<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)(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 (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.
[_] 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>
[LOGO APPEARS HERE]
December 22, 1999
Dear Atmos Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas 75201, on
Wednesday, February 9, 2000, 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 Hotel Crescent Court, 400 Crescent Court,
Dallas, Texas 75201, on Wednesday, February 9, 2000, at 11:00 a.m., Central
Standard Time, for the following purposes:
1. To elect four Class II directors for three-year terms expiring in
2003.
2. 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 13, 1999 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,
SHIRLEY A. MORGAN
Assistant Corporate Secretary and
Interim Corporate Secretary
December 22, 1999
- -------------------------------------------------------------------------------
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 22, 1999.
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 13, 1999, there were 31,469,665 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 13, 1999 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, 1999, 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)
1,848,895 5.9%
</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, 1999, 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 10 of
this Proxy Statement, 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............................ 5,234 (a)(b)
Robert W. Best............................... 139,457 (a)
Glen A. Blanscet (c)......................... 10,788 (a)
Dan Busbee................................... 8,925 (a)(b)
Richard W. Cardin............................ 5,050 (a)(b)
Larry J. Dagley.............................. 72,275 (a)
Thomas J. Garland............................ 6,915 (a)(b)
J. Charles Goodman........................... 10,508 (a)
Gene C. Koonce............................... 23,590 (a)(b)
Vincent J. Lewis............................. 8,940 (a)(b)
Thomas C. Meredith........................... 2,499 (a)(b)
Wynn D. McGregor............................. 8,032 (a)
Phillip E. Nichol............................ 11,040 (a)(b)
Carl S. Quinn................................ 38,757 (a)(b)
Charles K. Vaughan........................... 52,799 (a)(b)
Richard Ware II.............................. 17,041 (a)(b)
All directors and executive officers as a
group (16 individuals)...................... 421,850 1.35%
</TABLE>
- --------
(a) The percentage of shares beneficially owned by such individual does not
exceed one percent of the class so owned.
(b) Includes share units credited to the following directors under the
Company's Equity Incentive and Deferred Compensation Plan for Non-Employee
Directors in the following respective amounts: Mr. Bain, 4,060 units, Mr.
Busbee, 4,350 units, Mr. Cardin, 2,550 units, Mr. Garland, 3,670 units,
Mr. Koonce, 4,660 units, Mr. Lewis, 1,940 units, Dr. Meredith, 1,280
units, Mr. Nichol, 3,540 units, Mr. Quinn, 3,270 units, Mr. Vaughan, 3,090
units, and Mr. Ware, 1,010 units.
(c) Mr. Blanscet resigned as Vice President, General Counsel and Corporate
Secretary, effective August 13, 1999.
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 II are to be elected at this Annual Meeting for
three-year terms expiring in 2003. Richard W. Cardin, Thomas C. Meredith, Carl
S. Quinn and Richard Ware II have been nominated to serve as Class II
directors.
Messrs. Meredith, Quinn and Ware were last elected to three-year terms by
the shareholders at the 1997 Annual Meeting and have been nominated to
continue to serve as directors for three-year terms ending in 2003. Mr.
Cardin, formerly a director of United Cities Gas Company ("United Cities")
prior to its merger with the Company on July 31, 1997 (the "United Cities
Merger"), was elected by the shareholders at the Special Meeting of the
Shareholders on November 12, 1996 to serve as an additional Class II director
of the Company pursuant to the provisions of the Agreement and Plan of
Reorganization, as amended, between the Company and United Cities. The Board
is nominating Messrs. Cardin, Meredith, Quinn and Ware to continue serving as
Class II directors. The terms of all nominated directors will expire in 2003.
The other directors listed on the following pages will continue to serve in
their positions for the remainder of their current terms. 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
Name; Principal Occupation or Employment First Became a Class Designation
During Past Five Years; Other Director And Year of
Directorships Age of the Company Expiration of Term
---------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Richard W. Cardin........................ 64 1997 Class II
Consultant and retired partner of Arthur 2000
Andersen LLP since 1995. Formerly
managing partner with Arthur Andersen
LLP in Nashville, Tennessee from 1980
until 1994. Also member of Board of
Trustees of Prison Realty Trust and
director of United States Lime &
Minerals, Inc.
Thomas C. Meredith....................... 58 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. Also
director of Alabama Power Company.
Carl S. Quinn............................ 68 1994 Class II
General Partner of Quinn Oil Company, 2000
Ltd. in East Hampton, 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.
Richard Ware II.......................... 53 1994 Class II
President of Amarillo National Bank in 2000
Amarillo, Texas since 1981. Member of
the Board of Trustees of Southern
Methodist University in Dallas, Texas.
