<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
NORTH CAROLINA NATURAL GAS COMPANY, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
CALVIN WELLS
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
NORTH CAROLINA NATURAL GAS CORPORATION
150 Rowan Street/Post Office Box 909
Fayetteville, North Carolina 28302-0909
-----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 10, 1995
-----------------------------------------------------------------
December 5, 1994
Fayetteville, North Carolina
TO THE STOCKHOLDERS:
Notice is hereby given that in accordance with the By-Laws, the Annual
Meeting of the Stockholders of North Carolina Natural Gas Corporation (the
"Company") will be held at The Radisson Prince Charles Hotel, 450 Hay Street,
Fayetteville, North Carolina, at 10:00 A.M., on the 10th day of January, 1995,
for the following purposes:
1. To elect three Directors to serve for a term of three years.
2. To transact such other business as may properly come before the meeting.
Only stockholders of record on November 25, 1994 are entitled to vote at
the Annual Meeting and any adjournment thereof.
SALLY T. SOWERS,
Secretary
- - --------------------------------------------------------------------------------
Each Stockholder Who Does Not Expect to Attend is Urged to Date and Sign the
Enclosed Proxy and Return it Promptly in the Enclosed Envelope Which Requires No
Postage if Mailed in the United States.
<PAGE> 3
NORTH CAROLINA NATURAL GAS CORPORATION
150 ROWAN STREET/POST OFFICE BOX 909
FAYETTEVILLE, NORTH CAROLINA 28302-0909
910-483-0315
DECEMBER 5, 1994
------------------------------------
Proxy Statement
------------------------------------
This proxy statement is furnished to Stockholders by the management of the
Company for solicitation of proxies for use at the Annual Meeting of
Stockholders on Tuesday, January 10, 1995, at 10:00 A.M. at The Radisson Prince
Charles Hotel, 450 Hay Street, Fayetteville, North Carolina, and at all
adjournments thereof, for the purposes set forth in the attached Notice of
Annual Meeting of Stockholders. Any proxy given pursuant to the solicitation may
be revoked by the persons giving it at any time before it is exercised. However,
any proxy duly executed will continue in full force and effect until written
instructions revoking it or a duly executed proxy bearing a later date is filed
with the Secretary of the Company. A proxy may also be revoked if the person
executing the proxy is present at the meeting and orally states that he wishes
to vote in person.
The Annual Report for the twelve-month period ended September 30, 1994, is
enclosed herewith.
This proxy is solicited on behalf of the Board of Directors of the Company
and the cost of solicitation has been or will be borne by the Company. The
solicitation is to be by mail. In addition, arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy material to their principals and the Company will reimburse them for
their expense in so doing. It may be that further solicitation of proxies will
be made by telephone or oral communication with some stockholders of the Company
following the original solicitation. All such further solicitation will be made
by officers and regular clerical employees of the Company who will not be
additionally compensated therefore.
RECORD DATE AND VOTING SECURITIES
Only common stockholders of record at the close of business on the 25th day
of November, 1994, are entitled to vote at the Annual Meeting. On that date, the
Company had outstanding and entitled to vote 6,366,544 shares of common stock,
$2.50 par value. Each outstanding share entitles the record holder to one vote.
No stockholder has the right to vote cumulatively for the election of directors.
As of September 30, 1994, no stockholder, to the knowledge of the Company, is
the beneficial owner of 5% or more of the Company's common stock.
ELECTION OF DIRECTORS AND INFORMATION AS TO MEMBERS
The Board of Directors is divided into three classes, with the term of
office of each class ending in successive years. The terms of the Directors of
Class I expire with this Annual Meeting of Stockholders. Each of the nominees
for Class I, if elected, will serve three years until the 1998 Annual Meeting
and until their successors have been elected and qualified. The current
Directors of Classes II and III will continue in office until the 1996 and 1997
Annual Meetings, respectively.
<PAGE> 4
The persons named in the enclosed form of proxy will vote for the election
of the three nominees named below. In the event any of the nominees should
become unable to serve as a Director, the proxy will be voted in accordance with
the best judgment of the person or persons acting under it. The proxies
solicited hereby will be voted FOR the election of three nominees listed below
unless otherwise specified in the proxy.
