Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
Compensation Committee Report
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and
Analysis contained in this proxy statement. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in the
Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
COMPENSATION COMMITTEE
J. N. JAGGERS, Chairman
D. H. ANDERSON
T. E. SKAINS
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) provides a detailed review of the Companys executive
compensation program, including the goals of the program, the process for determining compensation levels, and analysis of the specific components of compensation, among other things. Overall, the Companys compensation policies and practices
encourage a culture of pay for performance and are strongly aligned with the long-term interests of the Companys stockholders.
NO MODIFICATIONS TO FISCAL 2020 COMPENSATION
Despite the COVID-19 pandemic, which impacted commodity prices and contributed to lower
revenues in the Companys Exploration and Production segment, the Compensation Committee did not make any mid-year or
end-of-year adjustments to any elements of named executive officer compensation for fiscal 2020. Performance metrics and goals for fiscal 2020 short-term and long-term
incentive compensation remained unchanged.
STOCKHOLDER ENGAGEMENT AND ALIGNMENT
2020 Say-on-Pay Vote and Stockholder Engagement
The 2020 Say-on-Pay advisory vote yielded a
result of approximately 95% of votes cast in support of the compensation of the Companys named executive officers. The Board (including the Compensation Committee) generally considered this outcome an indicator of stockholder support for the
overall philosophy and structure of the Companys executive compensation policies and decisions. Given the high approval percentage of the vote, the Compensation Committee did not make any significant changes to the executive compensation
program that were based specifically on the results of the 2020 Say-on-Pay advisory vote.
From time to time members of Company management have held in-person and telephonic
meetings with some of the Companys largest stockholders to obtain feedback on matters of interest to them. The Board has directed management to continue to engage as appropriate with interested stockholders, and to inform it of any requests
for meetings with members of the Board. The Board and management believe that engagement with stockholders facilitates important dialogue from which we gather various viewpoints.
Executive Compensation Aligned with Stockholders Interests
The Compensation Committee has developed the Companys compensation policies and procedures to align the interests of
executives with those of the Companys stockholders. The Company recognizes
31
and rewards executives through compensation arrangements that directly link executive pay to the Companys performance, and we ensure a strong alignment of interests with our stockholders by
including a significant amount of equity in the overall mix of pay. As shown in the chart below, for fiscal 2020, 76% of the target compensation of David Bauer, the Companys CEO, was at-risk
compensation, with 52% tied to equity and 24% tied to short-term performance goals.
Key features of the Companys executive compensation program include the following:
|
Ø
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Annual performance incentives of the named executive officers are based entirely on objective performance
goals;
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Ø
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Long-term performance incentives are composed entirely of equity;
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Ø
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Long-term performance goals consist of three-year TSR and three-year total ROC, each relative to a peer
group;
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Ø
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The Company does not provide tax gross-ups;
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Ø
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Named executive officers and other officers are required to meet stock ownership guidelines that range from
one to six times base salary (six times for the CEO and three times for other named executive officers);
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Ø
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Executive officers may not hedge or pledge Company stock;
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Ø
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Equity incentive plans prohibit the repricing of equity awards without stockholder approval;
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Ø
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The Compensation Committee engages two independent compensation consultants to assist in setting
compensation;
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Ø
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All change-in-control agreements are double
triggered; and
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Ø
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The Board has adopted a clawback policy (see Recovery of Funds in the Companys Corporate
Governance Guidelines, included as Appendix B to this proxy statement).
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TSR PERFORMANCE AND CEO PAY RELATIVE TO
PEERS
Relative Total Shareholder Return
For the one-year period ended September 30, 2020, the Companys TSR was at
the 61st percentile of the Korn Ferry peer group selected by the Compensation Committee in September 2019. Under the calculation method used for this relative TSR analysis, starting stock prices are calculated as the average
32
closing stock prices for the month of September 2019, ending stock prices are calculated as the average closing stock prices for the month of September 2020, and dividends are deemed
reinvested at each ex-dividend date. The use of average closing stock prices mirrors the calculation method specified for the Companys TSR performance shares. For the three-year period ended
September 30, 2020, using the same calculation method, the Companys TSR was at the 75th percentile of the Korn Ferry peer group selected by the Compensation Committee in September 2017.
CEO Compensation Versus Peers
Reflected in the table below is Korn Ferrys comparison of fiscal 2019 total direct compensation for Mr. Bauer
(modified as described below) against that of CEOs in the Korn Ferry peer group selected by our Compensation Committee in September 2019. Fiscal 2019 is the most recent fiscal year for which proxy statement data is available for our peers. For this
comparison, Korn Ferry used the rate of salary in effect for Mr. Bauer as of his promotion to CEO on July 1, 2019 ($800,000). Korn Ferry also applied Mr. Bauers fiscal 2019 annual incentive target percentage (75%) to this higher
rate of salary, resulting in a higher annual incentive target amount ($600,000). Using these higher salary and annual incentive target amounts, Mr. Bauers target total direct compensation for fiscal 2019, as shown in the table, was below
that of all of our Korn Ferry peers. Applying Mr. Bauers 2019 annual incentive achievement percentage (119.70%) to his higher annual incentive target amount, his actual total direct compensation for fiscal 2019 (modified as
described in this paragraph) was below that of all but one of our Korn Ferry peers. The fiscal 2019 full-year target for total direct compensation of Mr. Bauers predecessor, Ronald Tanski (not shown in the table below), would have placed
the Company at the 58th percentile of the same Korn Ferry peers.
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CEO & President
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Compared to CEO proxy data for fiscal year 2019
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Total Direct
Compensation
|
Company
|
|
Title
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FYE
Revenue
(millions)
|
|
Market Cap
as of 9/30/19
(millions)
|
|
FYE # of
Employees
|
|
Actual
|
|
Target
|
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ATMOS ENERGY CORP
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President, CEO & Director
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$2,902
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$13,462
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4,776
|
|
$4,856,786
|
|
$4,577,330
|
|
|
|
|
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CABOT OIL & GAS CORP
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Chairman, CEO & President
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$1,985
|
|
$7,351
|
|
547
|
|
$13,472,009
|
|
$12,971,509
|
|
|
|
|
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CNX RESOURCES CORP
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President, CEO & Director
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|
$1,544
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|
$1,362
|
|
467
|
|
$8,909,570
|
|
$7,661,570
|
|
|
|
|
|
|
|
EQT CORP
|
|
President & CEO
|
|
$3,715
|
|
$2,719
|
|
647
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
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MDU RESOURCES GROUP INC
|
|
President, CEO & Director
|
|
$5,337
|
|
$5,611
|
|
13,359
|
|
$5,292,912
|
|
$4,749,392
|
|
|
|
|
|
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NEW JERSEY RESOURCES CORP
|
|
President & CEO
|
|
$2,592
|
|
$4,069
|
|
1,108
|
|
$2,779,381
|
|
$3,100,006
|
|
|
|
|
|
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RANGE RESOURCES CORP
|
|
CEO, President & Director
|
|
$2,601
|
|
$936
|
|
655
|
|
$8,327,208
|
|
$7,784,992
|
|
|
|
|
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SM ENERGY CO
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|
President, CEO & Director
|
|
$1,524
|
|
$1,094
|
|
530
|
|
$5,494,271
|
|
$5,398,381
|
|
|
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SOUTHWESTERN ENERGY CO
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|
President, CEO & Director
|
|
$3,038
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|
$1,042
|
|
923
|
|
$10,131,334
|
|
$9,956,334
|
|
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SOUTHWEST GAS HOLDINGS INC
|
|
President, CEO & Director
|
|
$3,120
|
|
$4,946
|
|
8,944
|
|
$4,028,934
|
|
$3,811,927
|
|
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|
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SPIRE INC
|
|
CEO, President & Director
|
|
$1,952
|
|
$4,433
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|
3,536
|
|
$4,117,827
|
|
$4,120,527
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|
|
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|
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UGI CORP
|
|
Chairman & CEO
|
|
$7,320
|
|
$10,504
|
|
12,800
|
|
$6,226,999
|
|
$6,857,138
|
|
|
|
|
|
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WHITING PETROLEUM CORP
|
|
President & CEO
|
|
$1,572
|
|
$728
|
|
505
|
|
$5,425,392
|
|
$5,524,007
|
|
|
|
|
|
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Summary Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75th Percentile
|
|
|
|
$3,120
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|
$5,611
|
|
4,776
|
|
$8,472,799
|
|
$7,692,426
|
|
|
|
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Average
|
|
|
|
$3,016
|
|
$4,481
|
|
3,754
|
|
$6,588,552
|
|
$6,376,093
|
|
|
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|
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Median
|
|
|
|
$2,601
|
|
$4,069
|
|
923
|
|
$5,459,832
|
|
$5,461,194
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|
|
|
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|
25th Percentile
|
|
|
|
$1,952
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|
$1,094
|
|
547
|
|
$4,672,046
|
|
$4,463,129
|
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NATIONAL FUEL GAS
CO
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CEO & President
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$1,693
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$4,050
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2,107
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$2,869,875
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|
$2,751,675
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Percentile Rank
|
|
|
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19%
|
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50%
|
|
62%
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|
1%
|
|
Min
|
|
|
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NOTES:
- Total Direct Compensation = base salary + bonus + long-term incentives
- EQT
Corp. CEO (Toby Rice) received $1 in total compensation for FY2019. Intended target compensation details are not disclosed in SEC filings.
