<PAGE>
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 [_] Confidential, For Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_]
Atmos Energy Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials
<PAGE>
[_] 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:
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<PAGE>
[ATMOS LOGO APPEARS HERE]
December 29, 1997
Dear Atmos Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Ambassador Hotel, 3100 I-40 West, Amarillo, Texas 79102, on
Wednesday, February 11, 1998, at 11:00 a.m. Central Standard Time.
The matters to be acted upon at the meeting are described in the attached
Notice of Annual Meeting and Proxy Statement. In addition, we will review with
you the affairs and progress of the Company during the past year and report
the results of operations for the first quarter.
Your participation at this meeting is very important, regardless of the
number of shares you hold or whether you will be able to attend the meeting in
person. Please date, sign, and return the proxy in the enclosed envelope to
ensure that your shares are represented at the meeting.
On behalf of your Board of Directors, thank you for your continued support
and interest in Atmos Energy Corporation.
Sincerely,
/s/ ROBERT W. BEST
Robert W. Best
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
ATMOS ENERGY CORPORATION
P.O. BOX 650205
DALLAS, TEXAS 75265-0205
NOTICE OF ANNUAL MEETING
To the Shareholders:
The Annual Meeting of the Shareholders of Atmos Energy Corporation (the
"Company") will be held at the Ambassador Hotel, 3100 I-40 West, Amarillo,
Texas 79102, on Wednesday, February 11, 1998, at 11:00 a.m., Central Standard
Time, for the following purposes:
1. To elect four Class III directors for three-year terms expiring in
2001.
2. To act upon a proposal to increase the total number of shares that may
be issued under the Restricted Stock Grant Plan by 650,000 shares.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record of the Company's Common Stock at the close of
business on December 15, 1997 will be entitled to notice of, and to vote at,
such meeting. The stock transfer books will not be closed.
By Order of the Board of Directors,
GLEN A. BLANSCET
Vice President, General Counsel
and Corporate Secretary
December 29, 1997
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE INDICATE YOUR CHOICES, SIGN AND DATE THE PROXY
CARD, AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY VOTE IN
PERSON AT THE MEETING EVEN THOUGH YOU SEND IN YOUR PROXY.
<PAGE>
ATMOS ENERGY CORPORATION
P.O. BOX 650205
DALLAS, TEXAS 75265-0205
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
The proxy enclosed with this statement is solicited by the management of
Atmos Energy Corporation (the "Company") at the direction of the Company's
Board of Directors. These materials were first mailed to the Company's
shareholders on December 29, 1997.
Any shareholder giving a proxy has the power to revoke the proxy at any time
prior to its exercise. The Company expects to solicit proxies primarily by
mail, but directors, officers, employees, and agents of the Company may also
solicit proxies in person or by telephone or other electronic means. The cost
of preparing, assembling, and mailing the proxies and accompanying materials
for this Annual Meeting of Shareholders, including the cost of reimbursing
brokers and nominees for forwarding proxies and proxy statements to their
principals, will be paid by the Company. In addition, Morrow & Co., Inc.
("Morrow") will assist the Company in the solicitation of proxies. The Company
will pay $5,000 in fees, plus expenses and disbursements, to Morrow for its
proxy solicitation services.
COMMON STOCK INFORMATION; RECORD DATE
As of December 15, 1997, there were 29,839,423 shares of the Company's
common stock, no par value ("Common Stock"), issued and outstanding, all of
which are entitled to vote. These shares constitute the only class of stock of
the Company issued and outstanding. As stated in the accompanying Notice of
Annual Meeting, only shareholders of record at the close of business on
December 15, 1997 will be entitled to vote at the meeting. Each share is
entitled to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners. The following table lists
the beneficial ownership, as of December 1, 1997, of the Company's Common
Stock with respect to each person known by the Company to be the beneficial
owner of more than five percent of such Common Stock.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
NAME AND ADDRESS COMMON STOCK OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK
------------------- ------------------ -------------
<S> <C> <C>
Employee Stock Ownership Plan and Trust
for Employees of Atmos Energy
Corporation (the "ESOP")(a)........... 1,962,080 6.6%
</TABLE>
- --------
(a) The ESOP permits Company employees who participate in the ESOP to exercise
voting power with respect to shares of the Company's Common Stock held in
their ESOP accounts. With respect to shares of Common Stock owned by the
ESOP for which participating employees do not exercise such voting rights,
the ESOP Trust Committee, which is a committee appointed by the Board of
Directors currently consisting of certain officers of the Company, is
entitled to vote such shares in its discretion.
<PAGE>
Security Ownership of Management. The following table lists the beneficial
ownership, as of December 1, 1997, of the Company's Common Stock with respect
to all directors and nominees for director of the Company, the executive
officers of the Company named in the Summary Compensation Table on page 12 of
this Proxy Statement (other than Robert F. Stephens who resigned from the
Company in March 1997), and all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME BENEFICIALLY OWNED COMMON STOCK
- ---- ------------------ -------------
<S> <C> <C>
Travis W. Bain II............................ 1,087 (a)
Robert W. Best............................... 100,000 (a)
Glen A. Blanscet............................. 10,864 (a)
Dan Busbee................................... 3,858 (a)
Richard W. Cardin............................ 1,000 (a)
Larry J. Dagley.............................. 75,000 (a)
Thomas J. Garland............................ 2,087 (a)
J. Charles Goodman........................... 8,687 (a)
Gene C. Koonce............................... 19,343 (a)
Vincent J. Lewis............................. 7,000 (a)
Mary S. Lovell............................... 13,754 (a)
Thomas C. Meredith........................... 445 (a)
Phillip E. Nichol............................ 6,300 (a)
Carl S. Quinn................................ 21,564 (a)
Lee E. Schlessman............................ 1,017,284(b) 3.4%
Charles K. Vaughan........................... 94,709 (a)
Richard Ware II.............................. 14,608 (a)
All directors and executive officers as a
group (20 individuals)...................... 1,434,643 4.8%
</TABLE>
- --------
(a) The percentage of shares beneficially owned by such individual does not
exceed one percent of the class so owned.
(b) Mr. Schlessman's shares are held in an irrevocable trust of which Mr.
Schlessman is the trustee and beneficiary.
2
<PAGE>
1. ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Board of Directors is divided into
three classes, each of which class consists, as nearly as possible, of one-
third of the total number of directors constituting the entire Board of
Directors. Directors for Class III are to be elected at this Annual Meeting
for three-year terms expiring in 2001. Robert W. Best, Thomas J. Garland,
Phillip E. Nichol, and Charles K. Vaughan have been nominated to serve as
Class III directors.
Messrs. Nichol and Vaughan were last elected to three-year terms by the
shareholders at the 1995 Annual Meeting and have been nominated to continue to
serve as directors for three-year terms ending in 2001. Mr. Best was appointed
to the Board of Directors in March 1997 when he assumed his position as
Chairman of the Board, President and Chief Executive Officer of the Company.
Mr. Best was appointed to fill the vacancy created by the resignation of Mr.
John W. Norris, Jr., who resigned from the Board on November 14, 1996, and
whose term as a Class I director was due to expire in 1999. In accordance with
Virginia state law, Mr. Best is required to stand for election by the
shareholders at this Annual Meeting. In addition, Texas and Virginia state law
both require that the number of directors in each class be as equal as
possible. Accordingly, Mr. Best has been nominated to serve as a Class III
director, whose term will expire in 2001. Mr. Garland, formerly a director of
United Cities Gas Company ("United Cities") prior to its merger with the
Company on July 31, 1997 (the "Merger"), was elected by the shareholders at
the Special Meeting of the Shareholders on November 12, 1996 to serve as an
additional director of the Company pursuant to the provisions of the Agreement
and Plan of Reorganization, as amended, between the Company and United Cities
(the "Reorganization Agreement"). The Board is nominating Messrs. Garland,
Nichol, and Vaughan to continue serving as Class III directors, and is
nominating Mr. Best to serve as a Class III director, whose class is being
redesignated from Class I. The terms of all nominated directors will expire in
2001.
The other directors listed on the following pages will continue to serve in
their positions for the remainder of their current terms. Lee E. Schlessman
will be retiring from the Board at the expiration of his term in February 1998
in accordance with the Company's mandatory retirement policy, and consequently
is not standing for reelection. The names, ages, and biographical summaries of
(i) the persons who have been nominated to serve as directors of the Company
and (ii) the directors who are continuing in office until the expiration of
their terms and the class in which such nominee or other director has been
designated, are set forth in the following table. Each of the nominees has
consented to be a nominee and to serve as a director if elected, and all votes
authorized by the enclosed proxy will be cast FOR all of the nominees. In
order to be elected as a director, the Company's Bylaws require a nominee to
receive the vote of a majority of all outstanding shares of the Company's
Common Stock entitled to vote and represented in person or by proxy at a
meeting of shareholders at which a quorum is present.