All of the nominees are currently Directors of the Company and each has
served continuously as a Director of the Company since the year indicated except
Mr. Johnson who has been elected a director effective December 15, 1994, to fill
a vacancy created by the retirement of Donald W. McCoy. The Company is not aware
of any reason why any nominee would be unable to serve.
The following table sets forth the names and ages of the Nominees and
Continuing Directors, their principal occupation during the past five years and
other data regarding them, including Company securities beneficially owned at
November 25, 1994, based on information received from the respective nominees
and continuing Directors.
INFORMATION CONCERNING DIRECTORS
<TABLE>
<CAPTION>
SHARES
DIRECTOR PRINCIPAL OCCUPATION AND DIRECTORSHIPS IN BENEFICIALLY
NAME AGE SINCE OTHER PUBLIC COMPANIES WHERE APPLICABLE OWNED(1)(2)
---------------------- --- -------- ---------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
NOMINEES FOR ELECTION AS DIRECTORS
George T. Clark, Jr. 66 1978 Attorney at Law, Wilmington, North Carolina 6,286
Robert T. Johnson 58 1994 Retired Partner, Arthur Andersen LLP, Atlanta, Georgia 2,000
William H. Prestage 59 1988 President, Prestage Farms, Clinton, North Carolina 9,340
CONTINUING DIRECTORS
Paul A. DelaCourt 60 1989 Chairman, The North Carolina Enterprise Corporation; Vice 7,250
(Term Expires 1996) Chairman, North Hills, Inc., Raleigh, North Carolina;
Directorships: Federal Reserve Bank of Richmond and Golden
Corral Corporation.
C. Felix Harvey 74 1983 Chairman, Harvey Enterprises, Inc., farm and petroleum 59,647
(Term Expires 1996) products, and real estate, Kinston, North Carolina,
Directorship: Katy Industries, Inc.
James E.S. Hynes 54 1993 Chairman of the Board of Hynes Sales Co. Inc., 3,000
(Term Expires 1997) manufacturers representatives, Directorship: Ruddick
Corporation
Hector MacLean 74 1959 Chairman Emeritus, Southern National Corporation, 360
(Term Expires 1996) Lumberton, North Carolina, Directorship: Southern National
Corporation.
Richard F. Waid 66 1981 Managing Director, The Robinson-Humphrey Company, 13,019
(Term Expires 1997) Investment Banking & Securities Broker/Dealer, Atlanta,
GA, 1992-date; Senior Vice President, Tucker Anthony,
Incorporated, Investment Banking & Securities
Broker/Dealer, Washington, D.C., 1990-1992; Executive Vice
President, Johnston, Lemon & Co., Inc. Investment Banking,
Washington, D.C., 1988-1990. Directorships: Griffith
Consumers Corp. and Iverson Technology Corp.
Calvin B. Wells 58 1981 Chairman, President and Chief Executive Officer of the 7,593
(Term Expires 1997) Company.
All Directors and Officers as a 108,495
Group, including those named above
(22 persons)
</TABLE>
- - ---------------
(1) The percentage of outstanding shares owned beneficially by each person named
above is less than 1%; and all Directors and Officers as a group owned
1.9%.
(2) Includes full shares acquired through the Dividend Reinvestment Plan.
2
<PAGE> 5
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
Meetings of the Board of Directors are held regularly each quarter,
including an organizational meeting following the conclusion of the Annual
Meeting of Stockholders. Special meetings of the Directors are called as
necessary. The Board held five meetings in fiscal year 1994.
The Company has two standing committees of the Board of Directors, an Audit
Committee and a Personnel Committee. The Company does not have a Nominating
Committee.
The Audit Committee, which consists of Messrs. Harvey, MacLean, Prestage
and Waid, is responsible for approval of the services performed by the Company's
independent accountants and for review of the objectivity of its financial
reporting. It meets with appropriate Company financial personnel and independent
public accountants in connection with its review of the financial statements to
be included in the Company's Annual Report to Stockholders. This Committee also
recommends to the Board the appointment of the independent public accountants to
serve as auditors for the following year in examining the accounts of the
Company. This Committee met one time during fiscal year 1994.
