preferred Stock unless (1)
approval for such purchase, partial redemption or other acquisition is obtained
from the Securities and Exchange Commission under the provisions of the Public
Utility Holding Company Act of 1935 or by any successor commission or regulatory
authority of the United States of America having jurisdiction in the premises
(so long as this corporation is subject to said Act or commission or regulatory
authority), and (ii) such purchase, partial reception or other acquisition is in
accordance with an offer (which may vary as to the terms offered with respect to
shares of different series of the Preferred Stock) made in writing to all
holders of shares of the Preferred Stock. Nothing herein contained, except for
time foregoing, shall limit any legal right of this corporation to purchase or
otherwise acquire any shares of the Preferred Stock to the extent permitted by
law. All or any shares of Preferred Stock at any time redeemed, purchased or
otherwise acquired by this corporation may thereafter, in the discretion of the
Board of Directors, be reissued or otherwise disposed of at any time or from
time to time, to the extent and in the manner now or hereafter permitted by law,
subject, however, to the limitations herein imposed upon the issue of shares of
Preferred Stock.
4. PREFERENCE ON LIQUIDATION, ETC. OF PREFERRED STOCK.
Before any amount shall be paid to, or any assets distributed among, the holders
of the Common Stock upon any liquidation, dissolution or winding up of this
corporation, and after paying or providing for the payment of all creditors of
this corporation, the holders of all shares of each series of the Preferred
Stock at the time outstanding shall be entitled to be paid in cash the amount
for the shares of fee particular series fixed therefor as provided in the
resolutions creating such series, which shall include unpaid accumulated
dividends, if any, to the date of such distribution. But no payments on account
of such distributive amounts shall be made to the holders of shares of any
series of the Preferred Stock unless there shall be paid at the same time to the
holders of shares of each other series of the Preferred Stock at the time
outstanding, distributive amounts in the same proportion to the full
distributive amounts to which they are respectively entitled as herein provided.
The holders of the Preferred Stock of any series shall not be entitled to
receive any amounts with respect thereto upon any liquidation, dissolution or
winding up of this corporation other than amounts referred to in this paragraph.
Neither the consolidation or merger of this corporation with or into any other
corporation or corporations, nor the sale or transfer by the corporation of all
or any part of its assets, shall be deemed to be a liquidation, dissolution or
winding up of this corporation for the purposes of this paragraph.
5 4. DIVIDENDS ON COMMON STOCK.
Whenever the full dividends on the shares of all Subject to the rights and
preferences of each series of the Preferred Stock at the time outstanding for
all past quarterly dividend periods shall have been paid or declared and set
apart for payment and after all amounts then or theretofore required to be set
apart or applied in respect of any sinking fund, then, as determined pursuant to
paragraph 1 hereof, such dividends (payable in cash, stock or otherwise) as may
be determined by the Board of Directors may be declared and paid on the Common
Stock, but only out of funds legally available for the payment of such
dividends.
6. 5. DISTRIBUTIONS ON COMMON STOCK.
In the event of any liquidation, dissolution or winding up of this
corporation, all assets and funds of this corporation remaining after paying or
providing for the payment of all creditors of this corporation and after paying
or providing for the payment to the holders or shares or all series of the
Preferred Stock of the fuel distributive amounts to which they are respectively
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entitled, as herein provided, shall be divided among and paid to the holders of
the Common Stock according to their respective shares.
7. DESIGNATION AND TERMS OF SERIES.
The Board of Directors of this corporation may, at any time or from time to
time, within the then total authorized number of shares of the Preferred Stock
of all series, increase the authorization number of shares of any series of the
Preferred Stock, establish or reestablish any unissued shares of Preferred Stock
as shares of the Preferred Stock of any series or as Preferred Stock which is
not part of a then existing series, create one or more additional series of the
Preferred Stock, fix the authorization number of shares of any series (which
number of shares shall be subject to change from time to time by like action
except where the amendment creating the series otherwise provides), and fix the
designations and the terms of any series of the Preferred Stock in the respects
in which the shares of any series may vary from the shares of other series of
the Preferred Stock, as provided in paragraph 1 hereof.
8. RESTRICTIONS ON CERTAIN CORPORATE ACTION.
(A) So long as any shares of the Preferred Stock are outstanding, this
corporation shall not, without the consent (given in writing or by vote at a
meeting called for that purpose) of the holders of at least two-thirds of the
total number of shares of the Preferred Stock then outstanding
(a) create or authorize any shares of any class of stock ranking prior to the
Preferred Stock or create or authorize any security convertible into shares of
any such stock, or issue any shares of any class of stock ranking prior to the
Preferred Stock more than twelve (12) months after the date as of which this
corporation was empowered to create or authorize such prior ranking stock.
(Whenever reference is made to shares "ranking prior to the Preferred Stock",
such reference shall mean all shares of this corporation in respect of which the
rights of the holders thereof either as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of this corporation are given preference over the
rights of the holders of Preferred Stock; whenever reference is made to shares
"ranking on a parity with the Preferred Stock", such reference shall mean and
include all shares of this corporation in respect of which the rights of the
holders thereof either as to the payment of dividends or as to distributions, is
in the event of a voluntary or involuntary liquidation, dissolution or winding
up of the corporation rank on parity (except as to the amounts fixed therefor)
with the rights of the holders of Preferred Stock); or
(b) amend, alter or repeal any of the powers, preferences or special rights of
the Preferred Stock then outstanding so as to affect adversely any such powers,
preferences or special rights; provided, however, that if any such amendment,
alteration or repeal affects adversely the powers, preferences or special rights
of one or more, but not all, series of the Preferred Stock at the time
outstanding, only the consent of the holders of at least two-thirds of the total
number of outstanding shares of all series so affected shall be required; and
provided, further, that an amendment to increase or decrease the authorized
number of shares of Preferred Stock or to create or authorize, or increase or
decrease the authorized number of shares of, any class of stock ranking on a
parity with the outstanding shares of Preferred Stock shall not be deemed to
adversely affect the powers, preferences or special rights of the holders of
Preferred Stock or of any series thereof.
