NUI Corporation
[Letterhead]
December 26, 1997
Dear NUI Shareholder:
We are pleased to invite you to attend the Company's 1998 Annual
Meeting of Shareholders which will be held at 10:30 a.m. on Tuesday,
January 27, 1998 at the offices of Elizabethtown Gas, 1085 Morris
Avenue, Union, New Jersey.
At the Annual Meeting, we will consider the election of three
directors; the approval of amendments to increase the number of shares
available for issuance under the 1996 Stock Option and Stock Award
Plan and the 1996 Employee Stock Purchase Plan; and the appointment of
Arthur Andersen LLP as our independent public accountants for the
fiscal year ending September 30, 1998.
We will also review the Company's financial results for fiscal year
1997 and discuss our strategy for successfully addressing the
challenges presented by the deregulation of the energy industry.
Please remember to complete, sign and date the enclosed proxy card and
return it promptly in the postage prepaid envelope provided. Your vote
is important to us.
We look forward to seeing you on January 27.
Sincerely,
JOHN Kean JOHN KEAN, JR.
Chairman of the Board President and Chief Executive Officer<PAGE>
NUI Corporation
[Letterhead]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of NUI Corporation will be held at
10:30 a.m. on Tuesday, January 27, 1998 at the offices of
Elizabethtown Gas, 1085 Morris Avenue, Union, New Jersey, for the
following purposes:
1. To elect three (3) directors for three-year terms expiring in
2001;
2. To approve an amendment to the 1996 Stock Option and Stock Award
Plan, as described in the accompanying proxy statement.
3. To approve an amendment to the 1996 Employee Stock Purchase Plan,
as described in the accompanying proxy statement.
4. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for the fiscal year ending September 30, 1998; and
5. To transact such other business as may properly be brought before
the Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on December 12,
1997 shall be entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof.
By Order of the Board of Directors
JAMES R. VAN HORN
Vice President, General Counsel and
Secretary
December 26, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE
PROVIDED.
Convenient parking is available in the immediate vicinity for
shareholders attending the meeting. Directions to the meeting site
are included on the back cover.<PAGE>
NUI CORPORATION
550 Route 202-206, P.O. Box 760
Bedminster, New Jersey 07921-0760
PROXY STATEMENT
This Proxy Statement is being furnished to shareholders in
connection with the solicitation by the Board of Directors of NUI
Corporation, a New Jersey corporation (hereinafter referred to as the
"Company" or "NUI") of proxies to be voted at the Annual Meeting of
Shareholders to be held on Tuesday, January 27, 1998 and at any
adjournment or postponement thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying form of proxy are first being mailed to
shareholders on or about December 26, 1997.
Record Date, Shareholders Entitled to Vote and Vote Required
Only shareholders of record of the Company's Common Stock, no par
value (the "Common Stock"), at the close of business on December 12,
1997 are entitled to notice of and to vote at the Annual Meeting. As
of December 12, 1997 there were outstanding 12,512,353 shares of
Common Stock entitled to notice of and to vote at the Annual Meeting.
These shares were held by 6,783 shareholders of record.
The presence of a majority of the outstanding shares of Common
Stock, either in person or by proxy, is necessary to constitute a
quorum at the Annual Meeting. Each holder of Common Stock is entitled
to one vote for each share held. The Company's By-Laws require the
affirmative vote of a plurality of the votes cast at the Annual
Meeting for the election of directors. The affirmative vote of a
majority of the votes cast is required to approve the amendments to
the 1996 Stock Option and Stock Award Plan and the 1996 Employee Stock
Purchase Plan and to ratify the appointment of Arthur Andersen LLP as
the Company's independent public accountants.
Solicitation, Revocation and Voting of Proxies
This solicitation is made on behalf of the Board of Directors of
the Company. The cost of soliciting these proxies will be borne by the
Company. In addition to solicitation by mail, directors, officers and
employees of the Company and its subsidiaries may solicit proxies for
the Annual Meeting from the Company's shareholders personally or by
telephone or telegram without additional remuneration. The Company
will also provide persons, firms, banks and companies holding shares
in their names or in the names of nominees which are beneficially
owned by others, proxy materials for transmittal to such beneficial
owners and will reimburse such record owners for their expenses
related to such transmittal. The Company has retained the firm of D.F.
King & Co., Inc. to assist in the solicitation of proxies at a cost of
$5,500, plus expenses.
The form of proxy enclosed is for use at the Annual Meeting. Any
proxy given pursuant to this solicitation may be revoked at any time
prior to its use by delivering a written notice of revocation or a
duly executed proxy bearing a later date to the Secretary of the
Company at the above address, or by attending the Annual Meeting and
voting in person. All shares represented by valid proxies will be
voted at the Annual Meeting in the manner indicated on the proxies. If
no contrary instructions are indicated, such proxies will be voted FOR
the election of each of the nominees to the Board of Directors, FOR
the approval of the amendment to the 1996 Stock Option and Stock Award
Plan, FOR the approval of the amendment to the 1996 Employee Stock
Purchase Plan and FOR the ratification of Arthur Andersen LLP as
independent public accountants for the fiscal year ending
September 30, 1998.
Broker non-votes and abstentions are not treated as votes cast
for purposes of any of the matters to be voted on at the Annual
Meeting.<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the Board of Directors
shall consist of not less than eight nor more than 25 directors. The
Company currently has eight directors. The By-Laws also provide that
the Board of Directors shall be divided into three classes, with
directors in each class serving three-year terms. Approximately one-
third of the Board of Directors is elected each year. The By-Laws
provide that no individual may be elected a director after having
attained his or her seventy-second birthday, although directors who
reach the age of 72 during a term may continue to serve until the
expiration of the term.
It is the intention of the persons named as proxies to vote in
favor the election of John Kean, John Kean, Jr. and Bernard S. Lee as
directors of the Company for three-year terms expiring at the 2001
Annual Meeting of Shareholders or until their successors are elected
and shall qualify, unless otherwise directed by the shareholder on the
proxy. Each of these nominees was last elected to the Board at the
1995 Annual Meeting of Shareholders.
While it is anticipated that the nominees will be able to serve,
if any nominee is unable or declines to serve as a director at the
time of the Annual Meeting, proxies will be voted for any nominee who
may be designated by the Board of Directors to fill the vacancy. The
By-Laws of the Company provide that specific advance notification and
information requirements must be satisfied in order for a shareholder
to nominate an individual for election to the Board. No such
nominations have been made. Information concerning these requirements
may be obtained by writing to the Secretary of the Company.
Nominees for Election
Set forth below is information concerning the age, current term,
committee memberships, the period served as a director and business
experience during the past five years with respect to each director
nominee:
Picture of John Kean, age 68
John Kean Current term expires in 1998
Chairman of the Board of Directors
Member of the Executive and Investment
Committees
Mr. Kean has served as a director since 1969. He
served as Chief Executive Officer of the Company from
1969 until his retirement in April, 1995, holding the
positions of Chairman of the Board since October, 1994
and President from 1969 until October, 1994. Mr. Kean
is also a director of E'Town Corporation and its
subsidiary, Elizabethtown Water Company.
Picture of John Kean, Jr., age 40
John Kean, Jr. Current term expires in 1998
President and Chief Executive Officer
Member of the Executive Committee
Mr. Kean has served as a director since 1995. Since
April, 1995 he has served as President and Chief
Executive Officer of the Company. From October, 1994
through March, 1995 he served as President and Chief
Operating Officer. He served as Executive Vice
President of the Company from January, 1992 to
September, 1994 and as Executive Vice President of
Elizabethtown Gas Company from March, 1993 to
September, 1994. Prior to March, 1993, Mr. Kean held
the additional position of Chief Financial Officer of
the Company. Mr. Kean also serves on the Board of
Trustees of the Institute of Gas Technology.
Picture of Dr. Dr. Bernard S. Lee, age 63
Bernard S. Lee Current term expires in 1998
Member of the Audit and Compensation Committees
Dr. Lee has served as a director since 1992. He is
President and Chief Executive Officer of the Institute
of Gas Technology ("IGT") (a United States based
energy and environmental research and development
organization providing global support to the natural
gas industry) and a member of the IGT Board of
Trustees and Executive Committee. He is Chairman of M-
C Power Corp., a majority-owned subsidiary of IGT. Dr.
Lee is also a director of Peerless Mfg. Co. and
National Fuel Gas Company.
Continuing Board Members
Set forth below is information concerning the age, current term,
committee memberships, the period served as director and business
experience during the past five years with respect to those members
of the Board of Directors whose current terms of office extend
beyond 1998:
Picture of Calvin R. Carver, age 72
Calvin R. Carver Current term expires in 1999
Member of the Audit, Executive and Investment
Committees
Mr. Carver has served as a director of the Company
since 1969. He served as Executive Vice President of
the Company until his retirement in 1986. He is Vice
President, Treasurer and a director of Penn-Jersey
Pipe Line Co.