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® 2020 Korn Ferry. All rights reserved
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1
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33
OBJECTIVES OF THE NAMED EXECUTIVE OFFICER COMPENSATION PROGRAM
The Companys named executive officer compensation program is designed to attract, motivate, reward and retain executive
talent in order to achieve the objectives that contribute to the overall success of the Company. When setting compensation for the Companys named executive officers, the Compensation Committees primary goal is to provide balanced
incentives for creating stockholder value in both the near-term and long-term. The Compensation Committee awards a combination of cash and equity components that are designed to focus management efforts on drivers of stockholder value, including
financial, safety, environmental, and customer service metrics. The Compensation Committee establishes the compensation program based on its business judgment after consultation with its compensation consultants. Total compensation for named
executive officers includes the following key components, each of which is addressed in greater detail below:
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Compensation Component
|
|
Objectives
|
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Key Features in 2020
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Base Salary
|
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Provide a fixed level of pay in recognition of day-to-day job performance.
Attract, retain and motivate leadership with compensation reflecting specific
responsibilities, experience and effectiveness.
|
|
Generally references the
50th percentile of peer median provided by independent compensation consultants; may pay greater base salary to attract, retain and motivate executives.
Adjustments are made
based on Compensation Committee members business judgment.
Overall corporate performance and individual performance are factors for subjective
consideration.
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Annual Cash Incentive Compensation
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Motivate performance toward, and reward achievement on, near-term
financial, operating and individual goals.
|
|
Target awards are set as a percentage of base salary.
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Long-Term Equity Incentive Compensation
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Focus attention on managing the Company from a long-term investors
perspective to create long-term stockholder value.
Encourage executives and other managers to have a significant, personal investment in the
Company through stock ownership.
Reward executives for longer-term performance of the Company relative to an industry peer
group.
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|
Long-term compensation denominated in equity.
For Messrs. Bauer and
McGinnis and Mmes. Camiolo and DeCarolis, two-thirds of long-term incentive award granted as performance shares, one-third as time-based RSUs as an additional retention
tool.
For
Mr. Pustulka, entire long-term incentive award granted as performance shares, to emphasize achievement of performance targets.
Performance shares split between two distinct performance conditions three-year
TSR and three-year ROC.
Performance conditions are objective and measured relative to a recognized peer
group.
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34
|
|
|
|
|
Compensation Component
|
|
Objectives
|
|
Key Features in 2020
|
|
|
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Executive Health, Welfare, and Retirement Benefits
|
|
Provide executives with reasonable and competitive benefits commensurate
with those in the regulated and unregulated energy industry.
Help the Company attract and retain high-caliber employees in high-level management
positions.
Restore
retirement benefits lost under qualified retirement plans as a result of Internal Revenue Code limits.
|
|
Retirement benefits consisting of:
1.a qualified defined contribution
plan (401(k));
2.a qualified non-contributory defined contribution plan (retirement savings account or RSA) or qualified defined benefit plan (depending on year of hire); and
3.a non-qualified executive retirement plan and/or non-qualified tophat plan, depending on year of hire.
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Change in Control Agreements
|
|
Help assure that executives direct their attention to their duties,
acting in the best interests of stockholders, notwithstanding potential for loss of employment in connection with a change in control.
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|
Double-trigger provision to avoid providing benefits to officers who
continue to enjoy employment with the Company after a Change in Control event.
No tax gross-up on payment.
Lump sum severance
payment is reduced on a pro-rata basis if termination occurs between age 62 and 65.
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PROCESS FOR DETERMINING COMPENSATION
Risk Assessment
The Board conducted a risk assessment of the Companys compensation programs during fiscal 2020. Based on the assessment,
the Board concluded that the Companys compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
Role of the Compensation Committee
The Compensation Committee comprises three directors, all of whom have been determined by the Board to be independent. The
Compensation Committee administers the Companys compensation program for named executive officers, setting base salaries and available incentive compensation ranges. The Compensation Committee exercises the authority delegated to it by the
stockholders or the Board under the Companys cash and equity incentive compensation plans, which include:
Cash
Compensation Plans/Short-Term Incentive
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|
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2012 Annual At Risk Compensation Incentive Plan (the At Risk Plan), generally for named executive
officers
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Executive Annual Cash Incentive Program (the EACIP), generally for other executive officers
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Equity Compensation Plans/Long-Term Incentive
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2010 Equity Compensation Plan
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35
In addition, the Compensation Committee makes recommendations to the Board with
respect to the development of incentive compensation plans and equity-based plans and changes in compensation for non-employee directors.
As described below, the Compensation Committee retained the services of independent compensation consultants to assist it in
administering the Companys compensation program. Further, as described earlier in this proxy statement, the members of the Compensation Committee have significant experience in the energy industry and as leaders of major corporations. In these
roles, as well as through their experiences with the Company, the Compensation Committee has garnered extensive knowledge regarding the establishment of a competitive and properly focused compensation program for the Companys named executive
officers. In making the decisions discussed below, the Compensation Committee uses its subjective business judgment developed through its years of experience.
Role of the Chief Executive Officer
In making its subjective determinations with respect to named executive officers other than the Chief Executive Officer, the
Compensation Committee discusses the information it receives from its compensation consultants with the CEO and seeks his recommendation as to the appropriate base salaries and target short-term and long-term incentive awards for each of these
officers, based on Korn Ferry and Meridian recommendations and his assessment of their performance, contributions and abilities. The CEO also provides input to the Compensation Committees compensation consultants with regard to the
responsibilities of the Companys named executive officers, to facilitate the consultants recommendations and comparisons of such officers and their positions to other positions in the marketplace. The CEO made no recommendations with
regard to his own compensation.
Independent Compensation Consultants
The Compensation Committee retains independent compensation consultants to inform its business judgment as to compensation
matters, including the selection of peer companies for compensation comparison purposes. The Compensation Committee retained the services of Korn Ferry to benchmark compensation at the Companys businesses other than its exploration and
production business, and Meridian Compensation Partners, LLC (Meridian) to benchmark compensation at its exploration and production business.
Determining Our Peers
The Compensation Committee understands the importance of using benchmark data that reflects information from companies with
business segments comparable to those of the Company. Because of the Companys diverse asset mix, selecting an appropriate peer group of companies requires a customized approach that calls for more critical thought than simple selection of a
standard industry group, which may include utility companies without a presence in the broader natural gas industry. The Companys assets span the entire natural gas value chain and include exploration and production (E&P),
interstate natural gas transmission and storage, natural gas gathering, and natural gas utility operations. For compensation and performance comparisons, the Compensation Committee utilizes two separate peer groups. The Korn Ferry peer group is the
primary peer group against which the Compensation Committee generally benchmarks named executive officer compensation and is intended to include a group of companies that, as a whole, represent our asset mix. Meridian assists in the formulation of a
peer group that is targeted to evaluate our E&P business and the compensation of executives who oversee it. Both peer groups may change over time due to corporate transactions or as the Compensation Committee believes is warranted based on its
business judgment. The Compensation Committee believes that the peer groups selected with the guidance of Korn Ferry and Meridian include a mix of companies that reflect businesses in which the Company participates, or with which it competes, as
reflected in the tables below.
36
For the purpose of establishing 2020 compensation, the Compensation Committee
reviewed the Korn Ferry peer group listed below. In addition, the Compensation Committee utilized the Korn Ferry peer group for purposes of setting relative performance conditions on long-term incentive awards of performance shares.
