<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
(NCNG 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 9, 1996
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December 6, 1995
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 9th day of January 1996, 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 24, 1995 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 6, 1995
------------------------------------
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 9, 1996, 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, 1995, 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 therefor.
RECORD DATE AND VOTING SECURITIES
Only common stockholders of record at the close of business on the 24th day
of November, 1995, are entitled to vote at the Annual Meeting. On that date, the
Company had outstanding and entitled to vote 6,477,200 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, 1995, 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 II expire with this Annual Meeting of Stockholders. Each of the nominees
for Class II, if elected, will serve three years until the 1999 Annual Meeting
and until their successors have been elected and qualified. The current
Directors of Classes I and III will continue in office until the 1998 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. 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 24, 1995, 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
Paul A. DelaCourt 61 1989 Chairman, The North Carolina Enterprise Corporation; Vice 7,750
Chairman, North Hills, Inc., Raleigh, North Carolina.
Directorships: Federal Reserve Bank of Richmond and Golden
Corral Corporation
Frank B. Holding, Jr. 34 1995 President of First Citizens BancShares, Inc. and First 1,500
Citizens Bank, Raleigh, North Carolina, 1994-date; Area
Executive, First Citizens Bank, Charlotte, North Carolina,
1992-1994; City Executive, First Citizens Bank, Fayetteville,
North Carolina, 1989-1991. Directorship: First Citizens
BancShares, Inc.
John O. McNairy 47 1995 President and CEO of Tidewater Transit Company and Harvey 4,500
Enterprises & Affiliates, Kinston, North Carolina, 1981-date;
Chairman of Board of Stackhouse, Inc., Goldsboro, North
Carolina, 1994-date
CONTINUING DIRECTORS
George T. Clark, Jr. 67 1978 Attorney at Law, Wilmington, North Carolina 7,648
(Term Expires 1998)
James E.S. Hynes 55 1993 Chairman of the Board of Hynes Sales Co. Inc., manufacturers 3,000
(Term Expires 1997) representatives, Charlotte, North Carolina.
Directorship: Ruddick Corporation
Robert T. Johnson 59 1994 Retired Partner, Arthur Andersen LLP, Atlanta, Georgia 2,500
(Term Expires 1998)
William H. Prestage 60 1988 President, Prestage Farms, Clinton, North Carolina. 10,570
(Term Expires 1998) Directorship: Smithfield Foods, Inc.
Richard F. Waid 67 1981 Managing Director, The Robinson-Humphrey Company, Investment 13,706
(Term Expires 1997) Banking & Securities Broker/Dealer, Atlanta, GA, 1992-date;
Senior Vice President, Tucker Anthony, Incorporated,
Investment Banking & Securities Broker/Dealer, Washington,
D.C., 1990-1992. Directorship: Iverson Technology Corp.
Calvin B. Wells 59 1981 Chairman, President and Chief Executive Officer of the 20,682
(Term Expires 1997) Company
All Directors and Officers as a Group, 103,671
including those named above (22 persons)
</TABLE>
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(1) The percentage of outstanding shares owned beneficially by each person named
above is less than 1%. All Directors and Officers as a group owned 1.6%.
(2) Includes full shares acquired through the Dividend Reinvestment Plan.
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<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 four meetings in fiscal year 1995.
The Company has two standing committees of the Board of Directors, an Audit
Committee and a Personnel and Compensation Committee. The Company does not have
a Nominating Committee.
The Audit Committee, which consists of Messrs. Holding, McNairy, 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 1995.
The Personnel and Compensation Committee, which consists of Messrs. Clark,
DelaCourt, Hynes, and Johnson, 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 1995.
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.
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<PAGE> 6
EXECUTIVE COMPENSATION AND STOCK OPTION INFORMATION
The following table sets forth all compensation paid to the Company's chief
executive officer and the two other most highly compensated executive officers
of the Company whose total annual salary and bonuses exceeded $100,000 for the
fiscal years 1993, 1994 and 1995.
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.(1) AWARDS COMPENSATION(2)
- --------------------------- ---- -------- ----- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Calvin B. Wells 1995 $246,412 $ 0 $121,788 $0 $ 0
Chairman, President and 1994 225,608 0 0 0 0
Chief Executive Officer 1993 205,608 0 0 0 3,465
Gerald A. Teele 1995 165,064 0 28,417 0 0
Senior Vice President 1994 153,858 0 0 0 0
and Chief Financial
Officer 1993 143,118 0 0 0 2,455
Terrence D. Davis 1995 118,331 0 0 0 0
Vice 1994 108,650 0 0 0 0
President -- Operations
and Industrial Sales 1993 97,967 0 0 0 1,110
</TABLE>
- ---------------
(1) Represents the difference between the price paid by the named executive
officers for Common Stock of the Company purchased from the Company upon
the exercise of stock options and the fair market value of such Common
Stock and cash paid for dividend equivalents accrued from the grant date to
the exercise date.
(2) This compensation represents 2% of fiscal 1991 base compensation authorized
by the Board of Directors and paid in March 1993.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows the aggregated stock options exercised in the
fiscal year ended September 30, 1995 and the stock option values for the named
executive officers at September 30, 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Calvin B. Wells..... 12,000 $ 90,900 -- -- $ -- $ --
Gerald A. Teele..... 2,800 21,210 5,600 -- 47,320 --
</TABLE>
- ---------------
(1) Represents the difference between the market value of the shares on the date
of exercise of the options and the exercise price.
(2) Represents the closing price for NCNG Common Stock on September 30, 1995 of
$22.25 less the exercise price for all outstanding options to the named
individual.
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<PAGE> 7
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
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.