Picture of Dr. Dr. Vera King Farris, age 57
Vera King Farris Current term expires in 1999
Member of the Compensation and Investment
Committees
Dr. Farris has served as a director of the Company
since 1994. She is President of The Richard Stockton
College of New Jersey. She also serves as a director
of Flagstar Companies, Inc. and on the boards of
numerous educational and civic organizations.
Picture of James J. Forese, age 61
James J. Forese Current term expires in 2000
Member of the Audit, Compensation and Executive
Committees
Mr. Forese has served as a director of the Company
since 1978. Since January, 1997 he has served as
Executive Vice President and President, International
Operations, of IKON Office Solutions (office equipment
and supply systems). From January, 1996 to December,
1996, he served as Executive Vice President, Chief
Operating Officer and a director of Alco Standard
Corp. From October, 1993 through December, 1995 he
served as General Manager of Customer Financing for
International Business Machines Corporation ("IBM")
and as Chairman of IBM Credit Corporation. From 1990
through 1993 he held the additional position of Vice
President-Finance of IBM. Mr. Forese also serves as a
director of American Management Systems, Inc. and
Unisource World Wide Corporation.
Picture of R. Van Whisnand, age 53
R.Van Whisnand Current term expires in 2000
Member of the Compensation and Executive
Committees
Mr. Whisnand has served as a director since 1982.
Since March, 1995 he has served as a principal of Fox
Asset Management (investment management firm). Prior
thereto, he served as a partner in Combined Capital
Management.
Picture of John Winthrop, age 61
John Winthrop Current term expires in 1999
Member of the Audit and Investment Committees
Mr. Winthrop has served as a director since 1978. He
is President of John Winthrop & Co., Inc. and a
partner of Winthrop Melhado Flynn (both investment
management firms). He also serves as a director of the
American Farmland Trust and the Pioneer Funds.
Meetings and Committees of the Board of Directors
The Board of Directors holds regular meetings every other month
and special meetings as necessary from time to time. The Board held
eight meetings during fiscal year 1997. During the year, total
attendance at Board and Committee meetings was 94%. No member of the
Board attended fewer than 75% of the aggregate of meetings of the
Board and meetings of Committees on which such director served. The
Board has an Executive, Audit, Compensation and Investment Committee
and does not have a Nominating Committee. Information on the
Committees of the Board is set forth below.
The Executive Committee has the authority (with certain
exceptions) to take such actions as the Board of Directors is
authorized to take. The Committee does not hold regularly scheduled
meetings, but remains on call. The Committee held no meetings during
fiscal year 1997. The current members of the Executive Committee are
Calvin R. Carver, James J. Forese, John Kean (Chairman), John Kean,
Jr. and R. Van Whisnand.
The Audit Committee has the responsibility to review and approve
the scope of the annual audit; recommend to the Board the
appointment of independent public accountants; review the adequacy
of the Company's system of internal controls; and review any non-
audit services provided by the independent public accountants. The
Committee met three times during fiscal year 1997. The current
members of the Audit Committee are Calvin R. Carver, James J. Forese
(Chairman), Bernard S. Lee and John Winthrop.
The Investment Committee has the responsibility to oversee the
investment of assets held by the Company's retirement plans and
savings and investment plans. The Committee selects investment
managers, establishes guidelines under which they operate and
reviews their performance. The Committee met five times during
fiscal year 1997. The current members of the Investment Committee
are Calvin R. Carver (Chairman),Vera King Farris, John Kean and John
Winthrop.
The Compensation Committee has the responsibility to review and
make recommendations to the Board of Directors regarding the annual
salaries and cash bonuses to be paid to officers of the Company, its
divisions and subsidiaries; review and make recommendations to the
Board concerning the Company's executive compensation policies,
practices and objectives; administer the Company's 1988 Stock Plan
and 1996 Stock Option and Stock Award Plan (the "Stock Plans"); and
make grants and awards under the Stock Plans, establishing vesting
and other criteria applicable to any such grants and awards. The
Committee met three times in fiscal year 1997. For additional
information on the role and activities of the Committee, please see
"Compensation Committee Report on Executive Compensation" located
later in this Proxy Statement. The current members of the
Compensation Committee are Vera King Farris, James J. Forese,
Bernard S. Lee and R. Van Whisnand (Chairman).
Compensation of Directors
The compensation program for directors is designed to closely
align the interests of directors with the interests of shareholders.
Each non-employee director of the Company (with the exception of
John Kean) is paid a retainer fee pursuant to the Company's Stock
Plans that consists of a deferred grant of shares of Common Stock.
The number of shares of Common Stock to be allocated to a non-
employee director's account every year is determined by dividing the
annual Board retainer (plus the annual Committee chair retainer, if
applicable) by the fair market value of the Common Stock on the date
of the annual organization meeting of the Board. Currently, the
annual Board retainer for non-employee directors is $15,000 and the
annual Committee chair retainer is $2,500. In addition to these
shares, the accounts of non-employee directors are credited on each
Common Stock dividend payment date with that number of additional
shares that could have been purchased on the accrued shares in the
account had the shares been issued and the dividends reinvested. The
number of shares accrued to a director are issued upon the
director's retirement or other termination of the director's service
as a member of the Board. As of September 30, 1997, the total
deferred grants for non-employee directors provide for the issuance
of 28,067 shares of Common Stock. In addition to these retainers,
non-employee directors (with the exception of John Kean) are paid
$600 for attendance at each regular or special meeting of the Board
of Directors and any Committee thereof.
The Company is party to a Consulting Agreement, dated March 24,
1995, with John Kean, who retired as Chief Executive Officer of the
Company effective April 1, 1995. The Agreement has a three-year term
and expires on March 31, 1998. Under the Agreement, Mr. Kean
provides consulting services to the Company for up to 110 hours each
calendar month. The Agreement requires Mr. Kean to devote sufficient
time and effort to perform such duties as may be assigned by the
Company or the Board of Directors from time to time. The Agreement
also provides that, during the term of the Agreement, if Mr. Kean
remains a director, he shall hold the position of Chairman of the
Board. In consideration of the services rendered under the
Agreement, the Company provides Mr. Kean with an annual fee of
$150,000 and office space, clerical support, expense reimbursement
and life, health and medical coverages similar to those previously
provided to him when he was an employee of the Company. During
fiscal year 1997 the Board of Directors awarded Mr. Kean $25,000 in
recognition of his exceptional service under the Agreement. Other
than the amounts paid and the benefits provided under the Agreement,
Mr. Kean does not receive any additional compensation for serving on
the Board or Committees of the Board of the Company, its divisions
or subsidiaries. The Agreement will terminate automatically in the
event of Mr. Kean's death and may be terminated by the Company for
cause or if Mr. Kean should become disabled. Mr. Kean may terminate
the Agreement for "Good Reason" (as defined in the Agreement)
following a change in control of the Company, upon the impairment of
his health or upon thirty days prior written notice. Upon a change
in control of the Company, the Agreement is automatically extended
for three years following such change in control. In addition, if,
following a change in control, the Agreement is terminated by Mr.
Kean for Good Reason or by the Company (or its successor) other than
as a result of Mr. Kean's disability or for cause, Mr. Kean shall be
entitled to receive (i) an amount equal to the amounts which would
have otherwise been paid to him if the Agreement had remained in
effect through its term, (ii) the continuation of benefits through
the term of the Agreement, and (iii) an amount, if necessary, in
order to offset the impact of the application of any excise tax
imposed under the Internal Revenue Code upon the value of such
payments and benefits.
Calvin R. Carver and John Kean currently serve as members of the
Advisory Board of the Company's Elizabethtown Gas division. Mr. Kean
receives no additional compensation for serving on this Board and
Mr. Carver is paid a $1,000 annual retainer and $450 for each
Elizabethtown Gas Board and Committee meeting attended.
The Company has in effect a retirement plan for directors. To be
eligible for retirement benefits under the Plan, a director must
have served as a director for at least ten years, with a minimum of
five years of service as a non-employee of the Company and its
subsidiaries. An eligible participant in the Plan will be paid, upon
retirement at or after age 70, an annual retirement benefit for life
equal to the value of the annual Board retainer in effect at the
time of the director's retirement, subject to a minimum annual
benefit of $8,000.
Compensation Committee Interlocks and Insider Participation
Proxy disclosure rules require the Company to report certain
relationships involving the Company in which members of the
Compensation Committee have a direct or indirect material interest.
Also required is disclosure of interlocking relationships among
Compensation Committee members and those executive officers of the
Company, if any, who also serve as members of compensation
committees or executive officers at other companies. The purpose of
these requirements is to allow shareholders to assess the
independence of the Company's Compensation Committee members in
making executive compensation decisions and recommendations. While
the Company has had transactions with companies and firms with which
certain members of the Compensation Committee are, or at some point
during fiscal year 1997 were, affiliated as an officer and/or
director, there are no such relationships in which members of the
Committee have a direct or indirect material interest. In addition,
there are no interlocking relationships of the nature described
above involving members of the Compensation Committee. The members
of the Compensation Committee are Vera King Farris, James J. Forese,
Bernard S. Lee and R. Van Whisnand (Chairman).