This subparagraph (A) shall not apply to, and the class or series vote
herein specified shall not be required for approval of, any action of the types
described in clause (a) or (b) which is a part of or effected in connection with
a consolidation of merger approved by the holders of Preferred Stock or which,
under clause (b) of subparagraph (B) of this paragraph 8, does not require their
approval.
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(B) So long as any shares of the Preferred Stock are outstanding, this
corporation shall not, without the consent (given in writing or by vote at a
meeting called for that purpose) of the holders of a majority of the total
number of shares of the Preferred Stock then outstanding:
(a) issue or assume, not permit any subsidiary to issue or assume, any unsecured
notes or other securities representing unsecured debt (other than debt
securities described in subclauses (i) and (ii) of this clause (a), unsecured
debt securities issued for the purpose of refunding or renewing outstanding
unsecured debt securities resulting in equal or longer maturities or for the
purpose of redeeming or otherwise retiring all outstanding shares of the
Preferred Stock), if, after giving effect to such issue or assumption, (i) the
total outstanding principal amount of all unsecured notes or other securities
representing unsecured debt of this corporation and its subsidiaries
consolidated would then thereby exceed 20% of the aggregate of all existing
secured debt of this corporation and its subsidiaries consolidated and the
capital stock, premiums thereon, and surplus of this corporation and its
subsidiaries consolidated at the end of any calendar month within a period of
four (4) consecutive calendar months immediately preceding the calendar month in
which such issue or assumption would be made, adjusted for any dividends or
distributions declared by, and any changes in capital or paid-in surplus of,
this corporation and its subsidiaries on a consolidated basis to and including
the date of the issue or assumption or (2) the total outstanding principal
amount of all unsecured notes or other securities representing unsecured debt of
this corporation and its subsidiaries consolidated with maturities of less than
10 years would then exceed 10% of such aggregate. For the purpose of this clause
(a), the payment due upon the maturity of unsecured debt which had an original
single maturity in excess of 10 years or the payment due upon the final maturity
of any unsecured serial debt which had original maturities in excess of 10 years
shall not be regarded as unsecured debt of a maturity of less than 10 years
until such payment shall be required to be made within 3 years.
(i) As used in clause (a), the term "unsecured debt" shall not include (x) any
debentures issued by this corporation under any indentures heretofore or
hereafter entered into by this corporation with any trustee, including any
amendments or supplements thereto, (y) inventory loans having maturities of not
more than twelve (12) months, and (z) accounts receivable loans; provided,
however, that the issuance of any such debentures and the incurrence of any such
loan obligations shall have been approved by the Securities and Exchange
Commission under the provisions of the Public Utility Holding Company Act of
1935 or by any successor commission or regulatory authority of the United States
of America having jurisdiction in the premises (so long as this corporation is
subject to said Act or commission or regulatory authority).
(ii) As used in clause (a), the term "secured debt" shall include the debentures
referred to in (i)(x) above, and all other forms of debt of this corporation and
its subsidiaries which are secured by their terms but shall not include the
loans specified in (i)(y) above.
(iii) As used in subclause (i)(z) above, "accounts receivable loans" shall mean
an amount of unsecured debt having maturities of not more than twelve (12)
months equal to the difference between (I) the highest amount of the aggregate
of billed but uncollected charges for delivered gas (net of reserves for bad
debts) and the charges for delivered but unbilled gas at the end of any calendar
month within the twelve (12) calendar months immediately preceding the calendar
month in which the issue or assumption of unsecured debt would be made, and (II)
the average amount of the aggregate of billed but uncollected charges for
delivered gas (net of reserves for bad debts) and the charges for delivered by
unbilled gas at the end of each calendar month of the six (6) consecutive
calendar month period from June through November in the immediately preceding
calendar year.
(b) merge or consolidate with or into any other corporation or corporations or
sell or otherwise dispose of all or substantially all of this corporation's
assets, unless such merger, consolidation, the issuance and assumption of all
securities to be issued or assumed in connection with any such merger or
consolidation, or such sale or other disposition of assets, shall have been
ordered, exempted, approved or permitted by the Securities and Exchange
Commission under the provisions of the Public Utility Holding Company Act of
1935 or by any successor commission or regulatory authority of the United States
of America having jurisdiction in the
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premises (so long as this corporation is subject to said Act or commission or
regulatory authority); or
(c) issue any additional snares, or reissue any reacquired shares, of Preferred
Stock or of any other class of stock ranking on a parity with the outstanding
shares of the Preferred Stock as to dividends or assets for any purpose other
than to redeem or otherwise retire an equal par amount or stated value of
Preferred Stock or of stock ranking prior to or on a parity with the Preferred
Stock as to dividends or assets at the time outstanding, unless:
(i) the consolidated gross income of this corporation and its subsidiaries for
any twelve (12) consecutive calendar months within a period of fifteen (15)
consecutive calendar months immediately preceding the calendar month of such
issuance is equal to at least one and one-half (1 1/2) times the aggregate of
the annual interest charges on the indebtedness of this corporation and its
subsidiaries consolidated (excluding interest charges on indebtedness to be
retired by the application of the proceeds from the issuance of such shares) and
the annual dividend requirements on all Preferred Stock (including dividend
requirements on any class of stock ranking prior to or on a parity with the
shares to be issued, as to dividends or assets), which will be outstanding
immediately after the issuance of such shares; and
(ii) the aggregate of the junior stock equity (as defined in paragraph 13
hereof) is at least equal to the aggregate amount payable upon any involuntary
liquidation, dissolution or winding up of this corporation with respect to all
shares of the Preferred Stock and all shares of stock, if any, ranking prior
thereto or.on parity therewith as to dividends or assets, which will De
outstanding immediately after the issuance of such shares of Preferred Stock or
Stock ranking on a parity therewith.