</TABLE>
4
<PAGE>
The following persons are directors of the Company who will be continuing in
office until the expiration of their terms as set forth below.
<TABLE>
<CAPTION>
Year in Which
Name; Principal Occupation or Employment First Became a Class Designation
During Past Five Years; Other Director And Year of
Directorships Age of the Company Expiration of Term
---------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Travis W. Bain II........................ 65 1988 Class I
Chairman of Texas Custom Pools, Inc. in 2002
Plano, Texas since March 1999. President
of Bain Enterprises, Inc. in Plano,
Texas since November 1991. Also director
of Delta Industries, Inc. in Jackson,
Mississippi.
************************************************************************************************
Robert W. Best........................... 53 1997 Class III
Chairman of the Board, President and 2001
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.
************************************************************************************************
Dan Busbee............................... 66 1988 Class I
Independent Business Consultant. 2002
Formerly Of Counsel with Gibson Dunn &
Crutcher in Dallas, Texas from August
1998 through August 1999 and formerly
Attorney and Shareholder with Locke
Purnell Rain Harrell (A Professional
Corporation) in Dallas, Texas from 1970
until August 1998.
************************************************************************************************
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Year in Which
Name; Principal Occupation or Employment First Became a Class Designation
During Past Five Years; Other Director And Year of
Directorships Age of the Company Expiration of Term
---------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Thomas J. Garland........................ 65 1997 Class III
Interim President of Tusculum College 2001
since 1999. Chairman of the Tusculum
Institute for Public Leadership and
Policy since 1998. Executive in
Residence and Distinguished Service
Professor of the Civic Arts of Tusculum
College in Greeneville, Tennessee and a
consultant since 1990. Also director of
Peoples Community Bank in Johnson City,
Tennessee.
***************************************************************************************************
Gene C. Koonce........................... 67 1997 Class I
Formerly Chairman of the Board, 2002
President and Chief Executive Officer of
United Cities from May 1996 until the
United Cities Merger in July 1997;
President and Chief Executive Officer of
United Cities from October 1978 until
May 1996. Director of First American
Corporation in Nashville, Tennessee
until November 1999.
Vincent J. Lewis......................... 55 1997 Class I
Senior Vice President at Legg Mason Wood 2002
Walker, Inc. in Rutherford, New Jersey
since 1987.
***********************************************************************************************
Phillip E. Nichol........................ 64 1985 Class III
Senior Vice President and Branch Manager 2001
of PaineWebber Incorporated in Dallas,
Texas since March 1999. Formerly Senior
Vice President and Divisional Hiring
Officer for Central Division of
PaineWebber Incorporated in Dallas,
Texas from March 1998 to February 1999;
Senior Vice President and Branch Manager
of PaineWebber Incorporated in Fort
Worth, Texas from May 1996 to February
1998; 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>
6
<PAGE>
<TABLE>
<CAPTION>
Year in Which
Name; Principal Occupation or Employment First Became a Class Designation
During Past Five Years; Other Director And Year of
Directorships Age of the Company Expiration of Term
---------------------------------------- --- -------------- ------------------
<S> <C> <C> <C>
Charles K. Vaughan 62 1983 Class III
Formerly Chairman of the Board of the 2001
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>
Certain Business Relationships
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 17.
The Board of Directors: Committees, Meetings, and Directors' Fees
Standing Committees. The Company has certain standing committees, each of
which is described below. The members of each committee discussed below served
in such capacities during the last fiscal year.
The Executive Committee consists of Messrs. Best, Koonce, Quinn 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 two meetings during the last fiscal year.
The Audit Committee consists of Messrs. Bain, Busbee, Cardin, Lewis,
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.
The Audit Committee held three meetings during the last fiscal year.
7
<PAGE>
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. This committee also administers the Company's 1998 Long-
Term Incentive Plan and Annual Incentive Plan for Management. During the last
fiscal year, the Human Resources Committee held three meetings.
The Nominating Committee consists of Messrs. Cardin, Koonce, Lewis, Meredith
and Nichol. 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
one meeting 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.
The Work Session/Annual Meeting Committee consists of Messrs. Bain, Garland,
Koonce, Nichol and Ware. Mr. Bain serves as chairman of the committee. This
committee selects the site and 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 ten meetings. During fiscal year 1999, 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, each of the non-
employee directors receives an annual retainer of $20,000 and a fee of $1,000
per day for attendance at each Board and committee meeting (excluding
telephone conference meetings). 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 fee for additional work done
in connection with their committee duties.
