December 28, 1998
Dear NUI Shareholder:
We are pleased to invite you to attend the Company's 1999 Annual Meeting
of Shareholders, which will be held at 10:30 a.m. on Tuesday, January
26, 1999 at the offices of NUI Elizabethtown Gas, 1085 Morris Avenue,
Union, New Jersey.
At the Annual Meeting, we will consider the election of three directors
and the appointment of Arthur Andersen LLP as our independent public
accountants for the fiscal year ending September 30, 1999.
We will also review the Company's financial results for fiscal year 1998
and discuss our corporate reorganization that positioned the Company to
excel in an increasingly competitive environment by placing greater
focus on revenue-generating activities.
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 26th.
Sincerely,
JOHN KEAN JOHN KEAN, JR.
Chairman of the Board President and Chief Executive
Officer<PAGE>
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 26, 1999 at the offices of NUI
Elizabethtown Gas, 1085 Morris Avenue, Union, New Jersey, for the
following purposes:
1. To elect three (3) directors for three-year terms
expiring in 2002;
2. To ratify the appointment of Arthur Andersen LLP as
independent public accountants for the fiscal year
ending September 30, 1999; and
3. 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 11,
1998 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
Chief Administrative Officer,
General Counsel and Secretary
December 28, 1998
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 26, 1999 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 28, 1998.
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 11, 1998 are
entitled to notice of and to vote at the Annual Meeting. As of December
11, 1998 there were outstanding 12,656,109 shares of Common Stock
entitled to notice of and to vote at the Annual Meeting. These shares
were held by 6,420 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 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 and FOR the ratification of Arthur
Andersen LLP as independent public accountants for the fiscal year
ending September 30, 1999.
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.
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 nine 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. Calvin R.
Carver, who attained the age of 72 during his current term as a
director, will be retiring from the Board at the Annual Meeting.
It is the intention of the persons named as proxies to vote in favor of
the election of Dr. Vera King Farris, J. Russell Hawkins and John
Winthrop as directors of the Company for three-year terms expiring at
the 2002 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 1996 Annual Meeting of Shareholders except for J. Russell Hawkins,
who was elected to the Board in September, 1998.
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 Dr. Vera King Farris)
Dr. Vera King Farris, age 58
Current term expires in 1999
Member of the Audit, 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 J. Russell Hawkins)
J. Russell Hawkins, age 43
Current term expires in 1999
Mr. Hawkins has served as a director of the Company since September
1998. Since September 1996, he has served as President and Chief
Executive Officer and a director of Paragon Networks International
(designer and manufacturer of innovative access products for use in wide
area network systems). Prior thereto, he served as Managing Director of
AT&T (Lucent Technologies).
(Picture of John Winthrop)
John Winthrop, age 62
Current term expires in 1999
Member of the Audit, Compensation 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, the Pioneer Funds and the Palmetto Project,
Charleston, SC.
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 1999:
(Picture of John Kean)
John Kean, age 69
Current term expires in 2001
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.)
John Kean, Jr., age 41
Current term expires in 2001
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. Bernard S. Lee)
Dr. Bernard S. Lee, age 64
Current term expires in 2001
Member of the Audit, Compensation and Executive 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.
(Picture of James J. Forese)
James J. Forese, age 62
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
July, 1998 he has served as President and Chief Executive Officer and a
director of IKON Office Solutions (office equipment and supply systems).
From January, 1997 to June, 1998 he served as Executive Vice President
and President, International Operations, of IKON Office Solutions. 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. Mr. Forese also
serves as a director of American Management Systems, Inc. and Unisource
World Wide Corporation.
(Picture of R. Van Whisnand)
R. Van Whisnand, age 54
Current term expires in 2000
Member of the Compensation and Executive Committees
Mr. Whisnand has served as a director since 1982. Since September, 1998
he has served as Managing Partner, Osprey Partners Investment
Management, LLC (investment management firm). From March, 1995 to
August, 1998 he served as a principal of Fox Asset Management
(investment management firm). Prior thereto, he served as a partner in
Combined Capital Management (investment management firm).
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 1998. During the year, total attendance at
Board and Committee meetings was 97%. 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 1998. The
current members of the Executive Committee are Calvin R. Carver, James
J. Forese, John Kean (Chairman), John Kean, Jr., Bernard S. Lee 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 1998. The current members of the Audit Committee are
Calvin R. Carver, Vera King Farris, 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 six times during fiscal year 1998. 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 1998. 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, R. Van Whisnand (Chairman) and John
Winthrop.