3
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
NOMINEES:
<TABLE>
<CAPTION>
YEAR IN WHICH
FIRST BECAME A CLASS DESIGNATION
NAME; PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR AND YEAR OF
DURING PAST FIVE YEARS; OTHER DIRECTORSHIPS AGE OF THE COMPANY EXPIRATION OF TERM
- ------------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Robert W. Best....................... 51 1997 Class I (1)
Chairman of the Board, President and 1999
Chief Executive Officer of the
Company since March 1997. Formerly
Senior Vice President--Regulated
Businesses of Consolidated Natural
Gas Company from January 1996 to
March 1997; President of Texas Gas
Transmission Company from February
1985 to May 1995 and President of
Transcontinental Gas Pipe Line
Corporation from February 1992 to
May 1995.
*******************************************************************************************
Thomas J. Garland.................... 63 1997 Class III
Executive in Residence and 1998
Distinguished Service Professor of
the Civic Arts at Tusculum College
in Greeneville, Tennessee and
consultant since 1990. Also director
of Peoples Community Bank in Johnson
City, Tennessee.
Phillip E. Nichol.................... 62 1985 Class III
Senior Vice President and Branch 1998
Manager of PaineWebber Incorporated
in Fort Worth, Texas since May 1996.
Formerly Senior Vice President and
Branch Manager of PaineWebber
Incorporated in Cleveland, Ohio from
February 1995 to May 1996; Senior
Vice President and Manager of Kidder
Peabody & Co. in Cleveland, Ohio
from September 1994 until February
1995 and Vice President and Manager
of Kidder Peabody & Co. in Toledo,
Ohio from May 1992 until February
1995.
</TABLE>
- ----------------
(1) Mr. Best was appointed to fill the Class I director vacancy created by the
resignation of Mr. Norris in November 1996. For the reasons discussed
above, Mr. Best has been nominated to serve as a Class III director, whose
term will expire in 2001.
4
<PAGE>
<TABLE>
<CAPTION>
YEAR IN WHICH
FIRST BECAME A CLASS DESIGNATION
NAME; PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR AND YEAR OF
DURING PAST FIVE YEARS; OTHER DIRECTORSHIPS AGE OF THE COMPANY EXPIRATION OF TERM
- ------------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Charles K. Vaughan.................. 60 1983 Class III
Formerly Chairman of the Board of 1998
the Company from June 1994 until
March 1997; Chairman of the Board
and Chief Executive Officer of the
Company from March 1993 until June
1994; Chairman of the Board,
President and Chief Executive
Officer of the Company from October
1983 until March 1993.
</TABLE>
The following persons are directors of the Company who will be continuing in
office until the expiration of their terms as set forth below. As mentioned
above, Mr. Schlessman will be retiring from the Board at the expiration of his
term in February 1998 in accordance with the Board's mandatory retirement
policy.
<TABLE>
<CAPTION>
YEAR IN WHICH
FIRST BECAME A CLASS DESIGNATION
NAME; PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR AND YEAR OF
DURING PAST FIVE YEARS; OTHER DIRECTORSHIPS AGE OF THE COMPANY EXPIRATION OF TERM
- ------------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Travis W. Bain II......................... 63 1988 Class I
President of Bain Enterprises, Inc. in 1999
Plano, Texas since November 1991. Also
director of Delta Industries, Inc. in
Jackson, Mississippi.
Dan Busbee................................ 64 1988 Class I
Attorney and shareholder with Locke 1999
Purnell Rain Harrell (A Professional
Corporation) in Dallas, Texas since 1972.
*******************************************************************************************
Richard W. Cardin......................... 62 1997 Class II
Consultant and private investor since 2000
1995. Formerly office managing partner
with Arthur Andersen, LLP in Nashville,
Tennessee from 1980 until 1994. Also
member of Board of Trustees of CCA Prison
Realty Trust.
*******************************************************************************************
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR IN WHICH
FIRST BECAME A CLASS DESIGNATION
NAME; PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR AND YEAR OF
DURING PAST FIVE YEARS; OTHER DIRECTORSHIPS AGE OF THE COMPANY EXPIRATION OF TERM
- ------------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Gene C. Koonce............................ 65 1997 Class I
Formerly Chairman of the Board, President 1999
and Chief Executive Officer of United
Cities from May 1996 until the Merger in
July 1997; President and Chief Executive
Officer of United Cities from October
1978 until May 1996. Also director of
First American Corporation in Nashville,
Tennessee.
Vincent J. Lewis.......................... 53 1997 Class I
Senior Vice President at Legg Mason Wood 1999
Walker, Inc. in Rutherford, New Jersey
since 1987.
*******************************************************************************************
Thomas C. Meredith........................ 56 1995 Class II
Chancellor of the University of Alabama 2000
System in Tuscaloosa, Alabama since June
1997. Formerly President of Western
Kentucky University in Bowling Green,
Kentucky from 1988 until June 1997.
Carl S. Quinn............................. 66 1994 Class II
General Partner of Quinn Oil Company, 2000
Ltd. in New York, New York since May
1992. Formerly Chairman of the Board,
President and Chief Executive Officer of
Interstate Natural Gas Company in
Houston, Texas from January 1992 until
December 1994; Chairman of the Board and
Chief Executive Officer of Arkla
Exploration Company from October 1989
until January 1992. Also director of Coho
Energy, Inc. in Dallas, Texas.
*******************************************************************************************
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
YEAR IN WHICH
FIRST BECAME A CLASS DESIGNATION
NAME; PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR AND YEAR OF
DURING PAST FIVE YEARS; OTHER DIRECTORSHIPS AGE OF THE COMPANY EXPIRATION OF TERM
- ------------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Lee E. Schlessman......................... 71 1994 Class III
President of Dolo Investment Company in 1998
Denver, Colorado since February 1994.
Formerly Chairman of the Board and Chief
Executive Officer of Greeley Gas Company
in Denver, Colorado from December 1992
until December 1993; Chairman of the
Board, President and Chief Executive
Officer of Greeley Gas Company in Denver,
Colorado from March 1976 until December
1992. Also President of the Board of the
Rocky Mountain American Automobile
Association in Denver, Colorado.
*******************************************************************************************
Richard Ware II........................... 51 1994 Class II
President of Amarillo National Bank in 2000
Amarillo, Texas since 1981. Also director
of The Coca-Cola Bottling Group
(Southwest), Inc. and member of the Board
of Trustees of Southern Methodist
University in Dallas, Texas.
</TABLE>
CERTAIN BUSINESS RELATIONSHIPS
Mr. Schlessman and members of his immediate family are partners in various
partnerships that are mortgage lenders to an unaffiliated third party who
purchased several real property holdings of the partnerships in Colorado and
Kansas. The Company leases those real properties from the third party for
office or warehouse space in its Greeley Gas Company division operations. The
partnerships continue to hold a mortgage interest in the properties.
Mr. Ware is the president and a shareholder of Amarillo National Bank,
Amarillo, Texas, which bank provides a $12 million short-term line of credit
to the Company, serves as a depository bank for the Company, and is trustee
for the Company's Restricted Stock Grant Plan.
For a discussion of other business relationships, see "Human Resources
Committee Interlocks and Insider Participation" on page 16.
7
<PAGE>
THE BOARD OF DIRECTORS: COMMITTEES, MEETINGS, AND DIRECTORS' FEES
Standing Committees. The Company has certain standing committees, each of
which is described below.
The Executive Committee consists of Messrs. Best, Koonce, Schlessman and
Vaughan. Mr. Vaughan serves as chairman of the committee. In accordance with
the Bylaws of the Company, the Executive Committee has, and may exercise, all
of the powers of the Board during the intervals between the Board's meetings,
subject to certain limitations and restrictions as set forth in the Bylaws or
as may be established by resolution of the Board of Directors from time to
time. The Executive Committee held one meeting during the last fiscal year.
The Audit Committee consists of Messrs. Bain, Busbee, Cardin, Meredith, and
Ware. Mr. Busbee serves as chairman of the committee. The Audit Committee
reviews the scope and procedures of internal auditing work, the results of
independent audits, and the accounting policies of management, and it
recommends to the Board the appointment of the Company's outside auditors.
During the last fiscal year, the Audit Committee held two meetings.
The Human Resources Committee consists of Messrs. Bain, Busbee, Garland,
Nichol, and Quinn. Mr. Quinn serves as chairman of the committee. This
committee reviews and makes recommendations to the Board of Directors
regarding compensation for officers of the Company. In addition to
compensation matters, the committee determines, develops, and makes
recommendations to the Board regarding benefit packages, special bonus or
stock plans, severance agreements, and succession planning with respect to the
Company's officers. During the last fiscal year, the Human Resources Committee
held seven meetings.