8
<PAGE>
Other Compensation for Non-Employee Directors. In August 1998, the Board
adopted the Company's Equity Incentive and Deferred Compensation Plan for Non-
Employee Directors, representing an amendment to the Company's Deferred
Compensation Plan for Outside Directors that was originally adopted in May
1990. This amended plan became effective when shareholders of the Company
approved such amendment at their 1999 Annual Meeting in February 1999. Under
the terms of this plan, each non-employee director is allowed to defer receipt
of his annual retainer and meeting fees and to invest his deferred
compensation into either a cash account or a stock account. All directors who
are eligible to participate in this plan have elected to receive share units.
In addition, under the terms of this plan, the directors receive an annual
grant of share units for each year of service on the Board. The specific unit
amounts credited to each director are shown in the Security Ownership Table on
page 2 of this Proxy Statement.
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 are issued; fractional shares are paid in cash.
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.
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 term of the agreement may be extended for additional one-year periods upon
the agreement of the Board and Mr. Vaughan. The term of the agreement was
extended by amendment approved by the Board in August 1998 for an additional
one-year period, ending September 30, 2000, and again in November 1999 for an
additional one-year period, ending September 30, 2001. The agreement provides
for future payments to Mr. Vaughan, in consideration for his consulting
services, of $130,000 during fiscal year 2000 and fiscal year 2001. During the
1999 fiscal year, Mr. Vaughan received $130,000 in payment for his services
under the Consulting Agreement. The payments are made in semi-annual
installments payable on October 1 and April 1 of each fiscal year.
9
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who beneficially own more than
ten percent of the Company's Common Stock to file with the Securities and
Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in their ownership in the Company's Common
Stock. Directors, executive officers, and greater-than-ten-percent beneficial
shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such reports furnished to the Company, the Company believes that,
during the last fiscal year, all of the Company's directors, executive
officers, and greater-than-ten-percent beneficial owners were in compliance
with the Section 16(a) filing requirements.
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation
paid by the Company for each of the Company's last three completed fiscal
years to Mr. Best and the Company's four most highly compensated executive
officers other than Mr. Best.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------- -------------------------------
Other Annual Restricted Securities All Other
Salary Bonus(a) Compensation Stock Awards(b) Underlying Compensation
Name and Principal Position Year ($) ($) ($) ($) Options/SARs(#) ($)
- --------------------------- ---- ------- --------- ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Best(c)........ 1999 540,192 0 (d) 1,525,000 50,000 8,584(e)
Chairman of the Board, (d)
President 1998 480,786 450,000 1,262,500 -- 8,584
and Chief Executive (d)
Officer 1997 266,426 487,200 1,225,000 -- 2,184
Larry J. Dagley(f)....... 1999 352,477 0 113,728(g) 0 30,000 11,445(e)
Executive Vice President (d)
and 1998 310,385 263,300 631,250 -- 5,528
Chief Financial Officer 1997 125,000 283,400 (d) 1,225,000 -- 1,872
J. Charles Goodman....... 1999 214,631 0 (d) 0 20,000 7,674(e)
Executive Vice (d)
President, 1998 184,537 108,800 126,250 -- 8,028
Utility Operations 1997 177,530 121,400 (d) 0 -- 11,132
Glen A. Blanscet(h)...... 1999 138,497 0 (d) 0 -- 6,378(e)
Former (d)
Vice President, General 1998 135,973 58,700 65,650 -- 6,328
Counsel and Corporate (d)
Secretary 1997 129,854 198,200 0 -- 9,335
Wynn D. McGregor......... 1999 134,762 0 (d) 0 12,000 6,018(e)
Vice President, Human (d)
Resources 1998 116,892 41,800 32,825 -- 5,434
1997 114,047 52,000 (d) 0 -- 5,273
</TABLE>
10
<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, 137,500 shares with a value of
$3,317,188; Larry J. Dagley, 68,750 shares with a value of $1,658,594; J.
Charles Goodman, 3,750 shares with a value of $90,469; Glen A. Blanscet,
-0- shares; and Wynn D. McGregor, 975 shares with a value of $23,522.
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.
(c) Mr. Best became Chairman, President and Chief Executive Officer 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 contributions made
during the last fiscal year to the named executive officer's account
pursuant to the Company's 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 1999 fiscal year for each named executive officer were as
follows: Robert W. Best, $6,400 in Company matching contributions made
pursuant to the ESOP and $2,184 in term life insurance premiums; Larry J.
Dagley, $9,300 in Company matching contributions made pursuant to the ESOP
and $2,145 in term life insurance premiums; J. Charles Goodman, $6,332 in
Company matching contributions made pursuant to the ESOP and $1,342 in
term life insurance premiums; Glen A. Blanscet, $5,540 in Company matching
contributions made pursuant to the ESOP and $838 in term life insurance
premiums; and Wynn D. McGregor, $5,176 in Company matching contributions
made pursuant to the ESOP and $842 in term life insurance premiums.