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, 1998, the total deferred
grants for non-employee directors provide for the issuance of 33,113
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 with John Kean, who
retired as Chief Executive Officer of the Company effective April 1,
1995. The Agreement expires on March 31, 2001. 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. 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.
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 1998 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, R. Van Whisnand (Chairman) and John Winthrop.
Certain Transactions
Companies and firms with which certain directors are, or during fiscal
year 1998 were, affiliated as an officer and/or director had
transactions in the ordinary course of business with the Company during
fiscal year 1998 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
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, 1999. 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 aware of only the following shareholders, who own
beneficially more than five percent of the Company's Common Stock.
Information concerning these shareholders and their Common Stock ownership
is set forth below:
Name and Address Number of Shares Percent of
Beneficial Owner Class
Northern Asset Management, Inc. 648,700 5.13%
130 W. Superior St.
Duluth, MN 55802
Fiduciary Trust Company
International 671,221 5.30%
Two World Trade Center
New York, NY 10048
Security Ownership of Management. The following table shows, as of
November 30, 1998, the number and percent of the shares of Common 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 Beneficial Owner Shares (1)(2) of Class
Common
Stock A. Mark Abramovic 14,560 *
Michael J. Behan 18,575 *
Calvin R. Carver 128,912(3) 1.02%
Vera King Farris 4,091 *
James J. Forese 6,399 *
J. Russell Hawkins 219 *
John Kean 420,627(4) 3.32%
John Kean, Jr. 101,224 *
Bernard S. Lee 11,445(5) *
Robert F. Lurie 11,990 *
James R. Van Horn 17,074 *
R. Van Whisnand 6,399 *
John Winthrop 13,682 *
13 directors and
executive officers
as a group 755,197 5.97%
*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, 6,249 shares each; John
Winthrop, 5,552 shares; Bernard S. Lee, 4,930 shares; Vera King Farris,
3,665 shares; J. Russell Hawkins, 219 shares; and all directors as a
group, 33,113 shares; (b) shares of restricted stock, as follows: A.
Mark Abramovic, 12,375 shares; Michael J. Behan, 8,464 shares; John
Kean, Jr., 42,500 shares; Robert F. Lurie, 7,464 shares; James R. Van
Horn, 8,518 shares; and all directors and executive officers as a group,
79,321 shares; and (c) shares that are subject to currently exercisable
stock options, as follows: John Kean, Jr., 5,000 shares; and all
directors and executive 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 41
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 50
Senior Vice President, Chief Operating Officer and Chief Financial
Officer
Mr. Abramovic has served as Senior Vice President and Chief Financial
Officer of the Company since September, 1997 and as Chief Operating
Officer since May, 1998. 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.
Michael J. Behan, age 52
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.
Robert F. Lurie, age 41
Vice President-Corporate Development and Treasurer<PAGE>
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.
James R. Van Horn, age 42
Chief Administrative Officer, General Counsel and Secretary
Mr. Van Horn has served as General Counsel and Secretary of the Company
since June, 1995 and Chief Administrative Officer since May, 1998.
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.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
is comprised of five independent, non-employee directors. The Committee
has responsibility for 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 and its
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 the provision of a competitive benefits
package.
The components of the Company's executive compensation program are base
salary, 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.
In making determinations for long-term performance-based restricted
stock grants, and 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, the Committee considers data provided by
independent compensation experts for the purpose of determining
competitive levels of total compensation for each of the Company's
executives. The Committee's objective is to develop a total compensation
program that is competitive in the marketplace and provides significant
incentive to increase shareholder value. Accordingly, the mix of
compensation for executive officers will generally consist of: (i) a
base salary that is below the competitive midpoint for similar positions
in the marketplace; (ii) cash bonuses which are generally in line with
the competitive midpoint for similar positions in the marketplace; and
(iii) long-term incentive grants of restricted stock that are generally
above the midpoint for similar positions in the marketplace. While the
Committee believes it is important to ensure that total compensation
levels for each of the Company's executives are competitive, it also
believes that the mix of compensation should be weighted toward variable
components which are either partially or totally contingent upon the
achievement of financial performance objectives by the Company.
In order to further align management's interest with NUI shareholders,
the Board of Directors has implemented a Committee recommendation to
establish 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
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 in a deferred grant of Common Stock 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 given six years to
comply. The Committee regularly monitors the progress of officers and
directors toward compliance.
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 1998 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, all shares related
to the applicable performance period are forfeited. The Committee has
the authority to make adjustments to these performance objectives if it
deems such adjustments appropriate.
