<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 (S) 240.14a-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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ATMOS]
December 28, 2000
Dear Atmos Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Lafayette Hilton & Towers, 1521 Pinhook Road, Lafayette,
Louisiana, 70503, on Wednesday, February 14, 2001, 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 Lafayette Hilton & Towers, 1521 Pinhook Road,
Lafayette, Louisiana, 70503, on Wednesday, February 14, 2001, 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
2004.
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 18, 2000 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. HINES
Corporate Secretary
December 28, 2000
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 28, 2000.
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 approximately $6,000 in fees, plus expenses and disbursements, to
Morrow for its proxy solicitation services.
Common Stock Information; Record Date
As of December 18, 2000, there were 32,097,110 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 18, 2000 will be entitled to vote at the meeting. Each share is
entitled to one vote.
<PAGE>
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, 2000, 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>
Atmos Energy Corporation Employee Stock
Ownership Plan and Trust (the
"ESOP")(a) 2,073,398 6.5%
SASCO Capital Inc.
10 Sasco Hill Road
Fairfield, CT 06430(b) 1,622,100 5.1%
</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.
(b) SASCO Capital has informed the Company that it is the beneficial owner of
1,622,100 shares, which are held for the accounts of discretionary
clients. Of such shares, SASCO Capital has sole voting power with respect
to 776,300 shares, and sole dispositive power with respect to 1,622,100
shares.
2
<PAGE>
Security Ownership of Management. The following table lists the beneficial
ownership, as of December 1, 2000, of the Company's Common Stock with respect
to all directors and nominees for director of the Company, the current and
former executive officers of the Company named in the Summary Compensation
Table on page 11 of this Proxy Statement, and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Percentage
Amount of Common of
Stock Outstanding
Name Beneficially Owned Common Stock
---- ------------------ ------------
<S> <C> <C>
Travis W. Bain II............................. 5,707 (a)(b)
Robert W. Best ............................... 145,265(c) (a)
Dan Busbee.................................... 9,498 (a)(b)
Richard W. Cardin............................. 5,450 (a)(b)
Larry J. Dagley............................... 85,437(c) (a)
R. Earl Fischer............................... 18,823(c) (a)
Thomas J. Garland............................. 7,456 (a)(b)
J. Charles Goodman............................ 9,080 (a)
Gene C. Koonce................................ 25,174 (a)(b)
Vincent J. Lewis.............................. 9,340 (a)(b)
Thomas C. Meredith............................ 3,525 (a)(b)
Wynn D. McGregor.............................. 12,472(c) (a)
Phillip E. Nichol............................. 13,940 (a)(b)
Carl S. Quinn................................. 42,233 (a)(b)
John P. Reddy................................. 10,100(c) (a)
Charles K. Vaughan............................ 53,199 (a)(b)
Richard Ware II............................... 18,517 (a)(b)
All directors and executive officers as a
group (17 individuals)....................... 475,216 1.5%
</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, 4,460
units, Mr. Busbee, 4,750 units, Mr. Cardin, 2,950 units, Mr. Garland,
4,070 units, Mr. Koonce, 5,060 units, Mr. Lewis, 2,340 units, Dr.
Meredith, 1,680 units, Mr. Nichol, 3,940 units, Mr. Quinn, 3,670 units,
Mr. Vaughan, 3,490 units, and Mr. Ware, 1,410 units.
(c) Includes shares issuable upon the exercise of options held by the
following current and former officers within 60 days of December 1, 2000
under the Company's 1998 Long-Term Incentive Plan in the following
respective amounts: Mr. Best, 16,667 shares, Mr. Dagley, 30,000 shares,
Mr. Fischer, 4,000 shares, Mr. McGregor, 4,000 shares, and Mr. Reddy,
6,667 shares.
3
<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 2004. Robert W. Best, Thomas J. Garland,
Phillip E. Nichol, and Charles K. Vaughan have been nominated to serve as
Class III directors.
Messrs. Best, Garland, Nichol and Vaughan were last elected to three-year
terms by the shareholders at the 1998 Annual Meeting. The Board is nominating
Messrs. Best, Garland, Nichol and Vaughan to continue serving as Class III
directors, whose three-year terms will expire in 2004.
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.
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>
Robert W. Best.......................... 54 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.
</TABLE>
*******************************************************************************
4
<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........................ 66 1997 Class III
Chairman of the Tusculum Institute for 2001
Public Leadership and Policy since 1998.