(f) Mr. Dagley became Executive Vice President and Chief Financial Officer of
the Company on May 1, 1997.
(g) Other Annual Compensation paid to Mr. Dagley during the 1999 fiscal year
included the purchase by the Company of a club membership in the amount of
$99,072 (including an amount for federal income tax gross-up).
(h) Mr. Blanscet resigned as Vice President, General Counsel and Corporate
Secretary, effective August 13, 1999.
11
<PAGE>
Stock Options. The following table provides information concerning options
to purchase Common Stock of the Company under the Company's 1998 Long-Term
Incentive Plan granted to the named executive officers in the last fiscal
year. The options have a term of ten years and may be exercised as follows:
one-third after one year from the date of grant, another one-third after two
years from the date of grant and the remaining one-third after three years
from the date of grant.
OPTION/SAR GRANTS IN LAST COMPLETED FISCAL YEAR
<TABLE>
<CAPTION>
Percent of Potential
Number of Total Realizable Value at
Securities Options/ Assumed Rates of
Underlying SARs Stock Price
Options/ Granted to Exercise Appreciation for
SARs Employees or Base Option Term (c)
Granted in Fiscal Price Expiration -------------------
Name (#)(a) Year ($/Sh)(b) Date 5% 10%
---- ---------- ---------- --------- ---------- -- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Best.......... 50,000 15.3% $24.41 03-02-09 $767,500 $1,945,000
Larry J. Dagley......... 30,000 9.2% $24.41 03-02-09 $460,500 $1,167,000
J. Charles Goodman ..... 20,000 6.1% $24.41 03-02-09 $307,000 $ 778,000
Wynn D. McGregor ....... 12,000 3.7% $24.41 03-02-09 $184,200 $ 466,800
</TABLE>
- --------
(a) No SARs were granted in Fiscal Year 1999 to any of the named executive
officers. The options granted to Mr. Blanscet during the fiscal year were
forfeited upon his resignation from the Company on August 13, 1999, in
accordance with the provisions of the 1998 Long-Term Incentive Plan.
(b) Exercise price is the fair market value per share of the shares as of the
date of grant, as determined in accordance with the Company's 1998 Long-
Term Incentive Plan.
(c) Potential realizable value is the amount that would be realized upon
exercise by the named executive officer of the options immediately prior
to the expiration of their respective terms, assuming the specified
compound annual rates of appreciation on Common Stock over the respective
terms of the options. These amounts represent assumed rates of
appreciation only. Actual gains, if any, on stock option exercises depend
on the future performance of the Company's common stock and overall market
conditions. There can be no assurances that the potential values reflected
in this table will be achieved.
12
<PAGE>
AGGREGATED OPTION/ SAR EXERCISES IN FISCAL YEAR 1999
AND 1999 FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
on Value Options/SARs at Fiscal In-The-Money Options/SARs
Exercise Realized Year-End (#)(a) at Fiscal Year-End ($)(b)
(#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
Name -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert W. Best.......... -0- -0- -0-/50,000 -0-/-0-
Larry J. Dagley......... -0- -0- -0-/30,000 -0-/-0-
J. Charles Goodman...... -0- -0- -0-/20,000 -0-/-0-
Wynn D. McGregor........ -0- -0- -0-/12,000 -0-/-0-
</TABLE>
- --------
(a) No SARs have been granted to any of the named executive officers. The
options previously granted to Mr. Blanscet were forfeited upon his
resignation from the Company on August 13, 1999, in accordance with the
provisions of the 1998 Long-Term Incentive Plan.
(b) Based on per share price for Company's common stock of $24.13 per share.
The price reflects the closing trading price on the New York Stock
Exchange on September 30, 1999.
Retirement Plans. Until January 1, 1999, the executive officers listed in
the Summary Compensation Table were covered by the Employees' Retirement Plan
of Atmos Energy Corporation (the "Retirement Plan"), a defined benefit pension
plan pursuant to which all participants automatically accrued pension credits
after completing one year of service with the Company. Since January 1, 1999,
the executive officers listed in the Summary Compensation Table have been
covered by the Company's new Pension Account Plan, which covers all employees
of the Company. Such executive officers had an opening account balance
established for them as of January 1, 1999 equal to the then present value of
their respective accrued benefits under the Retirement Plan as of December 31,
1998. The present value factor is based on average life expectancy, normal
retirement age and a discount rate of seven percent. The Pension Account Plan
will credit an allocation to each participant's account at the end of each
year according to a formula based on his age, service and total eligible pay
up to $160,000 (excluding incentive pay).