The Nominating Committee consists of Messrs. Lewis, Meredith, Nichol, and
Schlessman. Mr. Nichol serves as chairman of the committee. This committee
selects candidates for consideration by the full Board to fill any vacancies
on the Board, which may occur from time to time. The Nominating Committee held
three meetings during the last fiscal year. The Nominating Committee also
considers sound and meritorious nomination suggestions for directors from
shareholders. All letters of recommendation for nomination should be sent to
the Corporate Secretary of the Company at the Company's headquarters and
should include, in addition to the nominee's name and address, a listing of
the nominee's background and qualifications. A signed statement from the
nominee should accompany the letter of recommendation indicating that he or
she consents to being considered as a nominee and that, if nominated by the
Board and elected by the shareholders, he or she will serve as a director.
8
<PAGE>
The Work Session/Annual Meeting Committee consists of Messrs. Bain, Koonce,
Nichol, and Ware. Mr. Bain serves as chairman of the committee. This committee
plans the meeting and agenda for the special meeting of the Board held each
year for the purpose of focusing on long-range planning and corporate strategy
issues and selects the site for the Annual Shareholders Meeting. During the
last fiscal year, the Work Session/Annual Meeting Committee held two meetings.
Attendance at Board Meetings. During the last fiscal year, the Board of
Directors of the Company held fourteen meetings. During fiscal year 1997, each
director attended at least seventy-five percent of the aggregate of (a) all
meetings of the Board and (b) all meetings of the committees of the Board on
which such director served.
Directors' Fees. As compensation for serving as a director during fiscal
year 1997, each of the non-employee directors received an annual retainer of
$18,000 and a fee of $1,000 per day for attendance at each Board and committee
meeting (excluding telephone conference meetings). The annual retainer will be
increased to $20,000 commencing on January 1, 1998. The fee paid for
participation in a telephonic conference meeting of the Board or a committee
is one-half of the regular meeting fee. Committee chairmen are also paid a
meeting fee for extraordinary work in connection with their committee duties
consisting of work in excess of four hours in any day, the payment of which is
determined by the President and the Corporate Secretary of the Company.
Directors may elect to defer all or a part of their compensation earned as a
director until the earlier of a date specified by the director or the date he
or she ceases to be a director. The Company will pay interest on amounts
deferred at a rate equal to 100 basis points above the New York Federal
Reserve Bank discount rate in effect as of each January 15.
In November 1994, the Board adopted the Outside Directors Stock-for-Fee
Plan, which plan was approved by the shareholders of the Company in February
1995. The plan permits non-employee directors to receive all or part of their
annual retainer and meeting fees in Common Stock of the Company rather than in
cash. An election by a director to receive his or her fees in stock does not
alter the amount of fees payable but results in the deferral of payment of the
stock portion of the fees until after the end of each quarter in which the
fees were earned. The number of shares of Common Stock issued at such time
will be equal to (a) the dollar amount of the fees to be paid in stock divided
by (b) the fair market value of the Company's Common Stock on the last day of
the applicable quarter. The fair market value is the closing price of a share
of Common Stock of the Company as reported by the New York Stock Exchange.
Only whole numbers of shares have been and will be issued; fractional shares
will be paid in cash.
9
<PAGE>
Other Compensation for Non-Employee Directors. The Board has adopted a
Retirement Plan for Non-Employee Directors, which covers non-employee
directors who have served on the Board (including service prior to January 1,
1994 on the Board of Greeley Gas Company and prior to August 1, 1997 on the
Board of United Cities) for at least five years and who have attained age 65.
Upon retirement, a participating non-employee director is entitled to an
annual pension benefit equal to the sum of (a) 50% of the amount of the
participant's final annual retainer plus (b) 10% of the amount of the
participant's final annual retainer for each year of service on the Board in
excess of five years. In no event may the annual pension benefit exceed 100%
of a director's final annual retainer. The pension benefit is payable for the
participant's life. The plan is unfunded.
In addition, the Company provides business travel accident insurance for
non-employee directors and their spouses. The policy provides $100,000
coverage to directors and $50,000 coverage to their spouses per accident while
traveling on Company business.
Special Arrangements with Mr. Koonce. In connection with the Merger on July
31, 1997, Gene C. Koonce, former Chairman of the Board of United Cities,
entered into an Employment Agreement with the Company through December 31,
1997. Under the agreement, Mr. Koonce served as Vice Chairman of the Board and
performed Merger assimilation duties and such other duties and functions as
the Company assigned Mr. Koonce from time to time. The agreement provided to
Mr. Koonce in consideration for his services, a monthly salary of $30,906 and
certain other benefits, including, but not limited to, participation in the
Company's Supplemental Executive Benefits Plan. In addition, Mr. Koonce will
be entitled to a one-time employee retention payment of $60,000 if he is still
employed by the Company on December 31, 1997 (or if he is not employed by the
Company on that date only under special limited circumstances described in the
agreement). Mr. Koonce will also be entitled to benefits under the Company's
Retirement Plan for Non-Employee Directors upon his retirement from the Board.
Other Arrangements with Mr. Vaughan. Effective October 1, 1994, Mr. Vaughan
retired as an officer and employee of the Company and entered into a five-year
Consulting Agreement with the Company. Under the agreement, Mr. Vaughan
performs such consulting services as the Board may request from time to time.
The Consulting Agreement was amended on May 14, 1997 to provide additional
compensation to Mr. Vaughan in recognition of Mr. Vaughan's increased
responsibilities as a result of the change in the Company's management in
early 1997. The agreement, as amended, provides for future payments to Mr.
Vaughan, in consideration for his consulting services, of $300,000 during
fiscal year 1998 and $130,000 during fiscal year 1999. During the 1997 fiscal
year, Mr. Vaughan received $345,000 in payment for his services under the
Consulting Agreement. The payments are made in semi-annual installments
payable on October 1 and April 1 of each fiscal year. The
10
<PAGE>
term of the agreement may be extended for additional one-year periods upon the
agreement of the Board and Mr. Vaughan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers and persons who own
more than ten percent of the Company's Common Stock to file with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in their ownership in the
Company's Common Stock. Executive officers, directors, and greater-than-ten-
percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of such reports furnished to the Company and written
representations that no Forms 5 were required, the Company believes that,
during the last fiscal year, all of the Company's executive officers,
directors, and greater-than-ten-percent beneficial owners were in compliance
with the Section 16(a) filing requirements.
11
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the compensation
paid by the Company for each of the Company's last three completed fiscal
years to Mr. Best, Robert F. Stephens, who resigned from the Company in March
1997, and the Company's four most highly compensated executive officers other
than Messrs. Best and Stephens.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ---------------
OTHER ANNUAL RESTRICTED ALL OTHER
SALARY BONUS(A) COMPENSATION STOCK AWARDS(B) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($)
- --------------------------- ---- ------- --------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Best(c)........ 1997 266,426 487,200 (d) 1,225,000 2,184(e)
Chairman of the Board,
President
and Chief Executive
Officer
Robert F. Stephens(f).... 1997 147,436 0 18,565(g) 0 3,243,584(h)
Former President and 1996 263,436 140,100 (d) 99,375 7,644
Chief Operating Officer 1995 240,845 121,900 (d) 0 7,388
Larry J. Dagley(i)....... 1997 125,000 283,400 (d) 1,225,000 1,872(e)
Executive Vice President
and
Chief Financial Officer
J. Charles Goodman....... 1997 177,530 121,400 (d) 0 11,132(e)
Executive Vice (d)
President-- 1996 171,127 45,400 91,425 7,895
Corporate Operations 1995 138,704 63,700 55,484(j) 0 6,486
Mary S. Lovell........... 1997 157,869 106,000 (d) 0 11,287(e)
Senior Vice President--
Utility 1996 146,878 46,800 (d) 59,625 6,792
Services 1995 132,431 35,400 (d) 0 6,125
Glen A. Blanscet......... 1997 129,854 198,200 (d) 0 9,335(e)
Vice President, General
Counsel 1996 122,924 32,600 (d) 29,813 5,690
and Corporate Secretary 1995 113,712 19,700 (d) 17,125 5,475
</TABLE>
12
<PAGE>
- --------
(a) Some bonuses were actually paid after the end of the fiscal year in which
they are reported. Because their payment relates to services rendered in
the fiscal year prior to payment, the Company has consistently reported
bonus payments in such prior fiscal year.