Executive in Residence and Distinguished
Service Professor of the Civic Arts at
Tusculum College in Greeneville,
Tennessee and consultant since 1990.
Formerly Interim President of Tusculum
College from July 1999 through June
2000. Director of Peoples Community Bank
in Johnson City, Tennessee.
********************************************************************************
Phillip E. Nichol........................ 65 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 the 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. Formerly Senior Vice President and
Branch Manager of PaineWebber
Incorporated in Cleveland, Ohio from
February 1995 to May 1996.
********************************************************************************
Charles K. Vaughan....................... 63 1983 Class III
Retired. Formerly Chairman of the Board 2001
of the Company from June 1994 until
March 1997.
</TABLE>
********************************************************************************
5
<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........................ 66 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. Director of
Delta Industries, Inc. in Jackson,
Mississippi.
*******************************************************************************
Dan Busbee............................... 67 1988 Class I
Attorney. Formerly of Counsel with 2002
Gibson Dunn & Crutcher in Dallas, Texas
from August 1998 through August 1999.
Formerly Attorney and Shareholder with
Locke Purnell Rain Harrell (A
Professional Corporation) in Dallas,
Texas from 1970 until August 1998.
*******************************************************************************
Richard W. Cardin........................ 65 1997 Class II
Consultant and retired partner of Arthur 2003
Andersen LLP since 1995. Director of
U.S. Lime and Minerals, Inc.
*******************************************************************************
Gene C. Koonce........................... 68 1997 Class I
Formerly Chairman of the Board, 2002
President and Chief Executive Officer of
United Cities Gas Company from May 1996
until the merger of United Cities with
the Company 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.
</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>
Vincent J. Lewis......................... 56 1997 Class I
Senior Vice President at Legg Mason Wood 2002
Walker, Inc. in Rutherford, New Jersey
since 1987.
*******************************************************************************
Thomas C. Meredith....................... 59 1995 Class II
Chancellor of the University of Alabama 2003
System in Tuscaloosa, Alabama since June
1997. Formerly President of Western
Kentucky University in Bowling Green,
Kentucky from 1988 to May 1997. Director
of Alabama Power Company.
*******************************************************************************
Carl S. Quinn............................ 69 1994 Class II
General Partner of Quinn Oil Company, 2003
Ltd. in East Hampton, New York since May
1992.
*******************************************************************************
Richard Ware II.......................... 54 1994 Class II
President of Amarillo National Bank in 2003
Amarillo, Texas since 1981. Member of
the Board of Trustees of Southern
Methodist University in Dallas, Texas.
</TABLE>
*******************************************************************************
Certain Business Relationships
Mr. Ware is the president and a shareholder of Amarillo National Bank,
Amarillo, Texas, which bank provides a $15 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.
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, 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 three meetings during the last fiscal year.
The Audit Committee consists of Messrs. Bain, Busbee, Cardin, Lewis and
Meredith. 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 four meetings during the last fiscal year. The Company's
securities are listed on the New York Stock Exchange and are governed by its
listing standards. The Audit Committee has adopted a charter, which is
attached to this Proxy Statement as Appendix A. All members of the Audit
Committee meet the independence standards of Section 303.01(B)(2)(a) and (3)
of the Rules of the New York Stock Exchange.
The Human Resources Committee consists of Messrs. Bain, Busbee, Garland,
Koonce, Nichol and Quinn. Mr. Quinn serves as chairman and Mr. Koonce serves
as vice-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, Lewis, Meredith, Nichol
and Ware. 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
8
<PAGE>
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 11 meetings. During fiscal year 2000, 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 extra work done in
connection with their committee duties.
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 the Company's Equity Incentive
and Deferred Compensation Plan for Non-Employee Directors, 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. In addition, each non-employee director receives an annual grant of
share units for each year he serves as a director. The specific unit amounts
credited to each director are shown in the Security Ownership Table on page 3
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
9
<PAGE>
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.
Other Compensation for Non-Employee Directors. 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
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 was extended by amendment approved in 2000 for an
additional three-year period, ending September 30, 2004, at which time the
agreement will terminate. The agreement provides for future payments to Mr.