The Pension Account Plan provides for an additional annual allocation based
upon a participant's age as of January 1, 1999 for those participants who were
participants in the Retirement Plan. The Pension Account Plan will credit this
additional allocation each year through December 31, 2008. In addition, at the
end of each year, a participant's account will be credited with interest on
the participant's prior year account balance. A special grandfather benefit
also applies through December 31, 2008, for participants who were at least age
50 as of January 1, 1999, and who were participants in the Retirement Plan on
December 31, 1998. Participants are fully
13
<PAGE>
vested in their account balances after five years of eligibility service and
may choose to receive their account balances as a lump sum or an annuity.
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 disability and death benefits) to all officers and utility
business unit presidents of the Company. A participant who has been an officer
or utility business unit president for at least two years, has five years of
vesting service under the Pension Account 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 Pension Account Plan or a similar plan,
equals 75% of his 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 Pension Account 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 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>
14
<PAGE>
- --------
(a) The benefit amounts listed in the Pension 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.
The Pension Account Plan covers only the regular salary of each of its
participants, excluding incentive pay (subject to the maximum covered
compensation limit of $160,000 as of January 1, 1997 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;
and (b) the greater of the amount of the participant's last award under any of
the Company's annual performance bonus or incentive plans or the average of
the participant's highest three performance awards under such plan (whether or
not consecutive). 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, $1,005,000; Larry J. Dagley, $625,900; J. Charles Goodman,
$331,400; Glen A. Blanscet, $246,543; and Wynn D. McGregor, $181,400. Each of
such executive officers has the following approximate number of years of
credited service under the retirement plans: Mr. Best, 2 years; Mr. Dagley, 2
years; Mr. Goodman, 18 years; Mr. Blanscet, 14 years; and Mr. McGregor, 11
years.
Each of the executive officers listed in the Summary Compensation Table 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" of the Company (as both
terms are defined in the plan), (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
for any reason other than "cause", or (e) a termination of the participant's
participation in the plan for any reason other than "cause" prior to the
participant's termination of employment. The approval of the United Cities
Merger by the shareholders on November 12, 1996 constituted a "change in
control" as defined in the Supplemental Plan, and as a result, Messrs.
Blanscet, Goodman and McGregor, who were participants in the Supplemental Plan
as of November 12, 1996, are each entitled to receive unreduced supplemental
pension benefits commencing at age 55. The Participation Agreements set forth
the specific 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.
15
<PAGE>
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 (other than Mr.
Blanscet) 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 agreement for each executive officer other than Mr. Goodman
provides that if employment is terminated by the Company other than for
"cause" (as defined in the agreement), retirement, death, or disability, or by
the employee for other than "constructive termination" (as defined in the
agreement), the Company will pay such executive officer a lump sum severance
payment equal to 2.5 times such executive officer's total compensation,
comprised of the annual base salary and "Average Bonus", as such term is
defined in the agreement. If the total of such lump sum severance payment plus
all other payments, distributions or benefits of any type made to or on behalf
of the executive officer results in the imposition of the excise tax imposed
by Section 4999 of the Internal Revenue Code, the lump sum severance payment
will be increased in an amount required for the executive officer to pay any
such excise taxes due the Internal Revenue Service. In addition, such
executive officer will be entitled to all rights and benefits, if any,
provided under any other plan or agreement between him and the Company.
Mr. Goodman's severance agreement provides that if his employment is
terminated by the Company other than for "cause" (as defined in the
agreement), retirement, death, or disability, or by the employee for "good
reason" (as defined in the agreement), the Company will pay him a lump sum
severance payment equal to 2.99 times his "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 payment described
above. In addition, Mr. Goodman will be entitled to all rights and benefits,
if any, provided under any other plan or agreement between him and the
Company.
Each of the executive officers listed in the Summary Compensation Table
(other than Mr. Blanscet) also participates in the Company's Restricted Stock
Grant Plan and has received, from time to time, awards of stock
16
<PAGE>
that are restricted with respect to their transferability. The restrictions
lapse pursuant to a schedule established by 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
(age 62) or in the event of a "change of control" (as defined in the plan) of
the Company.
Human Resources Committee Interlocks and Insider Participation. The members
of the Human Resources Committee during the last fiscal year were Messrs.
Bain, Busbee, Garland, Nichol and Quinn. From August 1998 through August 1999,
Mr. Busbee was of counsel to the law firm of Gibson, Dunn & Crutcher in
Dallas, Texas, which the Company retains from time to time to perform legal
services. There are no interlocking relationships between any executive
officer of the Company and any other company.