As a result of warmer-than-normal weather, a one-time restructuring
charge resulting from the Company's reorganization and other factors,
the Company's net income and earnings per share in fiscal year 1998 were
lower than net income and earnings per share results in fiscal year
1997. As a result, all shares of restricted Common Stock previously
granted by the Committee, and which were to vest upon the achievement of
performance goals in fiscal 1998, were forfeited. A total of 34,796
shares of NUI Common Stock, with a market value of $875,328, were
forfeited by the holders of restricted stock. Of this amount, a total of
19,547 shares of Common Stock, with a market value of $491,724, were
forfeited by those officers listed in the Summary Compensation Table.
The compensation paid to John Kean, Jr., President and Chief Executive
Officer of the Company, with respect to fiscal year 1998 is set forth in
the Summary Compensation Table. Mr. Kean's salary increased by 3.4% in
1998 from the salary he received in 1997. While the Committee and the
Board feel that Mr. Kean performed well in fiscal 1998, it felt that in
light of the Company's financial performance he should not receive a
cash bonus. In addition, as a result of the Company's failure to meet
its performance targets in fiscal year 1998, Mr. Kean forfeited a total
of 11,250 shares of previously granted restricted Common Stock, with a
market value of $283,005. The Committee strongly believes in
performance-based compensation in order to provide an incentive to
management to create shareholder value. In order to provide a future
long-term incentive for Mr. Kean to lead the Company to continually
improve financial performance and to enhance shareholder value, the
Committee granted him 20,000 shares of restricted Common Stock, which is
reflected in the Summary Compensation Table. 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
John Winthrop
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, 1993 and assumes the reinvestment of dividends.
NUI TOTAL RETURN COMPARISON
[GRAPHICAL REPRESENTATION OF CHART]
1993 1994 1995 1996 1997 1998
NUI 100.0 67.3 65.1 78.2 101.1 103.0
Gas
Utilities 100.0 87.1 97.6 117.2 137.2 154.3
S&P 500 100.0 103.7 134.5 161.7 227.0 247.7
Although the total return for NUI during the five-year period ending
September 30, 1998 has lagged the Gas Utilities Index and the S&P 500,
recently the Company's performance has been comparable to that of the
gas utility industry. Based upon the indices as well as the Company's
performance shown above for the three-year period ending September 30,
1998, the total return for NUI was 58.2%, as compared with a total
return of 58.1% for the Gas Utilities Index. The total return for the
S&P 500 during this period was 84.2%. The closing price of NUI Common
Stock on September 30, 1998 was $23.00.
Annual Compensation, Long-Term Compensation and All Other Compensation
The following table summarizes the compensation paid during fiscal year
1998 to the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers.
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Annual Compensation Compensation
Restricted All Other
Name and Principal Fiscal Salary Bonus Stock Awards Compensation
Position Year ($) ($) ($)(1)(2) ($)(3)
<S> <C> <C> <C> <C> <C>
John Kean, Jr. 1998 $261,175 $ -- $503,120 $6,302
President and Chief 1997 252,650 150,000 368,438 5,366
Executive Officer 1996 242,050 134,400 292,500 7,875
A. Mark Abramovic(4) 1998 $190,000 $ 47,500 $226,404 $6,175
Senior Vice President, 1997 15,800 -- 36,844 --
Chief Operating Officer
& Chief Financial
Officer
James R. Van Horn 1998 $154,500 $ 39,000 $ 88,046 $6,030
Chief Administrative 1997 143,000 66,500 85,969 4,489
Officer, General Counsel 1996 130,000 46,800 62,400 3,900
and Secretary
Robert F. Lurie 1998 $146,475 $ 30,280 $ 75,468 $4,426
Vice President-Corporate 1997 128,025 45,600 73,688 5,090
Development & Treasurer 1996 114,800 23,400 58,500 3,223
Michael J. Behan 1998 $140,175 $ 35,300 $ 88,046 $4,763
Vice President-New 1997 133,325 49,400 81,056 4,616
Ventures 1996 117,075 42,700 64,350 3,495
</TABLE>
(1) The number of shares of restricted stock granted to the listed
officers with respect to fiscal year 1998 is as follows: John Kean, Jr.-
20,000; A. Mark Abramovic-9,000; James R. Van Horn-3,500; Robert F.
