<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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 23, 1996
<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 23, 1996
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 23, 1996, 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); and
3. 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 10, 1996,
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 23, 1996
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 23, 1996, and was first mailed to shareholders on or
about January 23, 1996. 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
telegraph, 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 Company's 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 10, 1996, 28,898,955
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 10, 1996, 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 of Directors 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 10, 1996, no shareholder was known by management to own of
record or beneficially more than 5% of the outstanding Common Stock.
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<PAGE> 5
PURPOSES OF THE MEETING
At the Meeting, the Company's shareholders will consider and vote upon the
following matters:
1. The election of four Directors, each would serve for a term of three
years or until their successors are duly elected and qualified (Proposal
A);
2. The ratification of the action of the Company's Board of Directors in
selecting Deloitte & Touche LLP as independent auditors of the Company
for the current fiscal year (Proposal B); and
3. 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 of Directors
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 Proposal
B. 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 of Directors and for the ratification of the selection
by the Board of Directors of independent auditors for the current fiscal year.
If instructions are given with respect to one, but not the other, Proposal, such
instructions as are given will be followed, but the proxy will be voted for the
Proposal 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. Abstentions and broker
non-votes will not affect the election results of the following proposals, so
long as a quorum is present.
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 of Directors, but shall not be less than nine. The
Company's Certificate of Incorporation (the "Charter") divides the Board of
Directors 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 Charter
provides that each class shall consist as nearly as possible of one-third of the
total number of directors constituting the entire Board.
Muriel W. Helms, Donald S. Russell, Jr., and John E. Simkins, Jr., whose
terms expire at the Meeting, are standing for reelection for three-year terms.
In addition, the Board of Directors at its meeting on March 20, 1995, elected
Ned R. McWherter as a Director in Class I until consideration for election as a
Director by the shareholders of the Company at the 1996 Annual Meeting of
shareholders. All nominees, with the exception of Mr. McWherter, were previously
elected by the shareholders. 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 Ms. Helms, Mr. McWherter, Mr. Russell, and Mr. Simkins as
directors in Class I to serve three-year terms expiring in 1999. The election of
directors requires a plurality of the votes cast at the Meeting. If all nominees
are elected, the Board will consist of ten members.
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<PAGE> 6
The Board of Directors 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 of Directors, 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 1999:
MURIEL W. HELMS 1993 Age 54. 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 65. 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 57. Attorney at Law, Columbia, South
Carolina. Mr. Russell is also a director of
NationsBank of South Carolina, N.A., and
Jefferson-Pilot Corporation.
JOHN E. SIMKINS, JR. 1966 Age 57. Consultant in business applications,
Baltimore, Maryland. From 1993 through
1995, 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.
DIRECTORS CONTINUING IN OFFICE UNTIL 1997:
C.M. BUTLER III 1991 Age 52. 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 67. Former Partner in Arthur Andersen &
Co. (certified public accountants),
Chicago, Illinois.
</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 F. MCNAIR III 1984 Age 68. 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 57. 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.
JOHN H. MAXHEIM 1979 Age 61. 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 66. 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.
</TABLE>
INFORMATION REGARDING THE BOARD OF DIRECTORS
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During the fiscal year ended October 31, 1995, the Board of Directors held
six meetings. All directors attended 75% or more of the aggregate meetings of
the Board of Directors and committees of the Board on which they served.
COMMITTEES OF THE BOARD
The Board of Directors 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 of Directors
the engagement of the Company's independent auditors, reviews the
4
<PAGE> 8
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 twice during the fiscal year. The
Compensation Committee oversees the Company's compensation policies and
programs, including administration of the Executive Long-Term Incentive Plan. It
also recommends to the Board of Directors 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 Committee recommends to the Board of Directors
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
Currently, 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. Directors who are employees
receive no additional compensation for their services as Directors.
A non-employee Director who shall have served not less 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, a retirement benefit shall be
paid to the Director's designated beneficiary(s) in an amount equal to the
annual Director 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 Director 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
$594,957 for legal services performed for the Company during the 1995 fiscal
year. That 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.
5
<PAGE> 9
INSURANCE
The Company provides accident insurance coverage in the amount of $200,000
to each director and each officer. The current annual premium for such coverage
is $2,440. The Company is not designated as the beneficiary under the policy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES AS DIRECTORS OF THE COMPANY 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, 1996.
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 of
Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
6
<PAGE> 10
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned, as of December 1, 1995, 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...................................... 50,277(3) --
C.M. Butler III.................................... 300 --
Sam J. DiGiovanni.................................. 6,175(4) --
Muriel W. Helms.................................... 660 --
John H. Maxheim.................................... 119,719(5) --
John F. McNair III................................. 6,000(6) --
Ned R. McWherter................................... 1,144(3) --
Walter S. Montgomery, Jr........................... 1,544(7) --
Donald S. Russell, Jr.............................. 70,624 --
John E. Simkins, Jr................................ 2,506(3) --
Executive Officers
J. William Denny................................... 48,489(5) --
Ray B. Killough.................................... 21,704(5) --
William R. Pritchard, Jr........................... 16,075(5) --
Ware F. Schiefer................................... 24,657(5)(8) --
All Directors and executive officers as a group (28
persons)......................................... 493,902(5) --
</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 Company's Dividend Reinvestment and Stock Purchase Plan.