Vaughan, in consideration for his consulting services, of $130,000 during
fiscal year 2001 and 2002, $100,000 during fiscal year 2003 and $75,000 during
fiscal year 2004. During fiscal year 2000, Mr. Vaughan received $130,000 in
payment for his services under the Consulting Agreement. The payments are made
in semi-annual installments payable on October 1 and April 1 of each fiscal
year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who beneficially own more than
ten percent of the Company's Common Stock to file with the Securities and
Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in their ownership in the Company's Common
Stock. Directors, executive officers, and greater-than-ten-percent beneficial
shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such reports furnished to the Company, the Company believes that,
during the last fiscal year, all of the Company's directors, executive
officers, and greater-than-ten-percent beneficial owners were in compliance
with the Section 16(a) filing requirements.
10
<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation
paid by the Company for each of the Company's last three completed fiscal
years to Mr. Best, Mr. Dagley, who resigned from the Company effective May 3,
2000, Mr. Goodman, who resigned from the Company effective June 30, 2000, and
the Company's remaining most highly compensated executive officers other than
Mr. Best.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------- -------------------------------
Other Annual Restricted Securities All Other
Name and Principal Salary Bonus(a) Compensation Stock Awards(b) Underlying Compensation
Position Year ($) ($) ($) ($) Options/SARs(#) ($)
------------------ ---- ------- -------- ------------ --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Best.......... 2000 555,000 0 (c) 0 50,000 8,584(d)
Chairman of the Board, 1999 540,192 0 (c) 1,525,000 50,000 8,584
President and Chief 1998 480,786 450,000 (c) 1,262,500 0 8,584
Executive Officer
R. Earl Fischer(e)...... 2000 176,174 0 (c) 0 32,000 8,206(d)
Senior Vice President, 1999 162,091 100,000 (c) 213,750 12,000 7,466
Utility Operations 1998 135,563 89,600 (c) 45,450 0 6,257
John P. Reddy(f)........ 2000 213,390 0 (c) 0 40,000 9,515(d)
Senior Vice President 1999 190,000 0 (c) 0 20,000 1,186
and
Chief Financial Officer 1998 20,462 63,600 (c) 89,625 0 99
Wynn D. McGregor........ 2000 150,820 0 (c) 0 12,000 6,579(d)
Vice President, Human 1999 134,762 0 (c) 0 12,000 6,018
Resources 1998 116,892 41,800 (c) 32,825 0 5,434
Larry J. Dagley(g)...... 2000 324,946 0 (c) 0 0 1,107,451(h)
Former Executive Vice 1999 352,477 0 113,728(i) 0 30,000 11,445
President and Chief 1998 310,385 263,300 (c) 631,250 0 5,528
Financial Officer
J. Charles Goodman(j)... 2000 175,512 0 38,162(k) 0 0 704,461(l)
Former Executive Vice 1999 214,631 0 (c) 0 20,000 7,674
President, Utility 1998 184,537 108,800 (c) 126,250 0 8,028
Operations
</TABLE>
11
<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) Dollar amounts shown equal number of shares of restricted stock granted
multiplied by stock price on grant date. This valuation does not take
into account the diminution in value attributable to the restrictions
applicable to the shares. The number and value of the aggregate
restricted stock holdings at the end of the last fiscal year for each of
the current and former executive officers listed above were as follows:
Robert W. Best, 100,000 shares with a value of $2,063,000; R. Earl
Fischer, 5,900 shares with a value of $121,717; John P. Reddy, 3,000
shares with a value of $61,890; Wynn D. McGregor, 650 shares with a value
of $13,410; Larry J. Dagley, -0- shares; and J. Charles Goodman, -0-
shares. 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) 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.
(d) 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 2000 fiscal year for each named current 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; R.
Earl Fischer, $7,101 in Company matching contributions made pursuant to
the ESOP and $1,105 in term life insurance premiums; John P. Reddy,
$8,154 in Company matching contributions made pursuant to the ESOP and
$1,361 in term life insurance premiums and Wynn D. McGregor, $5,635 in
Company matching contributions made pursuant to the ESOP and $944 in term
life insurance premiums.
(e) Mr. Fischer became Senior Vice President, Utility Operations of the
Company on May 1, 2000.
(f) After joining the Company on August 12, 1998, Mr. Reddy became Senior
Vice President, Chief Financial Officer and Treasurer of the Company on
April 26, 2000. Effective October 1, 2000, Mr. Reddy became Senior Vice
President and Chief Financial Officer of the Company.
(g) Mr. Dagley became Executive Vice President and Chief Financial Officer of
the Company on May 1, 1997 and resigned from that position with the
Company effective May 3, 2000.