Korn Ferry
Korn Ferry assists the Compensation Committee in evaluating and setting compensation for Company officers and officers employed
by affiliate companies other than Seneca. Generally, Korn Ferry provides job matching advice to a wide range of companies through detailed position analyses based on proprietary information from multiple participant companies. Korn Ferrys job
evaluation and benchmarking methodology allows for customizable job descriptions and organizational rankings that are specific to the Company but relative to industry benchmarks.
For Company officers and officers employed by affiliate companies other than Seneca, Korn Ferry provided an analysis of
compensation practices with respect to the following forms of compensation compared to similar positions in the general industry and, where appropriate, in the energy industry based on Korn Ferrys proprietary databases:
|
2)
|
Total Cash Compensation (base salary plus short-term cash incentive); and
|
|
3)
|
Total Direct Compensation (base salary plus short-term cash incentive plus long-term equity incentive).
|
Korn Ferry also made recommendations on incentive compensation target amounts to the Compensation
Committee for:
|
1)
|
Short-Term Cash Incentive; and
|
|
2)
|
Long-Term Equity Incentive.
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37
Additionally, Korn Ferry provided a proxy analysis of base salary, incentive
targets, total cash compensation, long-term incentive and total direct compensation for the offices of President and CEO of the Company, Chief Operating Officer of the Company, Treasurer and Principal Financial Officer of the Company, and President
of National Fuel Gas Distribution Corporation, based on proxy data for the Company and the 13 energy companies in the peer group listed below. The Compensation Committee selected these 13 companies for purposes of establishing compensation for 2020
because each participated in one or more businesses that are similar to those of the Company:
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Korn Ferry Peer Companies for Fiscal 2020
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Exploration
&
Production
|
|
Pipeline
&
Storage
and/or
Gathering
|
|
Natural
Gas Utility
|
1
|
|
Atmos Energy Corporation
|
|
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X
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|
X
|
2
|
|
Cabot Oil & Gas
Corporation
|
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X
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|
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3
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|
CNX Resources Corporation
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X
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X
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|
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4
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EQT Corporation
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X
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5
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MDU Resources Group, Inc.
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X
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|
X
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6
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|
New Jersey Resources
Corporation
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X
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X
|
7
|
|
Range Resources Corporation
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X
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8
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SM Energy Company
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X
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|
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9
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|
Southwest Gas Holdings, Inc.
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X
|
10
|
|
Southwestern Energy Company
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|
X
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|
X
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|
|
11
|
|
Spire Inc.
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|
|
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X
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12
|
|
UGI Corporation
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|
|
|
X
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|
X
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13
|
|
Whiting Petroleum
Corporation
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|
X
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TOTAL
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7
|
|
6
|
|
6
|
The Compensation Committee reviews the members of the peer group each year and makes such
adjustments as it believes are warranted. The Compensation Committee revised the peer group used for purposes of establishing compensation for 2020. In particular, the Compensation Committee removed Energen Corporation, because it was acquired by
another company.
Meridian Compensation Partners, LLC
Meridian assists the Compensation Committee in evaluating and setting compensation for employees at Seneca, including
Senecas President, Mr. McGinnis. Meridian also benchmarked the compensation of Mr. Bauer, Mr. Pustulka and Ms. Camiolo against the E&P peer group. The Compensation Committee requested these analyses for its use in
supplementing the Korn Ferry-provided comparisons due to the importance of the Companys E&P segment and the contributions of Mr. Bauer, Mr. Pustulka and Ms. Camiolo in the management of that segment. The Compensation
Committee selected Meridian due to its expertise in E&P industry compensation matters.
Meridian provided an analysis
for officers of Seneca and select officers of the Company of compensation practices with respect to the following forms of compensation compared to similar positions in the E&P industry:
|
2.
|
Target Short-Term Incentive;
|
|
3.
|
Target Cash Compensation (base salary plus short-term incentive);
|
|
4.
|
Long-Term Incentive; and
|
|
5.
|
Total Target Compensation (base salary plus short-term and long-term incentive).
|
38
The Meridian analysis was based on data from Meridians proprietary North
America Oil & Gas Exploration & Production compensation database, supplemented by publicly available sources. Meridian compiled data with respect to 16 E&P companies chosen by the Compensation Committee based on certain
criteria, such as revenues, assets, and nature of operations, that made them relatively comparable to Seneca, in terms of operations, and similar in size to Seneca or the Company. The companies in the
16-member peer group ranged in size from approximately $1.1 billion to $9.8 billion in assets (with a median of $4.3 billion). By comparison, at the time the peer group was selected, Senecas
assets and the Companys consolidated assets totaled approximately $2.0 and $6.5 billion, respectively. The peer group is:
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|
|
|
|
|
|
|
|
Meridian Compensation Partners
Peer E&P Companies for Fiscal 2020
|
1
|
|
Bonanza Creek Energy, Inc.
|
|
9
|
|
Montage Resources Corporation
|
2
|
|
Callon Petroleum Company
|
|
10
|
|
Oasis Petroleum Inc.
|
3
|
|
Cimarex Energy Co.
|
|
11
|
|
Parsley Energy, Inc.
|
4
|
|
Comstock Resources Inc.
|
|
12
|
|
PDC Energy, Inc.
|
5
|
|
Gulfport Energy Corporation
|
|
13
|
|
Range Resources Corporation
|
6
|
|
HighPoint Resources Corporation
|
|
14
|
|
Roan Resources, Inc.
|
7
|
|
Jagged Peak Energy Inc.
|
|
15
|
|
SM Energy Company
|
8
|
|
Matador Resources Company
|
|
16
|
|
Southwestern Energy Company
|
The Compensation Committee reviews the members of this E&P peer group from time to time and
makes adjustments as it believes are warranted. For purposes of establishing compensation for 2020, the Compensation Committee reviewed the peer group and determined to remove Sanchez Energy Corporation and Halcon Resources Corporation due to their
bankruptcies and SRC Energy Inc. due to non-participation in Meridians annual compensation survey. The Compensation Committee added Bonanza Creek Energy, Inc., HighPoint Resources Corporation, Jagged
Peak Energy Inc. and Roan Resources, Inc., based on the criteria noted above.
FISCAL 2020 TOTAL COMPENSATION
Base Salary
Base salaries provide a predictable base compensation for
day-to-day job performance. The Compensation Committee reviews named executive officer base salaries at calendar year-end and
adjusts them, if it deems appropriate in its subjective business judgment, following review of its compensation consultants competitive analyses and, with respect to named executive officers other than the CEO, upon consideration of the
recommendations of the CEO. In addition, base salary may be adjusted during the calendar year when changes in responsibility occur. Base salary is not adjusted based on specific objective financial results, although overall corporate performance is
reviewed by the Compensation Committee in its decision making process. The Compensation Committee does not use formulas; rather, it exercises its business judgment.
In establishing the base salary amount, the Compensation Committee generally references the 50th percentile of the Korn Ferry Energy Industry survey data. In its subjective business judgment, the Compensation Committee may pay a greater salary if it is necessary to attract, retain and motivate
the individuals responsible for the success of the business enterprise. The Compensation Committee considers overall corporate performance and an individuals specific responsibilities, experience (including time in position) and effectiveness
and makes adjustments based on business judgment and, for named executive officers other than the CEO, the CEOs recommendations.
In setting Mr. Bauers base salary for calendar year 2020, the Compensation Committee referenced the Korn Ferry
report indicating Mr. Bauers then-current base salary was below the 25th percentile of Korn Ferrys Energy Industry market data. Considering Mr. Bauers recent promotion, in July 2019, to the
39
position of CEO, the Compensation Committee increased his base salary to a rate generally in line with the 25th percentile mark. The Compensation Committee structured the increase as the first
step of a planned two-year process to raise Mr. Bauers salary to the 50th percentile level.
In determining Ms. Camiolos base salary for calendar year 2020, the Compensation Committee referenced the Korn Ferry
report and increased Ms. Camiolos salary to a level slightly above the Energy Industry 50th percentile for principal accounting officers. This level maintained Ms. Camiolos positioning as of her promotion in July 2019. The
increase followed discussion with Mr. Bauer regarding Ms. Camiolos responsibilities, effectiveness and experience.
For calendar year 2020, upon review of the Korn Ferry report and consultation with Mr. Bauer, the Compensation Committee
increased Mr. Pustulkas base salary to the Energy Industry 50th percentile for positions comparable to his position as Chief Operating Officer. The increase recognized
Mr. Pustulkas performance managing the operations and development plans of the Company.