Certain Transactions
Companies and firms with which certain directors are, or during
fiscal year 1997 were, affiliated as an officer and/or director had
transactions in the ordinary course of business with the Company
during fiscal year 1997 and similar transactions are expected to
occur in the future. Except as discussed in the next paragraph, none
of these directors had a direct or indirect material interest in
such transactions. The companies or firms involved in these
transactions and the related directors are: E'Town Corporation and
Elizabethtown Water Company (John Kean), Fox Asset Management (R.
Van Whisnand), Institute of Gas Technology (John Kean, Jr. and
Bernard S. Lee), IKON Office Solutions (James J. Forese) and Penn-
Jersey Pipeline Co. (Calvin R. Carver).
In 1987, Elizabethtown Gas Company entered into an Agreement of
Lease with Liberty Hall Joint Venture for the occupancy of
approximately 160,000 square feet of a 200,000 square foot office
building in Union, New Jersey. The Joint Venture participants are
Cali Liberty Hall Associates (a New Jersey general partnership) and
a Kean family trust of which John Kean is a trustee. All
negotiations relative to the lease were conducted between
Elizabethtown Gas Company and Cali Liberty Hall Associates. No
person involved with the Kean family trust participated in such
discussions. The annual base rent is approximately $2.9 million from
1996 through 1999, $3.3 million from 2000 through 2004, and $3.7
million from 2005 through 2009.
Family Relationships
John Kean is the father of John Kean, Jr.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR THE
ELECTION OF THE DIRECTOR NOMINEES LISTED ABOVE. Proxies solicited by
management will be voted FOR the election of all director nominees
unless contrary voting instructions are indicated.
PROPOSAL NUMBER TWO
APPROVAL OF AN AMENDMENT TO THE 1996 STOCK OPTION AND STOCK AWARD
PLAN
The Board of Directors has approved and is unanimously
recommending that shareholders approve an amendment to the NUI
Corporation 1996 Stock Option and Stock Award Plan (the "1996 Stock
Plan") to increase by 350,000 the number of shares of Common Stock
authorized for issuance under the 1996 Stock Plan to an aggregate of
600,000 shares. The amendment and 1996 Stock Plan are summarized
below.
Description of the Amendment
The amendment increases by 350,000 the number of shares of
Common Stock authorized for issuance under the 1996 Stock Plan to an
aggregate of 600,000 shares. If approved by shareholders, the
amendment will be effective immediately.
Reasons for the Amendment
The 1996 Stock Plan is one of several initiatives undertaken by
the Board in order to align the interests of the Company's
management with the interests of shareholders and to attract, retain
and motivate key employees through participation in the long-term
growth and financial success of the Company. The Compensation
Committee of the Board has utilized shares available under the 1996
Stock Plan to make grants of performance-based restricted Common
Stock to key employees. The terms of these grants require certain
Company performance objectives to be attained in order for ownership
of the shares to vest. For a further discussion of the Compensation
Committee's philosophy of aligning the interests of management with
the interests of shareholders, and for more details concerning these
restricted stock grants, please see the ``Compensation Committee
Report on Executive Compensation'' located later in this Proxy
Statement. As of November 30, 1997, only 41,926 shares remained
available for the granting of stock options and stock awards under
the 1996 Stock Plan. The amendment to the 1996 Stock Plan to
increase the number of shares authorized for issuance is intended to
enable the Board to continue the purposes of the 1996 Stock Plan.
Description of the 1996 Stock Plan
The 1996 Stock Plan was originally approved by shareholders on
March 12, 1996. The following description of the material features
of the 1996 Stock Plan is qualified in its entirety by reference to
the full text of the 1996 Stock Plan. A copy of the 1996 Stock Plan
is available upon a shareholder's written request to NUI
Corporation, 550 Route 202-206, P. O. Box 760, Bedminster, New
Jersey 07921, Attention: Corporate Secretary.
The 1996 Stock Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The 1996
Stock Plan requires that the Committee be comprised of at least
three members, each of whom must be a "disinterested person" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and
an "outside director" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended from time to time (the
"Code"). The Committee has, among other powers, the power to
interpret, waive, amend, and establish rules and regulations for the
1996 Stock Plan.
Subject to the terms and conditions of the 1996 Stock Plan, the
Committee has the sole and complete authority to grant to eligible
participants one or more grants or awards, including incentive stock
options, nonqualified stock options, stock appreciation rights,
bonuses payable in stock and restricted stock, or any combination
thereof. The Committee has the sole discretion to determine the
amount of any such grants or awards, provided however, that no
participant may receive grants or awards totaling more than 20
percent of the total shares authorized for issuance under the 1996
Stock Plan. The Committee also has the sole authority to establish
vesting periods and/or performance-based goals that must be attained
in order for the participant to be able to exercise any stock option
or stock appreciation right or to obtain ownership of shares subject
to a stock grant or award.
All stock options, stock appreciation rights and stock grants
and awards are subject to agreements which must be approved by the
Committee. The Agreement must set forth the terms and conditions of
any such grants and awards and the conditions, if any, that must be
satisfied by participants in order to obtain the benefits of the
grants or awards. The Committee may provide in the Agreements that,
in the event of a change in control of the Company, outstanding
awards will vest, become immediately exercisable or payable and have
all restrictions lifted. All grants and awards are non-transferable.
The 1996 Stock Plan also provides for the payment of annual
retainers to non-employee members of the Board of Directors for
their service as members of the Board and for service as the chair
of a Board Committee in the form of deferred grants of Common Stock.
The number of shares of Common Stock to be allocated to a non-
employee director's account every year is determined by dividing the
annual Board retainer (plus the annual Committee chair retainer, if
applicable) by the fair market value of the Common Stock on the date
of the annual organization meeting of the Board. Currently, the
annual Board retainer for non-employee directors is $15,000 and the
annual Committee chair retainer is $2,500. In addition to these
shares, the accounts of non-employee directors are credited on each
Common Stock dividend payment date with that number of additional
shares that could have been purchased on the accrued shares in the
account had the shares been issued and the dividends reinvested. The
number of shares accrued to a director are issued upon the
director's retirement or other termination of the director's service
as a member of the Board. As described earlier in this Proxy
Statement under "Compensation of Directors", the Company has a
Consulting Agreement with John Kean, Chairman of the Board. Under
the Agreement, he receives no Board or Committee chair retainers.
Accordingly, although he is a non-employee director, he is not a
Consulting Agreement.
Eligible Participants
Under the 1996 Stock Plan, key salaried employees, including
officers, of the Company, its divisions and subsidiaries are
eligible to receive grants and awards. There are approximately
thirty officers. The determination of those employees who shall
receive grants and awards is determined by the Committee in its sole
discretion.
Amendments Permitted to the 1996 Stock Plan Without Shareholder
Approval
The Board of Directors may amend, alter or discontinue the 1996
Stock Plan at any time provided that no amendment, alteration or
discontinuation shall be made which would impair the rights of any
holder of a grant or award without the participant's written
consent, or which, without shareholder approval, would (i) increase
the maximum number of shares of Common Stock with respect to which
grants and awards may be made (except for permitted adjustments
applicable to changes in the outstanding Common Stock), (ii)
decrease the exercise price for options below 100% of the fair
market value of the Common Stock on the date of grant (except for
permitted adjustments arising as a result of changes in the
outstanding Common Stock), (iii) materially change the class of
persons eligible to receive grants and awards, (iv) extend the ten-
year term of the 1996 Stock Plan, or (v) materially increase in any
other way the benefits accruing to participants.
Discussion of Federal Income Tax Consequences
Set forth below is a summary of the federal income tax
consequences relating to grants and awards under the 1996 Stock
Plan. The Plan has been designed to meet the requirements of Section
162(m) of the Code. The tax consequences of stock options, stock
awards, and stock appreciation rights are complex. Therefore, the
description of tax consequences set forth below is necessarily
general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual
circumstances.
Incentive Stock Options
No taxable income is recognized by the optionee upon the grant
or exercise of an incentive stock option ("ISO") that meets the
requirements of Section 422 of the Code. However, the exercise of an
ISO may result in alternative minimum tax liability for the
optionee. If no disposition of shares issued to an optionee pursuant
to the exercise of an ISO is made by the optionee within two years
from the date of grant or within one year after the date of
exercise, then upon sale of such shares, any amount realized in
excess of the exercise price (the amount paid for the shares) will
be taxed to the optionee as a long-term capital gain and any loss
sustained will be a long-term capital loss, and no deduction will be
allowed to the Company for federal income tax purposes.
If shares of Common Stock acquired upon the exercise of an ISO
are disposed of prior to the expiration of the two-year and one-year
holding periods described above (a "disqualifying disposition"),
generally the optionee will recognize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair
market value of the shares on the date of exercise (or, if less, the
amount realized on the arm's length sale of such shares) over the
exercise price of the underlying options, and the Company will be
entitled to deduct such amount. Any gain realized from the shares in
excess of the amount taxed as ordinary income will be taxed as
capital gain and will not be deductible by the Company.