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 date of the option. 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.
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.
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<PAGE> 8
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.
EMPLOYEE RETIREMENT PLANS
The Company has a defined benefit retirement plan (the "Retirement Plan")
which covers all full time employees upon their attaining age 21 and completing
one year of service. The Company also has a pension restoration plan (the
"Restoration Plan") which provides certain employees with retirement benefits
they otherwise would have received under the Retirement Plan formula but which
may not be paid to them under the Retirement Plan due to limitations on benefits
imposed by the Internal Revenue Code. Collectively, these plans are referred to
herein as the "Retirement Plans".
The Retirement Plan is wholly paid for by the Company which has established
a trust with a bank as trustee to which contributions are made from time to time
by the Company and from which the benefits under the Retirement Plan are paid.
The Restoration Plan is administered by the Company and the benefits thereunder
are payable from the Company's general funds.
A participant in the Retirement Plans becomes fully vested prior to normal
retirement at age 65 upon the completion of five years of service. Benefits are
also provided under the Retirement Plans in the event of early retirement or
disability retirement at or after age 55 and the completion of at least 20 years
of service. Benefits under the Retirement Plans are based upon application of a
formula to the specified average compensation and years of credited service (up
to a maximum of 20 years) at normal retirement age. Benefit amounts are computed
on a straight life annuity basis. Compensation covered by the Retirement Plans
consists of W-2 wages plus certain deferred compensation, the total of which
approximates the total of amounts shown in the Summary Compensation Table.
The table below illustrates the amount of annual, normal retirement
benefits payable under the Retirement Plans based upon application of the plan
formula to the specified average compensation and years of credited service at
normal retirement age, allowing for reasonable increases in existing
compensation levels. These amounts, which do not reflect reductions which would
result from joint
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<PAGE> 9
and survivor elections, are in addition to Social Security benefits that would
be paid at normal retirement age.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE ---------------------------------
COMPENSATION 10 15 20
------------ ------- -------- --------
<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
175,000 43,750 65,625 87,500
200,000 50,000 75,000 100,000
225,000 56,250 84,375 112,500
250,000 62,500 93,750 125,000
275,000 68,750 103,125 137,500
</TABLE>
Anticipated years of credited service under the Retirement Plans for the
individuals named in the Summary Compensation Table are as follows: Calvin B.
Wells, 27 years; Gerald A. Teele, 31 years; and Terrence D. Davis, 19 years.
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,
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<PAGE> 10
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 $114,060.
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, James E.S. Hynes and Robert T. Johnson serve as
the Directors' Personnel and Compensation Committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
The Company's directors and executive officers, and persons who own more
than 10% of the Company's Common Stock, are required under the Securities
Exchange Act of 1934 to file reports of ownership and changes in ownership of
Company Common Stock with the Securities and Exchange Commission and the New
York Stock Exchange.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's Directors and executive
officers, the Company believes that during the 1995 fiscal year, its Directors
and executive officers complied with all applicable Section 16(a) filing
requirements.
REPORT OF PERSONNEL AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Personnel and Compensation 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 four 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;
(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
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<PAGE> 11
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.
On recommendation of the Personnel and Compensation Committee and approval
of the Board of Directors, Mr. Wells' salary was set at a level of $248,000 at
the January 1995 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 below.
This report is submitted by members of the Personnel and Compensation
Committee: Paul A. DelaCourt, Chairman; George T. Clark, Jr.; James E.S. Hynes;
and Robert T. Johnson.
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, 1990 and reinvestment of all subsequent dividends.
<TABLE>
<CAPTION>
Measurement Period S&P 40 Utili-
(Fiscal Year Covered) NCNG ties Peer Group
<S> <C> <C> <C>
1990 100 100 100
1991 117 116 119
1992 174 132 147
1993 236 165 184
1994 205 143 164
1995 209 182 183
</TABLE>
The members of the peer group referred to in the performance graph above
are Atlanta Gas Light Co., Atmos Energy Corp., Bay State Gas, Berkshire Gas Co.,
Brooklyn Union Gas Co., Cascade Natural Gas Corp., Colonial Gas Co., Connecticut
Energy Corp., Connecticut Natural Gas Corp., Delta Natural Gas Co. Inc., Energy
West Inc., Energynorth Inc., Essex County Gas Co.,
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<PAGE> 12
Indiana Energy Inc., Laclede Gas Co., MCN Corp., Mobile Gas Service Corp., New
Jersey Resources, Nicor Inc., Northwest Natural Gas Co., NUI Corp., Peoples
Energy Corp., Piedmont Natural Gas Co., Providence Energy Corp., Public Service
Co. of NC, Southeastern Michigan Gas Enterprises, United Cities Gas Co.,
Washington Gas Light Co., and Yankee Energy System, Inc.
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, NCNG Energy Corporation
and Cape Fear Energy Corporation, for the fiscal year beginning October 1, 1995.
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 1997 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 5, 1996.
ANNUAL REPORT
Pursuant to regulations of the Securities and Exchange Commission (SEC),
the Company is required to file with the SEC an Annual Report on Form 10-K
within 90 days of the end of each fiscal year. ON OR AFTER DECEMBER 31, 1995,
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, 1995,
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 6th day of December 1995.
Sally T. Sowers, Secretary
10
<PAGE> 13
APPENDIX A
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 9, 1996, and at any adjournments thereof as
follows:
<TABLE>
<C> <S> <C> <C>
1. ELECTION OF DIRECTORS
/ / VOTE FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees listed below
</TABLE>
Nominees: Paul A. DelaCourt, Frank B. Holding, Jr., John O. McNairy
(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
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
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