(b) The number and value of the aggregate restricted stock holdings at the end
of the last fiscal year for each of the executive officers listed above
were as follows: Robert W. Best, 50,000 shares with a value of $1,243,750
and Larry J. Dagley, 50,000 shares with a value of $1,243,750. Dividends
are paid on the restricted stock reported in the Table at the same rate
they are paid on all of the Company's Common Stock. Other than the grants
to Messrs. Best and Dagley, no other grants of restricted stock were made
during the 1997 fiscal year. The approval of the Merger by the
shareholders on November 12, 1996 caused all of the restrictions on the
shares of restricted stock previously granted to the other named executive
officers to lapse at that time. Accordingly, the remaining named executive
officers had no restricted stock holdings at the end of the last fiscal
year.
(c) Mr. Best became Chairman, President and CEO of the Company on March 8,
1997.
(d) The total dollar value of perquisites and other personal benefits for the
named executive officer was less than the reporting thresholds established
by the Securities and Exchange Commission.
(e) This amount reflects the amount of Company matching and discretionary
contributions made during the last fiscal year to the named executive
officer's account pursuant to the ESOP and the amount of insurance
premiums paid by the Company during the last fiscal year with respect to
term life insurance for the benefit of the named executive officer. The
amounts paid during the 1997 fiscal year for each named executive officer
were as follows: Robert W. Best, $2,184 in term life insurance premiums;
Larry J. Dagley, $1,872 in term life insurance premiums; J. Charles
Goodman, $10,015 in Company matching and discretionary contributions made
pursuant to the ESOP and $1,117 in term life insurance premiums; Mary S.
Lovell, $10,282 in Company matching and discretionary contributions made
pursuant to the ESOP and $1,005 in term life insurance premiums; and Glen
A. Blanscet, $8,514 in Company matching and discretionary contributions
made pursuant to the ESOP and $821 in term life insurance premiums.
(f) Mr. Stephens resigned as President and Chief Operating Officer of the
Company on March 1, 1997.
(g) Other Annual Compensation paid to Mr. Stephens during the 1997 fiscal year
included a car allowance in the amount of $13,500.
(h) The total of All Other Compensation paid to Mr. Stephens during the 1997
fiscal year consists of the following: (i) a payment of $3,235,000
pursuant to an agreement dated March 25, 1997 in complete settlement of
all benefit rights and other claims arising out of Mr. Stephens'
employment with the Company and resignation, (ii) $6,818 in Company
matching and discretionary contributions made pursuant to the ESOP, and
(iii) $1,766 in term life insurance premiums.
(i) Mr. Dagley became Executive Vice President and Chief Financial Officer of
the Company on May 1, 1997.
(j) Other Annual Compensation paid to Mr. Goodman during the 1995 fiscal year
included the purchase by the Company of a country club membership in the
amount of $42,771.
Retirement Plans. The executive officers listed in the Summary Compensation
Table (other than Mr. Stephens who resigned in March 1997) are covered by the
Employees' Retirement Plan of Atmos Energy Corporation (the "Atmos Retirement
Plan"), a defined benefit pension plan pursuant to which all participants
automatically accrue pension credits after completing one year of service with
the Company. Each of the executive officers listed in the Summary Compensation
Table also participates in the Company's Supplemental Executive Benefits Plan
(the "Supplemental Plan"), which provides retirement benefits (as well as
supplemental
13
<PAGE>
disability and death benefits) to all officers and division presidents of the
Company. A participant who has been an officer or division president for at
least two years, has five years of vesting service under the Atmos Retirement
Plan or a similar plan, and attained age 55 is entitled to a supplemental
pension in an amount that, when added to his or her pension payable under the
Atmos Retirement Plan or a similar plan, equals 75% of his or her
compensation, subject to reductions for less than ten years of vesting service
and for retirement prior to age 62.
The following table illustrates the estimated combined annual benefits
payable under the Atmos Retirement Plan and the Supplemental Plan upon
retirement at age 62 or later to persons in specified compensation categories
and years-of-service classifications as determined in such person's last year
of employment.
PENSION PLAN TABLE(A)
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 125,000.............................. 93,750 93,750 93,750 93,750 93,750
150,000.............................. 112,500 112,500 112,500 112,500 112,500
175,000.............................. 131,250 131,250 131,250 131,250 131,250
200,000.............................. 150,000 150,000 150,000 150,000 150,000
225,000.............................. 168,750 168,750 168,750 168,750 168,750
250,000.............................. 187,500 187,500 187,500 187,500 187,500
300,000.............................. 225,000 225,000 225,000 225,000 225,000
350,000.............................. 262,500 262,500 262,500 262,500 262,500
400,000.............................. 300,000 300,000 300,000 300,000 300,000
450,000.............................. 337,500 337,500 337,500 337,500 337,500
500,000.............................. 375,000 375,000 375,000 375,000 375,000
600,000.............................. 450,000 450,000 450,000 450,000 450,000
700,000.............................. 525,000 525,000 525,000 525,000 525,000
800,000.............................. 600,000 600,000 600,000 600,000 600,000
900,000.............................. 675,000 675,000 675,000 675,000 675,000
1,000,000.............................. 750,000 750,000 750,000 750,000 750,000
</TABLE>
- --------
(a) The benefit amounts listed in the Pension Plan Table are not subject to
any deduction for Social Security or offset amounts and are computed based
upon payment as a joint and 50% survivor annuity.
14
<PAGE>
The Atmos Retirement Plan covers only the regular salary of each of its
participants, excluding bonuses (subject to the maximum covered compensation
limit of $150,000 as of January 1, 1994 established by the Internal Revenue
Code for qualified plans). The Supplemental Plan covers compensation in an
amount equal to the sum of (a) the greater of the participant's annual base
salary at the date of termination of employment or the average of the
participant's annual base salary for the highest of three calendar years
(whether or not consecutive) of employment with the Company, plus (b) the
greater of the amount of the participant's last award under the Company's
Annual Performance Bonus Plan or the average of the participant's highest
three performance awards under such plan (whether or not consecutive), plus
(c) the participant's annual car allowance payable by the Company at the date
of his or her termination of employment. The amount of current compensation
covered by the Supplemental Plan as of the end of the last fiscal year for
each of the executive officers listed in the Summary Compensation Table is as
follows: Robert W. Best, $877,200; Larry J. Dagley, $496,000; J. Charles
Goodman, $273,044; Mary S. Lovell, $237,800; and Glen A. Blanscet, $226,485.
Each of such executive officers has the following approximate number of years
of credited service under the retirement plans: Robert W. Best, 0 years; Larry
J. Dagley, 0 years; J. Charles Goodman, 16 years; Mary S. Lovell, 10 years;
and Glen A. Blanscet, 12 years.
Employment Severance Compensation Agreements and Change-in-Control
Arrangements. The Company has entered into severance agreements with each of
the executive officers named in the Summary Compensation Table (with the
exception of Mr. Stephens who resigned in March 1997) to provide certain
severance benefits for them in the event of the termination of their
employment within three years following a "change in control" (as defined in
the agreements) of the Company. Under each of the severance agreements and
plans described below, a "change in control" of the Company is deemed to occur
if, among other things, the shareholders of the Company approve a merger or
other similar transaction, whereby the shareholders prior to the transaction
will not own at least 60% of the voting power of the Company after the
transaction.
The severance agreements provide that if employment is terminated by the
Company other than for "cause" (as defined in the agreements), retirement,
death, or disability, or by the employee for "good reason" (as defined in the
agreements), the Company will pay to each such executive officer a lump sum
severance payment equal to 2.99 times such executive officer's "base amount"
compensation, as defined in Section 280G of the Internal Revenue Code. If the
total of such lump sum severance payment plus all other payments made in
connection with a change in control pursuant to any other plan, arrangement,
or agreement results in the imposition of the excise tax imposed by Section
4999 of the Internal Revenue Code, such lump sum severance payment will be
reduced to the extent necessary to make the total of all such payments not be
subject to such excise tax unless the total of all such payments as reduced by
the amount of such excise tax is greater than the lump sum severance
15
<PAGE>
payment described above. In addition, the executive officer will be entitled
to all rights and benefits, if any, provided under any other plan or agreement
between such executive officer and the Company.
Each of the executive officers listed in the Summary Compensation Table
(other than Mr. Stephens) has also entered into a Participation Agreement with
the Company as required by the Supplemental Plan. The Supplemental Plan
provides that the accrued benefits, as calculated pursuant to the plan, of
each participant will vest in the event of (a) a termination of the
participant's employment by the Company without "cause" (i) following a
"change of control" (as both terms are defined in the plan) of the Company,
(ii) in anticipation of a "change in control" (whether or not a "change in
control" ever occurs), or (iii) at the request of a party to a pending
transaction that will constitute a "change in control", if and when the
transaction is consummated; (b) a termination of the plan; (c) an amendment to
the plan resulting in a decrease in the benefits otherwise payable to the
participant; (d) a termination of the participant's employment without
"cause"; or (e) a termination of the participant's participation in the plan
for any reason other than resignation or termination of employment for
"cause." The approval of the Merger by the Shareholders on November 12, 1996
constituted a "change in control" as defined in the Supplemental Plan.