For calendar year 2020,
consistent with the Compensation Committees past practice regarding the President of Seneca, the Compensation Committee increased Mr. McGinnis base salary to a level above the 75th percentile of the Meridian survey data for chief
operating officers of independent exploration and production company peers, but below the 50th percentile of the Meridian survey data for chief executive officers of those peers. Given the size and importance to the Company of the E&P segment
and the highly competitive nature of the Marcellus and Utica shales, the Compensation Committee generally sets the base salary of Senecas president above the 75th percentile of the Meridian survey data for chief operating officers of
independent exploration and production peers. However, the long-term incentive compensation opportunities for Mr. McGinnis and other employees in the E&P segment have tended to rank below independent exploration and production benchmarks to
reflect the relative stability of the positions of these employees within the Companys diversified and integrated holding company system. Considering base salary, annual incentive and long-term incentive, Mr. McGinnis target
compensation falls at the 50th percentile of the Meridian survey data for chief operating officers of independent E&P peers. The Compensation Committees action on Mr. McGinnis salary followed discussion with Mr. Bauer of
Mr. McGinnis responsibilities, experience and effectiveness.
For calendar year 2020, following discussion with
Mr. Bauer regarding Ms. DeCarolis responsibilities, experience and effectiveness, the Compensation Committee increased her base salary to an amount in line with the Energy Industry
50th percentile for positions comparable to her position as President of the Companys Utility segment.
The fiscal 2020 base salaries paid to the named executive officers are shown in the Fiscal 2020 Summary Compensation Table
under the Salary column within this proxy statement.
Annual Cash Incentive
The Company provides an annual cash incentive to its executives to motivate their performance over a short term (which is
generally considered to be no longer than two years). Early in the fiscal year, the Compensation Committee establishes for each named executive officer a target amount for the annual cash incentive, stated as a percentage of base salary. Subject to
the limitations described in this paragraph, executives generally can earn up to two times the target percentage, based on performance on written goals. The maximum payment may not exceed the lesser of (i) two times the executives base
salary, or (ii) two million dollars. In addition, because earnings-related goals take into account performance over two fiscal years, as described below, performance below the maximum level on an earnings-related goal in the first year will
negate the possibility of achieving maximum performance on the averaged two-year goal. For participants in the EACIP, the CEO has broad discretion to reduce the amount otherwise payable as annual cash
incentive based on such factors as the CEO may determine.
40
Target Award Levels
In considering target award levels for the annual cash incentive for fiscal 2020, the Compensation Committee took into account
the recommendations of Korn Ferry and Meridian based on reviews of competitive market practices, and the recommendations of Mr. Bauer with respect to named executive officers other than himself. The Compensation Committee exercised its business
judgment and set target awards as follows:
|
|
|
|
|
|
Named Executive Officer
|
|
Target
(As a Percentage of Base Salary)
|
Mr. Bauer
|
|
|
|
100
|
%
|
Ms. Camiolo
|
|
|
|
50
|
%
|
Mr. Pustulka
|
|
|
|
100
|
%
|
Mr. McGinnis
|
|
|
|
85
|
%
|
Ms. DeCarolis
|
|
|
|
75
|
%
|
These target awards were consistent with the prior year, except that Mr. Bauers
target award level increased from 75% to 100% of base salary, reflecting his promotion in 2019 to the office of CEO.
Fiscal Year 2020
Performance Goals
Based upon discussions with Mr. Bauer and upon review of forecasted financial and operational
data, the Compensation Committee approved for each named executive officer a set of particular performance goals for the 2020 fiscal year. Certain goals overlapped among named executive officers; for example, each named executive officer had a goal
tied to consolidated EBITDA and to safety. Incentive payments are based upon performance against the stated goals. Each of the named executive officers participated in the AARCIP, under which 100% of the target incentive is made dependent on
objective performance criteria. All performance criteria applicable to a particular executive are communicated to that executive in writing at the time the criteria are established.
Two-Year Averaging of Earnings-Related Goals
The earnings-related goals established by the Compensation Committee are structured so as to average current-year and
prior-year performance. As a result, earnings performance in any given year will impact compensation over two years, mitigating against a potential incentive to pursue short-term results at the expense of longer-term value. In the Companys
E&P segment, for example, a low commodity price environment can militate in favor of scaling back drilling plans, a change that can negatively affect near-term earnings but enhance longer-term value. The Compensation Committee endeavors to
incentivize strong short-term results without encouraging activity that is not economic under prevailing market conditions. Averaging earnings-related goals over two years helps to balance those two objectives. The Compensation Committee also sets
targets based on the current fiscal years financial forecast. Thus, the current years targets may be lower (or higher) than the prior years actual results (to which the averaging applies). In this way, the impact of lower (or
higher) natural gas commodity prices on the Companys earnings affects the target levels from one year to the next. The use of a two-year averaging technique for earnings-related goals will impact the
performance percentage points earned on those goals in a given year, but over time and all other things being equal, it will not change the cumulative performance percentage points earned for actual performance.
41
The types of objective goals approved for fiscal 2020 and the purpose of the
goals are set forth in the following table:
|
|
|
Goals
|
|
Purpose
|
Earnings-related goals (EBITDA)
|
|
To focus executives attention on the
Companys overall profitability, as well as the profitability of certain segments, as appropriate. Performance is averaged with the prior years performance to mitigate against short-term action to impact one years earnings.
|
Health, safety and environmental goals
|
|
To focus executives attention on
employee, customer and public safety, environmental stewardship and operational efficiency.
|
Expense goals
|
|
To focus executives attention on
controlling expense.
|
Customer service goals
|
|
To encourage continued excellence in Utility
customer service.
|
Operations assessment goals
|
|
To encourage operational efficiency and
safety.
|
To determine the annual cash incentive award payout based on stated performance objectives, the
weight assigned to each goal is multiplied by the percentage of the goal achieved to calculate a weighted percentage for each goal. Once the weighted percentage for each goal is determined, the percentages are totaled. That total weighted percentage
is multiplied by the target award to arrive at the total incentive payment amount.
The fiscal 2020 annual cash incentives
actually earned by the named executive officers are shown in the Fiscal 2020 Summary Compensation Table in the Non-Equity Incentive Plan Compensation column. For each named executive officer, the
amount earned was based on performance against objective goals established in the first quarter of the fiscal year. The fiscal 2020 EBITDA goals were designed to average fiscal 2020 performance with the prior years performance on EBITDA goals.
The incentive payments made to the named executive officers were approved by the Compensation Committee.
42
The following chart identifies the goals assigned to each of the named executive
officers for the 2020 fiscal year, the percentage of each goal achieved, the weight assigned to each goal, and the weighted percentage achieved for each goal. Also noted is each named executive officers target percentage of base salary,
maximum percentage of base salary, total weighted percentage achieved, target amount, and actual incentive payout. Following the chart, numbered sequentially to match the appearance of the performance objective in the chart, is a summary of what the
objective was at the threshold level, target level and maximum level of performance, and a summary of actual performance. Where a target level of performance is stated as a range, achievement at any point within the range will result in the same
contribution to the total payout. With regard to EBITDA goals, performance is averaged with the prior years performance as a mechanism to mitigate against short-term action to impact one years earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive
|
Executive
|
|
David P. Bauer
|
|
Karen M. Camiolo
|
|
John R. Pustulka
|
|
John P. McGinnis
|
|
Donna L. DeCarolis
|
Target % of Base Salary
|
|
100%
|
|
50%
|
|
100%
|
|
85%
|
|
75%
|
Maximum % of Base Salary
|
|
200%
|
|
100%
|
|
200%
|
|
170%
|
|
150%
|
Fiscal 2018 Goals
|
|
%
Achvd
|
|
Wght
|
|
Wghtd %
Achvd
|
|
%
Achvd
|
|
Wght
|
|
Wghtd %
Achvd
|
|
%
Achvd
|
|
Wght
|
|
Wghtd %
Achvd
|
|
%
Achvd
|
|
Wght
|
|
Wghtd %
Achvd
|
|
%
Achvd
|
|
Wght
|
|
Wghtd %
Achvd
|
1.
|
|
Consolidated EBITDA*
|
|
98
|
|
0.25
|
|
24.50
|
|
98
|
|
0.25
|
|
24.50
|
|
98
|
|
0.25
|
|
24.50
|
|
98
|
|
0.25
|
|
24.50
|
|
98
|
|
0.25
|
|
24.50
|
2.