(4) Includes 3,036 shares held by Mr. DiGiovanni in joint tenancy with his
spouse.
(5) The number of shares shown includes those credited to participants' accounts
under the Company's Dividend Reinvestment and Stock Purchase Plan and the
Employee Stock Ownership Plan.
(6) Includes 2,000 shares owned by a family member. Mr. McNair disclaims
beneficial ownership of such shares.
(7) Mr. Montgomery is a co-trustee of a trust which holds these shares.
(8) Includes 864 shares held by Mr. Schiefer in joint tenancy with his spouse.
7
<PAGE> 11
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, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation 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 1995 $413,269 $ 87,822 $334,371 $ 107,750
Chairman of the Board, 1994 398,269 101,123 100,580
President and Chief 1993 381,538 95,204 100,368
Executive Officer
Ware F. Schiefer 1995 190,077 30,246 113,049 47,673
Executive Vice President 1994 179,692 34,712 45,981
1993 167,115 32,680 60,690
J. William Denny 1995 151,231 25,727 107,751 45,842
Vice President -- Nashville 1994 146,231 30,155 44,071
Division 1993 141,231 28,390 40,654
Ray B. Killough 1995 170,962 19,167 70,007 17,181
Senior Vice President -- 1994 154,616 21,908 17,134
Operations 1993 117,985 19,091 12,831
William R. Pritchard, Jr. 1995 135,846 19,731 75,078 29,512
Vice 1994 127,846 22,717 24,359
President -- Information 1993 119,846 21,387 22,943
Services
</TABLE>
- ---------------
(1) Represents payments of dividend equivalents on units awarded, but not yet
distributed, to the named executive officers under the Company's Executive
Long-Term Incentive Plan.
(2) All Other Compensation includes the following for 1995:
(i) Insurance premiums paid by the Company under the Supplemental
Executive Benefit Plan (SEBP), including payments by the Company of the
assumed income tax liabilities of the participants for such premium
payments, as follows: Mr. Maxheim, $58,330; Mr. Schiefer, $30,753; Mr.
Denny, $41,222; Mr. Killough, $12,561; and Mr. Pritchard, $24,892.
(ii) Salary continuation accruals under the SEBP as follows: Mr.
Maxheim, $44,800, and Mr. Schiefer, $12,300.
(iii) Company contributions to the Salary Investment Plan (a 401(k)
plan) of $4,620 for each named executive officer.
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 prior to such anniversary date; provided, however, that
the term of the agreement shall not extend beyond
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<PAGE> 12
Mr. Maxheim's 65th birthday. Mr. Maxheim's base salary agreement is subject to
review and increase annually by the Board of Directors. 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
directors of the Company, 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 of Directors, 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.
EXECUTIVE LONG-TERM INCENTIVE PLAN
The Company maintains a shareholder-approved Executive Long-Term Incentive
Plan (the "Incentive Plan") for the purpose of promoting the interests of the
Company by attracting and retaining in its employment persons of outstanding
ability. The Incentive Plan provides executives and other key employees of the
Company and its subsidiaries greater incentive to make material contributions to
the success of the Company by granting them incentive compensation conditioned
upon the corporate achievement of financial and other performance objectives.
Employees of the Company and its subsidiaries who are in active service at the
time awards are granted and are determined by the Board of Directors to be in
the executive compensation group are eligible for awards under the Incentive
Plan. The Incentive Plan is administered by the Compensation Committee, the
members of which are ineligible to participate in the Incentive Plan.
Under the Incentive Plan, the Board of Directors may grant awards of units,
each equivalent in value to one share of Common Stock, in each of the years 1986
through 1996 to eligible key employees. No awards were granted during the fiscal
year ended October 31, 1995. Except as otherwise provided, these awards are
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 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.
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<PAGE> 13
The percentage of the units awarded that are distributed depends on the
levels of financial and other performance achieved by the Company during the
performance period. The Board of Directors 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 is made if the minimum average percentage of the
applicable measurement of performance established by the Board is not achieved.
An amount equal to the dividend payable on one share of Common Stock is
accumulated or 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
cancelled.
The Board of Directors 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 issuable
under the Incentive Plan, changes the class of employees eligible to
participate, or withdraws the direction of administration of the Incentive Plan
from the Compensation Committee.
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. For the
1995 fiscal year, aggregate contributions to the Retirement Plan amounted to
1.87% of plan participants' remuneration based on regular basic compensation.
Based upon current remuneration of the individuals named in the Summary
Compensation Table above and their expected credited years of service at normal
retirement age (65), the estimated annual retirement benefits payable upon
retirement to each of the named individuals and their credited years of service
as of October 31, 1995, are as follows: Mr. Maxheim, $103,486, 17 years; Mr.