The Personnel Committee, which consists of Messrs. Clark, DelaCourt and
Hynes, approves changes in the Company's pension plan and makes recommendations
to the Board with respect to compensation of the officers of the Company. This
Committee met one time during fiscal year 1994.
During the past fiscal year, no member of the Board of Directors attended
fewer than 75% of the Directors' meetings or 75% of the meetings of committees
of the Board of Directors on which they served.
DIRECTORS' COMPENSATION
The Company's standard arrangement for compensation of Directors is payment
of $1,250 per month as a Director's retainer fee and $600 for attendance at each
meeting of the Board or a committee. Salaried officers of the Company also
serving on the Board of Directors receive no additional compensation for their
services as members of the Board of Directors.
Under a retirement plan for Directors adopted by the Board on January 13,
1981, as amended, Directors of the Company, upon retirement from the Board of
Directors at age 75 and after serving as a Director for five years or more, will
be paid retirement compensation for life in an amount equal to the annual
Director's retainer fee. If a Director elects to retire before age 75, the
retirement compensation continues for the number of years he served on the
Board. In the event of a change in control of the Company, a Director who has
served not less than five years on the Board may elect to retire at such time
with retirement compensation for life. After retirement, each Director shall be
an Advisory Director available to the Board of Directors for consultation and
advice.
DIRECTORS' TRANSACTIONS
McCoy, Weaver, Wiggins, Cleveland & Raper, a law partnership, received the
sum of $211,501 for legal services rendered to the Company and its wholly owned
subsidiaries, NCNG Exploration Corporation and Cape Fear Energy Corporation,
during the fiscal year ended September 30, 1994. Donald W. McCoy, an Advisory
Director, is a partner in such law partnership. McCoy, Weaver, Wiggins,
Cleveland & Raper has been retained by the Company for the prior two fiscal
years and is currently retained by the Company.
3
<PAGE> 6
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid to the Company's
chief executive officer and the two other most highly compensated executive
officers of the Company for the fiscal years 1992, 1993 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- ------------
OTHER RESTRICTED ALL
NAME AND ANNUAL STOCK OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMP. AWARDS COMPENSATION(1)
- - ------------------------------ ---- -------- ----- ------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Calvin B. Wells 1994 $225,608 $ 0 $0 $0 $ 0
Chairman, President and 1993 205,608 0 0 0 3,465
Chief Executive Officer 1992 188,680 0 0 0 3,465
Gerald A. Teele 1994 153,858 0 0 0 0
Senior Vice President 1993 143,118 0 0 0 2,455
and Chief Financial Officer 1992 134,492 0 0 0 2,455
Terrence D. Davis 1994 108,650 0 0 0 0
Vice President -- Operations 1993 97,967 0 0 0 1,110
and Industrial Sales 1992 84,482 0 0 0 1,110
</TABLE>
- - ---------------
(1) This compensation represents 4% of fiscal 1991 base compensation authorized
by the Board of Directors and paid in installments of 2% in September 1992
and 2% in March 1993.
The persons named above are participants in the Company's retirement plan
which provides for fixed benefits for all Company employees. Such benefits are
computed on an actuarial basis. Contributions for individual employees cannot
readily be separately or individually calculated by the actuaries for the Plan.
However, the Company contributed 3.16% of the covered compensation of all plan
participants during the fiscal year ended September 30, 1994. The Plan is
designed on an actuarial basis to provide for fixed benefits to covered
employees upon retirement at age 65. The estimated annual retirement benefit
based on anticipated years of credited service of the persons named above is
shown below:
<TABLE>
<CAPTION>
ANTICIPATED YEARS ESTIMATED ANNUAL
NAME OF CREDITED SERVICE RETIREMENT BENEFIT
- - ------------------ -------------------- ------------------
<S> <C> <C>
Calvin B. Wells 27 $ 84,513
Gerald A. Teele 31 $ 75,080
Terrence D. Davis 19 $ 52,250
</TABLE>
KEY EMPLOYEE STOCK OPTION PLAN
The Key Employee Stock Option Plan (the "Plan") was authorized by the Board
of Directors and Shareholders in 1990. Specified key employees of the Company
(currently 15 persons) are eligible to receive an option to purchase shares of
Common Stock of the Company. The purpose of the Plan is to attract and retain
individuals of outstanding ability and to encourage such key employees to
acquire an ownership in the Company.