An ISO will not be eligible for the tax treatment described
above if it is exercised more than three months following
termination of employment, except in certain cases where the ISO is
exercised after the death or permanent and total disability of the
optionee. If an ISO is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is
treated as a nonqualified stock option ("NQO").
Nonqualified Stock Options
No taxable income is recognized by the optionee at the time an
NQO is granted under the 1996 Stock Plan. Generally, on the date of
exercise of an NQO, ordinary income is recognized by the optionee in
an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise, and the
Company receives a tax deduction for the same amount. Upon
disposition of the shares acquired, an optionee generally recognizes
the appreciation or depreciation on the shares after the date of
exercise as either short-term or long-term capital gain or loss
depending on how long the shares have been held.
If the stock received upon exercise of an option or stock
appreciation right is subject to a substantial risk of forfeiture,
the income and the deduction, if any, associated with such award may
be deferred in accordance with the rules described below for
restricted stock.
Stock Appreciation Rights
No income will be recognized by an optionee in connection with
the grant of a stock appreciation right ("SAR"). When the SAR is
exercised, the optionee will generally be required to include as
taxable ordinary income in the year of such exercise an amount equal
to the amount of cash received and the fair market value of any
stock received. The Company will generally be entitled to a
deduction equal to the amount included as ordinary income by such
optionee.
Restricted Stock
A recipient of restricted stock generally will be subject to tax
at ordinary income rates on the excess of the fair market value of
the stock (measured at the time the stock is either transferable or
is no longer subject to forfeiture) over the amount, if any, paid
for such stock. However, a recipient who elects under Section 83(b)
of the Code within 30 days of the date of issuance of the restricted
stock to be taxed at the time of issuance of the restricted stock
will recognize ordinary income on the date of issuance equal to the
fair market value of the shares of restricted stock at the time
(measured as if the shares were unrestricted and could be sold
immediately), minus any amount paid for such stock. If the shares
subject to such election are forfeited, the recipient will be
entitled to a capital loss for tax purposes only for the amount paid
for the forfeited shares, not the amount recognized as ordinary
income as a result of the Section 83(b) election. The holding period
to determine whether the recipient has long-term or short-term
capital gain or loss upon sale of the shares begins when the
forfeiture period expires (or upon issuance of the shares, if the
recipient elected immediate recognition of income under Section
83(b) of the Code).
Non-employee directors who receive deferred grants of restricted
stock will generally recognize as ordinary income the market value
of the shares of Common Stock on the date when the shares are issued
upon the director's retirement or other termination of the
director's Board service.
Plan Benefits Under the 1996 Stock Plan
As of November 30, 1997, the number of shares of Common Stock
relating to restricted stock awards granted under the 1996 Stock
Plan to each of the executive officers named in the Summary
Compensation Table is as follows: John Kean, Jr.-45,000; Frank T.
Bahniuk-11,810; Lyle C. Motley, Jr.-13,809; James R. Van Horn-9,875;
Victor Fortkiewicz-10,366; All Executive Officers as a Group-
151,455; Non-Executive Directors as a Group-6,176 and All Other Key
Employees as a Group-62,088.
The closing price of NUI Corporation Common Stock on
November 30, 1997 was $24.69 per share.
Approval
Approval of the amendment to the 1996 Stock Plan requires the
affirmative vote of a majority of the votes cast at the Annual
Meeting. The Board of Directors believes that the approval of the
amendment of the 1996 Stock Plan is in the best interests of the
Company since it will enable the Board to continue the purposes of
the 1996 Stock Plan, as discussed above.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED THE AMENDMENT TO
THE 1996 STOCK PLAN AND RECOMMENDS SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT. Proxies solicited by management will be voted FOR
this proposal unless a vote against this proposal or abstention is
specifically indicated.
PROPOSAL NUMBER THREE
APPROVAL OF AN AMENDMENT TO THE 1996 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved and is unanimously
recommending that shareholders approve an amendment to the NUI
Corporation 1996 Employee Stock Purchase Plan (the "Employee Plan")
to increase by 100,000 the number of shares of Common Stock
authorized for issuance under the Employee Plan to an aggregate of
240,000 shares. The amendment and the number of shares authorized
for issuance is intended to enable the Company to continue the
purposes of the Employee Plan.
Reason for the Amendment
The Employee Plan is designed to encourage employees to increase
their ownership interest in the Company and to motivate them to
exert their maximum efforts toward the success of the Company. The
Employee Plan is one of several initiatives undertaken by the Board
in order to align the interests of the Company's employees with the
interests of shareholders. All employees who have been employed with
the Company or one of its divisions or subsidiaries for at least six
months are eligible for participation in the Employee Plan.
Accordingly, approximately 1,000 employees are eligible. As of
November 30, 1997, 232 employees are participants in the Employee
Plan and only 86,265 remained available for issuance under the
Employee Plan. The amendment to the Employee Plan to increase the
number of shares authorized for issuance is intended to enable the
Company to continue the purposes of the Employee Plan.
Description of the Amendment
The Amendment increases by 100,000 the number of shares of
Common Stock authorized for issuance under the Employee Plan to an
aggregate of 240,000. If approved by shareholders, the amendment
shall be effective immediately.
Description of the Employee Plan
The Employee Plan was originally approved by Company
shareholders on March 12, 1996. The following description of the
material features of the Employee Plan is qualified in its entirety
by reference to the full text of the Employee Plan. A copy of the
Employee Plan is available upon a shareholder's written request to
NUI Corporation, 550 Route 202-206, P.O. Box 760, Bedminster, New
Jersey 07921, Attention: Corporate Secretary.
The Employee Plan is administered by the Compensation Committee
of the Board of Directors (the "Committee"). The Employee Plan
requires that the Committee be comprised of at least three
directors, each of whom shall be a "disinterested person" within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and an
"outside director" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended from time to time (the
"Code").
Employees eligible to participate in the Employee Plan consist
of all employees of the Company and participating subsidiaries of
the Company who have been employed for at least six months and who
regularly work at least twenty hours per week ("Participants").
Participants are entitled to purchase shares of the Company's Common
Stock in the following ways: (i) by designating a percentage of
their pay ranging from one percent (1%) to a maximum of ten percent
(10%) to be withheld on a regular basis in order to purchase shares
of the Company's Common Stock monthly ("Payroll Payments"); (ii) by
delivering to the Company funds in the minimum amount of $100 and a
maximum amount of 10% of their current annual salary within three
business days of the end of a month to purchase shares of Common
Stock ("Optional Payments"); or (iii) through a combination of
Payroll Payments and Optional Payments. In no event, however, may
more than 10% of an employee's annual salary be used to purchase
shares under the Employee Plan during any Plan Year. For purposes of
the Employee Plan, a "Plan Year" is the calendar year. In order to
be eligible to make Payroll Payments, enrollment and payroll
deduction forms must be filed by specified dates. Once enrolled for
Payroll Payments, a Participant will continue to be enrolled in
subsequent months at the percentage of pay selected until the
Participant either elects a different rate by filing appropriate
forms or terminates Payroll Payments.
On a monthly basis, the agent for the Employee Plan credits to
the account of a Participant the number of whole shares of Common
Stock derived by dividing the total amount of the Participant's
Payroll Payments during the month plus any Optional Payments made by
the Participant by the lesser of (i) 85% of the fair market value of
the Common Stock on the first business day of the month, and (ii)
85% of the fair market value of the Common Stock on the last
business day of the month. For purposes of the Employee Plan, the
"fair market value" of the Common Stock on a particular day is the
mean between the highest and lowest prices at which the Common Stock
is traded on a national securities exchange or, if there is no sale
on such exchange on such date, the mean between the bid and asked
prices on such exchange at the close of the market on such date, or
if the market is closed on such date, the nearest prior trading day.
A Participant may withdraw Payroll Payments credited to the
Participant's account under the Employee Plan if the amounts have
not already been used to purchase Common Stock by giving at least
ten days prior written notice. The cash balance will then be paid to
the Participant and no further payroll deductions will be made from
the Participant's pay until the Participant re-enrolls for such
payroll deductions.
Participants are required to hold shares acquired under the
Employee Plan for at least six months. In the event that a
Participant violates this requirement, the Participant will be
suspended from the Employee Plan. The Participant will not be
permitted to re-enroll in the Payroll Payments feature for six
months from the violation and will not be permitted to participate
in the Optional Payments feature for the remainder of the Plan Year
in which the violation occurred and the next succeeding Plan Year.
Participants do not have the ability to assign or transfer their
rights to purchase Common Stock under the Employee Plan.
In the event that the outstanding shares of Common Stock of the
Company have been increased, decreased, changed into or exchanged
for a different number or kind of shares of Company securities
through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split or similar transaction, the
Committee may make appropriate adjustments to the number and/or kind
of shares which may be offered under the Employee Plan.
The Board of Directors has the authority to terminate or amend
the Employee Plan at any time, provided that the Board may not,
without the approval of the shareholders of the Company, increase
the maximum number of shares which may be issued under the Employee
Plan (except as set forth in the immediately preceding paragraph),
amend the requirements as to the employees eligible to participate
in the Employee Plan or permit members of the Committee to
participate in the Employee Plan.