(h) The total of All Other Compensation paid to Mr. Dagley during the 2000
fiscal year consists of the following: (i) a payment of $1,100,000
pursuant to an agreement dated April 25, 2000 in settlement of all
benefit rights and other claims arising out of Mr. Dagley's employment
with the Company and resignation therefrom (ii) $5,579 in Company
matching contributions made pursuant to the ESOP, and (iii) $1,872 in
term life insurance premiums. Under the terms of the agreement, Mr.
Dagley is also entitled to receive a payment of $2,000,000 should the
Company experience a change of control as defined in the agreement prior
to October 25, 2001. The Company also granted to Mr. Dagley immediate
vesting of all options to purchase 30,000 shares of Common Stock
previously granted to him at an exercise price of $24.41 per share at any
time prior to October 25, 2002, removed all remaining restrictions on a
total of 62,500 restricted shares of Common Stock, and provided
continuation of medical and dental benefits for 18 months
(i) 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).
(j) Mr. Goodman resigned as Executive Vice President, Utility Operations of
the Company effective June 30, 2000.
(k) Other Annual Compensation paid to Mr. Goodman during the 2000 fiscal year
included payments under the Company's mini-med plan of $17,408 and
payments for financial planning services of $12,000.
12
<PAGE>
(l) The total of All Other Compensation paid to Mr. Goodman during the 2000
fiscal year consists of the following: (i) a payment of $698,800 pursuant
to an agreement dated April 13, 2000 in complete settlement of all
benefit rights and other claims arising out of Mr. Goodman's employment
with the Company and resignation therefrom, (ii) $4,623 in Company
matching contributions made pursuant to the ESOP, and (iii) $1,038 in
term life insurance premiums. Under the terms of the settlement
agreement, the Company also removed all remaining restrictions on a total
of 2,500 restricted shares of Common Stock.
Stock Options. The following table provides information concerning options
to purchase Common Stock of the Company under the Company's 1998 Long-Term
Incentive Plan granted to the named current executive officers in the last
fiscal year. The options have a term of ten years and may be exercised as
follows: one-third after one year from the date of grant, another one-third
after two years from the date of grant and the remaining one-third after three
years from the date of grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------
Percent of Potential
Number of Total Realizable Value at
Securities Options/ Assumed Rates of
Underlying SARs Stock Price
Options/ Granted to Exercise Appreciation for
SARs Employees or Base Option Term(c)
Granted in Fiscal Price Expiration -------------------
Name (#)(a) Year ($/Sh)(b) Date 5% 10%
---- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Best.......... 50,000 12.8% $15.65 03-07-10 $492,110 $1,247,103
R. Earl Fischer......... 12,000 3.1% $15.65 03-07-10 $118,106 $ 299,305
20,000 5.1% $16.31 05-01-10 $205,145 $ 519,879
John P. Reddy........... 20,000 5.1% $15.65 03-07-10 $196,844 $ 498,841
20,000 5.1% $14.68 04-06-10 $184,643 $ 467,923
Wynn D. McGregor........ 12,000 3.1% $15.65 03-07-10 $118,106 $ 299,305
</TABLE>
--------
(a) No SARs were granted in the 2000 fiscal year to any of the named executive
officers. No options were granted to Messrs. Dagley or Goodman during the
fiscal year.
(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.
13
<PAGE>
AGGREGATED OPTION/ SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options/SARs at Fiscal In-The-Money Options/SARs
on Exercise Realized Year-End (#)(a) at Fiscal Year-End ($)(b)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert W. Best.......... -0- -0- 16,667/83,333 0/249,000
R. Earl Fischer......... -0- -0- 4,000/40,000 0/146,160
John P. Reddy........... -0- -0- 6,667/53,333 0/218,600
Wynn D. McGregor........ -0- -0- 4,000/20,000 0/59,760
Larry J. Dagley......... -0- -0- 30,000/0 0/0
</TABLE>
--------
(a) No SARs were granted in Fiscal Year 2000 to any of the named executive
officers. The options previously granted to Mr. Goodman were forfeited
upon his resignation from the Company, in accordance with the provisions
of the 1998 Long-Term Incentive Plan.
(b) Based on per share price for Common Stock of $20.63 per share. The price
reflects the closing trading price on the New York Stock Exchange on
September 29, 2000.
