<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Piedmont Natural Gas Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PIEDMONT NATURAL GAS
COMPANY, INC.
1915 REXFORD ROAD/POST OFFICE BOX 33068
CHARLOTTE, NORTH CAROLINA 28233
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
ANNUAL MEETING
FEBRUARY 28, 1997
<PAGE> 3
PIEDMONT NATURAL GAS COMPANY, INC.
1915 REXFORD ROAD
POST OFFICE BOX 33068
CHARLOTTE, NORTH CAROLINA 28233
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 28, 1997
The Annual Meeting of Shareholders of Piedmont Natural Gas Company, Inc.
(the "Company"), will be held at the Executive Offices of the Company, 1915
Rexford Road, Charlotte, North Carolina, on February 28, 1997, at 9:30 a.m.,
E.S.T., for the following purposes:
1. To elect four Directors, each to serve for a term of three years
(Proposal A);
2. To ratify the selection by the Board of Directors of the firm of
Deloitte & Touche LLP as independent auditors of the Company for the
current fiscal year (Proposal B);
3. To consider and act upon a proposal to approve the Piedmont Natural
Gas Company Executive Long-Term Incentive Plan (Proposal C);
4. To consider and act upon a proposal to amend Article 3 of the
Company's Articles of Incorporation, as amended, to increase the authorized
shares of Common Stock from 50,000,000 to 100,000,000 shares (Proposal D);
and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 15, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting. Accordingly, only holders of Common Stock of record
on such date will be entitled to vote at the Meeting.
By order of the Board of Directors,
Martin C. Ruegsegger
Corporate Counsel and Secretary
January 29, 1997
THE FORM OF PROXY IS ENCLOSED TO ENABLE YOU TO VOTE YOUR SHARES AT THE MEETING.
YOU ARE URGED, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY PROMPTLY. A RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 4
PIEDMONT NATURAL GAS COMPANY, INC.
1915 REXFORD ROAD
POST OFFICE BOX 33068
CHARLOTTE, NORTH CAROLINA 28233
PROXY STATEMENT
The following information is furnished in connection with the Annual
Meeting of Shareholders (the "Meeting") of Piedmont Natural Gas Company, Inc.
(the "Company"), to be held at the Company's executive offices in Charlotte,
North Carolina, on February 28, 1997, and was first mailed to shareholders on or
about January 29, 1997. The notice is set forth on the front page of this Proxy
Statement. The Company's principal executive offices are located at 1915 Rexford
Road, Charlotte, North Carolina 28211, and its telephone number is 704-364-3120.
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. The cost of soliciting proxies will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited by
Directors, officers and employees of the Company, personally or by telephone or
facsimile, none of whom will be separately compensated for such activities. The
Company has retained W.F. Doring & Co. to assist in the solicitation of proxies
in the same manner for an estimated fee of $4,000, plus reimbursement of
out-of-pocket expenses. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries who are record holders of shares of
the Common Stock for the forwarding of proxy materials to the beneficial owners
of such shares, and the Company will reimburse them for their expenses.
The Company had issued and outstanding on January 15, 1997, , ,
shares of Common Stock, which shares constitute the only class of stock
which is entitled to notice of and to vote at the Meeting. Only holders of
Common Stock of record at the close of business on January 15, 1997, will be
entitled to notice of and to vote at the Meeting, one vote for each share of
stock.
The holders of a majority of the outstanding shares of Common Stock present
in person or represented by proxy at the Meeting will constitute a quorum. Since
many shareholders cannot attend the Meeting, it is necessary that a large number
be represented by proxy. The Board has accordingly designated proxyholders to
represent those shareholders who cannot be present in person and who desire to
be so represented.
The presence of a shareholder at the Meeting will not automatically revoke
such shareholder's proxy. However, shareholders who sign proxies have the right
to revoke them at any time before they are voted by filing with the Corporate
Counsel and Secretary of the Company an instrument revoking the proxy or a duly
executed proxy bearing a later date or by attending the Meeting and voting in
person.
As of January 15, 1997, no shareholder was known by management to own of
record or beneficially more than 5% of the outstanding Common Stock.
PURPOSES OF THE MEETING
At the Meeting, the shareholders will consider and vote upon the following
matters:
1. The election of four Directors, each of whom would serve for a term
of three years or until their successors are duly elected and qualified
(Proposal A);
<PAGE> 5
2. The ratification of the action of the Board in selecting Deloitte &
Touche LLP as independent auditors of the Company for the current fiscal
year (Proposal B);
3. To consider and act upon a proposal to approve the Piedmont Natural
Gas Company Executive Long-Term Incentive Plan (Proposal C);
4. To consider and act upon a proposal to amend Article 3 of the
Company's Articles of Incorporation, as amended, to increase the authorized
shares of Common Stock from 50,000,000 to 100,000,000 shares (Proposal D);
and
5. Such other business as may properly come before the Meeting or any
adjournment(s) thereof.
The enclosed form of proxy provides a means for any shareholder to direct
the proxyholders to vote for all nominees for election to the Board or to
withhold authority to vote for any one or more or all of the nominees. A
shareholder may also vote for or against or may abstain from voting on Proposals
B, C and D. If the enclosed proxy is properly marked, signed, dated and
returned, and not revoked, it will be voted in accordance with the instructions
thereon. If no instructions are given, the proxy will be voted for the nominees
named herein for election to the Board, for the ratification of the selection by
the Board of independent auditors for the current fiscal year, for the proposal
to amend the Articles of Incorporation, as amended, and for approval of the
Executive Long-Term Incentive Plan. If instructions are given with respect to
one, but not the other Proposals, such instructions as are given will be
followed, but the proxy will be voted for the Proposals on which no instructions
are given. Should other matters properly come before the Meeting, the
proxyholders will vote the proxies thereon in accordance with their best
judgment.
Abstentions and broker non-votes will be counted for purposes of
determining whether a quorum is present at the Meeting. With respect to election
of Directors and ratification of auditors, abstentions and broker non-votes will
not affect the election results of the following proposals, so long as a quorum
is present. With respect to amendment of the Articles of Incorporation, as
amended, and approval of the Executive Long-Term Incentive Plan, abstentions and
broker non-votes will have the effect of a vote against the respective proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH SHAREHOLDER VOTE
FOR EACH PROPOSAL.