Tax Consequences of the Employee Plan
The rights to purchase Common Stock granted to Participants
under the Employee Plan constitute nonqualified options ("NQO") for
Federal income tax purposes. No taxable income is recognized by the
Participant at the time an NQO is granted under the Employee Plan.
Generally, on the date of exercise of an NQO, ordinary income will
be recognized by the Participant in an amount equal to the
difference between the exercise price and the fair market value of
the shares on the date of exercise, and the Company receives a tax
deduction for the same amount. Upon disposition of the shares
acquired, the Participant generally recognizes the appreciation or
depreciation on the shares after the date of exercise as either
short-term or long-term capital gain or loss depending on how long
the shares have been held. The Participant's basis in the shares
will generally be equal to the price paid for the shares plus an
amount equal to the discount on the purchase price included as
ordinary income.
Plan Benefits Under the Employee Plan
As of November 30, 1997, the total number of shares of Common
Stock purchased under the Employee Plan by each of the executive
officers named in the Summary Compensation Table is as follows: John
Kean, Jr.-3,046; Frank T. Bahniuk-0, Lyle C. Motley, Jr.-1,098;
James R. Van Horn-1,020; Victor Fortkiewicz-1,336; All Executive
Officers as a Group-10,124 and All Other Employees as a Group-
45,629.
The closing price of the NUI Corporation Common Stock on
November 30, 1997 was $24.69 per share.
Approval
Approval of the amendment to the Employee Plan requires the
affirmative vote of a majority of the votes cast at the Annual
Meeting. The Board of Directors believes that the approval of the
amendment to the Employee Plan is in the best interests of the
Company since it will permit the Company to continue the purposes of
the Employee Plan as discussed above.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED THE AMENDMENT TO
THE EMPLOYEE PLAN AND RECOMMENDS SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE EMPLOYEE PLAN. Proxies solicited by management
will be voted FOR this proposal unless a vote against this proposal
or abstention is specifically indicated.
PROPOSAL NUMBER FOUR
RATIFICATION OF AUDITORS
The accounting firm of Arthur Andersen LLP, 1345 Avenue of the
Americas, New York, N.Y. 10105 has been selected by the Board of
Directors, upon the recommendation of its Audit Committee, to serve
as independent public accountants for the Company and its
subsidiaries for the fiscal year ending September 30, 1998. This
firm has served as auditors for the Company since 1969. It is
expected that representatives of Arthur Andersen LLP will be present
at the Annual Meeting. They will have the opportunity to make a
statement and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE APPOINTMENT
OF ARTHUR ANDERSEN LLP AND RECOMMENDS SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THIS APPOINTMENT. Proxies solicited by management
will be voted FOR this proposal unless a vote against this proposal
or abstention is specifically indicated. In the event of an
insufficient number of votes to ratify this appointment, the Board
of Directors will reconsider its selection of Arthur Andersen LLP as
independent public accountants.
OWNERSHIP OF VOTING SECURITIES BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners. The Company's
management is not aware of any share-holder who owns beneficially
more than five percent of the Company's Common Stock.
Security Ownership of Management. The following table shows, as
of November 30, 1997, the number and percent of the shares of Common<PAGE>
Stock beneficially owned by each director, each executive officer
listed in the Summary Compensation Table and all directors and
executive officers of the Company as a group:
Title of Beneficial Owner Number of Percent of
Class Shares Class
(1)(2)
Common Stock Calvin R. Carver 128,033(3) 1.03%
Vera King Farris 3,385 *
James J. Forese 5,520 *
John Kean 204,877(4) 1.65%
John Kean, Jr. 93,938 *
Bernard S. Lee 9,241(5) *
R. Van Whisnand 5,520 *
John Winthrop 11,217 *
Frank T. Bahniuk 21,308 *
Victor A. Fortkiewicz 16,849 *
Lyle C. Motley, Jr. 26,597 *
James R. Van Horn 15,778 *
19 directors and
executive officers as
a group 642,424 5.17%
* Less than 1.0%.
1.Includes (a) the number of shares of Common Stock issuable to non-
employee directors upon termination of Board service in payment for
their annual Board and Committee chair retainers, as follows:
Calvin R. Carver, James J. Forese and R. Van Whisnand, 5,370 shares
each; John Winthrop, 4,790 shares; Bernard S. Lee, 4,192 shares;
Vera King Farris, 2,975 shares; and all directors as a group,
28,067 shares; (b) shares of restricted stock, as follows: John
Kean, Jr., 39,225 shares; Frank T. Bahniuk, 10,003 shares; Victor
A. Fortkiewicz, 9,668 shares; Lyle C. Motley, Jr., 11,452 shares;
James R. Van Horn, 8,287 shares; and all directors and officers as
a group, 127,379 shares; and(c) shares that are subject to
currently exercisable stock options, as follows: John Kean, Jr.,
5,000 shares; and all directors and officers as a group, 5,000
shares.
2.Except as noted, each beneficial owner listed has sole voting and
investment power with respect to the shares indicated next to such
person's name.
3.Includes 600 shares with respect to which Mr. Carver disclaims
beneficial ownership.
4.Includes 157,407 shares over which John Kean has shared voting and
investment power as a co-trustee under various trusts for the
benefit of members of the Kean family.
5.Includes 1,000 shares held by Dr. Lee's wife.
EXECUTIVE OFFICERS
The following information is provided with respect to each
executive officer of the Company. Officers are elected annually at
the first meeting of the Board of Directors following the Annual
Meeting. There are no arrangements or understandings between any
officer and any other person pursuant to which the officer was
selected.
John Kean, Jr., age 40
President and Chief Executive Officer
Since April, 1995 Mr. Kean has served as President and Chief
Executive Officer of the Company. From October, 1994 through March,
1995 he served as President and Chief Operating Officer. From March,
1993 to September, 1994 he served as Executive Vice President of
Elizabethtown Gas. Prior thereto, he served as Chief Financial
Officer of the Company. He held the additional position of Executive
Vice President of the Company from January, 1992 to September, 1994.
A. Mark Abramovic, age 49
Senior Vice President and Chief Financial Officer
Mr. Abramovic has served as Senior Vice President and Chief
Financial Officer of the Company since September, 1997. From
December, 1993 to August, 1997 he served as Senior Vice President
and Chief Financial Officer of Equitable Resources, Inc. Prior
thereto, he served as Vice President and Chief Financial Officer of
Connecticut Natural Gas Corporation.
Frank T. Bahniuk, age 60
Senior Vice President-Energy Management
Mr. Bahniuk has served as Senior Vice President of the Company
since August, 1994. Prior thereto, he served as Senior Vice
President of Elizabethtown Gas. He also serves as President of NUI
Energy, Inc. and NUI Energy Brokers, Inc.
Michael J. Behan, age 51
Vice President-New Ventures
Mr. Behan has served as Vice President of the Company since
March, 1993. Prior thereto, he served as Assistant Vice President of
the Company. He also serves as President of NUI Environmental Group,
Inc. and Utility Business Services, Inc.
James W. Crowley, Jr., age 58
Vice President-Customer Service
Mr. Crowley has served as Vice President of the Company since
March, 1996. Prior thereto, he served as Vice President-Customer
Field Services of The Brooklyn Union Gas Company.
Victor A. Fortkiewicz, age 45
President-Northern Division
Mr. Fortkiewicz has served as President of the Northern Division
in January, 1997. From October, 1995 to December, 1996 he served as
Vice President of the Company. Prior thereto, he served as Vice
President of Elizabethtown Gas.
Richard L. Gruber, age 38
Vice President-Marketing
Mr. Gruber has served as Vice President of the Company since
January, 1996. He also serves as President of NUI Energy Solutions,
Inc. From 1994 until January, 1996 he served as Managing Member for
Exchange Development Company, L.L.C. Prior thereto, he served as
Director of Business Development for Electronic Data Systems, Inc.
Robert F. Lurie, age 40
Vice President-Corporate Development and Treasurer
Mr. Lurie has served as Vice President-Corporate Development and
Treasurer of the Company since March, 1997. He has served as
Treasurer since February, 1994 and Vice President since March, 1996.
Prior to February, 1994, he served as Director of the Office of
Public Finance for the Treasury Department of the State of New
Jersey.
Lyle C. Motley, Jr., age 56
President-Southern Division
Mr. Motley has served as President of the Southern Division
since April, 1995. Prior thereto, he served as President of
Pennsylvania and Southern Gas Company, which was acquired by the
Company in April, 1994.
Richard J. O'Neill, age 58
Vice President-Human Resources
Mr. O'Neill has served as Vice President of the Company since
October, 1995. From April, 1995 through September, 1995, he served
as Senior Vice President, and prior thereto as Group Vice
President, of Elizabethtown Gas.