As used in subclause (i) of this clause (c), the term "consolidated gross income
of this corporation and its subsidiaries" shall mean the sum of the consolidated
net income of the corporation and its subsidiaries as determined by this
corporation in accordance with sound accounting practice plus amounts deducted
in the computation of such consolidated net income for interest charges on
indebtedness and for dividends paid or accrued on the Preferred Stock of this
corporation, and the term "indebtedness" shall mean all obligations, whether or
not represented by bonds, debentures or notes for the repayment of money
borrowed, all deferred obligations for the payment of the purchase price of
property purchased and all obligations assumed, but shall not include any
customers' deposits or employees' deposit accounts or employees' pension or
other accounts.
If during the period as of which consolidated gross income is to be determined
for the purpose set forth in subclause (i) of this clause (c), the amount
required to be charged for depreciation, depletion and amortization in the
determination of "Consolidated Income Available for Dividends" under the most
restrictive provisions of this corporation's indentures with trustees for
debentures (now outstanding or hereafter created) pursuant to which debentures
have been issued by this corporation, exceeds the amounts so charged on the
books of this corporation and its consolidated subsidiaries as reported in the
last annual officers' Certificates filed with such trustees, such excess shall
also be deducted in determining consolidated gross income of this corporation
and its subsidiaries.
(C) So long as any shares of the Preferred Stock are outstanding, this
corporation shall not declare any dividends or make any distributions, other
than dividends or distributions payable in Common Stock, to one holders of
shares of its Common Stock if after giving effect to such declaration or
distribution the capital of this corporation represented by its Common Stock as
would then be stated on its books of account, together with the consolidated
surplus of this corporation and its subsidiaries at the end of any calendar
month within a period of four (4) consecutive calendar months immediately
preceding the month in which such dividends or distributions are declared, shall
in the aggregate be less than the involuntary liquidating value of all shares of
its then outstanding Preferred Stock. For the purpose of this subparagraph, such
consolidated surplus of this corporation and its subsidiaries shall be adjusted
for any other dividends or distributions declared by, and changes in capital or
paid-in surplus of, this corporation and its subsidiaries on a consolidated
basis, to and including the date of such declaration.
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(D) As used in this Article FOURTH, the term "subsidiary" shall mean any
corporation a majority of the voting shares of which are at the time owned by
this corporation or by other subsidiaries of this corporation or by this
corporation and other subsidiaries of this corporation.
(E) As used in this paragraph 8 and in paragraph 13, the term "consolidated
surplus of this corporation and its subsidiaries" shall include capital surplus,
earned surplus and any other surplus of this corporation and its subsidiaries,
consolidated as determined by this corporation in accordance with sound
accounting practice. and subject to the rights and preferences of each series of
Preferred Stock, as determined pursuant to paragraph 1 hereof, all assets and
funds of this corporation remaining after paying or providing for the payment of
all creditors of this corporation shall be divided among and paid to the holders
of the Common Stock according to their respective shares.
9 6. PREEMPTIVE RIGHTS.
No holder of shares of any stock of this corporation of any class now or
hereafter authorized shall have any right as such holder to purchase, subscribe
for or otherwise acquire any shares of stock of this corporation of any class
now or hereafter authorized, or any securities convertible into or exchangeable
for any such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase or otherwise acquire any such shares, whether
such shares, certificates, securities, warrants or other instruments be unissued
or issued and thereafter acquired by this corporation and whether such shares
and other instruments be issued for cash, property, services, or by way of
dividends or otherwise.
10 7. VOTING RIGHTS.
(A) At all meetings of the stockholders of this corporation, the holders of
shares of Common Stock shall be entitled to one vote for each share of Common
Stock held by them respectively except as otherwise expressly provided herein.
The holders of shares of Preferred Stock shall have no right to vote and shall
not be entitled to notice of any meeting of stockholders of this corporation nor
to participate in any such meeting except as herein otherwise expressly provided
herein or in any amendment creating a series of Preferred Stock and except for
those purposes, if any, for which said rights cannot be denied or waived under
some mandatory provisions of law that shall be controlling.
(B) If and when dividends payable on If, and to the extent that, the shares of
any series of Preferred Stock shall be in default in an amount equivalent to or
exceeding four (4) full quarterly dividends on all are provided voting rights in
accordance with the provisions hereof, including the provision of such voting
rights in any amendment creating such series, each holder of shares of all such
series of the Preferred Stock then outstanding, and until all dividends then in
default shall have been paid or declared and set apart for payment, the holders
of all shares of all series of the Preferred Stock, voting as one class, shall
be entitled to elect additional directors in the smallest number necessary to
constitute a majority of the full Board of Directors, and the holders of shares
of Common Stock, voting separately as a class, shall continue to elect the
remaining directors of this corporation. While such default continues and the
majority of the Board of Directors is being elected by the holders of shares one
vote for each outstanding share of such series of Preferred Stock , the
remaining directors shall continue in office for the duration of the respective
terms for which they were elected and until their successors are elected by the
holders of shares of Common Stock and shall qualify. Each director elected by
vote of the holders of shares of Preferred Stock pursuant to the special right
to vote as a class shall hold office until the next succeeding annual meeting of
stockholders and until his or her successor shall be elected by the holders of
shares of Preferred Stock and shall qualify.