PROPOSAL A
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the Board of Directors shall
consist of such number of directors as shall be fixed from time to time by
resolution of the Board, but shall not be less than nine. The Articles of
Incorporation, as amended, divide the Board into three classes, designated Class
I, Class II and Class III, with one class standing for election each year for a
three-year term. The Articles provide that each class shall consist as nearly as
possible of one-third of the total number of directors constituting the entire
Board.
C. M. Butler III, Sam J. DiGiovanni and John F. McNair III, whose terms
expire at the Meeting, are standing for reelection for three-year terms. All
these nominees have been previously elected by the shareholders. In addition,
the Board at its meeting on December 6, 1996, nominated John W. Harris to stand
for election as a Director in Class II. In the absence of instructions to the
contrary, it is intended that the shares covered by the accompanying proxy will
be voted for the election of Messrs. Butler, DiGiovanni, Harris and McNair as
directors in Class II to serve three-year terms expiring in 2000. The election
of directors
2
<PAGE> 6
requires a plurality of the votes cast at the Meeting. If all nominees are
elected, the Board will consist of eleven members.
The Board does not know of any nominee or nominees who will be unable or
unwilling to serve, but if any of them should be unable to serve, the proxies
will be voted under discretionary authority for a substitute or substitutes
designated by the Board, unless appropriate action has been taken to provide for
a lesser number of directors.
The following sets forth certain information concerning each person
nominated for election as a director and each person whose term of office as a
director will continue after the Meeting:
<TABLE>
<CAPTION>
DIRECTOR OF
THE BUSINESS EXPERIENCE DURING PAST
NAME COMPANY SINCE FIVE YEARS AND OTHER INFORMATION
- -------------------------------------- -------------- --------------------------------------
<S> <C> <C>
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 2000:
C.M. Butler III 1991 Age 53. Attorney and consultant in
financial and regulatory affairs,
Houston, Texas. Mr. Butler is also a
director of Hawkins Energy
Corporation.
Sam J. DiGiovanni 1988 Age 68. Former Partner in Arthur
Andersen & Co. (certified public
accountants), Chicago, Illinois.
John W. Harris -- Age 49. President of The Harris Group,
Charlotte, North Carolina. Mr. Harris
is also a director of USAir and
Dominion Capital, Inc.
John F. McNair III 1984 Age 69. Retired President and Chief
Executive Officer of Wachovia Bank of
North Carolina, N.A., and Wachovia
Corporation of North Carolina,
Winston-Salem, North Carolina. Mr.
McNair is Chairman of the Research
Triangle Foundation and President,
Chief Executive Officer and a director
of the North Carolina Railroad
Company.
DIRECTORS CONTINUING IN OFFICE UNTIL 1998:
Jerry W. Amos 1978 Age 58. Partner in the law firm of
Amos & Jeffries, L.L.P., Greensboro,
North Carolina, and General Counsel to
the Company. Prior to October 1994,
Mr. Amos was a partner in the law firm
of Brooks, Pierce, McLendon, Humphrey
& Leonard, L.L.P.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR OF
THE BUSINESS EXPERIENCE DURING PAST
NAME COMPANY SINCE FIVE YEARS AND OTHER INFORMATION
- -------------------------------------- -------------- --------------------------------------
<S> <C> <C>
John H. Maxheim 1979 Age 62. Chairman of the Board,
President and Chief Executive Officer
of the Company, Charlotte, North
Carolina. Mr. Maxheim is also a
director of the Southern Region Board
of Wachovia Bank of North Carolina,
N.A., and Conso Products Company.
Walter S. Montgomery, Jr. 1973 Age 67. President and Treasurer and
Chief Executive Officer of Spartan
Mills (textile manufacturer),
Spartanburg, South Carolina. Mr.
Montgomery is also a director of M.S.
Bailey & Son, Allendale Insurance
Company (Advisory Board), Spartan
Mills and Montgomery Industries.
DIRECTORS CONTINUING IN OFFICE UNTIL 1999:
Muriel W. Helms 1993 Age 55. President of the Charlotte
Area of Prudential Carolinas Realty
(real estate), Charlotte, North
Carolina. Ms. Helms is also a director
of United Carolina Bank.
Ned R. McWherter 1995 Age 66. Former Governor of the State
of Tennessee, Dresden, Tennessee. Mr.
McWherter is also a director of
Coca-Cola Bottling Co. Consolidated
and SunTrust Bank.
Donald S. Russell, Jr. 1966 Age 58. Attorney at Law, Columbia,
South Carolina. Mr. Russell is also a
director of Jefferson-Pilot
Corporation.
John E. Simkins, Jr. 1966 Age 58. Associate State Director,
Maryland Small Business Development
Center Network, College Park,
Maryland. From 1993 through 1995, Mr.
Simkins was Program Planning Manager,
Airborne Surveillance Division,
Westinghouse Electric Corporation
(electronics products and services).
Prior to 1993, Mr. Simkins was
Manager, Planning and Administration,
in the C3I Logistics Support Division
of that company and in the Aerospace
Logistics Support Division of that
company.
</TABLE>
4
<PAGE> 8
INFORMATION REGARDING THE BOARD OF DIRECTORS
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During the fiscal year ended October 31, 1996, the Board held four
meetings. All directors except Messrs. McNair and McWherter attended 75% or more
of the aggregate meetings of the Board and committees of the Board on which they
served.
COMMITTEES OF THE BOARD
The Board has several standing committees, including an Audit Committee, a
Compensation Committee and a Nominating Committee.
The members of the Audit Committee are Sam J. DiGiovanni (Chairman), C.M.
Butler III, Ned R. McWherter and John E. Simkins, Jr. The Committee met twice
during the fiscal year. The Audit Committee recommends to the Board the
engagement of the Company's independent auditors, reviews the arrangements for
and scope of the audit, reviews internal auditing procedures and the adequacy of
internal controls, and reviews the reports submitted by the independent
auditors.
The members of the Compensation Committee are John F. McNair III
(Chairman), Sam J. DiGiovanni and Walter S. Montgomery, Jr. John H. Maxheim is
an ex officio member. The Committee met once during the fiscal year. The
Compensation Committee oversees compensation policies and programs, including
administration of the Executive Long-Term Incentive Plan. It also recommends to
the Board the salaries and other compensation of elected officers and Directors
and reviews executive development and management succession plans.