James R. Van Horn, age 41
Vice President, General Counsel and Secretary
Mr. Van Horn has served as General Counsel and Secretary of the
Company since June, 1995 and Vice President since March, 1996. Prior
to June, 1995, he served as Senior Vice President, General Counsel
and Secretary of Citizens First Bancorp, Inc. and Citizens First
National Bank of New Jersey.
David P. Vincent, age 54
Vice President-Information Technology
Mr. Vincent has served as Vice President since March, 1996. He
served as Chief Technology Officer of the Company from October, 1995
to March, 1996. From April through September, 1995, he served as a
Senior Vice President of Elizabethtown Gas. From March, 1993 through
March, 1995, he served as Executive Vice President and Chief
Financial Officer of the Company and, prior thereto, he served as
Executive Vice President of the Company.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is comprised of four independent, non-employee
directors. The Committee has the responsibility of making
recommendations to the Board concerning the Company's executive
compensation policies, practices and objectives. The Committee makes
recommendations to the Board concerning base salary levels and cash
bonus awards for the officers of the Company, its divisions and
subsidiaries. The Committee also administers the Company's 1988
Stock Plan and 1996 Stock Option and Stock Award Plan (the "Stock
Plans"), making grants and awards under the Stock Plans to selected
key employees in its discretion.
In discharging its responsibilities, the Committee draws upon
various resources, including, but not limited to, the varied
business experiences and knowledge of Committee members and other
non-employee directors in the area of executive compensation and the
advice of independent compensation experts. These resources allow
the Committee to stay abreast of current trends and developments in
executive compensation and provide valuable guidance to the
Committee in making decisions and recommendations to the Board of
Directors.
The Committee strongly believes that the executive compensation
program should be designed to align the interests of management
closely with the interests of shareholders and to tie compensation
levels to the performance of the Company and the achievement of
long-term and short-term goals and objectives. The Committee also
recognizes the importance of a strong executive compensation program
to attract and retain qualified executives. Accordingly, the program
is designed to:
Provide short-term incentives for individual and Company
performance through the payment of cash bonuses;
Provide long-term incentives for enhancing shareholder value
through equity-based compensation which is earned upon the
achievement of specific Company performance goals; and
Provide the Company with the ability to attract, motivate and
retain key executives who are critical to the success of the
Company through the payment of competitive base salaries, the
opportunity to earn incentive compensation and through the
provision of a competitive benefits package.
The components of the Company's executive compensation program
are base salary, annual cash bonuses, long-term incentive
compensation and various benefits. Long-term compensation is
comprised of grants and awards under the Company's Stock Plans
pursuant to which the Committee may make stock awards and grants of
restricted stock, stock options and stock appreciation rights. The
benefits provided to executives include medical, retirement and
savings plans which are available to employees generally and
supplementary medical and retirement plans that are not available to
employees generally.
Consistent with the Committee's overall objective of aligning
the interests of management with the interests of shareholders and
providing an incentive for the enhancement of shareholder value, the
Committee made grants of restricted Common Stock for fiscal year
1997 to certain key employees of the Company, including the officers
listed in the Summary Compensation Table. The terms of these grants
require that the Company achieve specific goals for earnings per
share growth during each of the next four fiscal years in order for
the recipients to receive all of the shares of Common Stock granted.
Ownership of the shares will vest 50% after two years, 25% after the
third year and 25% after the fourth year, subject to the condition
that the performance objectives have been attained. If minimum
performance targets are not met, shares are forfeited. The Committee
has the authority to make adjustments to these performance goals if
it deems such adjustments appropriate.
In addition, to further align management's interest with NUI
shareholders, the Committee recommended, and the Board of Directors
approved, minimum stock ownership requirements for both officers and
directors of the Company. The Board has required that the Chief
Executive Officer own Company Common Stock with a market value equal
to a minimum of four times his then current base salary. Other
executive officers must own Common Stock with a market value equal
to a minimum of two times their then current base salary; and non-
executive officers at or above the level of Vice President must own
Common Stock with a market value equal to their then current base
salary. Only shares which are owned outright by these officers will
be included in determining their compliance with these requirements;
shares of restricted Common Stock which have not vested, as well as
shares which have not yet vested under the Company's benefit plans,
are not included in determining compliance. Members of the Board of
Directors are required to own shares of Common Stock with a market
value equal to a minimum of six times the then current value of the
Board's annual retainer. This would be equivalent to $90,000 based
upon the current retainer of $15,000 paid to members of the Board.
For purposes of determining compliance with this requirement, shares
owned outright by directors will be combined with any shares
credited to their deferred stock accounts in accordance with the
Stock Plans. These minimum stock ownership requirements were
instituted in 1996 and officers and directors were give six years to
comply. The purpose of these minimum stock ownership requirements is
to help ensure the alignment of the interests of management and the
Board of Directors with the interests of shareholders. The Committee
regularly monitors the progress of officers and directors toward
compliance.
In establishing recommendations to be made to the Board of
Directors for increases in base salary and for cash bonuses for the
Company's executives, including the Chief Executive Officer, for
fiscal year 1997, the Committee considered a number of factors,
including various measures of the Company's financial performance,
relative both to historical Company performance and the performance
of other natural gas distribution companies. The Committee also
considered management's achievement of a number of goals during the
year, including net income and earnings per share objectives as well
as the individual performance and contributions made by each
executive officer. These factors were considered collectively, with
no specific weight given to each factor. The general conclusion of
the Committee after this evaluation was that, on an overall basis,
salary increases should be in line with the average level of
executive raises nationwide and cash bonus payments should reflect
the significant improvement in the Company's financial results in
fiscal year 1997 as well as the individual contributions of each
executive officer to this and other Company achievements.
The compensation paid to John Kean, Jr., President and Chief
Executive Officer of the Company, with respect to fiscal year 1997
is set forth in the Summary Compensation Table. Mr. Kean's salary
increased by 4.5% in 1997 from the salary he received in 1996. The
cash bonus awarded to Mr. Kean, in the amount of $150,000, reflects
an assessment of his high level of performance, as determined by the
Committee and the Board of Directors. The factors considered by the
Committee and the Board in reaching this conclusion included the
favorable financial performance for the Company in fiscal year 1997
as evidenced by a 32% increase in net income and a 15% increase in
earnings per share. Other factors included, but were not limited to
the successful acquisition of a 49% interest in TIC Enterprises,
LLC; the strong performance in the Company's gas distribution
businesses; and the profitable growth of the Company's non-regulated
businesses. None of these factors were given specific weight but
instead were considered collectively. In order to provide a long-
term incentive to Mr. Kean to continue to improve upon the financial
performance of the Company and enhance shareholder value, the
Committee awarded him 15,000 shares of restricted Common Stock. In
order for Mr. Kean to obtain ownership of these shares, certain
vesting and company performance conditions must be satisfied. This
restricted stock award is consistent with the Committee's objective
of aligning the interests of management with the interests of
shareholders.
The Committee believes that the Company's executive compensation
program is well structured and provides maximum incentive to
executives to continually improve upon the financial performance of
the Company; to attract, retain and motivate key officers; and to
enhance shareholder wealth.
Members of the Compensation Committee
R. Van Whisnand, Chairman
Vera King Farris
James J. Forese
Bernard S. Lee<PAGE>
Performance Graph
The graph below reflects the performance of the Company's Common
Stock during the past five fiscal years and compares that
performance with the performance of a broad market index, the S & P
500, and the performance of an industry index during that same
period of time. The industry index is an index of natural gas
distribution companies prepared by Edward D. Jones & Co. The chart
below tracks the performance of an investment of $100 on October 1,
1992 and assumes the reinvestment of dividends.
NUI TOTAL RETURN COMPARISON
NUI 100.0 131.1 88.2 85.3 102.5 132.5
Gas
Utilities 100.0 125.1 110.3 125.1 151.5 179.0
S&P 500 100.0 112.9 117.1 151.9 182.6 256.4
Although the total return for NUI during the five-year period ending
September 30, 1997 has lagged the Gas Utilities Index and the S&P 500,
recently the Company's performance has been much stronger. Based upon the
indices as well as the Company's performance shown above, from
October 1, 1995 to September 30, 1997, the total return for NUI was
55.3%, as compared with a total return of 43.1% for the Gas Utilities
Index. The total return for the S&P 500 during this period was 68.8%.
The closing price of NUI Common Stock on September 30, 1997 was
$23.50.
Annual Compensation, Long-Term Compensation and All Other Compensation
The following table summarizes the compensation paid during
fiscal year 1997 to the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers.
Summary Compensation Table
Annual Long Term
Compensation Compensation
Name and Year Salary Bonus Restricted
Principal ($) ($) Stock All Other
Position Awards Compensation
($)(1) ($)(2)
John Kean, Jr. 1997 $252,650 $150,000 $368,438 $ 5,366
President and 1996 242,050 134,400 292,500 7,875
Chief 1995 221,200 -0- 243,750 6,389
Executive Officer
Frank T. Bahniuk 1997 $160,650 $66,500 $ 98,250 $ 5,378
Senior Vice 1996 154,500 56,200 78,000 5,304
President- 1995 147,675 12,000 61,912 10,539
Energy Management
Lyle C. Motley,Jr. 1997 $162,225 $52,400 $110,531 $ 6,432
President- 1996 155,625 50,400 87,750 28,720
Southern Division 1995 117,644 15,000 78,146 6,643
James R. VanHorn(3) 1997 $143,000 $66,500 $ 85,969 $ 4,489
Vice President, 1996 130,000 46,800 62,400 3,900
General Counsel 1995 42,500 10,000 51,593 979
and Secretary
Victor A.