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. Each of the executive
officers listed in the Summary Compensation Table (other than Messrs. Dagley
and Goodman) also participates in the Company's Supplemental Executive
Benefits Plan or Performance-Based Supplemental Executive Benefits Plan
(collectively, the "Supplemental Plan"), which provides retirement benefits
(as well as supplemental disability and death benefits) to all officers and
business unit presidents of the Company. A participant who has been an officer
or business unit president for at least two years, has five years of vesting
service under the 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 Retirement Plan or a similar plan, equals 50% to
100% of his compensation, subject to reductions for less than ten years of
vesting service and for retirement prior to age 62.
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 pay (excluding incentive pay).
14
<PAGE>
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 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.
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 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.
15
<PAGE>
The Pension Account Plan covers only the regular salary of each of its
participants, excluding bonuses (subject to the maximum covered compensation
limit of $170,000 as of January 1, 2000 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 (other than Messrs. Dagley and
Goodman) is as follows: Robert W. Best, $1,005,000; R. Earl Fischer, $248,552;
John P. Reddy, $251,990; and Wynn D. McGregor, $201,800. Each of such
executive officers has the following approximate number of years of credited
service under the retirement plans: Mr. Best, three years; Mr. Fischer, 38
years; Mr. Reddy, two years; and Mr. McGregor, 12 years.
Each of the executive officers listed in the Summary Compensation Table
(other than Messrs. Dagley and Goodman) 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 involuntarily by the Company for any reason
other than "cause" or "disability" (i) following a "change of control" of the
Company (as such term is 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. Fischer and McGregor, who were participants in the
Supplemental Plan as of November 12, 1996, are 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.
16
<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
Messrs. Dagley and Goodman) 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 such executive officer 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 or
any resulting income or other 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.
Each of the executive officers listed in the Summary Compensation Table
(other than Messrs. Dagley and Goodman) 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 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, Koonce, Nichol and Quinn. There are no interlocking
relationships between any executive officer of the Company and any other
company.
17
<PAGE>
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.
This report has been prepared by the Committee immediately following the
meeting of the Committee on October 24, 2000, at which time the Committee
determined not to pay bonus awards for the most recent performance year,
established new incentive targets and performance measures for the 2001
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.
18
<PAGE>
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
Company's overall business strategy of focusing upon growth opportunities
in both regulated and nonregulated business sectors, seeking ongoing
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.
. 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.
STRATEGY FOR NON-EMPLOYEE DIRECTOR COMPENSATION. The Committee has worked
closely with the management consulting firm of Towers Perrin 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
19
<PAGE>
the marketplace. In 1999, the Company's shareholders approved the adoption of
the Equity Incentive and Deferred Compensation Plan for Non-Employee
Directors. Subsequent to that approval, 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 from some of the companies that appear in the
performance graph displayed below. 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.
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.
20
<PAGE>
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 considers individual goals and areas of accountability. The
individual executive's salary increase is based upon his or her 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 direct reports to the officers and 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 2000, the Company failed to reach the minimum financial
performance threshold for purposes of funding the Incentive Plan. As such, no
incentive awards or bonuses were earned or paid to any Company employees for
2000 performance, including the proxy-named executives. The Company's failure
to reach the threshold level of financial performance also resulted in the
Company's failure to fund a special incentive plan developed for all employees
(eligible participants are those who do not participate in the Incentive
Plan).
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
21
<PAGE>
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 2000 fiscal year, the Company granted only nonqualified stock
options to a select number of key executives and officers. The Company has
adopted share ownership guidelines for key officers; 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 1.0 to
2.5 times the officer's base salary.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee has awarded Mr.
Robert W. Best, Chairman of the Board, President and Chief Executive Officer
of the Company, a base salary of $580,000 for 2001. Mr. Best's base salary was
$555,000 in 1999 and 2000. The increase in base salary awarded to Mr. Best by
the Committee is in recognition of both the Company and individual performance
achieved in 2000, especially his achievements in leading the Company in the
acquisition of the Missouri assets of Associated Natural Gas from a subsidiary
of Southwestern Energy Company, as well as the announcements of the
acquisitions of the assets of the Louisiana Gas Services division of Citizens
Communications Company, and the remaining 55 percent interest in Woodward
Marketing, LLC that the Company does not already own. In addition, Mr. Best
guided the Company during the implementation of its numerous technology
initiatives that will position the Company for further growth as well as the
approvals of new rate structures in several states that should help mitigate
the impact of warm weather on the Company's businesses. Mr. Best will not earn
an annual incentive award under the Incentive Plan for the 2000 fiscal year
because the Company's performance did not meet the minimum financial
performance threshold during fiscal year 2000, thereby negating any payouts
for participants pursuant to the Incentive Plan. Mr. Best received a grant of
50,000 nonqualified stock options during fiscal year 2000, which is consistent
with the grants awarded to other Company key executives and with the Company's
past practices. The nonqualified stock option grant awarded to Mr. Best in
fiscal year 2000 was in recognition of Mr. Best's contributions to the overall
performance and success of the Company during the year.