4
<PAGE> 7
The Plan is administered by the Personnel Committee of the Board of
Directors. No member of the Committee and no Director who is not also an
employee of the Company or one of its subsidiaries is eligible to participate in
the Plan. The Committee is authorized to interpret the Plan and establish rules
relating to it; to prescribe terms and conditions of agreements for the grant of
options and any other forms or instruments required under the Plan, consistent
with the requirements of the Plan; and to make other determinations and take
other actions necessary or advisable to administer the Plan in a proper manner.
Under the Plan, options may be granted to all key employees as a group to
purchase up to a maximum of 150,000 shares of the Company's Common Stock as
adjusted for a stock split during 1992. The option price per share in each case
will be 90% of the "fair market value" of a share of the Company's Common Stock
on the date the option is granted as determined under the terms of the Plan.
Payment of the purchase price upon exercise of an option must be made in cash.
However, the Company shall pay to any employee exercising an option a sum equal
to 50% of the dividends which would have been payable on the shares of Common
Stock covered by the option during the period from the grant of the option to
the exercise of the option but not to exceed five years. Proceeds received by
the Company upon the exercise of options will be used for general corporate
purposes.
An option may not be exercised until five years following the date of grant
and shall then be exercisable only during the next two-year period (the "Option
Period"). An option will terminate upon the earliest to occur of: (i) expiration
of the Option Period; (ii) termination of the employee's employment during the
five-year period following the date of grant for any reason other than death,
disability or retirement under the Pension Plan; or (iii) three months following
termination of the employee's employment for any reason during the Option
Period. In the event of termination of employment during the five-year period
following the date of grant due to death, disability or retirement, the employee
(or, in the event of death, his beneficiary or estate) shall immediately become
entitled to exercise the option for a period of three months as to a portion of
the shares equal to the number of full calendar months between the date of grant
and the date of termination divided by sixty. The plan also provides for a
forfeiture at the discretion of the Committee of an employee's rights to
purchase a portion of the shares subject to an option in certain cases where the
employee is demoted or his responsibilities are reduced during the five years
following the date of grant, and allows the Committee to provide that any option
granted will otherwise expire or terminate prior to the expiration of the Option
Period upon the occurrence of other events specified by the Committee. Options
may be granted under the Plan on terms deemed appropriate by the Committee but
which differ from those provided in the Plan where such options are granted in
substitution for options held by employees of other corporations who become
employees of the Company or one of its subsidiaries as the result of a merger or
consolidation with the Company or the acquisition by the Company of such other
corporation.
The number, class and/or purchase price of shares as to which options may
be granted under the Plan or which are subject to previously granted options
shall be proportionately adjusted in such manner as the Committee deems
appropriate in the event of (i) a dividend by the Company payable in shares of
its Common Stock; (ii) any recapitalization, reclassification, split-up or
consolidation of, or other change in, the Company's Common Stock, or (iii) an
exchange of the outstanding shares of the Company's Common stock for a different
number or class of shares or other securities of the Company or any other
corporation in connection with a merger, consolidation or other reorganization
of or involving the Company, or in connection with a sale by the Company of all
or substantially all of its assets.
5
<PAGE> 8
The Board of Directors may from time to time amend, terminate or suspend
the Plan (but without affecting options granted prior to the time of any such
action); provided, however, that without shareholder approval, no such amendment
may change the aggregate number of shares for which options may be granted (as
adjusted under the Plan), change the option exercise price (with the exception
of adjustments provided for in the Plan and certain changes in the method of
determination of the "fair market value" of shares), change the maximum period
during which options may be exercised, extend the termination date of the Plan,
or materially change requirements as to eligibility for participation in the
Plan.
In June 1990, September 1991 and December 1993, the Personnel Committee of
the Board of Directors granted options under the Plan to purchase a total of
84,300, 5,700 and 2,600 shares, respectively, of the Company's Common Stock at
an exercise price of $13.80, $14.10 and $24.98, respectively. The closing sale
price of the Company's Common Stock on the dates of grant were $15.33, $15.67
and $27.75, respectively. Of this amount, options were granted to Calvin B.