Fortkiewicz 1997 $143,075 $57,100 $110,531 $ 4,557
President- 1996 108,150 30,000 87,750 3,900
Northern Division 1995 103,400 -0- 21,710 2,819
(1) The number of shares of restricted stock granted to the listed
officers with respect to fiscal year 1997 is as follows: John Kean,
Jr.-15,000; Frank T. Bahniuk-4,000; Victor A. Fortkiewicz-4,500; Lyle
C. Motley, Jr.-4,500; and James R. Van Horn-3,500. These shares will
vest over a four year period as follows: 50% after two years, 25%
after three years and 25% after four years. In order for recipients to
receive the granted shares, specific performance goals must be
achieved by the Company.
(2) Includes the following amounts representing the employer match
under qualified savings plans during fiscal year 1997: John Kean, Jr.-
$5,366; Frank T. Bahniuk-$5,378; Victor A. Fortkiewicz-$4,557; Lyle C.
Motley, Jr.-$5,604; and James R. Van Horn-$4,489. Also includes
relocation reimbursement during fiscal year 1997 to Lyle C. Motley,
Jr.-$828.
(3) Mr. Van Horn joined the Company on June 5, 1995 and the
compensation information for Mr. Van Horn in 1995 relates to the
period of June 5, 1995 through September 30, 1995.
Set forth below is information on current outstanding restricted
stock for the listed officers as of September 30, 1997. Prior to
vesting, the recipients receive dividends on these shares and have
voting rights with respect to these shares.
Name Date of Number of Vesting Schedule
Grant Shares Value on
Remaining 9/30/97 Shares Date
John Kean, Jr. 11/22/93 700 $ 16,516 700 11/22/97
11/22/94 3,450 $ 81,399 1,725 11/22/97
1,725 11/22/98
11/28/95 15,000 $353,910 7,500 11/28/97
3,750 11/28/98
3,750 11/28/99
11/22/96 15,000 $353,910 7,500 11/22/98
3,750 11/22/99
3,750 11/22/00
Frank T. Bahniuk 11/22/94 195 $ 4,601 98 11/22/97
97 11/22/98
11/28/95 3,810 $ 89,893 1,905 11/28/97
953 11/28/98
952 11/28/99
11/22/96 4,000 $ 94,376 2,000 11/22/98
1,000 11/22/99
1,000 11/22/00
Lyle C.
Motley, Jr. 11/22/94 98 $ 2,312 49 11/22/97
49 11/22/98
11/28/95 4,809 $113,464 2,405 11/28/97
1,202 11/28/98
1,202 11/28,99
11/22/96 4,500 $106,173 2,250 11/22/98
1,125 11/22/99
1,125 11/22/00
James R. Van Horn 11/28/95 3,175 $ 74,911 1,588 11/28/97
794 11/28/98
793 11/28/99
11/22/96 3,200 $ 75,501 1,600 11/22/98
800 11/22/99
800 11/22/00
Victor A.
Fortkiewicz 11/28/95 1,336 $ 31,522 668 11/28/97
334 11/28/98
334 11/28/99
11/22/96 4,500 $106,173 2,250 11/22/98
1,125 11/22/99
1,125 11/22/00
Options and Stock Appreciation Rights
No options or Stock Appreciation Rights (SARs) were granted
during fiscal year 1997 to any of the officers listed in the Summary
Compensation Table and no outstanding options or SARs were repriced
in the most recent fiscal year. The table set forth below provides
information concerning all currently outstanding stock options held
by officers listed in the Summary Compensation Table.
<TABLE>
Aggregated Option/SAR Exercises in 1997 Fiscal Year
Option and SAR Values as of September 30, 1997
<CAPTION>
Value of
Unexercised
Shares In-the-Money
Acquired Number of Securities Options/SARs
on Value Underlying Unexercised at FY-End
Exercise Realized Options/SARs at FY-End (#) Exercisable/
Name (#) ($) Exercisable/Unexercisable Unexercisable(1)
<S> <C> <C> <C> <C>
John Kean, Jr. - - 5,000/- $29,845
---------------
<F1>
(1) The fair market value of the Common Stock as of September 30,
1997 was $23.594. Mr. Kean has an option to purchase 5,000 shares at a
per share exercise price of $17.625.
</TABLE>
Retirement Benefit Plans
The executive officers of the Company, other than Lyle C.
Motley, Jr., earn retirement benefits that may be payable under
three separate plans: (1) the Company's Retirement Plan, a funded
plan in which more than 70% of the Company's employees are eligible
to participate; (2) the ERISA Excess Benefits Plan, an unfunded plan
that is designed to provide benefits for those participants in the
Retirement Plan for whom benefits are reduced by reason of the
limitations imposed under Section 415 of the Internal Revenue Code
of 1986, as amended from time to time (the "Code"); and (3) the
Supplemental Retirement Benefits Plan, an unfunded plan that
provides additional benefits to certain key employees, including
those listed in the Summary Compensation Table. Lyle C. Motley, Jr.
earns retirement benefits that may be payable under the following
three separate plans: (1) the Pennsylvania & Southern Gas Company
Employees Retirement Plan (the "P&S Retirement Plan"); (2) the City
Gas Company of Florida Pension Plan (the "CGF Pension Plan"); and
(3) the Supplemental Retirement Benefits Plan. While participants in
the Retirement Plan and the ERISA Excess Benefits Plan become vested
in their entitlement to benefits under vesting requirements
established under the Employee Retirement Income Security Act of
1974, participants in the Supplemental Retirement Benefits Plan are
eligible to receive benefits from the plan only if they reach
retirement age while working for the Company.
The Retirement Plan, which is funded entirely by the Company,
provides that a participant retiring at or after age 65 (or at or
after age 62 with at least 25 years of credited service) will
receive an annual retirement benefit equal in amount (when
calculated as a life annuity with two years certain) to 1-1/2% of
the participant's final average compensation (the average of the<PAGE>
highest sixty consecutive months' base salary) multiplied by the
number of years of credited service. Benefits payable to
participants in the Retirement Plan may be reduced by reason of the
limitations imposed under Section 415 of the Code. The ERISA Excess
Benefits Plan will pay the difference between the amount payable to
the participant under the Retirement Plan and the amount the
participant would have been paid but for the limitations imposed
under Section 415 of the Code. Benefits under this plan are subject
to the same terms and conditions as the benefits payable to the
participant under the Company's Retirement Plan.
The unfunded Supplemental Retirement Benefits Plan provides that
each eligible employee who reaches retirement age while working for
the Company will receive an annual retirement benefit equal in
amount (when calculated as a life annuity with two years certain) to
2% of the participant's final average total compensation (the
average of the highest sixty consecutive months' earnings, including
cash bonuses earned) multiplied by the number of years of credited
service up to a maximum of 60%. Benefits otherwise payable under the
unfunded Supplemental Retirement Benefits Plan are reduced by
amounts payable under the Retirement Plan and the ERISA
ExcessBenefits Plan.
The following table shows the maximum aggregate annual
retirement benefit payable from all three plans at normal retirement
age for various levels of final average compensation and years of
service, assuming payment of benefits in the form of a life annuity
with two years certain:
Years of Service
Remuneration 10 Years 20 Years 30 Years 40 years
$ 50,000 $10,000 $ 20,000 $ 30,000 $ 30,000
100,000 20,000 40,000 60,000 60,000
150,000 30,000 60,000 90,000 90,000
200,000 40,000 80,000 120,000 120,000
250,000 50,000 100,000 150,000 150,000
300,000 60,000 120,000 180,000 180,000
350,000 70,000 140,000 210,000 210,000
400,000 80,000 160,000 240,000 240,000
450,000 90,000 180,000 270,000 270,000
Average annual compensation utilized for formula purposes
includes salary and cash bonus as reported on the Summary
Compensation Table. The benefit amounts shown in the preceding table
are not subject to any deduction for Social Security benefits or
other offset amounts. The number of years of service now credited
under the Retirement Plan for the participants listed in the
"Summary Compensation Table" is as follows: John Kean, Jr., 12
years; Frank T. Bahniuk, 19 years; James R. Van Horn, 2 years; and
Victor A. Fortkiewicz, 18 years.
City Gas Company of Florida Pension Plan. The CGF Pension Plan
is the retirement plan in which the Company's non-bargaining unit
employees based in Florida are generally eligible to participate.