The members of the Nominating Committee are Jerry W. Amos (Chairman), John
H. Maxheim, John F. McNair III and Donald S. Russell, Jr. The Committee met once
during the fiscal year. The Nominating Committee recommends to the Board
nominees to fill vacancies on the Board as they occur and recommends candidates
for election as directors at annual meetings of shareholders. The Committee will
consider nominees recommended by shareholders upon submission in writing to the
Corporate Counsel and Secretary of the Company of the names of such nominees,
together with their qualifications for service and evidence of their willingness
to serve. Such nominations to the Board must be made at least sixty days prior
to the shareholders' meeting at which the election of directors will take place.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company or its affiliated companies
are paid an annual retainer for Board service of $20,000, an attendance fee of
$750 for each Board meeting attended and an attendance fee of $500 for each
committee meeting attended, in addition to reimbursement for expenses incurred
in attending such meetings. If a Director elects to invest any of his or her
director fees in the Company's Dividend Reinvestment and Stock Purchase Plan
(the "DRIP"), the Company will match 25% of such fees for investment in the
DRIP. Directors who are employees receive no additional compensation for their
services as Directors.
A non-employee Director who shall have served more than ten continuous
years on the Board is entitled to receive on retirement from the Board at any
age, an annual retirement benefit equal to the annual retainer fee in effect at
the time of his or her retirement, which retirement benefit will continue for
life. Should a non-employee Director die before ten years have elapsed from the
retirement date of that Director from the Board,
5
<PAGE> 9
a retirement benefit shall be paid to the Director's designated beneficiary(s)
in an amount equal to the annual retainer fee in effect at the time of the
Director's retirement for the remaining portion of the ten-year period following
the retirement date of that Director from the Board. Should a non-employee
Director die while serving on the Board, the Director's previously designated
beneficiary(s) shall be paid ten times the annual retainer fee that is in effect
at the date of such Director's death.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Amos & Jeffries, L.L.P., a limited liability law partnership, received
$616,606 for legal services performed for the Company during the 1996 fiscal
year. This law firm is expected to continue to perform such services during the
current fiscal year. Jerry W. Amos, a Director and General Counsel to the
Company, is a partner in this law firm.
Transactions involving this law firm and the Company were made in the
ordinary course of business and, in the opinion of management, were on
substantially the same terms to the Company as those prevailing at the time from
unrelated parties for comparable transactions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES AS DIRECTORS FOR THE TERMS STATED.
PROPOSAL B
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Deloitte & Touche LLP, independent auditors, to serve as the
independent auditors of the Company for the fiscal year ending October 31, 1997.
Deloitte & Touche LLP has acted as the independent auditors of the Company since
1951. Although not required to submit this selection to the shareholders for
ratification, the Directors believe it is desirable that an expression of
shareholder opinion be solicited.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting. They will have an opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
If a majority of the shares of Common Stock represented at the Meeting is
voted against ratification of the selection of Deloitte & Touche LLP, the
selection of independent auditors will be reconsidered by the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
PROPOSAL C
ADOPTION OF PIEDMONT NATURAL GAS COMPANY
EXECUTIVE LONG TERM-INCENTIVE PLAN
On December 6, 1996, the Board of Directors adopted the Piedmont Natural
Gas Company, Inc. Executive Long-Term Incentive Plan (the "Incentive Plan"), to
be effective January 1, 1997. Adoption of the Incentive Plan is subject to
approval by the shareholders at the Meeting. In 1986, the shareholders of the
Company approved a substantially similar plan (the "1986 Incentive Plan"). As of
January 1, 1997, 1,054,261
6
<PAGE> 10
shares of Common Stock have been reserved for issuance, but not used, under the
1986 Incentive Plan. The Company intends to transfer these remaining shares
reserved for issuance under the 1986 Incentive Plan for use under the proposed
incentive Plan.
The purpose of the Incentive Plan is to promote the interests of the
Company by attracting and retaining in its employment persons of outstanding
ability and to provide executives and other key employees greater incentive to
make material contributions to the success of the Company by providing them with
incentive compensation conditioned upon the corporate achievement of financial
and other performance objectives.
Employees who are in active service at the time awards are granted and are
determined by the Board to be in the executive compensation group are eligible
for awards under the Incentive Plan.
The Incentive Plan will be administered by the Compensation Committee of
the Board (the "Committee"), which presently consists of three members who are
ineligible to participate in the Incentive Plan. Subject to the terms of the
Incentive Plan, the Committee has authority to construe and interpret the
Incentive Plan, to determine the terms and provisions of awards to be granted
under the Incentive Plan, to define the terms used in the Incentive Plan and in
the awards granted thereunder, to prescribe, amend and rescind rules and
regulations relating to the Incentive Plan, to determine the individuals to whom
and the times at which awards shall be granted and the number of shares to be
subject to each award, and to make all other determinations necessary or
advisable for the administration of the Incentive Plan. Each grant of an award
will be evidenced by a written agreement containing such terms and conditions
consistent with the Incentive Plan as the Committee may determine.
The Board may grant awards of units, each equivalent in value to one share
of Common Stock, each year to eligible key employees. Except as otherwise
provided, these awards will be distributed only after the end of a performance
period of two or more years, as determined by the Board, beginning with the year
in which the awards are granted.
The percentage of units awarded that will be distributed will depend on the
levels of financial and other performance achieved during the performance
period. The Board may adopt one or more performance categories in addition to or
in substitution for a performance category or eliminate all performance
categories other than financial performance. No distribution of units will be
made if a minimum average percentage of the applicable measurement of
performance is not achieved.
At the end of a performance period, the units which the participants are
entitled to receive will be distributed over a three-year period in the form of
a combination of equal portions of shares of Common Stock and cash; provided,
however, that a participant may elect to take more than one-half of the units in
shares of Common Stock.
The aggregate number of units which may be awarded to all participants
under the Incentive Plan in any year may not exceed 1/2 of 1% of the total
number of shares of Common Stock outstanding at the time the units are awarded.