Human Resources Committee Report on Executive Compensation.
THE ROLE OF THE COMMITTEE. The Human Resources Committee of the Board of
Directors is charged with the responsibility of providing oversight and
direction with respect to the compensation programs and employee benefit plans
of the Company. All members of the Committee are non-employee directors who
serve on the Board of Directors. Specific duties and responsibilities of the
Committee include:
. The establishment and oversight of the Company's executive compensation
policy and strategy.
. Development of recommendations to the Board of Directors regarding the
pay of Company officers and of the CEO's compensation.
. Development of recommendations to the Board of Directors regarding
performance targets and criteria underlying the Company's various
incentive compensation plans and approval of such targets and criteria
with respect to the Company's incentive compensation plans subject to
Section 162(m) of the Internal Revenue Code.
. Interaction with outside advisors and consultants regarding the Company's
current compensation and benefit plans as well as periodic assessments of
the competitive marketplace, emerging trends and legislative
developments, and best practices employed by other corporations.
. Review and determination, for recommendation to the Board of Directors,
of the Company's program for providing compensation to non-employee
directors.
. Assurance that the Company's compensation program for the CEO and other
officers is aligned with the Company's overall business strategy and
focuses upon the creation of value for the Company's shareholders.
17
<PAGE>
This report has been prepared by the Committee immediately following the
meeting of the Committee on October 20, 1999, at which time the Committee
established incentive targets and performance measures for the 2000
performance year, reviewed salary recommendations for all officers and
business unit presidents, and conducted other matters consistent with the
Committee's charter.
COMPENSATION STRATEGY. The Company's approach to compensation for all
employees is based upon the tenets of "total rewards." Total rewards is a
comprehensive approach to compensation and benefits which emphasizes the
importance of the entire rewards package of the Company: base salary,
incentive compensation, employee benefits, training and development
opportunities, and the corporate environment.
Consistent with the total rewards approach for all employees, the Company's
compensation program for executives is founded upon the same underlying tenets
of total reward opportunities. The Company's executive compensation strategy
is founded upon the following guiding principles:
. The Company's executive compensation strategy should be aligned with the
overall Company's business strategy of focusing upon growth opportunities
in both regulated and nonregulated business sectors, seeking on-going
improvements in operating efficiencies and service levels, and preparing
for a more competitive environment in a consolidating industry.
. Overall pay targets should reflect the Company's intent to pay executive
base salaries at the 50th percentile of the competitive market practice
with targeted total cash and targeted total direct compensation to be
paid at the 75th percentile of competitive market practice if performance
targets are reached.
. Key executives who are charged with the responsibility for establishing
and executing the Company's business strategy should have incentive
compensation opportunities that are aligned with the creation of
shareholder value.
. Stock ownership is an important component for ensuring that executives'
interests are aligned with shareholders.
. To facilitate stock ownership for executives, the Company should provide
stock options and other stock-based incentive vehicles that focus on
shareholder value creation.
. Incentive compensation opportunities should have significant upside
potential with commensurate downside risk.
. The Company's compensation strategy should place a greater emphasis upon
stock options and related long-term incentive opportunities, with limited
emphasis upon special benefits and perquisites.
18
<PAGE>
. The incentive compensation plans of the Company, to the extent that it is
practical and consistent with the overall corporate business strategy,
should comply with Section 162(m) of the Internal Revenue Code so that
the Company can take the full tax deduction for executive compensation.
SHIFT IN STRATEGY FOR NON-EMPLOYEE DIRECTOR COMPENSATION. The Committee has
worked closely with the management consulting firm of Towers Perrin over the
past 18 months to ensure that the compensation program for non-employee
directors serving on the Board of Directors is competitive and reflective of
current best practices in the marketplace. The Company's shareholders last
year approved the adoption of the Equity Incentive and Deferred Compensation
Plan for Non-Employee Directors. As a result of this action, all current non-
employee directors have voluntarily elected to participate in this new plan
and to cease their participation in the Company's Retirement Plan for Non-
Employee Directors.
ASSESSMENT OF COMPETITIVE PRACTICES. The Committee regularly evaluates
competitive compensation data provided by management consultants to ensure
that the Company's pay policy and practices are aligned with the competitive
marketplace. Over the course of the past 12 months, the Committee reviewed on
three occasions competitive compensation levels from numerous survey sources
and analyses provided by Towers Perrin. These sources of competitive
compensation data included:
. A review of the total direct compensation of the five highest paid
executives for a select peer group of 17 gas utility companies which have
annual revenues and market capitalizations comparable to the Company.