Schiefer, $87,426, 30 years; Mr. Killough, $76,559, 22 years; Mr. Denny,
$63,582, 13 years; and Mr. Pritchard, $77,943, 25 years.
10
<PAGE> 14
The amounts shown in the following table are those payable in the event of
retirement at age 65 on December 31, 1995. 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.............................................. $53,348 $ 74,558 $ 81,413
200,000.............................................. 69,810 100,350 109,705
250,000.............................................. 81,610 118,838 120,000
300,000.............................................. 81,610 118,838 120,000
350,000.............................................. 81,610 118,838 120,000
400,000.............................................. 81,610 118,838 120,000
450,000.............................................. 81,610 118,838 120,000
</TABLE>
The Employee Retirement Income Security Act of 1974 places certain
limitations on benefits which may be paid under plans qualified under the Tax
Code. Current law limits the amount payable in 1995 under a defined benefit plan
to $120,000 and limits compensation used in 1995 for determining benefits to
$150,000 per year.
11
<PAGE> 15
COMPARISONS OF CUMULATIVE TOTAL SHAREHOLDER RETURNS
The following performance graph compares the Company's cumulative total
shareholder return from October 31, 1990 through October 31, 1995 (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 the Company's Common
Stock and in each index was $100 on October 31, 1990, 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, 1990
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PNG S&P 500 INDUSTRY
<S> <C> <C> <C>
1990 100 100 100
1991 115 134 88
1992 159 147 95
1993 214 169 117
1994 178 175 111
1995 205 221 128
</TABLE>
** S&P Natural Gas Index
12
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The duty of the Compensation Committee of the Board of Directors is to
review and approve the Company's compensation programs including its salary
administration plan and Executive Long-Term Incentive Plan. In addition, the
Committee reviews management compensation levels, 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 provide executives
and other key employees of the Company and its subsidiaries greater incentive to
make material contributions to the success of the Company, its shareholders and
service it provides to its customers.
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.
Executive compensation at the Company for 1995 was comprised of two
elements: 1) base salary and 2) long-term incentive awards. It is the philosophy
of the Committee to set the base salary of officers in relation to salaries for
similarly situated officers in peer groups at natural gas distribution companies
and other industrial companies of comparable size. The Board of Directors has
previously adopted and shareholders have approved the Executive Long-Term
Incentive Plan. 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 ending October
31, 1994, performance is measured against corporate average net earnings from
continuing operations, after tax and after deducting the Gross National Product
deflator over the performance period, with 100 percent of the award being
distributed for performance that achieves an average annual increase of five
percent after deducting the Gross National Product deflator. For the five-year
performance period ending October 31, 1997, 100 percent of the award is
distributed for performance that achieves an average increase in corporate
average net earnings of six percent. Up to 120 percent of the award may be
distributed for performance that materially exceeds targeted performance goals.
Awards 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 awards to be made. The Committee recommends to the Board
of Directors for their final approval the level that should be rewarded based
upon achievement of Corporate goals.
The compensation for each of the five highest paid officers for 1995 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.
13
<PAGE> 17
The 1995 base salary for Mr. Maxheim, Chairman, President and Chief
Executive Officer, 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 $400,000 for 1995. This amount had been increased $15,000 from
his base salary in 1994 in recognition of the overall performance of the
officer, 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 14.2% over the past five years.
Compensation Committee
John F. McNair III, Chairman
Sam J. DiGiovanni
Walter S. Montgomery, Jr.
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 Compensation Committee
but does not vote on Committee actions. Moreover, he does not participate in and
is not present during the Compensation 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 the Company's
Directors, executive officers and persons who own more than 10% percent of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC") and the NYSE. 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 the Company's Directors and executive
officers, the Company believes that during the 1995 fiscal year, its Directors
and executive officers complied with all applicable Section 16(a) filing
requirements.
PROPOSALS FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder proposal intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Corporate Secretary of the
Company at the Company's executive offices no later than September 25, 1996, in
order to be considered for inclusion in the Proxy Statement for such meeting.
14
<PAGE> 18
OTHER BUSINESS
The Board of Directors 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 1995 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.
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 23, 1996
15
<PAGE> 19
APPENDIX A
PIEDMONT NATURAL GAS COMPANY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON FEBRUARY 23, 1996
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 23, 1996, and at any adjournment or adjournments thereof, as follows:
The Board of Directors recommends a vote FOR the following proposals:
<TABLE>
<S> <C> <C>
A. ELECTION OF DIRECTORS / /FOR the nominees listed below (except / / WITHHOLD AUTHORITY to vote for all
as indicated to the contrary below) nominees listed below
</TABLE>
MURIEL W. HELMS, NED R. MCWHERTER, DONALD S. RUSSELL, JR., AND JOHN E. SIMKINS,
JR.
(To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.)
- --------------------------------------------------------------------------------
B. RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS
/ / 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 AND B.
Dated: , 1996
-------------------------
-------------------------------------
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.