|
|
Regulated EBITDA*
|
|
142
|
|
0.20
|
|
28.40
|
|
142
|
|
0.20
|
|
28.40
|
|
142
|
|
0.20
|
|
28.40
|
|
|
|
|
|
|
|
142
|
|
0.25
|
|
35.50
|
3.
|
|
Seneca/Midstream EBITDA**
|
|
89
|
|
0.20
|
|
17.80
|
|
89
|
|
0.20
|
|
17.80
|
|
89
|
|
0.20
|
|
17.80
|
|
89
|
|
0.25
|
|
22.25
|
|
|
|
|
|
|
4.
|
|
Safety
|
|
200
|
|
0.15
|
|
30.00
|
|
200
|
|
0.15
|
|
30.00
|
|
200
|
|
0.15
|
|
30.00
|
|
|
|
|
|
|
|
200
|
|
0.15
|
|
30.00
|
5.
|
|
Operational Safety and Methane Emissions Reduction
|
|
200
|
|
0.10
|
|
20.00
|
|
|
|
|
|
|
|
200
|
|
0.15
|
|
30.00
|
|
|
|
|
|
|
|
200
|
|
0.20
|
|
40.00
|
6.
|
|
Seneca F&D Cost
|
|
0
|
|
0.10
|
|
0.00
|
|
0
|
|
0.10
|
|
0.00
|
|
|
|
|
|
|
|
0
|
|
0.20
|
|
0.00
|
|
|
|
|
|
|
7.
|
|
Seneca LOE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167
|
|
0.10
|
|
16.70
|
|
|
|
|
|
|
8.
|
|
Seneca G&A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189
|
|
0.10
|
|
18.90
|
|
|
|
|
|
|
9.
|
|
Customer Service
|
|
|
|
|
|
|
|
158
|
|
0.10
|
|
15.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158
|
|
0.15
|
|
23.70
|
10.
|
|
Seneca Operations Assessment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
0.05
|
|
5.00
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
|
Seneca Operations Assessment and Safety
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
0.10
|
|
10.00
|
|
|
|
|
|
|
|
|
Total Weighted % Achieved
|
|
120.70%
|
|
116.50%
|
|
135.70%
|
|
92.35%
|
|
153.70%
|
|
|
Target
|
|
$875,000
|
|
$212,375
|
|
$827,500
|
|
$613,063
|
|
$439,688
|
|
|
Annual Cash Incentive
|
|
$1,056,125
|
|
$247,417
|
|
$1,122,918
|
|
$566,163
|
|
$675,800
|
*
|
Reflects an average of 2020 performance and 2019 performance.
|
**
|
Reflects an average of Seneca/Midstream 2020 performance and Seneca 2019 performance. Midstream refers to
National Fuel Gas Midstream Company, LLC, the subsidiary that conducts the Companys natural gas gathering operations.
|
43
|
|
|
|
|
|
|
|
|
|
|
Performance Measure
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual Performance
|
1.
|
|
Consolidated EBITDA In determining final performance level, the results of this goal are averaged with the prior year results on the consolidated EBITDA goal.
|
|
$725 Million
|
|
$780-799 Million
|
|
$872 Million
|
|
2020 Consolidated EBITDA=$770 Million; performance level of 91%; 2-year average of performance
levels=(91%+104%)/2=98%
|
2.
|
|
Regulated EBITDA In determining final performance level, the results of this goal are averaged with the prior year results on the regulated companies EBITDA goal.
|
|
$328 Million
|
|
$343-347 Million
|
|
$368 Million
|
|
2020 Regulated EBITDA=$360 Million; performance level of 162%; 2-year average of performance
levels=(162%+121%)/2=142%
|
3.
|
|
Seneca/Midstream EBITDA In determining final performance level, the results of this goal are averaged with the prior year results on the Seneca EBITDA goal.
|
|
$404 Million
|
|
$444-459 Million
|
|
$511 Million
|
|
2020 Seneca/Midstream EBITDA=$416 Million; performance level of 65%; 2-year average of performance
levels=(65%+112%)/2=89%
|
4.
|
|
Safety To promote continued importance of safety; measured by participation in Health, Safety and Environmental (HSE) meetings, and by number of OSHA recordable injuries in the
utility and pipeline divisions.
|
|
At least 6 HSE meetings and safety performance at or better than goal in any division
|
|
At least 6 HSE meetings and safety performance at or better than goal in any two divisions
|
|
At least 6 HSE meetings and safety performance at combined level of 3.08 or less
|
|
At least 6 HSE meetings and safety performance at combined level of 3.08 or less
|
5.
|
|
Operational Safety and Methane Emissions Reduction Measured by the Utility segments operational safety performance in New York and outstanding leaks reduction.
|
|
Complete 2 of 3 Safety Performance Standards
|
|
Complete all 3 Safety Performance Standards OR any 2 Safety Performance Standards and Outstanding Leaks Reduction
|
|
Complete all 3 Safety Performance Standards and Outstanding Leaks Reduction
|
|
Completed all 3 Safety Performance Standards and Outstanding Leaks Reduction
|
6.
|
|
Seneca Finding and Development Cost (per thousand cubic feet equivalent (Mcfe))
|
|
$0.99/Mcfe
|
|
$0.72/Mcfe
|
|
$0.58/Mcfe
|
|
Did not meet threshold
|
7.
|
|
Seneca Lease Operating Expense (per Mcfe)
|
|
$0.91/Mcfe
|
|
$0.87-0.88/Mcfe
|
|
$0.84/Mcfe
|
|
$0.85/Mcfe
|
8.
|
|
Seneca General and Administrative Expense excluding certain expenses related to joint venture or development agreements and acquisition or divestiture transactions
|
|
$71.0 Million
|
|
$66.5-68.5 Million
|
|
$63 Million
|
|
$63.4 Million
|
9.
|
|
Customer Service Measured by average of performance levels on residential satisfaction rates and non-emergency appointments kept.
|
|
Residential Satisfaction Rates in NY and PA are 85%, or Non-Emergency Appointments Kept are 98% in NY and 98% in PA
|
|
Residential Satisfaction Rates in NY and PA are 92%, and Non-Emergency Appointments Kept are 98% in NY and 98% in PA
|
|
Residential Satisfaction Rates in NY and PA are at least 96%, and Non-Emergency Appointments Kept are at least 99.7% in NY and at least 99.8% in
PA
|
|
Residential Satisfaction Rates in NY and PA between target and maximum performance levels;
Non-Emergency Appointments Kept in NY and PA between target and maximum performance levels
|
10.
|
|
Seneca Operations Assessment Measured by assessments completed.
|
|
Complete 1 of 2 operations assessments
|
|
Complete 2 operations assessments
|
|
Performance capped at Target
|
|
Completed 2 operations assessments
|
11.
|
|
Seneca Operations Assessment and Safety Measured by participation in HSE meetings and assessments completed.
|
|
At least 6 HSE meetings
|
|
At least 6 HSE meetings and complete 2 operations assessments
|
|
Performance capped at Target
|
|
At least 6 HSE meetings and completed 2 operations assessments
|
44
Preview of Fiscal Year 2021 Performance Goals
Based upon discussions with Mr. Bauer and upon review of forecasted financial data, the Compensation Committee approved
for each named executive officer a set of particular performance goals for the 2021 fiscal year. These goals are aligned with the Companys strategic business plans, as well as its on-going corporate
responsibility efforts, including environmental, social and governance matters. The types of objective goals approved for fiscal 2021 include the following:
|
|
|
Earnings-related goals (EBITDA), which serve to focus executives attention on the Companys overall
profitability, as well as the profitability of certain segments, as appropriate;
|
|
|
|
Health, safety and environmental goals, which serve to focus executives attention on employee, customer
and public safety and environmental stewardship, including methane and greenhouse gas emissions and operational efficiency;
|
|
|
|
Diversity and inclusion goal, which serves to focus executives attention to build upon and maintain
efforts to create an inclusive workplace and a diverse workforce;
|
|
|
|
Customer service goals, which encourage continued excellence in Utility customer service; and
|
|
|
|
Expense goals, which serve to focus executives attention on controlling expense.
|
Information regarding performance on these goals will be described in the Companys proxy statement to be filed following
the completion of the 2021 fiscal year.