The division of directors into classes as provided in Article SIXTH shall not
apply to the directors elected by vote of the holders of shares of Preferred
Stock pursuant to the special right to vote as a class provided in this
subparagraph.
(C) If and when all dividends then in default on the shares of Preferred Stock
then outstanding shall be paid or declared and set apart for payment (and such
dividends shall be declared and paid out of any funds legally available therefor
as soon as reasonably practicable), the
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Preferred Stock shall thereupon be divested of any special right with respect to
the election of directors provided in subparagraph (B) hereof, and the voting
power of the holders of shares of Preferred Stock and the holders of shares of
Common Stock shall revert to the status existing before the occurrence of such
default, but always subject to the same provisions for vesting such special
rights in the Preferred Stock in case of further like default or defaults in
dividends thereon. Upon the termination of any such special right upon the
payment or setting apart for payment of all accumulated and defaulted dividends
on such Preferred Stock, the terms of office of all persons who may have been
elected directors of this corporation by vote of the holders of shares of
Preferred Stock, as a class, pursuant to such special rights, shall forthwith
terminate.
(D) In case of any vacancy in the office of a director occurring among the
directors elected by the holders of shares of Preferred Stock, as a class,
pursuant to the foregoing provisions of subparagraph (B) hereof, the remaining
directors elected by the holders of shares of Preferred Stock may elect, by
affirmative vote of a Majority thereof, or the remaining director so elected if
there be but one, a successor or successors to hold office for the unexpired
term of the director or directors whose place or places shall be vacant. This
special right shall likewise be divested if and when all dividends then in
default on the shares of Preferred Stock then outstanding shall be paid or
declared and set apart for payment (and such dividends shall be declared and
paid out of any funds legally available therefor as soon as reasonably
practicable); but always subject to the same provisions for granting to
directors elected by the holders of shares of Preferred Stock the aforesaid
right to elect directors to fill vacancies in case of further like default or
defaults in dividends on the shares of Preferred Stock and the election of
directors by the holders of shares of Preferred Stock.
(E) Whenever under the provisions of subparagraph (B) hereof the right shall
have accrued to the holders of shares of Preferred Stock to elect directors, the
Board of Directors shall call a special meeting of the holders of shares of
Preferred Stock for the election of such additional directors, such meeting to
be held not less than forty-five (45) days and not more than ninety (90) days
after the accrual of such right. At all meetings of stockholders held for the
purpose of electing directors during such times as the holders of shares of
Preferred Stock shall have the special right, voting separately as one class, to
elect directors pursuant to subparagraph (B) hereof, the presence in person or
by proxy of the holders of a majority of the outstanding shares of all series of
the Preferred Stock shall be required to constitute a quorum for the election of
directors by such class.
(F) Except when some mandatory provision of law shall be controlling or except
as otherwise provided in clause (b) of paragraph 8(A) hereof or, except as
regards the special rights of any series of the Preferred Stock as provided in
the amendment creating such series, whenever shares of two or more series of the
Preferred Stock are outstanding no particular series of the Preferred Stock
shall be entitled to vote as a separate series on any matter and all shares of
the Preferred Stock of all series shall be deemed to constitute but one class
for any purpose for which a vote of the stockholders of this corporation by
classes may now or hereafter be required. held by such holder.
11 8. RECLASSIFICATION, ETC.
From time to time, and without limitation of other rights and powers of
this corporation as provided by law, this corporation may reclassify its capital
stock and may create or authorize one or more classes or kinds of stock ranking
prior to or on a parity with or subordinate to the Preferred Stock or may
increase the authorized amount of the Preferred Stock or of the Common Stock or
of any other class of stock of this corporation or may amend, alter, change or
repeal any of the rights, privileges, terms and conditions of shares of the
Preferred Stock or of any series thereof then outstanding or of shares of the
Common Stock or of any other class of stock of this corporation, upon such vote,
given at a meeting called for that purpose, of its stockholders then entitled to
vote thereon as may be provided by law; provided that the consent of the holders
of shares of the Preferred Stock (or of any series thereof) required by the
provisions of paragraph 8 hereof any amendment creating any series of Preferred
Stock or by applicable law, if any such consent be so required, shall have been
obtained; and provided further that the rights, privileges, terms and conditions
of shares of Common Stock shall not be
B-10
<PAGE> 43
subject to amendment, alteration, change or repeal without such vote (given by
written consent, or by vote at a meeting called for that purpose), of the
holders of Common Stock as may be provided by law).
12 9. CONSIDERATION FOR SHARES.
To the extent permitted by law, this corporation may, at any time, and from
time to time, issue and dispose of any of the authorized and unissued shares of
the Preferred Stock and Common Stock for such consideration as may be fixed by
the Board of Directors, or as may be determined in accordance with a general
formula established by the Board of Directors, or at not less than such minimum
consideration as the Board of Directors may authorize.