Wells to purchase 12,000 shares; Gerald A. Teele to purchase 8,400 shares; and
Terrence D. Davis to purchase 5,700 shares. Options are now outstanding to key
employees as a group (15 persons) including the foregoing individuals to
purchase 75,350 shares. The stock prices and number of shares have been adjusted
to reflect the stock split with a record date of September 30, 1992, and issue
date of October 30, 1992.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "ESPP") was adopted by the Board of
Directors and approved by Shareholders in 1990. The purpose of the ESPP is to
encourage employees of the Company to purchase Common Stock in the Company and
thereby increase employee interest in the successful operations of the Company
and allow the Company's employees to share in the economic growth and success of
the Company through stock ownership.
The ESPP is administered by a committee of four (4) or more individuals who
are Directors or employees of the Company. The ESPP provides for the reservation
of 300,000 shares, adjusted for the stock split, of the Company's Common Stock
available to all eligible employees of the Company.
Eligible employees of the Company are those employees who have completed
twelve (12) months of continuous service with the Company and meet the minimum
work hours per week. Such employees may authorize a payroll deduction of any
amount between 2% and 6% of their compensation, including bonuses and overtime,
for the purchase of the Company's Common Stock. Any payroll deduction designated
by an employee must be in whole multiples of 1% and any stock purchased from the
Company on behalf of an employee shall be purchased once a year at a price equal
to 90% of the lesser of the average of five (5) trading days ending on:
(a) the first day of the offering period, or
(b) the last day of the offering period.
The offering period shall be each twelve (12) month period commencing on January
1.
The Board of Directors has the right to amend or terminate the ESPP at any
time. The Plan was originally scheduled to terminate January 1, 1994. However in
September 1993, the Board of Directors amended the Plan to extend the
termination date to the earlier of (a) January 1, 1999, or (b) the date on which
all or substantially all of the shares of Common Stock authorized for issuance
under the Plan have been purchased. Except for stock splits, stock dividends or
other reclassifications or adjustments in capital resulting from reorganizations
or mergers, the Company may not, without Shareholder approval, (i) increase the
number of shares of Common Stock reserved under the ESPP;
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<PAGE> 9
(ii) change the method of determining the purchase price for shares of Common
Stock; (iii) materially increase the benefits accruing to Participants; or (iv)
materially change the eligibility requirement for participation in the ESPP.
The expenses incurred by the ESPP or the Committee of the Board of
Directors administering the ESPP shall be borne by the Company. In addition, to
the extent permitted by applicable law, the Company shall indemnify and hold
harmless each member of the Committee from any and all action or inactions of
the Committee in connection with the administration of the ESPP except for
actions or inactions which are not made in good faith or which constitute
willful misconduct.
In June 1990, the Board of Directors authorized that purchase rights be
granted to employees under the ESPP. In January 1994, under the 1990 Plan,
12,677 shares were issued to 219 eligible employees at $20.86 per share (average
market price was $23.18). The executive officers as a group (10 persons)
purchased 2,462 of these shares.
EMPLOYEE RETIREMENT PLAN
The Company has a noncontributory defined benefit retirement plan covering
all full time employees upon attainment of age 21 and completion of one (1) year
of service. Benefits under the retirement plan are based on the participant's
average annual compensation (defined as the total cash compensation paid by the
Company to the participant for a plan year) during the highest five (5)
consecutive years of the last ten (10) years prior to retirement. These benefits
become fully vested prior to normal retirement age upon the completion of five
(5) years of service. Benefits are also provided under the plan in the event of
early retirement or disability retirement at or after age 55 and the completion
of at least twenty (20) years of service.