Discretionary Bonus
On December 10, 2020, the Compensation Committee authorized a discretionary bonus to Mr. McGinnis in the amount of
$100,000, in recognition of his work on the Companys acquisition of upstream and midstream gathering assets in Appalachia from a subsidiary of Royal Dutch Shell. The acquired assets, valued at approximately $506 million, are largely
contiguous to, and synergistic with, the Companys existing development activities and operations. As a result, the acquisition provides the Company with a significant strategic opportunity to further its integrated development approach in the
region.
Long-Term Incentive Compensation
The Compensation Committee uses its business judgment to establish target long-term incentive awards, taking into account the
recommendations of its compensation consultants based on reviews of competitive market practices, and the recommendations of the CEO with respect to named executive officers other than himself. Such awards are intended to focus attention on managing
the Company from a long-term investors perspective. In addition, the Compensation Committee wishes to encourage officers and other managers to have a significant, personal investment in the Company through stock ownership. The Compensation
Committee typically makes equity awards on an annual basis in December, but has not established a policy to make grants at a specific meeting, to allow flexibility to review and evaluate appropriate equity grant practices.
Fiscal Year 2020 Awards
The Compensation Committee established fiscal 2020 target long-term incentive awards for the named executive officers at or
below the 50th percentile of market data for comparable positions. For Mr. Bauer, the Compensation Committee targeted the 25th percentile,
given his recent promotion to the office of CEO. For the other named executive officers, the Compensation Committee set targets ranging from approximately 80% to 100% of the 50th percentile mark.
For Mr. Bauer and each of the other named executive officers other than Mr. Pustulka, the Compensation Committee
granted two-thirds of the fiscal 2020 long-term incentive award in the form of
45
performance shares, and one-third in the form of time-vested RSUs, which serve as an additional retention tool. For Mr. Pustulka, the Compensation
Committee granted a long-term incentive award entirely in the form of performance shares. The Compensation Committee made that determination to focus attention on the achievement of performance targets, and in recognition of the fact that retention
incentives such as time-vested RSUs can have a lesser impact with respect to long-tenured executives.
As in prior years,
the performance shares awarded in fiscal 2020 to the named executive officers are split evenly between relative TSR and relative ROC performance conditions, as described below. The performance conditions are to be achieved over a three-year
performance cycle that started October 1, 2019 and concludes September 30, 2022.
The Compensation Committee
established the performance condition for one set of performance shares awarded in fiscal 2020 as the Companys three-year TSR over the performance cycle as compared to the same metric for companies in the Korn Ferry peer group, as calculated
based on the data reported for each company in the Bloomberg online database. Starting stock prices are calculated as the average closing stock prices for the calendar month immediately preceding the start of the performance cycle; ending stock
prices are calculated as the average closing stock prices for the calendar month concluding the performance cycle; and dividends are deemed reinvested in each companys securities at each ex-dividend
date. The Compensation Committee linked the awards to relative levels of performance, which results in the vesting and payment of a percentage of the target number of performance shares depending on the Companys percentile rank in the Korn
Ferry peer group, as follows:
|
|
|
|
|
|
Relative TSR Goal
|
|
Percentage of
Target Opportunity Paid
|
Companys Percentile Ranking
|
30th or below
|
|
|
|
0
|
%
|
40th
|
|
|
|
50
|
%
|
50th
|
|
|
|
100
|
%
|
70th
|
|
|
|
150
|
%
|
90th or above
|
|
|
|
200
|
%
|
If the Companys three-year TSR is negative (less than 0.0), the percentage of target
opportunity paid is capped at 100%, regardless of the Companys percentile ranking. For performance between two established performance levels, the percentage of target opportunity paid is determined by straight line mathematical interpolation.
The Compensation Committee established the performance condition for the second set of performance shares awarded in
fiscal 2020 as the Companys three-year ROC over the performance cycle as compared to the same metric for companies in the Korn Ferry peer group. ROC for the Company or any member of the peer group means the average of the returns on capital
for each twelve month period corresponding to each of the Companys fiscal years during the performance cycle, calculated based on the data reported for that company in the Bloomberg database. The Compensation Committee linked the awards to
relative levels of performance, which results in the vesting and payment of a percentage of the target number of performance shares depending on the Companys percentile rank in the Korn Ferry peer group, as follows:
|
|
|
|
|
|
Relative ROC Goal
|
|
Percentage of
Target Opportunity Paid
|
Companys Percentile Ranking
|
<45th
|
|
|
|
0
|
%
|
45th
|
|
|
|
50
|
%
|
60th
|
|
|
|
100
|
%
|
75th
|
|
|
|
150
|
%
|
100th
|
|
|
|
200
|
%
|
If the Companys three-year ROC is negative (less than 0.0), the percentage of target
opportunity paid is capped at 100%, regardless of the Companys percentile ranking. For performance between two established performance levels, the percentage of target opportunity paid is determined by mathematical interpolation.
46
No dividend equivalents are provided in respect of any performance shares.
Each of the time-based RSU awards granted to Mr. Bauer, Ms. Camiolo, Mr. McGinnis and Ms. DeCarolis in
fiscal 2020 vests in three equal annual installments beginning on the first anniversary of the date of grant. No dividend equivalents are provided in respect of any RSUs.
The performance shares and time-based RSUs granted to the named executive officers in fiscal 2020 are set out in the Grants of
Plan-Based Awards in Fiscal 2020 Table within this proxy statement.
Performance on Past Awards
With respect to the performance shares granted in fiscal 2018, which had a performance cycle covering fiscal years 2018 through
2020, the Compensation Committee had established a 14-member peer group. Two of the companies in that peer group were acquired during the course of the performance cycle, and those companies therefore dropped
out of the peer group. The Companys performance was ranked against that of the 12 companies remaining in the peer group at September 30, 2020. With respect to TSR, the Company outperformed nine of the 12 companies, placing it at the 75th
percentile. Pursuant to the TSR performance share payout scale, performance at the 75th percentile generally would have translated to a payout of 162.5% of the target opportunity. However, because the Companys three-year total shareholder
return was negative (as was that of 11 of the 12 companies in the peer group), the payout was capped at 100% of the target opportunity. Regarding ROC, the Company outperformed 7 of the 12 companies, placing it at the 58.33 percentile. Pursuant
to the ROC performance share payout scale, performance at the 58.33 percentile resulted in a payout of 94.43% of the target opportunity.
The Companys performance on the last five completed TSR and ROC performance share grants is summarized in the table
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
(fiscal year)
|
|
Performance
Cycle
(fiscal years)
|
|
TSR
|
|
ROC
|
|
Relative
Performance
|
|
Percentile
|
|
Payout
Percentage
|
|
Relative
Performance
|
|
Percentile
|
|
Payout
Percentage
|
2018
|
|
2018 2020
|
|
outperformed
9 of 12
|
|
75.00
|
|
100.00
(capped)
|
|
outperformed
7 of 12
|
|
58.33
|
|
94.43
|
2017
|
|
2017 2019
|
|
outperformed
6 of 12
|
|
50.00
|
|
100.00
|
|
outperformed
10 of 12
|
|
83.33
|
|
166.66
|
2016
|
|
2016 2018
|
|
outperformed
6 of 12
|
|
50.00
|
|
100.00
|
|
outperformed
8 of 12
|
|
66.67
|
|
122.23
|
2015
|
|
2015 2017
|
|
outperformed
7 of 13
|
|
53.85
|
|
100.00
(capped)
|
|
outperformed
7 of 13
|
|
53.85
|
|
79.50
|
2014
|
|
2014 2016
|
|
outperformed
7 of 13
|
|
53.85
|
|
100.00
(capped)
|
|
outperformed
4 of 13
|
|
30.77
|
|
0.00
|
|
|
|
|
Average
|
|
56.54
|
|
100.00
|
|
Average
|
|
58.59
|
|
92.56
|
EMPLOYEE BENEFITS
Retirement Benefits
The Company maintains four plans that provide retirement benefits: (i) a qualified defined contribution retirement plan
that includes a traditional 401(k) benefit and, for certain eligible employees hired at various points in 2003 and thereafter, a retirement savings account (RSA) benefit; (ii) a qualified defined benefit retirement plan for those
hired prior to various points in 2003; (iii) a non-qualified defined benefit executive retirement plan available only to select officers promoted prior to 2002; and (iv) a non-qualified tophat plan. These plans help the Company attract and retain high caliber employees in high-level management positions and, in the case of the non-qualified
plans, restore retirement benefits lost to employees under the qualified retirement plans as a result of the effect of the Internal Revenue
47
Code limits and the qualified plans limits on compensation considered and benefits provided under such qualified plans. The employee benefits for named executive officers employed prior to
2003 differ from those made available to those employed during or after that year. The Company made changes to its programs that reflected a shift in competitive practices away from certain types of retirement benefits, but generally grandfathered
existing employees (including named executive officers) who were then in service in the benefits programs that are commensurate with those in the regulated energy industry.