In the event of a death of a participant prior to the end of any
performance period, the number of units awarded for such performance period
shall be reduced in proportion to the number of months remaining in the
performance period after the date of death; and the remaining parts of the
award, if any, may, in the discretion of the Board, be adjusted based upon the
levels of performance achieved prior to the date of death and shall be
distributed within a reasonable time after death. Retirement or absence of a
participant for disability prior to the end of any performance period under
circumstances entitling the participant to an immediate pension or disability
benefit under a Company plan shall not affect any awards granted under the
Incentive Plan.
7
<PAGE> 11
In the event of any other termination of employment or leave of absence
prior to the end of any performance period, all non-vested units with respect to
such performance will be cancelled. All units awarded to a participant and not
previously distributed shall be forfeited if a participant is discharged for
cause or becomes associated with a competitor.
A cash payment is an amount equal to the dividend payable on one share of
Common Stock will be made to each participant for each unit which, on the record
date for the dividend, has been awarded to the participant and not distributed
or cancelled.
No dividend equivalent payments or distribution of units will be made or
deferred if, at the time of payment or distribution (a) any dividend on any
shares of outstanding Preferred Stock has been omitted and not subsequently paid
or the Company shall not have declared and paid a cash dividend on Common Stock
during the then current fiscal quarter, (b) there exists any default in payment
of dividends on any such outstanding shares, (c) the rate of dividends on such
shares is lower than at the time the units to which the payment relates were
awarded, (d) estimated consolidated net income for the twelve months preceding
the month of payment or distribution is less than the sum of payments to be made
under the Incentive Plan plus all dividends applicable to such period on an
accrual basis, either paid, declared or accrued at the most recently paid rate,
or (e) such payments or distribution of units would result in the default in any
agreement by which the Company is bound.
In the event of a stock dividend or split, recapitalization, combination of
shares or similar adjustment, or a result of a merger, consolidation or other
reorganization, the Board is authorized to make such adjustments, if any, in the
number or kind of units previously awarded and in the performance levels
previously established for any performance period not then completed. In
addition, if an extraordinary change occurs during a performance period which
significantly alters the basis upon which the performance levels were
established, the Board may make adjustments which it deems appropriate in the
performance levels. Such changes may include changes in accounting practices,
tax, regulatory or other laws or regulations, economic changes not in the
ordinary course of business cycles or compliance with judicial decrees or other
legal requirements.
The Board may amend, suspend or terminate the Incentive Plan at any time,
but no amendment may be made which adversely affects the rights of a participant
with respect to awards previously granted to him or her, without his or her
consent, and provided that no amendment may be made without the approval of the
shareholders which increases the total number of shares of Common Stock issuable
under the Incentive Plan (except pursuant to the adjustment provision described
above), changes the class of employees eligible to participate, or withdraws the
direction of administration of the Incentive Plan from the Committee.
No taxable income will be realized by the participant upon the award of the
unit(s) under the Incentive Plan because such award is subject to forfeiture
restrictions until the performance period is complete. The participant will
realize ordinary income in the years in which the restrictions lapse in the
amount of the then current value of the shares covered by the award units and an
equivalent amount will be deductible by the Company for the same years. Cash
payments made to participants equal to the dividends on the award units will be
taxable income to the participant and deductible to the Company as compensation
to the participant when paid.
VOTE REQUIRED FOR ADOPTION OF INCENTIVE PLAN
Under North Carolina law, the affirmative vote of the holders of a majority
of the shares of Common Stock entitled to vote at the Meeting is required to
adopt Proposal C.
8
<PAGE> 12
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE PIEDMONT NATURAL GAS COMPANY EXECUTIVE LONG-TERM INCENTIVE PLAN.
PROPOSAL D
AMENDMENT OF ARTICLE 3 OF
THE ARTICLES OF INCORPORATION, AS AMENDED,
TO INCREASE THE AUTHORIZED NUMBER OF SHARES
OF COMMON STOCK
On December 6, 1996, the Board adopted and recommended for shareholder
approval an amendment of the Company's Articles of Incorporation, as amended, to
increase the authorized Common Stock from 50,000,000 to 100,000,000 shares, for
the reasons discussed below. A copy of the proposed amendment of Article 3 of
the Articles of Incorporation, as amended, is attached to this Proxy Statement
as Appendix A. Article 3 currently provides for the issuance of up to 50,000,000
shares of Common Stock, without par value, and 175,000 of preferred stock, also
without par value. As of January 15, 1997, shares of Common Stock were
outstanding and shares of Common Stock were reserved for issuance
pursuant to the DRIP, the 1986 Incentive Plan and the Employee Stock Purchase
Plan. No preferred shares are outstanding.
The Board believes that it is desirable to increase the number of
authorized shares of Common Stock for a number of reasons, including having the
shares available for issuance pursuant to the DRIP and to accommodate any
possible future employee benefit plans or Common Stock dividends or stock
splits. Having such additional authorized shares of Common Stock available for
issuance will give the Company greater flexibility and will allow such shares to
be issued without the expense and delay of a special shareholders' meeting,
unless such action is required by applicable law or the rules of any stock
exchange on which the Company's securities may then be listed.
Accordingly, the Board recommends that the shareholders approve an
amendment of Article 3 of the Articles of Incorporation, as amended, to increase
the authorized shares of Common Stock from 50,000,000 to 100,000,000 shares. See
Appendix A. If the amendment is approved, it is expected that the amendment will
become effective upon the accepted filing of Articles of Amendment with the
North Carolina Secretary of State.
The proposed increase in the number of authorized shares of Common Stock is
not designed to deter or prevent a change in control; however, under certain
circumstances, the Company could use additional authorized shares of Common
Stock to create voting impediments or to frustrate persons seeking to effect a
takeover or otherwise gain control of the Company or privately place such shares
with purchasers who might side with the Board in opposing a hostile takeover
bid. At the date of this Proxy Statement, the Company has no agreements or
commitments with respect to the sale or distribution of additional shares of
Common Stock, except with respect to the DRIP and to certain employee benefit
plans.
Except as may be limited by the rules of any exchange on which the Common
Stock may be listed, the Board is empowered to authorize the issuance of any
authorized but unissued shares of Common Stock at such time or times, to such
persons and for such consideration as they may deem appropriate, without further
shareholder approval. Holders of Common Stock have no preemptive rights to
subscribe to or purchase shares of Common Stock which may be issued in the
future.