The table below illustrates the amount of annual, normal retirement
benefits payable under the plan based upon application of the plan formula to
the specified average compensation and years of credited service at normal
retirement age. These amounts are in addition to Social Security benefits that
would be paid at normal retirement age. The Omnibus-Budget Reconciliation Act of
1993 limits the retirement benefits that can be provided by a qualified plan by
reducing the amount of compensation that can be used in calculating benefits to
a maximum of $150,000 beginning in 1994 with provision for increases in the
future based on increases in the cost of living. The Company does not currently
have a nonqualified "benefit restoration" plan.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE ----------------------------------
COMPENSATION 10 15 20 OR MORE
- - ------------ ------- ------- ----------
<S> <C> <C> <C>
$ 50,000 $12,500 $18,750 $ 25,000
60,000 15,000 22,500 30,000
70,000 17,500 25,250 35,000
80,000 20,000 30,000 40,000
90,000 22,500 33,750 45,000
100,000 25,000 37,500 50,000
110,000 27,500 41,250 55,000
125,000 31,250 46,675 62,500
140,000 35,000 52,500 70,000
150,000 37,500 56,250 75,000(1)
</TABLE>
- - ---------------
(1) Mr. Wells' estimated annual retirement benefit shown on Page 4 is $84,513
due to compensation amounts used to calculate his benefits prior to the
passage of the Omnibus-Budget Reconciliation Act of 1993.
7
<PAGE> 10
EXECUTIVE EMPLOYMENT AGREEMENTS
IN THE EVENT OF CHANGE IN CONTROL
The Company has Employment Agreements ("Agreements") with ten (10) of its
executive officers holding the rank of corporate vice president or higher. The
purpose of such Agreements is to encourage retention of its present senior
executive officers and provide assurance that such officers are able to devote
their full attention and energies to the Company's business in the face of
potentially disruptive and distracting circumstances that may arise upon an
attempted or actual change in control or takeover of the Company. The Agreements
provide for the payment of certain severance benefits only in the event of a
termination of employment following a change in control of the Company. A
"Change in Control" is deemed to have occurred if (i) the Company consolidates
or merges into or with another corporation as a result of which the Company is
not the surviving corporation, or (ii) a majority of the outstanding shares of
the Company are acquired by any other corporation, person or group.
Each officer is entitled to such benefits in the event his employment with
the Company or its successor is terminated within a period of three (3) years
following a Change in Control unless such termination is (i) due to his death or
retirement, (ii) by the Company for "cause" or due to his "disability", or (iii)
by the officer other than for "Good Reason". Such benefits consist of severance
pay in an amount equal to the executive's salary in effect at the time of Change
in Control for a maximum period of two (2) years and eleven (11) months plus
participation in any pension or retirement plans, life insurance, health and
accident insurance, and disability benefits normally due the employee provided
that if the terminated executive obtains employment with another employer, the
amount of compensation due the terminated employee by the Company or its
successor will be reduced by the salary paid by the other employer. With respect
to all individuals who have such Agreements, the average of their current annual
salaries is $107,010.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no executive officer-director interlocks where an executive of
the Company serves on the Compensation Committee of another company that has an
executive officer serving on the Company's Board of Directors. Messrs. George T.
Clark, Jr., Paul A. DelaCourt and James E.S. Hynes serve as the Directors'
Personnel Committee which acts as the Compensation Committee.
REPORT OF PERSONNEL COMMITTEE ON EXECUTIVE COMPENSATION
The Personnel Committee is responsible for recommending to the Board of
Directors the compensation level of the Chief Executive and other officers of
the Company. This Committee is comprised of three independent outside directors
who are not eligible to participate in any compensation program available to
officers or employees of the Company.
The Committee's compensation philosophy is based on the following
principles:
(1) Compensation of the Company's executives is to be motivational and
emphasize the key financial and operating objectives that have the ultimate goal
of enhancing shareholder value while fulfilling the Company's responsibilities
as a regulated North Carolina utility;
(2) The levels of compensation shall reflect consideration of the level of
job responsibility, individual performance, experience and industry peer
comparisons;
8
<PAGE> 11
(3) Executive compensation is to be competitive in order to retain and
attract qualified employees. In addition to monetary payments, the Company shall
award stock options to executives in order to increase their stock ownership in
the Company, thereby aligning the interests of executives with those of
shareholders;
(4) The Committee shall set compensation for its executives outside the
presence of the executives concerned.