Mr. Bauer and Ms. Camiolo are eligible to participate in the traditional 401(k) plan, the qualified defined benefit
retirement plan and the non-qualified tophat plan. Mr. Pustulka and Ms. DeCarolis are eligible to participate in those three plans plus the non-qualified
executive retirement plan. Mr. McGinnis is eligible to participate in the traditional 401(k) plan, the additional RSA benefit, and the non-qualified tophat plan. These benefits are described in more
detail in the sections entitled Fiscal 2020 Pension Benefits and Fiscal 2020 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans within this proxy statement.
Executive Life Insurance
The Company maintains an insurance program known as the ExecutiveLife Insurance Plan. Executive officers who have
reached age 50 are eligible to participate in this plan, under which the Company will pay the premium, generally in an amount up to $15,000 per year, of a life insurance policy or policies to be owned by the executive officer. The payment is taxable
income to the executive officer and ceases when the executive officers employment ceases. In fiscal 2020 each of the named executive officers participated in the ExecutiveLife Insurance Plan.
Executive Perquisites
The Company offers a limited number of perquisites to our named executive officers. The basis for offering these perquisites is
to enhance the Companys ability to attract and retain highly qualified persons and also to assist the officer in conducting business on behalf of the Company. For certain items, the perquisite is incidental to other business-related use. For
example, the Company shares an arena suite with a local law firm for the local professional hockey team. The Company also has additional season tickets for seats for both the local professional hockey and football teams. The Company made these
investments as a result of specific drives by the Buffalo, New York business community to support the retention of these professional athletic teams in the Buffalo area. These suites are primarily used for Company business. On the occasions when the
suites are not used for Company business, the named executive officers as well as other employees are permitted personal use.
The Company offers named executive officers tax preparation advice, in part to assure the Company that its officers are
properly reporting compensation. The Company makes contributions for the named executive officers long-term disability plans. The Company also pays the costs of spouses accompanying named executive officers to certain of the Board of Directors
and industry meetings and functions, as well as blanket travel insurance for the named executive officer and spouse.
CHANGE IN CONTROL
ARRANGEMENTS
The Companys named executive officers serve at the pleasure of the Board of Directors and are not
employed pursuant to employment agreements. Each of the named executive officers is a party to an Employment Continuation and Noncompetition Agreement with the Company, which would become effective upon a Change in Control of the Company.
The Company and the Compensation Committee believe that these agreements are required for the attraction and retention of the
executive talent needed to achieve corporate objectives and to assure that named executive officers direct their attention to their duties, acting in the best interests of the stockholders, notwithstanding the potential for loss of employment in
connection with a Change in Control.
48
The agreement contains a double-trigger provision that provides
payment only if employment terminates within three years following a Change in Control, as defined in the agreement, either by the Company other than for cause or by the named executive officer for good reason. The Compensation Committee believes
this structure strikes a balance between the incentive and the executive attraction and retention efforts described above, without providing Change in Control benefits to named executive officers who continue to enjoy employment with the Company in
the event of a Change in Control transaction.
The payment is generally calculated by multiplying 1.99 by the sum of the
named executive officers current base salary plus the average of the annual short-term incentive compensation payment for the previous two fiscal years. The 1.99 multiplier is reduced on a pro-rata basis
if termination occurs between age 62 and age 65, at which point no amount is payable. If payment is triggered, certain health benefits are continued for the earlier of 18 months following termination or the date other similar coverage becomes
available.
The agreement contains a restrictive covenant whereby the named executive officer may, upon termination
following a Change in Control, choose to refrain from being employed by or otherwise serving as an agent, consultant, partner or major stockholder of a business engaged in activity that is competitive with that of the Company or its subsidiaries. If
the named executive officer so chooses to be bound by this restrictive covenant, an additional payment is made in the amount of one times the sum of current base salary plus the average of the annual short-term incentive compensation payment for the
previous two fiscal years. The Compensation Committee and the Company believe this is an appropriate payment in exchange for the named executive officers agreement to the non-compete covenant. There is
no gross-up for taxes on either payment.
If a named executive officer experiences
a qualifying termination of employment within a specific time following a Change in Control of the Company, many of the components of total compensation described above become immediately vested or paid out in a lump sum. More detail about these
items and calculations as of September 30, 2020, are set forth in the section entitled Potential Payments Upon Termination or Change in Control within this proxy statement.
STOCK OWNERSHIP GUIDELINES
In an effort to emphasize the importance of stock ownership and in consultation with the Compensation Committee, the Company
maintains Common Stock ownership guidelines for officers, ranging from one times base salary for junior officers to six times base salary at the CEO level. Generally, officers are expected to meet the guidelines within five years following
promotion. Mr. Bauer holds approximately 2.8 times his base salary as of December 10, 2020, and generally is expected to reach six times base salary by July 1, 2024, five years after his promotion to CEO. All other named executive
officers, for whom the requirement is three times base salary, exceed their ownership requirements. Other employees receiving equity awards are encouraged to retain their Common Stock for long-term investment. The Board and management believe that
employees who are stockholders perform their jobs in a manner that considers the long-term interests of the stockholders. Company directors are also subject to ownership requirements, as noted previously in this proxy statement.
TAX AND ACCOUNTING CONSIDERATIONS
In designing the Companys compensation program, general consideration is given to the accounting treatment of the awards
made to our named executive officers and pertinent tax law provisions. Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code), generally prohibits the Company from deducting compensation paid in excess of
$1 million per year to certain covered officers (including, beginning for 2018, certain former named executive officers). Historically, an exception was available for compensation that qualified as qualified performance-based
compensation within the meaning of Section 162(m) of the Code, but the exception was repealed by the Tax Cuts and Jobs Act of
49
2017 (the Tax Cut Act), effective for taxable years beginning after December 31, 2017, unless certain transition relief for certain compensation arrangements in place as of
November 2, 2017 is available. In general, the Compensation Committee historically intended for the long-term equity awards to qualify for the performance-based exception. Due to the continued importance and benefit to the Company and its
stockholders of awarding compensation that is structured to properly incentivize our named executive officers, the Compensation Committee believes that it is in the Companys best interests to retain flexibility in awarding compensation, even
if some awards may be non-deductible compensation expenses to the Company. The Company has also designed its compensation program with the intent that any awards granted thereunder will either be exempt from,
or comply with the applicable requirements under, Section 409A of the Code.