. Published survey data of the utility industry provided by the Executive
Compensation Service.
. Published and private survey data of both the utility industry and
general industry provided by Towers Perrin.
These survey sources provide a comprehensive review of national compensation
practices as well as selected companies that compete in specific geographic
markets in which the Company participates. The organizations participating in
these surveys are different than some of the companies that appear in the
attached Performance Graph, which is based upon a published index for local
gas distribution companies. Specific job comparisons and access to market data
for companies included in the performance graph are not readily available to
the Committee.
For the most recently completed fiscal year, the Company's executive
compensation program was comprised of base salary, annual incentive
compensation, and long-term incentive compensation in the form of stock
options. The following paragraphs discuss each of these program components.
19
<PAGE>
BASE SALARY. All positions in the Company, including executive positions,
have been assigned to formal salary grades and ranges. Positions are compared
on the basis of job content to similar positions in companies of comparable
revenue size and market capitalization to the Company. Salary ranges for all
positions 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 of base salaries of comparable companies in the marketplace, as
defined above.
The base salary for an individual executive may be more than or less than
the salary range midpoint based upon the individual's performance and his or
her level of experience in the position. In determining appropriate salary
levels, the Committee also considers current economic conditions and national
and industry trends in executive compensation.
Each year, the Chief Executive Officer and senior officers of the Company
provide the Committee with an oral presentation discussing the performance and
contributions of each executive. The Company uses a performance evaluation
process that has seven performance ratings and which considers individual
goals and areas of accountability. The individual executive's salary increase
is based upon his performance rating and the overall salary increase budget
and guidelines established by the Company for the year.
ANNUAL INCENTIVE COMPENSATION. The Company's corporate officers, business
unit presidents, and officers/direct reports to the business unit presidents,
participate in the Annual Incentive Plan for Management (the "Incentive
Plan"). The Incentive Plan, which has been designed to comply with Section
162(m) of the Internal Revenue Code, considers both financial and operational
quantitative measurements of performance at both the corporate and business
unit levels. Each participant in the plan has a stated target annual incentive
award opportunity stated as a percentage of base salary, with such target
opportunities ranging from 10 percent to 60 percent of the participant's
respective base salary. Awards pursuant to the Incentive Plan are typically
paid in cash. However, subject to the terms of the Plan and the approval of
the Committee, the participant may make a voluntary election to convert his
award to Company bonus stock, restricted shares or stock options. Such
voluntary elections must be made by a participant prior to the beginning of
the Performance Period as defined in the Plan.
For fiscal year 1999, the Company failed to reach the minimum financial
performance hurdle for purposes of funding the Incentive Plan. As such, no
incentive awards or bonuses were earned or paid under the provisions of the
Incentive Plan to any Company employees for 1999 performance, including the
five proxy-named executives. The Company's failure to reach the threshold
level of financial performance also resulted in the Company not funding a
special incentive plan developed for all employees (eligible participants are
those who do not participate in the management plan).
20
<PAGE>
LONG-TERM INCENTIVE COMPENSATION. The Company currently grants long-term
awards in the form of both time-lapse restricted stock and nonqualified stock
options. The Committee believes that restricted shares allow key executives to
share fully in the interests of all shareholders by having the executive
receive voting rights and dividends applicable to the restricted shares that
have been granted. In addition, the Company grants stock options to key
executives. All stock options are granted at fair market value on the date of
grant and have a term of ten years. Executives will only realize value from
their stock options should the share price appreciate above the grant price on
the date such option shares were granted. The Committee believes that stock
options further parallel the interests of executives with the interests of
other shareholders by focusing upon shareholder value.
During the 1999 fiscal year, the Company granted nonqualified stock options
and restricted stock to a select number of key executives and officers. All of
these grants were made in consideration of the Company's performance in fiscal
year 1998, a year in which the Company achieved record earnings. In addition,
the Company adopted share ownership guidelines for key officers in fiscal year
1999. The guidelines are voluntary and should be achieved by each officer over
the course of five years. The Committee strongly advocates executive share
ownership as a means by which to better align executive interests with those
of all shareholders. The Chief Executive Officer has a guideline to reach a
share ownership position of five times his base salary over the course of the
five years. Other officer positions have share ownership guidelines ranging
from 2.5 to 1.0 times the officer's base salary.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee has not changed
the base salary of Mr. Robert W. Best, Chairman, President, and Chief
Executive Officer of the Company for 2000. In 1999, Mr. Best's base salary was
at the level of $555,000. Mr. Best will not earn an annual incentive award
under the Annual Incentive Plan for Management for the 1999 fiscal year. The
Company's performance did not meet the minimum financial performance hurdle
during fiscal year 1999, thereby negating any payouts for participants
pursuant to the Incentive Plan. Mr. Best received a grant of 50,000
nonqualified stock options and 50,000 restricted shares during fiscal year
1999, which is consistent with the grants awarded to other Company key
executives and with the Company's past practices. Both the nonqualified stock
option grant and the restricted stock grant awarded to Mr. Best in fiscal year
1999 were in recognition of Mr. Best's contributions to the achievement of
record earnings performance during fiscal year 1998.