13. DIVIDEND RESTRICTION.
So long as any shares of the Preferred Stock shall be outstanding, this
corporation shall not declare any dividends or make any distributions in respect
of outstanding shares of any stock of this corporation ranking junior to the
Preferred Stock as to dividends or assets (in this paragraph called "junior
stock"), other than dividends in shares of junior stock, or purchase or
otherwise acquire for value any outstanding shares of junior stock except in
exchange for or with the proceeds of other junior stock (each such dividend,
distribution, purchase or acquisition being in this paragraph called a
"dividend") in contravention of the following:
(a) If and so long as the junior stock equity (as defined herein) as the result
of a dividend on the junior stock would become less than twenty percent (20%) of
total consolidated capitalization (as defined herein), this corporation shall
not declare such dividends in an amount which, together with all other dividends
on the junior stock declared within the year ending with and including the date
on which such dividend is declared, exceeds fifty percent (50%) of the
consolidated net income of this corporation and its consolidated subsidiaries
available for dividends on the junior stock for any period of twelve (12)
consecutive calendar months within a period of fifteen (15) consecutive calendar
months immediately preceding the calendar month in which such dividends are
declared, except in an amount not exceeding the aggregate of dividends on the
junior stock which under the restrictions set forth above in this subparagraph
(a) could have been, and have not been, declared; and
(b) If and so long as the junior stock equity as the result of a dividend on the
junior stock would become less than twenty-five percent (25%) but not less than
twenty percent (20%) of total consolidated capitalization, this corporation
shall not declare dividends on the junior stock in an amount which, together
with all other dividends on the junior stock declared within the year ending
with and including the date on which such dividend is declared, exceeds
seventy-five percent (75%) of the consolidated net income of this corporation
and its consolidated subsidiaries available for dividends on the junior stock
for any period of twelve (12) consecutive calendar months within a period of
fifteen (15) consecutive calendar months immediately preceding the calendar
months in which such dividends are declared, except in an amount not exceeding
the aggregate of dividends on the junior stock which under the restrictions set
forth above in subparagraph (a) of this paragraph and in this subparagraph (b)
could have been, and have not been, declared.
For the purposes of this Article FOURTH, "junior stock equity" shall mean the
aggregate of the par value of, or stated capital represented by, the outstanding
shares of junior stock then carried on the books of this corporation and
consolidated surplus of this corporation and it subsidiaries, less (i) the
excess, if any, of the aggregate amount payable on involuntary liquidation of
this corporation upon all outstanding shares of the Preferred Stock of this
corporation of all classes over the sum of (I) the aggregate par value of such
shares and (II) any premium thereon; (ii) any amounts on the books of this
corporation and its consolidated subsidiaries known, or estimated if not known,
to represent the excess, if any, of recorded value over original cost or other
recorded basis required by regulatory authorities of used or useful utility
plant; and (iii) any intangible items set forth on the asset side of the
consolidated balance sheet of this corporation and its consolidated subsidiaries
in accordance with generally accepted accounting principles, such as unamortized
debt discount and expense; provided, however, that no deduction shall be
required to be made in respect of items referred to in
B-11
<PAGE> 44
clauses (ii) and (iii) of this paragraph in cases in which such items are being
amortized or are provided for, or are being provided for, by reserves.
For the purposes of this Article FOURTH, "total consolidated capitalization"
shall mean the aggregate of (i) the principal amount of all outstanding
indebtedness of this corporation and its consolidated subsidiaries maturing more
than twelve (12) months after the date of issue or assumption thereof; and (ii)
the par value of, or stated capital represented by, the outstanding shares of
all classes of the capital stock of this corporation and its subsidiaries
consolidated, plus premiums on such stock and the consolidated surplus of this
corporation and its subsidiaries, less any amounts required to be deducted
pursuant to clause (ii) and (iii) the immediately preceding paragraph of this
paragraph in the determination of junior stock equity.
For the purposes of this paragraph 13 and paragraph 8, "junior stock equity" and
"total consolidated capitalization" shall be as of the date on which the
dividend or distribution is declared on or which the issue or reissue of capital
stock (to which paragraphs 13 and 8 relate) would occur, except, however,
consolidated surplus of this corporation and its subsidiaries included therein
shall be the amount thereof at the end of any calendar month within a period of
four (4) consecutive calendar months immediately preceding the calendar month in
which such dividend or distribution is declared or such issue or reissue of
capital stock would occur, adjusted, as applicable, for all dividends or
distributions declared and issues or reissues of capital stock by this
corporation and its subsidiaries on a consolidated basis subsequent to the date
such consolidated surplus of this corporation and its subsidiaries is
determined.
CUMULATIVE PREFERRED STOCK, 9.205 SERIES
The shares of Preferred Stock are hereby divided to create a series of Preferred
Stock, and it is hereby determined that such series shall consist of 1,200,000
shares, $25 par value, which shall have the following designation, relative
rights, preferences and limitations:
(a) The distinctive serial designation of the series is Cumulative Preferred
Stock, 9.20% Series ("9.20% Series")
(b) The annual dividend rate for the 9.20% Series is $2.30 per share per annum
payable quarterly on July 15, October 15, January 15 and April 15 of each year,
the first dividend date to be July 15, 1976, for the period commencing June 3,
1976, and such dividends to be cumulative from June 3, 1976.
(c) The 9.20% Series shall be subject to redemption in the manner provided in
the Certificate of Incorporation at a redemption price per share (i) of $27.30
if the date of redemption is on or prior to April 14, 1981, (ii) of $26.73 if
the date of redemption is after that date but on or prior to April 14, 1986,
(iii) of $26.15 if the date of redemption is after the last mentioned date but
on or prior to April 14, 1991 and (iv) $25.58 thereafter, in each case plus
unpaid accumulated dividends to the date of redemption; provided, however, that
the 9.20% Series shall not be redeemable on or prior to April 14, 1981, directly
or indirectly, as a part of, or in anticipation of, any refunding operation
involving the incurring of indebtedness or the issuance of Preferred Stock
ranking equally with or prior to the 9.20% Series as to dividends or on
liquidation, if the interest on such indebtedness or the dividends on such
Preferred Stock have an effective annual interest or dividend cost to the
corporation (computed in accordance with generally accepted financial practice)
of less than 9.50413%, the effective dividend cost to the corporation of the
9.20% Series.