Pursuant to the provisions of the Supplemental Plan, because they were
participants in the Supplemental Plan on November 12, 1996, Ms. Lovell, Mr.
Goodman and Mr. Blanscet are also each entitled to receive unreduced
supplemental pension benefits should any of them voluntarily terminate his or
her employment. The Participation Agreements set forth the rights of the
participants to their accrued benefits upon the occurrence of the events
described above and constitute enforceable contracts separate from the
provisions of the Supplemental Plan.
Each of the executive officers listed in the Summary Compensation Table
(other than Mr. Stephens) also participates in the Company's Restricted Stock
Grant Plan and has received, from time to time, awards of stock that are
restricted with respect to their transferability. The restrictions lapse
pursuant to a schedule established by the non-employee members of the Board of
Directors at the date of the grant. Notwithstanding any established schedule
for the removal of restrictions, however, the restrictions are immediately
removed in the event of the participant's death, disability, or retirement at
normal retirement age or in the event of a "change of control" (as defined in
the plan) of the Company. The approval of the Merger by the shareholders on
November 12, 1996 caused all of the restrictions on the shares of restricted
stock previously granted to all executive officers at that time to lapse.
Human Resources Committee Interlocks and Insider Participation. The members
of the Human Resources Committee during the last fiscal year were Travis W.
Bain, Dan Busbee, Thomas J. Garland, Phillip E. Nichol, and Carl S. Quinn.
John W. Norris, Jr. was also a member of the Committee from October 1, 1996
until his resignation on November 14, 1996. Mr. Busbee is a member and
shareholder of the law firm of Locke Purnell
16
<PAGE>
Rain Harrell (A Professional Corporation) in Dallas, Texas, which the Company
retains from time to time to perform legal services. Mr. Nichol is a senior
vice president and branch manager of PaineWebber Incorporated, the investment
banking firm retained by United Cities as its financial advisor in connection
with the Merger. Mr. Nichol had no involvement in the Merger on behalf of
PaineWebber Incorporated or United Cities. There are no interlocking
relationships between any executive officer of the Company and any other
company.
Human Resources Committee Report on Executive Compensation. The Company is
required to provide specific information regarding the compensation and
benefits paid to the Company's Chief Executive Officer and four most highly
compensated executive officers. The Human Resources Committee of the Board of
Directors (the "Committee"), which is composed entirely of non-employee
directors, has prepared this report which describes the philosophy followed by
the Company in establishing compensation and benefit practices for all
officers and business unit presidents of the Company (the "Executives"). This
report was prepared by the Committee after its meeting on October 28, 1997,
and the Committee presented this report to the Board of Directors at its
meeting held November 12, 1997.
COMPENSATION PHILOSOPHY AND PRINCIPLES. The Company's philosophy is that
total compensation for its Executives should be established by the same
process used for its other employees with the following exceptions:
. Executives should have a greater portion of their compensation at risk
than all other employees;
. A significant portion of executive compensation should be directly tied
to the performance of the business; and
. Executives of the Company should share in the same risks and rewards as
do shareholders of the Company.
To accomplish these goals, the Committee continuously compares its executive
compensation levels and performance with selected cross-industry groups of
industrial organizations. National market data for executive pay comparisons
was obtained from a variety of private industry surveys, including the Top
Management Report published by Watson Wyatt Data Services, which includes
compensation data on more than 11,000 executives in over 1,400 industrial
organizations, including companies in the natural gas distribution industry.
These surveys were used for compensation comparison purposes because the Board
of Directors believes they most closely represent the marketplace within which
the Company must compete for executive talent. The organizations participating
in these surveys are different than the companies that appear in the
performance graph. Specific job comparisons and access to market data for
companies included in the performance graph are not readily available
17
<PAGE>
to the Company through known market surveys. However, compensation information
from the American Gas Association Survey is also monitored on an annual basis,
and for 1997, Atmos base salary and total compensation levels are slightly
above the average pay practice for gas distribution companies in its size
group.
During 1997, the Committee retained the services of a nationally recognized
compensation consulting firm, Watson Wyatt Worldwide, to conduct an
independent review of executive compensation. The Committee reviews the
analysis provided by the consultants, evaluates the recommendations made by
the consultants, and assesses the performance of the Executives individually
and as a group and their contributions to the success of the Company. The
Committee provides executive compensation and benefits recommendations to the
Board of Directors to support the level of achievement of Company objectives
as attained by the Executive group over the last fiscal year.
At the present time, executive compensation programs consist of base salary,
an annual cash incentive plan, and a long-term incentive plan in the form of
restricted stock. Each of these compensation arrangements is briefly reviewed
in the following sections.
CASH COMPENSATION--ANNUAL BASE SALARY. All positions within the Company
including the Executive positions have formal salary ranges. Positions are
compared on the basis of job content to similar positions in companies of
approximately the same size as the Company. Salary ranges for all jobs are
reviewed on an annual basis, and proposed salary ranges are presented to the
Committee for its review and consideration each year in October. The midpoint
of each salary range is designed to approximate the 50th percentile or the
median of actual base salaries for comparable positions in the market, as
defined above.
Pay for individual Executives may be greater than or less than the salary
range midpoint based on performance of the individual and his/her experience
in the position. In determining the appropriate salary levels and salary
increase recommendations, the Committee also considers current economic
conditions and national and industry trends in executive compensation.
Annually, the Chief Executive Officer and senior officers of the Company
provide the Committee with an oral presentation relative to the contributions
and performance of each Executive. Seven performance rating categories were
used in 1997 to assess individual Executive performance in relation to
assigned accountabilities. Salary increase recommendations for Executives are
based upon the resulting performance rating and the position of each
Executive's salary within the applicable salary range.
CASH COMPENSATION--SHORT TERM INCENTIVE COMPENSATION. All Executives are
considered eligible to participate in the Executive Annual Performance Bonus
Plan (the "Bonus Plan"), which
18
<PAGE>
provides for cash payments based on criteria the Committee recommends to the
Board as critical to the short term success of the Company. Currently, the
Bonus Plan criteria consist of two parts, each weighted 50%. One portion is
determined by Company performance as measured against a targeted earnings per
share (EPS) goal as set by the Board of Directors at the beginning of each
fiscal year. The Board of Directors currently considers EPS as the most
appropriate measure of Company performance since it is so closely linked to
shareholder value. The other portion is measured by the achievement of
specific, measurable individual Executive performance goals.
Target award levels are established under the Bonus Plan and are expressed
as a percentage of annual base salary. Target award levels will vary among the
Executives based upon the level of responsibility and ability to impact
overall Company performance. These levels vary by salary grade. Incentive
opportunity for the lowest level Executive ranges from 0% to 31.5% of annual
base salary. The Chief Executive Officer of the Company is eligible for an
incentive award ranging from 0% to 90% of annual base salary. The Board of
Directors retains the discretion to award bonus payments outside the Bonus
Plan guidelines in the event of exceptional operating results or under special
circumstances which result in outstanding Company performance for the fiscal
period.
Total cash compensation opportunity for the Company is defined as the salary
paid for each position plus the maximum possible bonus award. In the event
that maximum awards were paid under the Bonus Plan, total cash compensation
for the Executives as a group would approximate the 75th percentile of actual
total cash compensation in industrial companies of similar size. Corporate
performance must significantly exceed stated goals and objectives to support
maximum incentive awards under the Bonus Plan, and each Executive must not
only achieve but far exceed assigned individual goals and objectives. While
this level of Company performance is possible, probability of attainment of
the targeted earnings per share to fund a maximum incentive award pool would
be the exception. If Company performance does not meet the targeted threshold
of earnings per share and bonus awards are not paid, total cash compensation
for the Executives would approximate the 25th percentile of actual total cash
compensation in industrial organizations of comparable size.
LONG-TERM INCENTIVE COMPENSATION--RESTRICTED STOCK GRANT PLAN. The Board of
Directors of the Company believes that long-term incentive awards strengthen
the ability of the Company to attract, motivate, and retain executives of
superior capability and more closely align the interests of the management
group with the interests of the shareholders. The Company's long-term
incentive compensation plan consists of grants of Company stock to Executives
under the Restricted Stock Grant Plan. Individual grants under the plan are
made on a discretionary basis. The timing and amount of restricted stock
granted will vary based on the performance of the Company and the Executive.