9
<PAGE> 13
VOTE REQUIRED FOR ADOPTION OF PROPOSAL D
Under North Carolina law, the affirmative vote of the holders of a majority
of the shares of Common Stock entitled to vote at the Meeting is required to
adopt this Proposal D. Accordingly, holders of shares of Common Stock who
abstain from voting or do not vote on this Proposal D will have, in effect, cast
votes against the proposal equal in number to the shares they abstain from
voting or do not vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE INCREASE IN
THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned, as of December 1, 1996, by each Director and nominee, each
executive officer named in the Summary Compensation Table and all Directors and
executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) CLASS(2)
---------------------------------------------------- -------------------------- ----------
<S> <C> <C>
DIRECTORS
Jerry W. Amos....................................... 55,477(3) --
C. M. Butler III.................................... 300 --
Sam J. DiGiovanni................................... 6,507(4) --
John W. Harris...................................... 1,000 --
Muriel W. Helms..................................... 753(5) --
John H. Maxheim..................................... 131,832(6) --
John F. McNair III.................................. 6,000(7) --
Ned R. McWherter.................................... 1,421(3) --
Walter S. Montgomery, Jr............................ 1,544(8) --
Donald S. Russell, Jr............................... 70,624 --
John E. Simkins, Jr................................. 2,640(3) --
EXECUTIVE OFFICERS
David J. Dzuricky................................... 64(6) --
Ray B. Killough..................................... 24,431(6) --
Ware F. Schiefer.................................... 27,723(6)(9) --
Thomas E. Skains.................................... 0(6) --
All Directors and Executive Officers as a Group (27
persons).......................................... 510,508(6) --
</TABLE>
- ---------------
(1) Unless otherwise indicated, each person listed has sole voting and
investment power.
(2) For all Directors, the number of shares shown represents less than 1% of the
outstanding Common Stock. The number of shares beneficially owned by all
Directors and executive officers as a group represents less than 2% of the
outstanding Common Stock.
(3) The number of shares shown includes those credited to participants' accounts
under the DRIP.
(4) Includes 3,199 shares held by Mr. DiGiovanni in joint tenancy with his
spouse.
(5) Includes 93 shares held in trust of which Ms. Helms is trustee.
(6) The number of shares shown includes those credited to participants' accounts
under the DRIP and the Employee Stock Ownership Plan.
10
<PAGE> 14
(7) Includes 2,000 shares owned by a family member. Mr. McNair disclaims
beneficial ownership of such shares.
(8) Mr. Montgomery is a co-trustee of a trust which holds these shares.
(9) Includes 864 shares held by Mr. Schiefer in joint tenancy with his spouse.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table sets forth a summary of the
compensation paid to the Company's Chief Executive Officer and to the four other
most highly compensated executive officers in the three fiscal years ended
October 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION PAYOUTS
-------------------------- ------------
OTHER ANNUAL LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION(1) PAYOUTS COMPENSATION(2)
- ------------------------------------ ---- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John H. Maxheim..................... 1996 $423,846 $ 126,392 $400,802 $ 123,427
Chairman of the Board, President 1995 413,269 87,822 334,371 107,750
and Chief Executive Officer 1994 398,269 101,123 -- 100,580
Ware F. Schiefer.................... 1996 208,154 47,128 135,509 50,987
Executive Vice President 1995 190,077 30,246 113,049 47,673
1994 179,692 34,712 -- 45,981
Ray B. Killough..................... 1996 182,308 34,195 83,916 14,441
Senior Vice 1995 170,962 19,167 70,007 17,181
President -- Operations 1994 154,616 21,908 -- 17,134
Thomas E. Skains.................... 1996 174,692 242,251 -- 19,004
Senior Vice President -- Gas 1995 85,673 35,301 -- 4,970
Supply and Services 1994 -- -- -- --
David J. Dzuricky................... 1996 167,115 256,580 -- 21,469
Senior Vice President -- Finance 1995 101,021 17,061 -- 5,977
1994 -- -- -- --
</TABLE>
- ---------------
(1) These amounts include the payments of dividend equivalents on units awarded,
but not yet distributed, under the 1986 Incentive Plan and moving expense
allowances plus assumed income tax liabilities for Messrs. Skains and
Dzuricky of $213,144 and $228,681, respectively, for 1996 and $29,569 and
$13,813, respectively, for 1995.
11
<PAGE> 15
(2) These amounts for 1996 consist of the following:
<TABLE>
<CAPTION>
MAXHEIM SCHIEFER KILLOUGH SKAINS DZURICKY
------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Insurance premiums plus assumed
income tax liabilities under the
Supplemental Executive Benefit
Plan (SEBP)..................... $70,177 $ 32,937 $9,691 $11,462 $ 16,456
Salary continuation accruals under
the SEBP........................ 48,500 13,300 -- -- --
Company contributions to the
Salary Investment Plan.......... 4,750 4,750 4,750 7,542 5,013
</TABLE>
LONG-TERM INCENTIVE AWARDS
The following table provides information on long-term performance awards
granted by the Board in the fiscal year ended October 31, 1996, to the named
executive officers pursuant to the 1986 Incentive Plan.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS
UNDER NON-STOCK
PRICE BASED PLANS(2)
------------------------------
NUMBER MAXIMUM
OF UNITS PERFORMANCE PERIOD THRESHOLD TARGET #
NAME AWARDED(1) UNTIL PAYOUT # SHARES # SHARES SHARES
- --------------------------------------- ---------- ------------------ --------- -------- -------
<S> <C> <C> <C> <C> <C>
John H. Maxheim........................ 47,159 5 years 37,727 47,159 56,591
Ware F. Schiefer....................... 19,273 5 years 15,418 19,273 23,128
Ray B. Killough........................ 15,909 5 years 12,727 15,909 19,091
Thomas E. Skains....................... 15,000 5 years 12,000 15,000 18,000
David J. Dzuricky...................... 14,091 5 years 11,273 14,091 16,909
</TABLE>
- ---------------
(1) If performance measures are met, payouts under the 1986 Incentive Plan are
50% in shares of Common Stock and 50% in cash, unless the executive officer
makes an irrevocable, advance election to receive a greater percentage of
the payout in shares of stock. The assumed stock price as of the date of
award was $22 per share. The awards would be payable in three equal
installments annually beginning December 1, 2000.