(d) The 9.20% Series shall be entitled to receive, upon involuntary liquidation,
dissolution or winding up of this corporation, $25 per share plus accumulated
and unpaid dividends, if any.
(e) The 9.20% Series shall be subject to redemption as and for a sinking fund as
follows:
On or before April 14 in each year, commencing with the twelve-month period
April 15, 1981 through April 14, 1982 and on or before each April 14 thereafter
(each such period being hereinafter referred to as a "9.20% Series Sinking Fund
Redemption Period" and each such April 14 being hereinafter referred to as a
"9.20% Series Sinking Fund Redemption Date"), for so long as any shares of the
9.20% Series shall remain outstanding, the corporation shall redeem, out of
funds legally available therefor and otherwise in the manner provided with
respect to the
B-12
<PAGE> 45
corporation's Preferred Stock, cumulative, $25 par value, in the Certificate of
Incorporation 60,000 shares of the 9.20% Series (or the number of shares then
outstanding if less than 60,000) at the sinking fund redemption price of $25 per
share plus, as to each share so redeemed, an amount equivalent to the
accumulated and unpaid dividends thereon, if any, to the date of redemption (the
obligation of the corporation so to redeem the shares of the 9.20% Series being
hereinafter referred to as the "9.20% Series Sinking Fund Obligation"). The
9.20% Series Sinking Fund Obligation shall be cumulative. If on any 9.20% Series
Sinking Fund Redemption Date the corporation shall not have redeemed 60,000
shares during the previous 9.20% Series Sinking Fund Redemption Period and the
corporation shall not have funds legally available therefor sufficient to redeem
the full number of shares required to be redeemed on or before that date, the
9.20% Series Sinking Fund Redemption Period and each successive 9.20% Series
Sinking Fund Redemption Date until such shares shall have been redeemed.
Whenever on any 9.20% Series Sinking Fund Redemption Date the funds of the
corporation legally available for the satisfaction of the 9.20% Series Sinking
Fund Obligation and all other sinking fund and similar obligations then existing
with respect to any other class or series of its stock ranking on a parity as to
dividends or assets with the 9.20% Series (such Obligation and obligations
collectively being hereinafter referred to as the "Total Sinking Fund
Obligation") are insufficient to permit the corporation to satisfy fully its
Total Sinking Fund Obligation on that date, the corporation shall apply to the
satisfaction of its 9.20% Series Sinking Fund Obligation on that date that
proportion of such legally available funds which is equal to the ratio of such
9.20% Series Sinking Fund Obligation to such Total Sinking Fund Obligation. In
addition to the 9.20% Series Sinking Fund Obligation, the corporation shall have
the option, which shall be noncumulative, to redeem, upon authorization of the
Board of Directors and otherwise in the manner provided with respect to the
corporation's Preferred Stock, cumulative, $25 par value, in the Certificate of
Incorporation on each 9.20% Series Sinking Fund Redemption Date, at the
aforesaid sinking fund redemption price, up to 60,000 additional shares of the
9.20% Series. The corporation shall be entitled, at its election, to credit
against its 9.20% Series Sinking Fund Obligation for any 9.20% Series Sinking
Fund Redemption Period or on any 9.20% Series Sinking Fund Redemption Date any
shares of the 9.20% Series (including shares of the 9.20% Series optionally
redeemed pursuant to this paragraph (e)) theretofore redeemed, other than shares
of the 9.20% Series redeemed pursuant to the 9.20% Series Sinking Fund
Obligation, purchased or otherwise acquired and not previously credited against
the 9.20% Series Sinking Fund Obligation; and
(f) The 9.20% Series shall have such other relative rights, preferences and
limitations as are set forth in the Certificate of Incorporation.
(k) "Subsidiary" shall have the meaning given that term in subparagraph (D) of
paragraph 8 of this Article FOURTH hereof SIXTH: The business and affairs of
this corporation shall be managed by a Board of Directors. The number of
directors (exclusive of directors, if any, to be elected by the holders of
paragraph 10 of Article FOURTH hereof) shall be not less than 7 nor more than
11, the exact number of directors to be determined from time to time by a
resolution adopted by the affirmative vote of a majority of the entire Board of
Directors.
The directors of this corporation shall be divided into three classes,
designated Class I, Class II and Class III, respectively. Each class shall be as
nearly equal in number as may be possible. At the 1985 annual meeting of
stockholders, Class I directors shall be elected for a one-year term, Class II
directors for a two-year term and Class III directors for a three-year term. At
each succeeding annual meeting of stockholders beginning in 1986, the successors
to the class of directors whose term expires at that annual meeting shall be
elected for a three-year term, and successors to directors of any other class,
including directors elected in any such class by the Board of Directors to fill
one or more vacancies or newly-created directorships, shall be elected for the
remaining term of that class. If the number of directors is changed by
resolution of the Board of Directors pursuant to this Article SIXTH, any
increase or decrease shall be apportioned by the Board among the classes so as
to maintain the number of directors in each class as nearly as possible, but in
no case shall a decrease in the number of directors shorten the term of any
incumbent director.
B-13
<PAGE> 46
Any newly-created directorship resulting from an increase in the number of
directors by resolution of the Board pursuant to this Article SIXTH may be
filled by a majority of the directors then in office. Any vacancy on the Board
of Directors occurring for any reason, other than an increase in the number of
directors as aforesaid, may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
Directors of any class shall hold office until the annual meeting of the year in
which the term of such class expires or, in the case of directors elected by the
Board of Directors to fill vacancies or newly-created directorships, until the
next annual meeting following their election, and until their respective meeting
following their election, and until their respective successors shall be elected
and shall qualify, subject to prior death, resignation, retirement,
disqualification or removal from office.