19
<PAGE>
Recommendations for awards under the Restricted Stock Grant Plan are
submitted by the Committee to the Board of Directors for approval. From time
to time the Committee, in its discretion, may recommend special awards under
the Restricted Stock Grant Plan beyond the typical award level. Such
recommendations may be forthcoming in instances where both Company performance
and the performance of the Executive are considered to be exceptional.
During the 1997 fiscal year, restricted stock grants were awarded to two of
the twenty-four Executives of the Company. These awards were granted to the
Chief Executive Officer and the Chief Financial Officer of the Company in
August 1997 in connection with their recent employment with the Company and
are consistent with the Company's past practices.
The Board of Directors, based upon recommendations from the Committee,
defines the restrictions applicable to any award under the Restricted Stock
Grant Plan. Restricted stock grants made in the recent past and in the 1997
fiscal year require the completion of six years of service with the Company
after the date of grant to be fully vested. The restricted stock award will
vest 25% on the third anniversary date of grant and will vest 25% per year on
each subsequent anniversary thereof. The Board of Directors, in its
discretion, may change the vesting period for subsequent awards to a
participant under the Restricted Stock Grant Plan and may accelerate the
vesting of awards previously made under the Restricted Stock Grant Plan.
Stock certificates are held in the custody of the Company by means of a
trust until restrictions are removed. As beneficiaries of restricted stock
grants, the Executives have the right to vote the restricted stock held in
trust and to receive all dividends paid.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Committee considers the anticipated
tax treatment to the Company and the Executives of various payments and
benefits. Some types of compensation payments and their deductibility depend
on the timing of any vesting requirement or the exercise of previously granted
rights. Further, interpretations of and changes in tax laws and other factors
beyond the Committee's control may also affect the deductibility of certain
compensation payments and benefits. For these reasons, the Committee will
consider various alternatives to preserving the deductibility of compensation
payments and benefits to the extent reasonably practicable and to the extent
consistent with its other compensation objectives.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Board of Directors elected Robert
W. Best as Chairman, President and Chief Executive Officer of the Company
effective March 8, 1997. Mr. Best's annual
20
<PAGE>
base salary is $475,000, or approximately 4% above the 1997 salary range
midpoint for the position of Chairman, President and Chief Executive Officer.
A sign-on bonus of $100,000 was paid to Mr. Best at the time of his
employment. Mr. Best received a restricted stock grant award of 50,000 shares
on August 13, 1997 in connection with his recent employment with the Company.
This is consistent with the Company's past practices.
Mr. Best received a bonus award for fiscal 1997 of $387,200 in accordance
with the provisions and performance objectives established under the Bonus
Plan. This incentive award payment is considered appropriate and reasonable
given the 1997 earnings per share of $1.42, as adjusted for unusual charges
incurred during 1997 and given the successful completion of the Company's
merger with United Cities Gas Company. The Company's total return to
shareholders for fiscal 1997, as calculated for purposes of the performance
graph, was 10.80% compared to the weighted average total return of 17.95% for
the gas distribution companies used as the comparison companies in the
performance graph.
HUMAN RESOURCES COMMITTEE
Carl S. Quinn, Chairman
Travis W. Bain II
Dan Busbee
Thomas J. Garland
Phillip E. Nichol
21
<PAGE>
Performance Graph. The following graph compares the yearly percentage change
in the Company's total return to shareholders for the last five fiscal years
with the total return of the Standard and Poors 500 Stock Index and the
cumulative total return of other natural gas distribution companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ATMOS, S&P 500 INDEX
AND COMPARISON COMPANY INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
-------------
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
ATMOS ENERGY CORPORATION $100 $143 $131 $150 $189 $209
----------------------------------------------------------
S&P 500 COMPOSITE INDEX $100 $113 $117 $152 $183 $257
----------------------------------------------------------
COMPARISON COMPANY INDEX $100 $127 $112 $130 $159 $187
</TABLE>
* Assumes a $100 investment on September 30, 1992, and reinvestment of
dividends.
22
<PAGE>
The following companies were included in the Comparison Company Index used
in the graph: AGL Resources, Inc., Cascade Natural Gas Corp., Connecticut
Energy Corporation, Eastern Enterprises, Indiana Energy, Inc., KeySpan Energy
Corporation, Laclede Gas Company, New Jersey Resources Corporation, NICOR
Inc., Northwest Natural Gas Company, NUI Corporation, ONEOK Inc., Pacific
Enterprises, Peoples Energy Corporation, Piedmont Natural Gas Company, Inc.,
Public Service Company of North Carolina, Southern Union Company, Southwest
Gas Corporation, UGI Corporation, Washington Gas Light Company, WICOR, Inc.,
and Yankee Energy System, Inc.
The Company utilized a different Comparison Company Index from the index it
used in the 1996 fiscal year due primarily to the fact that the size of the
Company (in total customers, revenues and assets) substantially increased in
the 1997 fiscal year as a result of the Merger in July 1997. The index used in
the 1997 fiscal year was the Merrill Lynch Small, Mid and Large Cap Index for
natural gas local distribution companies, which index Merrill Lynch utilizes
to represent natural gas distribution companies in its weekly research
reports. In the 1996 fiscal year, the Company utilized an index comprised of
returns of a peer group of companies, each of which received at least 90% of
its gross revenues from the distribution and sale of natural gas to end users
and had a September 30 fiscal year-end.
If the same index utilized in fiscal year 1996 had been utilized in 1997,
the weighted average total return for the companies included in such index for
the 1997 fiscal year would have been 20.51%. The Company believes that the
companies included in the Comparison Company Index utilized in the 1997 fiscal
year better reflect the peer companies of the Company for the reasons stated
above.
2.AMENDMENT TO INCREASE SHARES ISSUABLE
UNDER THE RESTRICTED STOCK GRANT PLAN
GENERAL DESCRIPTION OF PLAN
The Company's Restricted Stock Grant Plan (the "Plan"), which became
effective October 1, 1987, provides for awards of Common Stock that are
subject to certain restrictions ("Restricted Stock") to certain management and
key employees of the Company. The purpose of the plan is to retain and attract
exceptional managerial and professional employees and to encourage their
strong commitment to corporate objectives. Currently, 24 employees of the
Company participate in the Plan.
The Plan is administered by the Board of Directors. The members of the Board
make the final determinations regarding participation in the Plan, awards
under the Plan, and restrictions on the Restricted Stock awarded. The total
number of shares under such awards to be made during the next fiscal year is
not determinable
23
<PAGE>
at this time, although a total of 111,250 shares was awarded by the Board on
November 12, 1997. The Restricted Stock consists of both previously issued
stock purchased in the open market or shares purchased from the Company as
original issue or treasury shares.
The Restricted Stock may not be transferred until the restrictions on such
stock have been removed. Under the Plan, upon the participant's completion of
three years of service with the Company after the date of the participant's
first grant, restrictions on 25% of the Restricted Stock will be removed, and
restrictions on an additional 25% of the Restricted Stock will be removed each
year thereafter. Thus, the restrictions on all of such Restricted Stock will
be removed upon completion of the sixth year following the date of the grant
of the Restricted Stock. Subsequent grants of Restricted Stock to participants
may have different restriction provisions from those discussed above, as
determined by the Board of Directors. However, the award of such stock will be
conditioned upon the acceptance by the participant of such different
provisions. Share certificates representing Restricted Stock are held in the
custody of the Company for the participant's account by means of a trust
created for such purpose until such time as the restrictions are removed
pursuant to the plan. Participants have the right to vote the Restricted Stock
held in their accounts and to receive all dividends and other distributions
(other than stock dividends and distributions) paid or made with respect to
such Restricted Stock. Dividends are paid on the Restricted Stock at the same
rate they are paid on all of the Company's Common Stock. Notwithstanding the
foregoing schedule for the removal of restrictions, in the event of a
participant's death, disability, or retirement at normal retirement age or in
the event of a "change of control" (as defined in the Plan) of the Company,
the restrictions on shares of Restricted Stock granted to a participant prior
to such event will be immediately removed.
The Board of Directors may amend the Plan at any time or terminate the Plan
at any time with respect to shares of Restricted Stock not previously granted.
However, no amendment to the Plan may impair the rights of any participant
with respect to any Restricted Stock previously awarded to such participant
without his consent. Furthermore, no amendment may materially increase the
benefits accruing to participants under the Plan, materially increase the
aggregate number of shares issuable under the Plan, change the class of
employees who are eligible to participate in the Plan, withdraw the
administration of the Plan from the Board of Directors, or permit any non-
employee member of the Board to become eligible to participate in the Plan
without the approval of the shareholders of the Company.
BOARD RECOMMENDATION TO INCREASE SHARES ISSUABLE
On November 12, 1997, the Board of Directors adopted an amendment to the
Plan to increase the total number of shares of Restricted Stock that may be
awarded under the Plan by an additional 650,000 shares. The amendment will
become effective only upon the approval of the shareholders of the Company.