(2) Payouts are determined based on the Company achieving increases in annual
net income as set by the Board for the award period. The target amount will
be paid if at least 100% of the targeted performance measure is achieved;
the threshold amount will be paid if at least 80% of the targeted
performance measure is achieved; and the maximum amount will be paid if
120% or more of the targeted performance measure is achieved. No payment
will be made unless at least 80% of the targeted performance measure is
achieved. An amount equal to the dividend payable on one share of Common
Stock is paid to each participant for each unit which, on the record date
for the dividend, has been awarded to the participant and not distributed
or canceled.
EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE-OF-CONTROL
ARRANGEMENTS
On February 26, 1993, Mr. Maxheim entered into a four-year employment
agreement with the Company, effective December 1, 1992 (the "Commencement
Date"), at an initial base salary of $385,000 per annum. On each anniversary of
the Commencement Date, the then remaining term is automatically extended for an
additional year, unless the Company or Mr. Maxheim gives notice of termination
of such renewal 90 days
12
<PAGE> 16
prior to such anniversary date; provided, however, that the term of the
agreement shall not extend beyond Mr. Maxheim's 65th birthday. Mr. Maxheim's
base salary agreement is subject to review and increase annually by the Board.
The agreement contains a covenant not to compete with the Company or its
subsidiaries for the term of the agreement and for two years after termination
of the agreement, except in the case of termination without "cause," as defined
therein, by the Company.
Mr. Maxheim's employment agreement shall be terminated by his death or
total permanent disability and may be terminated for cause by the Company or
upon 60 days' notice by Mr. Maxheim. Mr. Maxheim's compensation would continue
to be paid through the end of the month in which his death occurred, through the
effective date of his voluntary termination of employment (except in connection
with a "Change in Control"), and for 90 days following the date of a
determination of total permanent disability. If terminated for cause, Mr.
Maxheim would be entitled to no payments of compensation after the date of
termination.
In the event Mr. Maxheim's employment is terminated by the Company without
cause, the nature of his duties is diminished after a Change in Control of the
Company, or he voluntarily terminates his employment upon certain changes in his
rights or duties after a Change in Control whether or not approved by the Board,
he will be entitled to receive his annual base salary (which base salary
automatically shall be increased 10% per annum in the event of a Change in
Control) and all amounts which he may be or may become entitled to receive under
any bonus or incentive plan for the remainder of the term of the agreement. He
also will continue to be eligible to participate in other benefit plans of the
Company for the remainder of the term of the agreement. Upon such a Change in
Control that has not been approved by the requisite vote of the Board, the then
remaining term of the agreement is automatically extended for a four-year
period. In the event Mr. Maxheim is terminated by the Company without cause
within twelve months after a Change in Control, he is entitled to receive in a
lump sum all base salary (including automatic increases resulting from the
Change in Control), incentive compensation and bonuses payable to him over the
remaining term of the agreement. Under the agreement, should any dispute arise
between Mr. Maxheim and the Company regarding the terms of the agreement,
whether in formal legal proceedings or otherwise, the Company must reimburse him
for all his costs and expenses should he prevail in such dispute.
On May 31, 1996, Ware F. Schiefer, David J. Dzuricky, Ray B. Killough and
Thomas E. Skains, senior executive officers of the Company, entered into
employment agreements (the "Agreements") with the Company. The Board had
previously determined that the continued retention of the services of these
officers on a long-term basis was in the best interest of the Company in that it
promoted the stability of senior management, it enabled the Company to retain
the services of a well-qualified officer with extensive contacts in the natural
gas industry, and it secured the continued services of the officer
notwithstanding any change in control of the Company.
The term of employment under the Agreement for Mr. Schiefer is for a
two-year period commencing on June 1, 1996, and the term of employment under
each Agreement for Messrs. Dzuricky, Killough and Skains is for a one-year
period commencing June 1, 1996. All such officers' Agreements shall
automatically be extended to a full one-year period, in the case of Mr.
Schiefer, a two-year period, on each successive day during the term of each
Agreement. If written notice from the Company or the officer is delivered to the
other party advising the other party that the Agreement is not to be further
extended, then the Agreement is terminated on the first anniversary of the date
of notice or, in the case of Mr. Schiefer, on the second anniversary of the date
of notice. No extension shall allow the Agreements to extend beyond the date on
which the officer reaches 65 years of age.
13
<PAGE> 17
Each officer's base salary may be increased from time to time by the Board
as reflected by the duties required of the officer. Each Agreement contains a
covenant not to compete with the Company or its subsidiaries for the term of the
Agreement without prior written consent of the Company.
Each Agreement shall be terminated upon the death or total permanent
disability of the officer. Compensation would continue to be paid through the
end of the month in which the officer died, through the effective date of the
officer's voluntary termination of employment (except in connection with a
"Change in Control"), and for 90 days following. If terminated for cause, the
officer would not be entitled to receive compensation or other benefits (other
than vested benefits) after the date of termination. In the event of involuntary
termination of the officer's employment with, or at any time following, any
Change of Control, or in the event of voluntary termination by the officer in
connection with, or within 12 months after (in the case of Mr. Schiefer, 24
months after) any Change in Control, the officer shall be paid the following
amount for a period of 12 months (in the case of Mr. Schiefer, 24 months) from
the effective date of termination or until such time as the officer reaches 65
years of age, whichever is less: (a) base salary plus (b) all amounts to which
the officer may be or may become entitled to under any incentive or bonus plan,
plus (c) participation in all welfare benefit plans, practices, policies and
programs at least as favorable as the most favorable of such plans, practices,
policies and programs in effect at any time during the 90-day period preceding
the officer's termination and with the costs of such benefits paid in the same
manner as prior to termination. Finally, should any dispute arise between the
officer and the Company regarding the terms of the Agreement, whether in formal
legal proceedings or otherwise, the Company must reimburse the officer for all
the officer's costs and expenses should the officer prevail in such dispute.