The CGF Pension Plan, which is funded entirely by the Company,
provides that a participant retiring at or after age 65 will receive
an annual retirement benefit equal in amount (when calculated as a
life annuity with two years certain) to 1-1/4%of the participant's
final average compensation (the average of the highest sixty
consecutive months' payroll compensation in the last ten years of
the participant's service subject to report on Internal Revenue
Service Form W-2) multiplied by the number of years of credited
service. Benefits payable to participants in the CGF Pension Plan
may be reduced by reason of the limitations imposed under Section
415 of the Code.
The following table shows the maximum aggregate annual
retirement benefit payable at normal retirement age for various
levels of final average compensation and years of service under the
CGF Plan, assuming the payment of benefits as a life annuity with
two years certain:
Years of Service
Remuneration 10 Years 20 Years 30 Years 40 years
$ 50,000 $ 6,250 $12,500 $18,750 $25,000
100,000 12,500 25,000 37,500 50,000
150,000 18,750 37,500 56,250 75,000
200,000 18,750 37,500 56,250 75,000
Average annual compensation utilized for formula purposes
includes salary, bonus, the value of restricted stock grants and
payments for unused vacation as reduced by reason of the limitations
imposed under Section 415 of the Code. The benefit amounts shown in
the preceding table are not subject to deduction for Social Security
benefits or other offset amounts. Lyle C. Motley, Jr. became a
participant in the CGF Plan effective January 1, 1996 and has two
years of credited service under the CGF Plan. Prior thereto, he had
been a participant in the Pennsylvania and Southern Gas Company
Retirement Plan, discussed below.
Pennsylvania and Southern Gas Company Employees Retirement Plan.
The P&S Retirement Plan is the retirement plan in which the
Company's employees based in New York, Pennsylvania, North Carolina
and Maryland are generally eligible to participate. The P&S
Retirement Plan, which is funded entirely by the Company, provides
that a participant retiring at or after age 65 will receive an
annual retirement benefit equal in amount to 1% of final average
compensation (the average of the highest sixty consecutive months'
payroll compensation during the last ten years of the participant's
service) plus 1.55% of the participant's final average compensation
in excess of 50% of Covered Compensation (defined by the Social
Security Administration for someone reaching Social Security normal
retirement age in the year of termination) multiplied by the number
of years of credited service up to a maximum of thirty-five years.
Benefits payable to participants in the P&S Retirement Plan may be
reduced by reason of the limitations imposed under Section 415 of
the Code.
The following table shows the maximum aggregate annual
retirement benefit payable at normal retirement age for various
levels of final average compensation and years of service:
Years of Service
Remuneration 10 Years 20 Years 30 Years 40 years
$ 50,000 $ 7,100 $14,150 $21,250 $24,800
100,000 14,850 29,650 44,500 51,900
150,000 22,600 45,150 67,750 79,050
200,000 22,600 45,150 67,750 79,050
Final annual compensation utilized for formula purposes includes
salary and bonus payments as reduced by reason of the limitations
imposed under Section 415 of the Internal Revenue Code, which limit
the participant's annual average compensation for formula purposes
to $150,000. Lyle C. Motley, Jr. has 14 years of credited service
under the P&S Plan.
Change in Control Agreements
The Company is party to Change in Control Agreements with
certain officers, including those officers listed in the Summary
Compensation Table. The purpose of these Agreements is to provide
key management personnel with certain financial protection in the
event of a change in control of the Company and the subsequent
termination of the officer's employment. By providing this
protection, the Company helps to ensure that the efforts of key
employees remain focused on the Company's performance and the
enhancement of shareholder value during rumored, potential or actual
change in control situations.
A covered officer becomes entitled to the payments and benefits
provided for in the Agreement if, within thirty-six months after the
change in control, the Company (or its successor) terminates the
employee other than for cause or as a result of the employee's death
or disability or the employee terminates his or her employment for
Good Reason (as defined in the Agreement). Under the Agreement, the
payments to which a covered officer will be entitled in such a
termination event include a payment not to exceed three times the
officer's annual base salary plus three times the highest incentive
compensation award received by the officer during the preceding
thirty-six months. In addition, the Agreements provide that
following termination of employment the officer will continue to
participate in all employee benefit plans in which the officer was
eligible to participate on the date of termination; all incentive
awards not yet paid will be payable; and the spread between the
exercise price and the higher of the highest bid price during the
twelve months preceding termination or the highest price per share
paid in connection with any change in control will be payable in
cash in lieu of stock issuable upon the exercise of stock options.
All Change in Control Agreements, with the exception of the
Agreement with John Kean, Jr., provide that in the event that any
payment or benefit received under the Agreement would be an "excess
parachute payment" (within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended from time to time), then
the present value of all payments to be received under the Agreement
shall be reduced to an amount which maximizes payments but does not
result in the payment of an excess parachute payment. The Agreement
with John Kean, Jr. provides that, if any payments are subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code
as a result of an excess parachute payment, the Company (or its
successor) shall gross-up the payments to be made to him so that the
net amount shall be equal to the payments prior to the payment of
any excise tax and any income taxes on the gross-up payment.
Except as set forth above, the Company is not party to any other
employment, change in control or termination agreements with
executive officers.
OTHER BUSINESS
The Board of Directors does not intend to present any other
business at the Annual Meeting, and is not aware of any business to
be presented by others. However, if other matters are properly
presented for a vote, the proxies will be voted upon such matters in
accordance with the judgment of the persons acting under the proxy.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended
September 30, 1997 is being mailed to shareholders with this Notice
of Annual Meeting of Shareholders and Proxy Statement. Shareholders
are referred to the Annual Report for financial and other
information about the Company.
The Company will furnish without charge a copy of its most
recent Annual Report on Form 10-K as filed with the Securities and
Exchange Commission to any beneficial owner of the Company's Common
Stock upon receipt of a written request from such person. Please
direct all such requests to James R. Van Horn, Vice President,
General Counsel and Secretary, 550 Route 202-206, P.O. Box 760,
Bedminster, New Jersey 07921-0760.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals for consideration
at the Company's 1999 Annual Meeting. Shareholders who desire to
submit a proposal to be considered for inclusion in the Proxy
Statement relating to that meeting must satisfy certain
informational and stock ownership requirements established by the
Company's By-Laws and the Securities and Exchange Commission and
submit such proposal to the Secretary of the Company at 550 Route
202-206, P.O. Box 760, Bedminster, New Jersey 07921-0760 no later
than August 21, 1998.
By Order of the Board of Directors
JAMES R. VAN HORN
Vice President, General Counsel and
Secretary
Dated: December 26, 1997
Bedminster, New Jersey<PAGE>
[Back Page]
Map to meeting location
[Proxy Card - Front]
P
R
O
X
Y
NUI Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John Kean, John Kean, Jr. and James R.
Van Horn, or any one of them, each with full power of substitution,
attorneys, agents and proxies to vote on behalf of the undersigned at
the Annual Meeting of Shareholders of NUI Corporation to be held at
10:30 a.m. on January 27, 1998, or at any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is
given, this proxy will be voted FOR with respect to items 1, 2, 3 and
4.
(Continued, and to be marked, dated and signed, on the other side)
Whether or not you expect to attend the meeting you are requested to
date and sign this proxy and mail it promptly in the enclosed
envelope.
Fold and Detach Here<PAGE>
[Proxy Card - Back]
Please mark your
X votes as in this
example.
1. Election of
Directors
WITHHELD
FOR FOR ALL
Nominees:
John Kean
John Kean, Jr.
Bernard S. Lee
WITHHELD FOR: (Write that nominee's name
in the space provided below).
FOR AGAINST ABSTAIN
2. Approval of Amendment to the 1996
Stock Option and Stock Award Plan.
3. Approval of Amendment to the 1996
Employee Stock Purchase Plan.
4. Ratification of the appointment of
Arthur Andersen LLP, as the Company's
independent public accountants.
5. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
Please mark this box if you plan to
attend the Annual Meeting in person
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee, or guardian, please give full title
as such. If a corporation, or limited liability company, please sign
in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED PREPAID ENVELOPE.
SIGNATURE(S) DATE
Fold and Detach Here
NUI Corporation
Savings and Investment Plan
Savings and Investment Plan for Collective
Bargaining Employees
As a participant in the NUI Corporation Savings and Investment Plan or
the NUI Savings and Investment Plan for Collective Bargaining
Employees (collectively, the "Plan"), you have the right to direct
Barclays Global Investors, N.A., (the "Plan Trustee") to vote the
shares of Common Stock of NUI Corporation (the "Company"), allocated
to your account at the Annual Meeting of Shareholders of the Company
to be held on January 27, 1998.
For your information, an Annual Report, Proxy Statement and proxy card
are enclosed. In addition, a postage-paid return envelope addressed to
First Chicago Trust Company is enclosed for your use in returning your
completed, signed, and dated proxy card to the Plan Trustee.
The Plan Trustee will hold your voting instructions in confidence and
will not divulge or release specific information regarding your
instructions to any person, including officers or employees of the
Company, except to the extent required by law.
If your completed proxy card is not received by January 21, 1998, the
Administrative Committee for the Plan may direct the Plan Trustee to
vote your shares.
Barclays Global Investors, N.A.<PAGE>