22
<PAGE>
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 proxy-named executives. In
order to comply with Section 162(m), all actions taken by the Committee with
respect to the compensation of the proxy-named executives will be taken by
those members who constitute a "non-employee director" as defined in Section
162(m).
HUMAN RESOURCES COMMITTEE
Carl S. Quinn, Chairman
Gene C. Koonce, Vice Chairman
Travis W. Bain II
Dan Busbee
Thomas J. Garland
Phillip E. Nichol
23
<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]
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
Atmos Energy Corporation $100 $126 $140 $167 $147 $133
----------------------------------------------------------
S&P 500 Composite Index $100 $120 $169 $184 $236 $267
----------------------------------------------------------
Comparison Company Index $100 $124 $144 $152 $160 $182
</TABLE>
* Assumes a $100 investment on September 30, 1995, and reinvestment of
dividends.
24
<PAGE>
The Comparison Company Index used in the graph is the Merrill Lynch Group I
and II Index (formerly known as 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, Eastern Enterprises, 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., South Jersey Industries, Inc., Southern
Union Company, Southwest Gas Corporation, UGI Corporation, and Washington Gas
Light Company.
Audit Committee Report
Our Committee has reviewed and discussed the audited financial statements of
the Company for the year ended September 30, 2000 (the "Audited Financial
Statements"). In addition, we have discussed with Ernst & Young LLP, the
independent auditing firm for the Company, the matters required by
Codification of Statements on Auditing Standards No. 61.
The Committee also has received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1, and
we have discussed with that firm its independence from the Company. We also
have discussed with management of the Company and the auditing firm such other
matters and received such assurances from them as we deemed appropriate.
Based on the foregoing review and discussions and relying thereon, we have
recommended to the Company's Board of Directors the inclusion of the Audited
Financial Statements in the Company's Annual Report for the year ended
September 30, 2000 on Form 10-K.
AUDIT COMMITTEE
Dan Busbee, Chairman
Travis W. Bain II
Richard M. Cardin
Vincent J. Lewis
Dr. Thomas C. Meredith
25
<PAGE>
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, 2001. 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 14, 2001, he or she must be a shareholder
of record on the Record Date, December 18, 2000, 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 principal executive offices of the Company by
January 7, 2001. In the event a shareholder intends to present a proposal at
the Year 2002 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 31, 2001.
By Order of the Board of Directors,
SHIRLEY A. HINES
Corporate Secretary
Dallas, Texas
December 28, 2000
26
<PAGE>
APPENDIX A
Charter of the Audit Committee
of the Board of Directors of
Atmos Energy Corporation
(Adopted: May 10, 2000)
Purpose:
The Audit Committee will serve as the focal point for communication among
the Board of Directors, the Company's independent auditors, the Company's
internal auditors, and management regarding the financial reporting standards,
practices and controls of the Company. It is the function of the Audit
Committee to satisfy itself and the Board of Directors of the integrity of the
Company's financial information, the adequacy of public disclosure with
respect thereto, that proper financial reporting is undertaken, that
satisfactory internal controls are maintained and of the appropriateness of
the audit process. In addition to carrying out its specific duties as set out
herein, the Audit Committee may be requested by the Board of Directors to
investigate any activity of the Company.
Powers and Duties:
A. The Audit Committee shall have the powers to perform the following duties,
as well as performing any additional duties as may be directed by the Board
of Directors from time to time:
. To provide an open avenue of communications between management, the
independent and internal auditors, and the Board of Directors.
. To recommend to the Board of Directors the selection of the independent
auditors of the Company, which firm is ultimately accountable to the
Board of Directors and Audit Committee of the Company.
. To approve the fees associated with recurring attestation engagements.
. To review at least annually the scope and general extent of the audit
approach utilized by the independent auditors.