Lurie-3,000; and Michael J. Behan-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) Since the Company did not achieve its performance objectives in
fiscal year 1998, shares of previously granted restricted stock, the
vesting of which was contingent upon meeting these objectives, were
forfeited. The number of shares forfeited by each of the listed officers
is as follows: John Kean, Jr.-11,250; A. Mark Abramovic-1,125; James R.
Van Horn-2,469; Robert F. Lurie-2,215; and Michael J. Behan-2,488.
(3) Includes the following amounts representing the employer match under
qualified savings plans during fiscal year 1998: John Kean, Jr.-$6,302;
A. Mark Abramovic-$6,175; James R. Van Horn-$6,030; Robert F. Lurie-
$4,426; and Michael J. Behan-$4,763.
(4) Mr. Abramovic joined the Company on September 2, 1997 and the
compensation information for Mr. Abramovic in 1997 relates to the period
of September 2, 1997 through September 30, 1997.
Set forth below is information on current outstanding restricted stock
for the listed officers as of September 30, 1998. Information on the
number of shares forfeited as a result of the Company's failure to
achieve performance goals for fiscal year 1998 is also provided. Prior to
vesting, the recipients receive dividends on these shares and have voting
rights with respect to these shares.
<TABLE>
Vesting Schedule
<CAPTION>
Shares Value on
Date of Remaining 9/30/98 Forfeited Vesting Vesting
Officer Grant to Vest $22.532 Shares Shares Date
<S> <C> <C> <C> <C> <C> <C>
John
Kean, Jr. 11/22/94 1,725 $ 38,868 1,725 11/22/98
11/28/95 7,500 $168,990 3,750 3,750 11/28/99
11/15/96 15,000 $337,980 3,750 3,750 11/15/98
3,750 11/15/99
3,750 11/15/00
11/24/97 15,000 $337,980 3,750 3,750 11/24/99
3,750 11/24/00
3,750 11/24/01
A. Mark
Abramovic 11/24/97 4,500 $101,394 1,125 1,125 11/24/99
1,125 11/24/00
1,125 11/24/01
James R.
Van Horn 11/28/95 1,587 $ 35,758 794 793 11/28/99
11/15/96 3,200 $ 72,102 800 800 11/15/98
800 11/15/99
800 11/15/00
11/24/97 3,500 $ 78,862 875 875 11/24/99
875 11/24/00
875 11/24/01
Robert F.
Lurie 11/22/94 97 $ 2,186 97 11/24/98
11/28/95 1,429 $ 32,198 715 714 11/28/99
11/15/96 3,000 $ 67,596 750 750 11/15/98
750 11/15/99
750 11/15/00
11/24/97 3,000 $ 67,596 750 750 11/24/99
750 11/24/00
750 11/24/01
Michael J.
Behan 11/22/94 181 $ 4,078 181 11/22/98
11/28/95 1,676 $ 37,764 838 838 11/28/99
11/15/96 3,300 $ 74,356 825 825 11/15/98
825 11/15/99
825 11/15/00
11/24/97 3,300 $ 74,356 825 825 11/24/99
825 11/24/00
825 11/24/01
</TABLE>
Options and Stock Appreciation Rights
No options or Stock Appreciation Rights (SARs) were granted during
fiscal year 1998 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.
Aggregated Option/SAR Exercises in 1998 Fiscal Year
Option and SAR Values as of September 30, 1998
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)
John Kean, Jr. - - 5,000/- $24,535
(1)The fair market value of the Common Stock as of September 30, 1998
was $22.532. Mr. Kean has an option to purchase 5,000 shares at a per
share exercise price of $17.625.
Retirement Benefit Plans
The executive officers of the Company 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. 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 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 Excess Benefits 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:
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., 13 years; A. Mark Abramovic, 1 year; James R.
Van Horn, 3 years; Robert F. Lurie, 4 years; and Michael J. Behan, 20
years.
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 of up to 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,
1998 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, Chief Administrative Officer, 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 2000 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 information 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, 1999.
By Order of the Board of Directors
JAMES R. VAN HORN
Chief Administrative Officer,
General Counsel and Secretary
Dated: December 28, 1998
Bedminster, New Jersey
Back Page
Directions and map to meeting location
Proxy Card
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 26, 1999, 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 and 2.
(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
Please mark your
votes as in this
example.
1. Election of Directors
WITHHELD
FOR FOR ALL
Nominees:
Vera King Farris
J. Russell Hawkins
John Winthrop
WITHHELD FOR: (Write that nominee's name in the space provided below).
2. Ratification of the appointment of Arthur Andersen LLP, as the
Company's independent public accountants.
3. 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<PAGE>