II. Changes to paragraph 4(k) of Article FIFTH of the Restated Certificate
of Incorporation of National Fuel Gas Company:
(k) "Subsidiary" shall have the meaning given that term in subparagraph (d)
of paragraph 8 of this Article FOURTH hereof mean any corporation a majority of
the voting shares of which are at the time owned by this corporation or by other
subsidiaries of this corporation or by this corporation and other subsidiaries
of this corporation.
III. Changes to the first paragraph of Article SIXTH of the Restated
Certificate of Incorporation of National Fuel Gas Company:
The business and affairs of this corporation shall be managed by a Board of
Directors. The number of directors (exclusive of directors, if any, to be
elected by holders of shares of Preferred Stock, voting separately as a class,
pursuant to paragraph 10 of Article FOURTH hereof voting separately from the
Common Stock as provided in any amendment creating any series of Preferred
Stock) shall be not less than 7 nor more than 11, the exact number of directors
to be determined from time to time by a resolution adopted by the affirmative
vote of a majority of the entire Board of Directors.
IV. Changes to the last paragraph of Article SIXTH of the Restated
Certificate of Incorporation of National Fuel Gas Company:
Notwithstanding the foregoing and except as otherwise provided by law,
whenever the holders of shares of Preferred Stock shall have the right, voting
separately as a class from the Common Stock, to elect directors of this
corporation, the number, election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms and
provisions of this Certificate of Incorporation applicable thereto, including
paragraph 10 of Article FOURTH hereof any amendment creating any series of
Preferred Stock; and such directors so elected shall not be divided into classes
pursuant to this Article SIXTH. During the prescribed term of office of any such
directors, the Board of Directors shall consist of such directors in addition to
the number of directors determined as provided in the first paragraph of this
Article SIXTH.
B-14
<PAGE> 47
PROXY
NATIONAL FUEL GAS COMPANY
PROXY/VOTING INSTRUCTION CARD SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 26, 1998
PLACE: MANDALAY BEACH RESORT, OXNARD, CALIFORNIA
The undersigned hereby appoints B.J. Kennedy, P.C. Ackerman, and A.M. Cellino,
and each or any of them, Proxies with full power of substitution and revocation
in each, to vote all the shares of Common Stock held of record by the
undersigned on December 29, 1997, at the Annual Meeting of Stockholders of
National Fuel Gas Company or at any adjournment of the meeting, on each of the
items on the reverse side and in accordance with the directions given there,
and, in their discretion, on all other matters that may properly come before the
Annual Meeting or any adjournment thereof. FAILURE TO WITHHOLD AUTHORITY TO VOTE
FOR THE ELECTION OF ANY NOMINEE FOR DIRECTOR SHALL CONFER ON THE PROXIES
AUTHORITY TO VOTE FOR SUCH NOMINEE'S ELECTION. FAILURE TO VOTE ON ANY OTHER
MATTER SHALL CONFER ON THE PROXIES AUTHORITY TO VOTE WITH RESPECT TO EACH SUCH
MATTER. THIS PROXY MAY BE REVOKED WITH THE SECRETARY OF THE MEETING AS DESCRIBED
ON THE FIRST PAGE OF THE ENCLOSED PROXY STATEMENT.
This card also provides confidential voting instructions for shares held in the
National Fuel Gas Company Employee Stock Ownership Plans, the National Fuel Gas
Company Employees' Thrift Plan, and the National Fuel Gas Company Tax-Deferred
Savings Plans. If you are a participant in any of these plans and have shares of
the Common Stock of the Company allocated to your account under these plans,
please read the following authorization to the Trustees of those plans as to the
voting of such shares.
TRUSTEES' AUTHORIZATION. The undersigned authorizes The Chase Manhattan Bank,
N.A. as Trustee of the National Fuel Gas Company Employee Stock Ownership Plans
and the National Fuel Gas Company Employees' Thrift Plan and/or authorizes
Vanguard Fiduciary Trust Company as Trustee of the National Fuel Gas Company
Tax-Deferred Savings Plans to vote all shares of the Common Stock of the Company
allocated to the undersigned's account under such plan(s) (as shown on the
reverse side) at the Annual Meeting, or at any adjournment thereof, in
accordance with the instructions on the reverse side.
THE TRUSTEE(S) MAY NOT VOTE THE SHARES HELD FOR YOUR ACCOUNT(S) IF YOU DO NOT
PROVIDE VOTING INSTRUCTIONS. EMPLOYEE PARTICIPANTS IN THE PLAN(S) MAY GIVE
VOTING INSTRUCTIONS BY TELEPHONE AS DESCRIBED ON THE REVERSE SIDE OF THIS VOTING
INSTRUCTION CARD. YOUR DIRECTIONS TO VOTE SHARES HELD IN THE PLAN(S) WILL BE
KEPT CONFIDENTIAL. YOU MAY REVOKE YOUR INSTRUCTIONS BY NOTICE TO THE TRUSTEE(S)
AS DESCRIBED ON THE FIRST PAGE OF THE ENCLOSED PROXY STATEMENT.
THIS PROXY/VOTING INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Mark, sign and date your proxy/card and return it promptly in the enclosed
envelope.
OR
2. Call toll free 1-800-840-1208 on a Touch Tone telephone and follow the
instructions found on the reverse side.
A majority of shareholders must vote in order for the Annual Meeting to be
held as scheduled on February 26, 1998.
PLEASE VOTE
<PAGE> 48
Please mark
your votes as
indicated in
this example. [X]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR ITEMS 1, 2, 3 AND 4.