. To meet at least annually with the independent auditors, the Company's
financial officers, and the Company's internal auditors to receive the
auditors' comments on their findings after the conclusion of the audit
and to hear management's responses to the report of the auditors, to
review the auditors' comments on the Company's financial statements,
including the judgment of the auditors about the
A-1
<PAGE>
quality of the application of accounting principles, the reasonableness of
significant judgments and the clarity of disclosures by the Company in its
financial statements, and to receive such other information relating to
such matters and the Company's operations as the Audit Committee deems
appropriate.
. To receive from the independent auditors, at least annually, a formal
written statement delineating all relationships between the auditors and
the Company and to investigate any disclosed relationships or services
that could possibly impact the objectivity and independence of the
independent auditors, including, if necessary, recommending to the Board
of Directors that it take appropriate action to satisfy itself of the
independence of the independent auditors.
. To review, or designate the Chairman of the Audit Committee to review,
interim financial statements with management and the independent auditors
prior to the filing of the Company's quarterly report on Form 10-Q and
discuss the results of the quarterly review by the independent auditors
and any other matters required to be communicated by the auditors under
generally accepted auditing standards.
. To review at least annually the operation of the Internal Audit
Department.
. To review the scope of the joint independent/internal audit program
(including adequacy of internal accounting controls) with both
independent and internal auditors at least annually.
. To review, with the advice of the independent auditors, the impact of
recent and prospective opinions of the Financial Accounting Standards
Board and SEC on the Company's financial statements.
. To report to the Board of Directors and to make such recommendations with
respect to the reports of the independent auditors and management as the
Audit Committee deems necessary or appropriate.
. To oversee investigations into the improper use of the assets of the
Company.
B. The power and authority of the Audit Committee is subject to the provisions
of the Texas Business Corporation Act, the Virginia Stock Corporation Act,
and the Company's Articles of Incorporation and Bylaws.
Membership:
A. The Audit Committee shall be comprised of three to six members of the Board
of Directors, who are independent of the management of the Company, as
appointed by the full Board by resolution. The Audit Committee and its
Chairman shall be appointed annually by the Board.
B. Vacancies in the membership of the Audit Committee shall be filled by the
Board of Directors.
A-2
<PAGE>
Meetings:
A. The Audit Committee shall meet as required, upon the call of the Chairman
of the Audit Committee. A majority of the Audit Committee members shall
constitute a quorum for the transaction of business.
B. The Audit Committee shall keep regular minutes of its meetings and shall
report its actions to the full Board at the next Board meeting. The
Secretary of the Board of Directors will serve as Secretary for the Audit
Committee.
A-3
<PAGE>
3100-PS-2001
<PAGE>
COMPANY HIGHLIGHTS DURING 2000
. The Company entered into two agreements that will significantly increase the
size of the Company's utility operations: the purchase of the Missouri natural
gas distribution properties of Associated Natural Gas, which upon closing in
May 2000 added about 48,000 customers and an agreement in April 2000 to
purchase the assets of the Louisiana Gas Service Company division of Citizens
Communications Company, which will add about 276,000 customers when closed in
fiscal 2001.
. The Company took steps to increase the size and scope of its non-utility
operations: in August 2000, the Company entered into an agreement to acquire
the remaining 55% equity interest in Woodward Marketing, LLC, a natural gas
services company. Also in August 2000, the Company merged its propane
operations with those of three other gas utilities to create US Propane, which
then merged into Heritage Propane Partners, L.P., the fifth largest retail
propane marketer in the nation, of which the Company indirectly owns a 6.5%
equity interest.
. The Company saw success in its rate and regulatory strategy through the
approval of aggregate annual increases in sales of over $12 million as well as
the mitigation of the adverse impact of warmer than normal weather on its
financial performance as a result of the purchase of weather hedges in Texas
and Louisiana and the approval of weather-normalized rates in several
jurisdictions.
--------------------------------------------------------------------------------
PROXY
ATMOS ENERGY CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting, February 14, 2001
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 Lafayette Hilton & Towers, 1521 Pinhook Road, Lafayette, Louisiana 70503, on
Wednesday, February 14, 2001, 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.
------------------- -------------------
SEE REVERSE SEE REVERSE
SIDE SIDE
------------------- -------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[ATMOS LETTERHEAD] 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. If you wish
to change your address, please mark the box below, vote and return your
proxy by mail.
[DETACH HERE]
[ X ] Please mark
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: (01) Robert W. Best, (02) Thomas J. Garland,
(03) Phillip E. Nichol, and (04) Charles K. Vaughan
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES 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
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