The total number of shares that can currently be awarded under the Plan is
900,000 shares, 758,750 shares of which have already
24
<PAGE>
been awarded. The Board of Directors believes that the Plan is accomplishing
its purpose of attracting and retaining exceptional managerial and
professional employees who are strongly committed to the objectives of the
Company and adopted this proposed amendment to the Plan in order that future
awards may continue to be made as the Board may determine.
The proposed amendment to the Plan to increase the total number of shares of
Restricted Stock that may be awarded is being submitted for the approval of
the shareholders of the Company pursuant to the provisions of the Plan.
According to the Company's Bylaws, this proposal to amend the Plan requires
the affirmative vote of the holders of a majority of the shares of Common
Stock present or represented by proxy and entitled to vote at the Annual
Meeting at which a quorum is present. An abstention will in effect constitute
a vote against the proposal, while a broker non-vote will not be counted.
In connection with its approval of the proposed amendment to the Plan, the
Board of Directors submits the following resolution for adoption by the
shareholders at the Annual Meeting:
RESOLVED, that an additional 650,000 shares be authorized for issuance
under the Atmos Energy Corporation Restricted Stock Grant Plan and the
third sentence of Section IV of the Plan be amended to read as follows:
"The total number of shares of Restricted Stock, subject to adjustment as
provided in Section XII, which may be awarded by the Company under the Plan
shall not be more than 1,550,000 shares."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
THE RESTRICTED STOCK GRANT PLAN TO INCREASE THE TOTAL NUMBER SHARES OF
RESTRICTED STOCK AWARDABLE THEREUNDER BY AN ADDITIONAL 650,000 SHARES.
AUDITORS
Upon the recommendation by the Audit Committee, the Board of Directors
selected Ernst & Young LLP to continue as the Company's auditors for the
fiscal year ending September 30, 1998. The firm of Ernst & Young LLP and its
predecessors have been the independent auditors of the Company since the
Company's incorporation in 1983. It is expected that representatives of Ernst
& Young LLP will be present at the Annual Meeting. The representatives will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
25
<PAGE>
OTHER MATTERS
OTHER BUSINESS
The Company does not know of any other business that may come before the
Annual Meeting. However, if any other matters are properly brought before the
meeting by the management or any shareholder, it is the intention of each
person named in the accompanying proxy to vote such proxy in accordance with
his judgment on such matters. The enclosed proxy confers discretionary
authority to take action with respect to any additional matters that may come
before the meeting.
SHAREHOLDER PROPOSALS
In the event a shareholder intends to present a proposal at the 1999 Annual
Meeting of Shareholders, it must be received at the offices of the Company no
later than August 31, 1998 for inclusion in the Company's Proxy Statement
relating to such meeting.
By Order of the Board of Directors,
GLEN A. BLANSCET
Vice President, General Counsel
and Corporate Secretary
Dallas, Texas
December 29, 1997
26
<PAGE>
APPENDIX 1
PROXY
ATMOS ENERGY CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting, February 11, 1998
The undersigned hereby constitutes and appoints Robert W. Best, Dan Busbee,
Charles K. Vaughan and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned at
the Annual Meeting of Shareholders of ATMOS ENERGY CORPORATION, to be held at
the Ambassador Hotel, 3100 I-40 West, Amarillo, Texas 79102 on Wednesday,
February 11, 1998, and at any postponements or adjournment thereof, on all
matters coming before said meeting.
You are encouraged to specify your choice by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return this card.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
27
<PAGE>
ATMOS LOGO THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Shareholders, you
can be sure your shares are represented at the meeting by promptly returning
your proxy in the enclosed envelope.
COMPANY HIGHLIGHTS DURING 1997
. On July 31, 1997, the Company successfully completed the merger of United
Cities Gas Company. As a result, the Company now serves over 1 million
customers in 13 states.
. The Company designed and began implementing a plan that will result in the
integration of the operations and personnel of United Cities, as well as a
customer service initiative project, which includes a centralized customer
call center operation in Amarillo, Texas.
. The Company achieved "A" ratings on its secured and unsecured debt, which
was rated by the debt rating agencies for the first time in 1997.
DETACH HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR the election of all nominees for
director.
1. Nominees for Director: Class III: Robert W. Best, Thomas J. Garland, Phillip
E. Nichol, Charles K. Vaughan
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
[___] [___]
For, except vote withheld from the following nominee(s):
------------------------------
The Board of Directors recommends a vote FOR approval of the amendment to the
Restricted Stock Grant Plan.
2. Approval of Amendment to Restricted FOR AGAINST ABSTAIN
Stock Grant Plan to increase number of [___] [___] [___]
shares issuable.
MARK HERE
FOR ADDRESS CHANGE
AND NOTE AT LEFT [___]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
AND AUTHORIZES THE PROXIES TO TAKE ACTION IN THEIR DISCRETION UPON OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR APPROVAL OF
THE PROPOSAL TO APPROVE THE AMENDMENT TO THE RESTRICTED STOCK GRANT PLAN.
28
<PAGE>
Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.
Signature: Date Signature: Date
-------------- --------- ----------------- -------
29
<PAGE>
APPENDIX 2
Atmos Energy Corporation
Restricted Stock Grant Plan
Effective October 1, 1987
Amended and Restated as of November 12, 1997
30
<PAGE>
ATMOS ENERGY CORPORATION
RESTRICTED STOCK GRANT PLAN
(Amended and Restated as of November 12, 1997)
I. Purpose of Plan
---------------
The Atmos Energy Corporation Restricted Stock Grant Plan (the "Plan") has
been established to align the interests of its participants more directly
with those of the Company's shareholders, to retain and attract managerial
and professional personnel of exceptional ability and to encourage strong
commitment to corporate objectives.
II. Plan Definitions
----------------
All rights and conditions under the Plan are specified in the following
paragraphs subject to compliance with applicable laws and regulations. As
used in the Plan, the following terms and phrases shall have the meanings
ascribed to them below:
A. "Board" or "Board of Directors" shall mean the Board of Directors of
Atmos Energy Corporation.
B. "Common Stock" shall mean the common stock of Atmos Energy
Corporation.
C. "Company" shall mean Atmos Energy Corporation.
D. "Disability" shall mean such total and permanent disability as
qualifies the participant for benefits under the Company's Long-Term
Disability Plan covering the participant at the time.
E. "Exchange Act" shall mean the Securities Exchange Act of 1934.
F. "Fair Market Value" with regard to the Restricted Stock on a
particular date shall mean the closing price of a share of Common
Stock as reported by the New York Stock Exchange-Composite
Transactions on that date. However, if no trading in the Common Stock
occurs on the New York Stock Exchange on that date, the "Fair Market
Value" shall mean the closing price as reported on the immediately
preceding date. In the event the Common Stock is traded on an
exchange other than the New York Stock Exchange, the Board of
Directors shall select a suitable substitute published stock quotation
system, which system shall be in compliance with all relevant
regulatory provisions.
G. "Subsidiary" shall mean any direct or indirect subsidiary of Atmos
Energy Corporation.
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<PAGE>
III. Eligibility
-----------
The participants in the Plan shall be such employees of the Company or any
Subsidiary as may be selected from time to time by the Board in its
discretion. Directors of the Company who are not also employees of the
Company shall not be eligible to participate in the Plan. In order to
receive Restricted Stock, participants must not, at the time the grant of
Restricted Stock is made, be subject to any agreement with the Company that
restricts the acquisition of shares of Common Stock.
IV. Stock Subject to Plan
---------------------
The stock subject to the Plan shall consist of shares of Common Stock to
which the restrictions specified in Section V.F. are attached. This stock
is hereafter referred to as "Restricted Stock". The total number of shares
of Restricted Stock, subject to adjustment as provided in Section XII, that
may be awarded by the Company under the Plan shall not be more than 900,000
shares. Restricted Stock awarded under the Plan shall, in the sole
discretion of the Board of Directors, consist of either previously issued
shares purchased on the open market or shares purchased from the Company as
original issue shares or treasury shares.
V. Terms and Conditions of Restricted Stock Awards
-----------------------------------------------
Each share of Restricted Stock awarded under the Plan shall be subject to
the following restrictions:
A. Shares of Restricted Stock awarded to a Plan participant may not be
sold, transferred, pledged, hypothecated, encumbered, or otherwise
alienated in any manner, whether voluntarily, by operation of law, or
otherwise, until the restrictions on such shares are removed pursuant
to the Plan and said shares are delivered to the participant.
B. Shares of Restricted Stock awarded to a Plan participant will be
forfeited if, prior to the removal of restrictions on the Restricted
Stock awarded hereunder, the recipient terminates employment for any
reason other than death, disability, or retirement.