RETIREMENT PLAN
The Company maintains a defined benefit plan (the "Retirement Plan") which
covers all full-time employees upon attainment of age 21 and completion of one
year of service, or attainment of age 30. The full cost of the Retirement Plan
is paid by the Company. Benefits under the Retirement Plan become fully vested
prior to normal retirement age upon the completion of five years of service, and
are determined by a step-rate formula which utilizes the participant's covered
compensation, final average earnings and credited years of service.
In the event of retirement at or after age 65, the average Retirement Plan
participant with maximum credited service of 35 years is, in general, entitled
to an annual pension for life in an amount which, when added to primary Social
Security benefits, will equal approximately 75% of the participant's average
annual compensation during the five consecutive years of the last ten years
prior to retirement during which the participant received his or her highest
compensation. Benefits are also provided under the Retirement Plan in the event
of early retirement at or after age 55 with ten years of credited service and in
the event of retirement for disability.
The persons named in the Summary Compensation Table above are participants
in the Retirement Plan which provides for fixed benefits computed on an
actuarial basis for all covered employees. The amount of the contribution,
payment or accrual by the Company with respect to a specified person under the
Retirement Plan cannot readily be separately or individually calculated. The
Company was not permitted by law to make a deductible contribution to the
Retirement Plan during the 1996 plan year, as it was actuarily determined that
the Retirement Plan met the definition of "fully funded" under Section 214(c)(6)
of the Tax Code.
Based upon current remuneration of the individuals named in the Summary
Compensation Table and their expected credited years of service at normal
retirement age (65), the estimated annual retirement
14
<PAGE> 18
benefits payable upon retirement to each of the named individuals and their
credited years of service as of October 31, 1996, are as follows: Mr. Maxheim,
$103,967, 18 years; Mr. Schiefer, $87,789, 31 years; Mr. Killough, $82,095, 23
years; Mr. Skains, $75,527, one year; and Mr. Dzuricky, $72,747, one year.
The amounts shown in the following table are those payable in the event of
retirement at age 65 on December 31, 1996. The table illustrates the estimated
normal annual retirement benefits payable under the Retirement Plan for the
specified remuneration and years of service classifications. The amounts shown
do not reflect reductions which would result from joint and survivor elections.
<TABLE>
<CAPTION>
ANNUAL BENEFITS UPON RETIREMENT
WITH YEARS OF SERVICE INDICATED
-------------------------------------
FINAL AVERAGE ANNUAL EARNINGS 15 25 35
- -------------------------------------------------------- ------- -------- --------
<S> <C> <C> <C>
$150,000................................................ $53,145 $ 74,265 $ 81,075
200,000................................................ 68,412 99,901 109,226
250,000................................................ 79,317 118,210 120,000
300,000................................................ 79,317 118,210 120,000
350,000................................................ 79,317 118,210 120,000
400,000................................................ 79,317 118,210 120,000
450,000................................................ 79,317 118,210 120,000
</TABLE>
The Employee Retirement Income Security Act of 1974 places certain
limitations on benefits which may be paid under qualified plans. Current law
limits the amount payable in 1996 under a defined benefit plan to $125,000 and
limits compensation used in 1996 for determining benefits to $160,000 per year.
15
<PAGE> 19
COMPARISONS OF CUMULATIVE TOTAL SHAREHOLDER RETURNS
The following performance graph compares the Company's cumulative total
shareholder return from October 31, 1991, through October 31, 1996 (a five-year
period), to that of the Standard & Poor's 500 Stock Index, a broad market index
("S & P 500"), and to that of the Standard & Poor's Natural Gas Index, an index
of natural gas utility companies (the "S & P Natural Gas").
The graph assumes that the value of an investment in Common Stock and in
each index was $100 on October 31, 1991, and that all dividends were reinvested.
Stock price performances shown on the graph are not indicative of future price
performances.
COMPARISONS OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED AT OCTOBER 31, 1991
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PNG S&P 500 INDUSTRY**
<S> <C> <C> <C>
1991 100 100 100
1992 133 110 109
1993 186 126 133
1994 155 131 126
1995 178 166 146
1996 209 206 212
</TABLE>
** S&P Natural Gas Utility Index
16
<PAGE> 20
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board provides overall guidance to the
Company's executive compensation programs, including its Employee Salary
Administration Plan and Executive Long-Term Incentive Plan. During 1996, the
Committee was composed of three outside directors. The Committee reviews the
Performance Management Program for salaried employees, the chief executive
officer's compensation level, and other officer compensation levels. In
addition, the Committee evaluates the performance of management and considers
management succession and related matters. To assist the Committee in its review
and evaluations, independent compensation consultants are periodically retained
to confirm the competitiveness of the Company's compensation policies and
practices.
The goals of the Compensation Committee are 1) to create compensation
packages for officers and key executives which will attract and retain in the
Company's employment persons of outstanding ability and 2) to reward those
officers for superior corporate performance as measured by the Company's
financial results and strategic achievements and provide a greater incentive for
the officers and key managers to make material contributions to the success of
the Company, its shareholders and service it provides to its customers.
Executive compensation at the Company for 1996 was comprised of two
elements: 1) base salary and 2) long-term incentive awards. The Board has
previously adopted and shareholders have approved the 1986 Executive Long-Term
Incentive Plan under which awards have been made.
The relative levels of base salary for the Company's officers are designed
to reflect each officer's scope of responsibility and accountability within the
Company. To determine the necessary amounts of base salary to attract and retain
top quality management, the Compensation Committee reviews comparable salary and
other compensation arrangements in effect at comparable local natural gas
distribution companies. The compensation policy of the Company, endorsed by the
Committee, is that a substantial portion of the annual compensation of each
officer relates to and must be contingent upon the performance of the Company,
as well as the individual contribution of each officer. A portion of an
officer's compensation therefore, is "at risk" through long-term incentive
compensation. Target levels, depending upon management responsibilities, can
amount to approximately 30 to 50 percent of average annual salary compensation.
Over time, the compensation policy of the Company has been to place less
emphasis on base salary and greater emphasis on variable, performance-related
long-term incentive compensation. The goal of this policy is to further align
the interests of management with the interests of shareholders.