IF YOU ARE A NATIONAL FUEL GAS COMPANY EMPLOYEE BENEFIT PLAN PARTICIPANT, THIS
VOTING INSTRUCTION CARD INSTRUCTS THE TRUSTEE(S) HOW TO VOTE YOUR SHARES WITHIN
THE BENEFIT PLANS. IF NO INSTRUCTIONS ARE GIVEN, YOUR SHARES MAY NOT BE VOTED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITEMS 1,2, 3 AND 4.
Item 1 -- Election of the following nominees as Directors:
For three-year terms which expire in 2001 --
01) P.C. Ackerman
02) J.V. Glynn
03) B.S. Lee
WITHHOLD for the following only. Write names(s) below.
FOR
all nominees WITHHOLD
(except as marked for all
to the left) nominees
[ ] [ ]
Item 2 -- Appointment of independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 3 -- Approval of Amendment of the Restated Certificate of
Incorporation to increase the amount of authorized Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 4 -- Approval of Amendment of the Restated Certificate of Incorporation to
revise the provisions relating to Preferred Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
WILL ATTEND MEETING
***IF YOU WISH TO VOTE BY TELEPHONE,
PLEASE READ THE INSTRUCTIONS BELOW***
(Signature of Stockholder(s))___________________________ Dated: ___, 1998
Please sign your name as it appears on this proxy/voting instruction card and
return the completed card in the enclosed envelope. When signing as an attorney,
executor, administrator, trustee, guardian or other representative, please give
title as such. If signer is a corporation, please sign full corporate name by
duly authorized officer and attach corporate seal. For joint accounts, each
joint owner should sign.
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE AND READ THE REVERSE SIDE
HELP US SAVE MONEY -- VOTE BY TELEPHONE
Your telephone vote authorizes the named proxies/trustees to vote your shares in
the same manner as if you marked, signed and returned your proxy card.
- - On a Touch Tone Telephone call toll free 1-800-840-1208 -- 24 hours per day --
7 days a week.
- - You will be asked to enter a Control Number, which is located in the box in
the lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL proposals: Press
1 now. If you wish to vote on each proposal separately, press 0 now.
WHEN YOU PRESS 1, YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED. END OF
CALL.
OPTION 2: If you choose to vote on each proposal separately, press 0 now and
you will hear these instructions.
Proposal 1: To vote FOR ALL nominees, press 1; To WITHHOLD FOR ALL nominees,
press 9;
TO WITHHOLD FOR AN INDIVIDUAL nominee, press 0.
If you press 0, enter the two digit number that precedes the
nominee(s) for whom you withhold your vote; then press 0.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 4: To vote FOR, press 1; AGAINST, press 9, ABSTAIN, press 0.
YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED. END OF CALL.
IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY/VOTING
INSTRUCTION CARD.
THANK YOU FOR VOTING.
<PAGE> 49
NATIONAL FUEL GAS COMPANY PROXY
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS, FEBRUARY 26, 1998
PROXY: B.J. Kennedy, P.C. Ackerman, and A.M. Cellino, and each or any of them,
with full power of substitution and revocation in each, are hereby appointed by
the undersigned as Proxies to vote all the shares of Common Stock held of record
by the undersigned on December 29, 1997, at the Annual Meeting of Stockholders
of National Fuel Gas Company or at any adjournment of the meeting, on each of
the items below and in accordance with the directions given there, and, in their
discretion, on all other matters that may properly come before the Annual
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
Item 1 -- Election of the following nominees as Directors:
For three-year terms which expire in 2001 -- P.C. Ackerman, J.V. Glynn, B.S. Lee
FOR all nominees
(except as marked to the right)
[ ]
WITHHOLD
for all nominees
[ ]
WITHHOLD for the following only. Write name(s) below.
____________________________________________________
Item 2 -- Appointment of independent accountants
For Against Abstain
[ ] [ ] [ ]
Item 3 -- Approval of Amendment of the Restated Certificate of Incorporation to
increase the amount of authorized Common Stock.
For Against Abstain
[ ] [ ] [ ]
Item 4 -- Approval of Amendment of the Restated Certificate of Incorporation to
revise the provisions relating to Preferred Stock.
For Against Abstain
[ ] [ ] [ ]
(Please date and sign on reverse side and return promptly.)
<PAGE> 50
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO SUCH DIRECTIONS ARE GIVEN WITH RESPECT TO
ALL OR SOME ITEMS, AS TO SUCH ITEMS, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR ITEMS 1, 2, 3 AND 4. FAILURE TO WITHHOLD AUTHORITY TO VOTE FOR THE
ELECTION OF ANY NOMINEE FOR DIRECTOR SHALL CONFER ON THE PROXIES AUTHORITY TO
VOTE FOR SUCH NOMINEE'S ELECTION. FAILURE TO VOTE ON ANY OTHER MATTER SHALL
CONFER ON THE PROXIES AUTHORITY TO VOTE WITH RESPECT TO EACH SUCH MATTER.
THIS PROXY MAY BE REVOKED BY GIVING THE SECRETARY OF
THE MEETING WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENT PROXY AT ANY TIME BEFORE THE VOTING OF THE
SHARES REPRESENTED BY THIS PROXY, OR BY CASTING A
BALLOT.
___________________________________
Signature
___________________________________
Signature
Date ______________________________
Please sign your name as it appears on
this proxy, and return the completed
proxy in the enclosed envelope. When
signing as an attorney, executor,
administrator, trustee, guardian or
other representative, please give title
as such. If signer is a corporation,
please sign full corporate name by duly
authorized officer and attach corporate
seal. For joint accounts, each joint
owner should sign.