COMPLIANCE WITH SECTION 162(m). The Board of Directors has elected to fully
comply with Section 162(m) of the Internal Revenue Code. The Company's
decision to comply means that the Company can maintain the tax deductibility
for performance-based compensation paid to the five proxy-named executives. In
order to
21
<PAGE>
comply with Section 162(m), all actions taken by the Committee with respect to
the compensation of the five proxy-named executives will be taken by those
members who constitute a "non-employee director" as defined in Section 162(m).
One member of the present Human Resources Committee, Dan Busbee, does not meet
the Section 162(m) definition due to the professional services provided to the
Company by the law firm with which Mr. Busbee was formerly employed until
August 1999. Therefore, Mr. Busbee has formally rescued himself from all
executive compensation matters discussed by the Human Resources Committee
affecting Section 162(m) compliance.
HUMAN RESOURCES COMMITTEE
Carl S. Quinn, Chairman
Travis W. Bain II
Dan Busbee
Thomas J. Garland
Phillip E. Nichol
22
<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 Poor's 500 Stock Index and the
cumulative total return of other natural gas distribution companies comprising
the Comparison Company Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ATMOS, S&P 500 INDEX
AND COMPARISON COMPANY INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
-----------------------------
1994 1995 1996 1997 1998 1999
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Atmos Energy Corporation $100 $115 $144 $159 $189 $167
----------------------------------------------------------
S&P 500 Composite Index $100 $130 $156 $219 $239 $305
----------------------------------------------------------
Comparison Company Index $100 $110 $134 $158 $169 $186
----------------------------------------------------------
</TABLE>
* Assumes a $100 investment on September 30, 1994, and reinvestment of
dividends.
23
<PAGE>
The Comparison Company Index used in the graph is 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. The following companies were included in the
Comparison Company Index used in the graph: AGL Resources Inc., Cascade
Natural Gas Corporation, CMS Energy Corporation, Connecticut Energy
Corporation, Eastern Enterprises, Indiana Energy, Inc., Laclede Gas Company,
MCN Energy Group Inc., New Jersey Resources Corporation, NICOR Inc., Northwest
Natural Gas Company, NUI Corporation, ONEOK, Inc., Peoples Energy Corporation,
Piedmont Natural Gas Company, Inc., SEMCO Energy, Inc., Southern Union
Company, Southwest Gas Corporation, UGI Corporation, Washington Gas Light
Company, WICOR, Inc., and Yankee Energy System, Inc.
AUDITORS
Upon the recommendation of 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, 2000. 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.
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 Annual
Meeting of Shareholders on February 9, 2000, he or she must be a shareholder
of record on the Record Date, December 13, 1999, who shall continue to be
entitled to vote at the Annual Meeting and who mails a notice of such proposal
so that it is received at the
24
<PAGE>
principal executive offices of the Company by January 1, 2000. In the event a
shareholder intends to present a proposal at the Year 2001 Annual Meeting of
Shareholders, in order for such proposal to be included in the Company's Proxy
Statement relating to such meeting, it must be received at the principal
executive offices of the Company no later than August 24, 2000.
By Order of the Board of Directors,
SHIRLEY A. MORGAN
Assistant Corporate Secretary and
Interim Corporate Secretary
Dallas, Texas
December 22, 1999
25
<PAGE>
3100-PS-2000
<PAGE>
APPENDIX 1
PROXY
ATMOS ENERGY CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting, February 9, 2000
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 in
the Crescent Ballroom at the Crescent Court Hotel, 400 Crescent Court, Dallas,
Texas, 75201, on Wednesday, February 9, 2000, at 11:00 a.m. Central Standard
Time, 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.
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.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
ATMOS LOGO THIS IS YOUR PROXY
c/o EquiServe YOUR VOTE IS IMPORTANT.
P.O. Box 8040
Boston, MA 02266-8040
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. If you wish to change your address, please
mark the box below, vote and return your proxy by mail.
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 II: Richard W. Cardin, Thomas C. Meredith,
Carl S. Quinn and Richard Ware II.
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
[__] [__]
For, except vote withheld from the following nominee(s):
[__] __________________________
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT [___]
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____________