Pursuant to the Incentive Plan, units (consisting of a combination of
shares of Common Stock and cash) may be awarded to participants and, depending
upon the levels of financial performance and customer satisfaction achieved by
the Company during a performance period, distribution of those awards may be
made. For the five-year performance period ended October 31, 1994, performance
was measured against corporate average net earnings from continuing operations,
after tax and after deducting the Gross National Product deflator over the
performance period. For a performance period beginning November 1, 1992 and
ending October 31, 1997, an award may be distributed over a three-year period
beginning in 1997 for performance that achieved an average annual increase of at
least 6% after deducting the Gross National Product deflator. For the five-year
performance period ending October 31, 2000, 100 percent of the award may be
distributed for performance that achieves an average increase in corporate
average net earnings of 6%. Up to 120% of the award may be distributed for
performance that materially exceeds targeted performance goals. Distributions
are based on achievement of pre-established internal measures and performance
standards. The Plan requires that a minimum threshold must be achieved in order
for any awards to be distributed. The Committee
17
<PAGE> 21
recommends to the Board, for their final approval, the level that should be
distributed based upon achievement of corporate goals.
The compensation for each of the five highest paid officers for 1996 has
been reviewed and has been found to be reasonable in view of the Company's
performance, as compared to executives in similarly situated positions in peer
group companies and the contribution of those officers to the established
performance standards.
The general policies described above for the compensation of officers and
key managers of the Company also apply to the compensation recommendations made
by the Compensation Committee and approved by the Board (other than Mr. Maxheim)
with respect to the 1996 compensation for Mr. Maxheim as the Company's President
and Chief Executive Officer. The 1996 base salary for Mr. Maxheim, was based
principally on his rights under his employment agreement with the Company dated
February 26, 1993, as described in the Company's proxy statement. In light of
the previous decisions of the Board of Directors, the Employment Agreement
established Mr. Maxheim's minimum annual base salary at $425,000 for 1996. This
amount had been increased $10,000 from his base salary in 1995 in recognition of
the officer's overall performance, the increase in the cost of living and in
recognition under his leadership which contributed to an increase in value of
the Company's common stock at an annual compound return of 17.4 percent over the
past five years.
Submitted by the Compensation Committee
John F. McNair III, Chairman
Sam J. DiGiovanni
Walter S. Montgomery, Jr.
18
<PAGE> 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Maxheim is an ex officio member of the Compensation Committee. As an ex
officio member, he participates in the discussions of the Committee but does not
vote on Committee actions. Moreover, he does not participate in and is not
present during the Committee's deliberations upon compensation matters related
to him.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Directors,
executive officers and persons who own more than 10% percent of the Common Stock
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Directors,
executive officers and greater than 10% beneficial owners 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 forms furnished to the
Company and written representations from Directors and executive officers, the
Company believes that during the 1996 fiscal year, its Directors and executive
officers complied with all applicable Section 16(a) filing requirements.
PROPOSALS FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder proposal intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Corporate Counsel and Secretary
at the Company's executive offices no later than September 25, 1997, in order to
be considered for inclusion in the Proxy Statement for such meeting.
OTHER BUSINESS
The Board and management do not know of any other matters to be presented
at the Meeting. If other matters do properly come before the Meeting, it is
intended that the persons named in the accompanying form of proxy will vote the
proxies in accordance with their best judgment. The form of proxy confers
discretionary authority to take action with respect to any additional matters
which may come before the Meeting.
MISCELLANEOUS
The Annual Report of the Company for the 1996 fiscal year, which includes
audited financial statements, is being mailed along with this Proxy Statement;
however, it is not intended that the Annual Report be a part of the Proxy
Statement or a solicitation of proxies.
Upon written request of a shareholder, the Company will provide, without
charge, a copy of its Annual Report on Form 10-K for the fiscal year, including
financial statements and schedules thereto, required to be filed with the SEC.
Requests should be directed to: Martin C. Ruegsegger, Corporate Counsel and
Secretary, Piedmont Natural Gas Company, Inc., Post Office Box 33068, Charlotte,
North Carolina 28233.
19
<PAGE> 23
Shareholders are respectfully urged to complete, sign, date and return the
accompanying form of proxy in the enclosed envelope. Your prompt response will
be appreciated.
By order of the Board of Directors,
Martin C. Ruegsegger
Corporate Counsel and Secretary
January 29, 1997
20
<PAGE> 24
APPENDIX A
The first sentence of the Articles of Incorporation of the Company, as
amended, is hereby to be amended again by deleting the first sentence of Article
3 of such Articles of Incorporation, as amended, and substituting in lieu
thereof a new first sentence which is set forth below in full:
Article 3. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is one hundred million one
hundred seventy-five thousand (100,175,000), one hundred million
(100,000,000) of which shall be common stock, without par value, and one
hundred seventy-five thousand (175,000) of which shall be preferred stock,
also without par value.
A-1
<PAGE> 25
APPENDIX B
PIEDMONT NATURAL GAS COMPANY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON FEBRUARY 28, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John H. Maxheim, John F. McNair III and
Walter S. Montgomery, Jr., and each of them, with full power of substitution and
power to act alone, as proxies to vote all the shares of Common Stock which the
undersigned would be entitled to vote if personally present and acting at the
Annual Meeting of Shareholders of Piedmont Natural Gas Company, Inc., to be held
February 28, 1997, and at any adjournment or adjournments thereof, as follows:
The Board of Directors recommends a vote FOR the following proposals:
A. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as indicated to the contrary below) nominees listed below
</TABLE>
C. M. Butler III, Sam J. DiGiovanni, John W. Harris and John F. McNair III
(To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.)
- --------------------------------------------------------------------------------
B. RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
C. APPROVAL OF EXECUTIVE LONG-TERM INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
D. APPROVAL OF PROPOSED AMENDMENT OF ARTICLES OF INCORPORATION, AS AMENDED, TO
INCREASE AUTHORIZED COMMON STOCK FROM 50,000,000 TO 100,000,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the reverse side)
(Continued from other side)
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted as directed herein by the undersigned shareholder. If no
direction is made, this proxy will be voted for proposals A, B, C and D.
Dated: 1997
----------------,
------------------------------
Signature
------------------------------
Signature (if held jointly)
Please sign exactly as name
appears hereon, date and
return in the enclosed
business reply envelope. Joint
owners should each sign
personally. Corporation
proxies should be signed by an
authorized officer. Executors,
administrators, trustees,
etc., should so indicate when
signing.