C. At the time and on the date of a participant's death, disability, or
retirement (upon or after attaining the age of 62) while employed by
the Company or Subsidiary, all restrictions placed on each share of
Restricted Stock awarded to that participant shall be removed and such
shares shall be delivered to the participant or to his legal
representatives, beneficiaries, or heirs. From and after such date,
the participant or the participant's estate, personal representative
or beneficiary, as the case may be, shall have full rights of transfer
or resale with respect to such stock subject to applicable
32
<PAGE>
state and federal regulations. The restrictions on shares of
Restricted Stock awarded to a participant shall not be removed due to
the participant's retirement prior to attaining the age of 62, unless
such removal is expressly approved by the Board of Directors.
D. Stock certificates representing the number of shares of Restricted
Stock granted to an employee of the Company or Subsidiary shall be
registered in the employee's name, but the certificates representing
any shares of Restricted Stock shall be held in the custody of the
Company for the participant's account. All dividends and
distributions (other than stock dividends and distributions) on shares
held in the custody of the Company shall be paid to the participant,
however, regardless of the fact that the shares are being held in
behalf of the participant. Any new, additional, or different shares
or securities issued (due to a stock split, stock dividend, or other
stock distribution) with respect to Restricted Stock previously
awarded under the Plan shall be held by the Company as Restricted
Stock for the participant's account and shall have the same
restrictions as the underlying Restricted Stock with respect to which
such new, additional, or different shares or securities were issued.
At such time as restrictions are removed from any portion of the
Restricted Stock held by the Company for the participant, certificates
representing such shares shall be delivered free of all restrictions
to the participant or to the participant's legal representatives,
beneficiaries, or heirs.
E. Additional grants of Restricted Stock to a participant after the
initial grant to such participant may have restriction provisions
different from those provided in Section VI. If such is the case, the
award of such stock will be conditioned upon the acceptance by the
participant of such different provisions.
F. Each certificate issued in respect of shares of Restricted Stock
granted to a participant under the Plan shall bear the following, or
similar legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeitures) contained in the Atmos Energy Corporation
Restricted Stock Grant Plan. A copy of the Plan is on file in
the office of Atmos Energy Corporation, 1800 Three Lincoln
Centre, 5430 LBJ Freeway, Dallas, Texas 75240."
VI. Removal of Restrictions
-----------------------
33
<PAGE>
A participant who receives a Restricted Stock award pursuant to the Plan
shall be entitled to delivery of shares free and clear of all restrictions,
if such participant is an employee of the Company or Subsidiary at the time
(subject to the provisions of Sections V.C. and V.E. herein), according to
the following schedule:
<TABLE>
<CAPTION>
Percentage of Original
Completed Years of Service Grant Delivered
After Date of Grant to Participant
------------------- --------------
<S> <C>
3 25%
4 25%
5 25%
6 25%
</TABLE>
Notwithstanding the foregoing provisions, each participant shall, in the
event of a Change of Control of the Company, receive free of restriction
all Restricted Stock granted to the participant on or before the effective
date of such Change of Control. As used in the Plan, a "Change in Control"
of the Company shall be deemed to have occurred if:
(i) (A) Any "Person" (as defined in subparagraph (ii) below), other than
(1) the Company or any Subsidiary, (2) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any of its affiliates, as defined in Rule 12b-2 promulgated under
Section 12 of the Exchange Act ("Affiliates"), (3) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the
shareholders of the Company, in substantially the same proportions as
their ownership of stock of the Company, who is or becomes the
"beneficial owner" (as defined in subparagraph (ii) below), directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
directly from the Company or its Affiliates) representing 33-1/3% or
more of the combined voting power of the Company's then outstanding
securities, or 33-1/3% or more of the then outstanding common stock of
the Company, excluding any Person who becomes such a beneficial owner
in connection with a transaction described in subparagraph (C)(1)
below.
(B) During any period of two consecutive years (the "Period"),
individuals who at the beginning of the Period constitute the Board of
the Company and any "new director" (as defined in subparagraph (ii)
below) cease for any reason to constitute a majority of the Board.
(C) There is consummated a merger or consolidation of the Company or
any Subsidiary with any other corporation, except if:
34
<PAGE>
(1) the merger or consolidation would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
any parent thereof) at least 60% of the combined voting power of
the voting securities of the Company or such surviving entity or
any parent thereof outstanding immediately after such merger or
consolidation; or
(2) the merger or consolidation is effected to implement a
recapitalization of the Company (or similar transaction) in which
no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates other than
in connection with the acquisition by the Company or its
Affiliates of a business) representing 60% or more of the
combined voting power of the Company's then outstanding
securities.
(D) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at
least 60% of the combined voting power of the voting securities of
which are owned by the stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately
prior to such sale.
(ii) For purposes of subparagraph (i) above,
(A) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) of the
Exchange Act.
(B) "Beneficial owner" shall have the meaning provided in Rule 13d-3
under the Exchange Act.
(C) "New director" shall mean an individual whose election by the
Company's Board or nomination for election by the Company's
shareholders was approved by a vote of at least 2/3's of the directors
then still in office who either were directors at the beginning of the
Period or whose election or nomination for election was previously so
approved or recommended. However, "new director" shall not include a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation relating to the election of directors of the
Company.
VII. Stock Withholding Requirement
-----------------------------
35
<PAGE>
Upon the removal or lapse of the restrictions on any Restricted Stock
awarded to a participant, the number of shares issuable by the Company to
the participant shall be subject to applicable withholding requirements for
income and employment taxes arising from the removal or lapse of the
restrictions on the Restricted Stock.
VIII. Forfeited Shares
----------------
If shares of Restricted Stock are forfeited according to the terms of the
Plan, the number of shares forfeited may be added back to the number of
shares available for issuance under the Plan. Any shares of Restricted
Stock that are forfeited according to the terms of the Plan shall be held
by the Company as treasury shares and shall be available for reissuance
under the Plan.
IX. Rights of Recipients as Shareholders
------------------------------------
Except as otherwise provided in the Plan, a recipient of a Restricted Stock
grant under the Plan shall have all of the rights of a shareholder of the
Company with respect to such shares of Restricted Stock, including the
right to vote such shares and receive the dividends and other distributions
paid or made with respect to such shares in accordance with Section V.D.
above.
X. Administration of the Plan
--------------------------
The Board shall have full authority to manage and control the operation and
administration of the Plan. Any action taken by the Board with respect to
the Plan shall be taken upon the affirmative vote of a majority of the
directors. The Board shall have the power to construe and interpret the
Plan in accordance with its terms and to establish and amend the rules and
regulations for its administration. All determinations of the Board shall
be final and shall not be subject to appeal. The Board shall designate
those employees of the Company and its Subsidiaries who are eligible to
participate in the Plan subject to the provisions of Section III and shall
designate the amounts of Restricted Stock to be granted.
XI. Amendment and Termination
-------------------------
The Board in its discretion may terminate the Plan at any time with respect
to any shares of Restricted Stock which have not theretofore been granted.
The Board shall have the right to alter or amend the Plan or any part
thereof from time to time; provided, that no change in any Restricted Stock
theretofore granted may be made which would impair the rights of the
grantee without the consent of such grantee; and provided, further, that
the Board may not make any alteration or amendment which would materially
increase the benefits accruing to participants under the Plan, materially
increase the aggregate number of shares which may be issued pursuant to the
provisions of the Plan, change the class of
36
<PAGE>
employees eligible to receive grants under the Plan, withdraw the
administration of the Plan from the Board or permit any non-employee
member of the Board to be eligible to receive a grant under the Plan
without the approval of the stockholders of the Company.
XII. Adjustment Upon Changes in Stock
--------------------------------
If there shall be any change in the number of shares of Common Stock
subject to the Plan or to any Restricted Stock granted thereunder,
through subdivision, combination, or reclassification of shares, or
through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in the corporate structure,
appropriate adjustment shall be made by the Board in the aggregate number
of shares subject to the Plan.
XIII. No Employment Rights
--------------------
The adoption of the Plan does not confer upon any employee of the Company
or a Subsidiary any right to continue employment with the Company or
Subsidiary, as the case may be, nor does it interfere in any way with the
right of the Company or a Subsidiary to terminate the employment of any
of its employees at any time.
IN WITNESS WHEREOF, and as conclusive evidence of its adoption of this
Amended and Restated Restricted Stock Grant Plan, the Company has caused this
Plan to be duly executed on this 12/th/ day of November, 1997.
ATMOS ENERGY CORPORATION
By: /s/ Robert W. Best
------------------------------
Robert W. Best
Chairman, President and
Chief Executive Officer
37