The compensation of executive officers consists primarily of a base salary
and the Key Employee Stock Option Plan previously described. Options granted
under the Company's Stock Option Plan may not be exercised until five years
following the date of grant and shall then be exercisable only in the next
two-year period. This Plan is designed to attract and retain capable individuals
and to encourage these employees to acquire an ownership interest in the Company
and provide additional incentive for them to exert their best efforts to
increase shareholder value. One option was granted during Fiscal Year 1994.
Information on the unexercised options at September 30, 1994 is shown on Page 6.
On recommendation of the Personnel Committee and approval of the Board of
Directors, Mr. Wells' salary was set at a level of $230,000 at the January 1994
meeting of the Board of Directors. This compensation level was set based on the
factors indicated above, including compensation of individuals holding similar
positions in other gas distribution companies, return on equity, other financial
and operating performance indicators and certain qualitative factors. The
performance of the Company's stock and total return for the most recent
five-year period of his leadership as Chief Executive Officer is shown on the
performance graph on Page 10.
This report is submitted by members of the Personnel Committee: Paul A.
DelaCourt, Chairman; George T. Clark, Jr.; and James E.S. Hynes.
9
<PAGE> 12
PERFORMANCE GRAPH
The graph below compares the yearly change in the cumulative total
stockholder return for NCNG Common Stock as compared with the S&P 40 Utilities
and a peer group of companies. This graph assumes investment of $100 in stock or
index on September 30, 1989 and reinvestment of all subsequent dividends.
<TABLE>
<CAPTION>
Measurement Period S&P 40
(Fiscal Year Covered) NCNG Utilities Peer Group
<S> <C> <C> <C>
1989 $ 100 $ 100 $ 100
1990 106 99 106
1991 125 115 128
1992 185 131 159
1993 251 163 203
1994 218 142 185
</TABLE>
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected the firm of Arthur
Andersen LLP to continue as independent accountants for the Company and its
wholly-owned subsidiaries, NCNG Exploration Corporation and Cape Fear Energy
Corporation, for the fiscal year beginning October 1, 1994. Arthur Andersen LLP
has acted for the Company in such capacity since 1959.
Before each professional service was rendered by Arthur Andersen LLP, it
was approved by, and the possible effect on the independence of the accountants
was considered by, the Audit Committee of the Board of Directors. An invitation
has been extended to the firm of Arthur Andersen LLP to attend the Annual
Meeting of Stockholders with the opportunity to make a statement and to answer
appropriate questions. A representative of the firm has indicated he will attend
the meeting.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 Annual Meeting
and included in the proxy statement and form of proxy relating to that meeting
must be received by the Company at its principal executive offices not later
than August 4, 1995.
10
<PAGE> 13
ANNUAL REPORT
Pursuant to regulations of the Securities and Exchange Commission (S.E.C.),
the Company is required to file with the S.E.C. an Annual Report on Form 10-K
within 90 days of the end of each fiscal year. ON OR AFTER DECEMBER 31, 1994,
UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY, POST OFFICE BOX 909, 150
ROWAN STREET, FAYETTEVILLE, NORTH CAROLINA 28302-0909, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994,
INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE FORWARDED WITHOUT
CHARGE TO THE STOCKHOLDER MAKING SUCH REQUEST.
OTHER MATTERS
The management of the Company knows of no other matters which may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
By order of the Board of Directors this 5th day of December, 1994.
Sally T. Sowers, Secretary
11
<PAGE> 14
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<S> <C>
NORTH CAROLINA NATURAL GAS CORPORATION PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
FAYETTEVILLE, N.C. 28302-0909
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Calvin B. Wells and Sally T. Sowers, or either of them, with full power of substitution as
proxies, to vote all of the shares of stock standing in the name of the undersigned at the Annual Meeting of Stockholders to be held
on January 10, 1995, and at any adjournments thereof as follows:
1. ELECTION OF DIRECTORS
/ / VOTE FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: George T. Clark, Jr., Robert T. Johnson, William H. Prestage
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through the nominee's name.)
2. Upon any other business which may properly come before the meeting or any adjournment thereof.
(continued and to be signed on reverse side)
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(continued from other side)
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted FOR proposal 1.
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
DATED
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(Be sure to date Proxy)
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Signature
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Signature if held jointly
- - ------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
- - ------------------------------------------------------------------------------------------------------------------------------------
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