50
Fiscal 2020 Summary Compensation Table
The following table sets forth a summary of the fiscal 2020 compensation of the Companys CEO, Principal Financial Officer
and of each of the three most highly compensated executive officers other than the CEO and Principal Financial Officer. The compensation reflected for each officer was for the officers services provided in all capacities to the Company and its
subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Fiscal
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)(2)
|
|
|
Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(3)
|
|
|
All Other
Compensation
($)(4)
|
|
|
Total
($)
|
|
David P. Bauer
President and Chief
Executive Officer
|
|
|
2020
2019
2018
|
|
|
|
875,000
667,500
587,500
|
|
|
|
0
0
31,872
|
|
|
|
1,945,917
1,351,675
724,657
|
|
|
|
0
0
0
|
|
|
|
1,056,125
599,248
549,019
|
|
|
|
937,392
817,243
268,191
|
|
|
|
145,481
75,817
68,805
|
|
|
|
4,959,915
3,511,483
2,230,044
|
|
|
|
|
|
|
|
|
|
|
|
Karen M. Camiolo
Treasurer and Principal
Financial Officer
|
|
|
2020
2019
|
|
|
|
424,749
390,250
|
|
|
|
0
96,997
|
|
|
|
370,176
226,032
|
|
|
|
0
0
|
|
|
|
247,417
180,003
|
|
|
|
338,162
518,593
|
|
|
|
55,336
54,869
|
|
|
|
1,435,840
1,466,744
|
|
|
|
|
|
|
|
|
|
|
|
John R. Pustulka
|
|
|
2020
|
|
|
|
827,500
|
|
|
|
0
|
|
|
|
2,079,813
|
|
|
|
0
|
|
|
|
1,122,918
|
|
|
|
922,119
|
|
|
|
135,017
|
|
|
|
5,087,367
|
|
Chief Operating Officer
|
|
|
2019
|
|
|
|
780,000
|
|
|
|
0
|
|
|
|
1,858,759
|
|
|
|
0
|
|
|
|
933,270
|
|
|
|
1,243,401
|
|
|
|
120,783
|
|
|
|
4,936,213
|
|
|
|
2018
|
|
|
|
731,250
|
|
|
|
56,672
|
|
|
|
1,445,921
|
|
|
|
0
|
|
|
|
954,281
|
|
|
|
813,346
|
|
|
|
118,864
|
|
|
|
4,120,334
|
|
|
|
|
|
|
|
|
|
|
|
John P. McGinnis
|
|
|
2020
|
|
|
|
721,250
|
|
|
|
100,000
|
|
|
|
1,696,682
|
|
|
|
0
|
|
|
|
566,163
|
|
|
|
0
|
|
|
|
109,579
|
|
|
|
3,193,674
|
|
President of Seneca
Resources Company, LLC
|
|
|
2019
2018
|
|
|
|
686,250
651,250
|
|
|
|
0
5,536
|
|
|
|
1,591,000
1,159,482
|
|
|
|
0
0
|
|
|
|
681,601
820,933
|
|
|
|
0
0
|
|
|
|
120,952
123,469
|
|
|
|
3,079,803
2,760,670
|
|
|
|
|
|
|
|
|
|
|
|
Donna L. DeCarolis
President of National
Fuel Gas Distribution Corporation
|
|
|
2020
2019
|
|
|
|
586,250
470,142
|
|
|
|
0
0
|
|
|
|
810,762
725,326
|
|
|
|
0
0
|
|
|
|
675,800
482,542
|
|
|
|
1,326,938
848,014
|
|
|
|
90,547
72,168
|
|
|
|
3,490,297
2,598,192
|
|
(1)
|
The stock award values for fiscal 2020 show the aggregate grant date fair value of performance shares and,
where applicable, time-based RSUs, computed in accordance with FASB ASC Topic 718. For information on the valuation assumptions and performance conditions with respect to these awards, refer to Note A under the heading Stock-Based
Compensation and Note E under the heading Stock Award Plans in the Companys financial statements in its Form 10-K for the fiscal year ended September 30, 2020 (2020 Form 10-K). The grant date fair value of performance shares reflects an estimate that 100% of the performance shares awarded will vest at the end of the three-year performance period. The actual percentage to vest
will be determined following fiscal 2022. The grant date fair value of stock awards granted in fiscal 2020, assuming the highest level of performance for performance shares (200%), is $3,260,455 for Mr. Bauer, $620,241 for Ms. Camiolo, $4,159,627
for Mr. Pustulka, $2,842,862 for Mr. McGinnis and $1,358,465 for Ms. DeCarolis.
|
(2)
|
For fiscal 2020, this column reflects compensation under the At Risk Plan. Please refer to the Compensation
Discussion and Analysis for additional information about the At Risk Plan, including information regarding the performance conditions applicable to the awards.
|
(3)
|
This column represents, for fiscal 2020, the actuarial increase in the present value of the named executive
officers benefits under all pension plans maintained by the Company, determined using interest rate and mortality rate assumptions consistent with those used in the Companys financial statements in its 2020 Form 10-K, as described in Note H, Retirement Plan and Other Post-Retirement Benefits. The amounts for Mr. Bauer and Ms. Camiolo also include the actuarial increase in the present value of their
respective retirement-related tophat benefits under the non-qualified tophat plan. These amounts may include amounts which the named executive officer may not currently be entitled to receive because such
amounts are not vested as of September 30, 2020, 2019 and 2018, respectively. For fiscal 2020, there were no above-market earnings under the Deferred Compensation Plan. See the narrative, tables and notes to the sections entitled Fiscal
2020 Pension Benefits and Fiscal 2020 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans within this proxy statement for more information.
|
(4)
|
See the All Other Compensation Table below for more information.
|
51
The following table describes each component of the All Other Compensation column
in the Fiscal 2020 Summary Compensation Table for fiscal 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
David P.
Bauer
($)
|
|
|
Karen M.
Camiolo
($)
|
|
|
John R.
Pustulka
($)
|
|
|
John P.
McGinnis
($)
|
|
|
Donna L.
DeCarolis
($)
|
|
Defined Contributions(a)
|
|
|
17,025
|
|
|
|
17,025
|
|
|
|
17,025
|
|
|
|
28,375
|
|
|
|
17,025
|
|
401(k) Tophat(b)
|
|
|
98,343
|
|
|
|
23,240
|
|
|
|
99,750
|
|
|
|
26,075
|
|
|
|
58,423
|
|
RSA Tophat(c)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
40,030
|
|
|
|
0
|
|
Employee Stock Ownership Plan (ESOP) Supplemental Payment(d)
|
|
|
0
|
|
|
|
0
|
|
|
|
3,143
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance(e)
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
15,000
|
|
Travel Accident Insurance(f)
|
|
|
113
|
|
|
|
71
|
|
|
|
99
|
|
|
|
99
|
|
|
|
99
|
|
Perquisites(g)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
|
145,481
|
|
|
|
55,336
|
|
|
|
135,017
|
|
|
|
109,579
|
|
|
|
90,547
|
|
a)
|
Represents the Company contributions to the 401(k) plan accounts of the named executive officers. Each named
executive officer receives a Company match of up to 6% within the 401(k) plan on the lesser of base salary or the IRS annual compensation limit. In addition, Mr. McGinnis is a participant in the Companys RSA benefit within the 401(k)
plan, pursuant to which he receives a Company contribution of 4% on the portion of his base salary plus annual bonus that does not exceed the IRS annual compensation limit.
|
b)
|
Each named executive officer is prohibited from receiving the full 401(k) Company match due to the IRS annual
compensation limit. The 401(k) tophat benefit gives each named executive officer a Company match on the following forms of compensation: (1) base salary that exceeds the IRS annual compensation limit, and (2) At Risk Plan payment.
|
c)
|
Represents the Company contributions on Mr. McGinnis base salary plus At Risk Plan payment that
exceeded the IRS annual compensation limit.
|
d)
|
All management participants who were hired prior to December 31, 1986 participate in the ESOP, which
pays dividends to the participants on the Common Stock held in the plan. Participants who were hired prior to 1983 did not have the option to reinvest dividends on shares acquired prior to 1983. The formula for the supplemental payment was designed
to result in aggregate supplemental payments to pre-1983 participants approximating the amount the Company saved in corporate income taxes by prohibiting the reinvestment of dividends. The ESOP is a qualified
benefit plan that was frozen in 1987 and closed to future participants.
|
e)
|
Represents the Company-paid life insurance premiums on behalf of each named executive officer under the
ExecutiveLife Insurance Plan. Mr. Bauer became a participant in the plan in the latter part of calendar 2019, and both the Companys calendar 2019 payment and calendar 2020 payment fell within the Companys 2020 fiscal year.
|
f)
|
Represents the premiums paid for the blanket travel insurance policy, which provides a death benefit to
beneficiaries of an officer if the officer dies while traveling on business.
|
g)
|
Perquisites for each named executive officer were less than $10,000 in the aggregate.
|
52
Grants of Plan-Based Awards in Fiscal 2020
The following table sets forth information with respect to awards granted to the named executive officers during fiscal 2020
under the At Risk Plan and the 2010 Equity Compensation Plan. Please refer to the CD&A within this proxy statement for additional information regarding these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
Payouts Under
Non-Equity Incentive Plan
Awards
|
|
|
Estimated Future
Payouts Under
Equity Incentive Plan
Awards
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
Grant Date
Fair Value of
Stock and
Option
Awards
($)(1)
|
|
Name
|
|
Note
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
David P. Bauer
|
|
(2)
|
|
|
12/9/19
|
|
|
|
318,500
|
|
|
|
875,000
|
|
|
|
1,499,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,586
|
|
|
|
15,171
|
|
|
|
30,342
|
|
|
|
|
|
|
|
604,383
|
|
|
|
(4)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
584
|
|
|
|
15,171
|
|
|
|
30,342
|
|
|
|
|
|
|
|
710,155
|
|
|
|
(5)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,176
|
|
|
|
631,379
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen M. Camiolo
|
|
(2)
|
|
|
12/9/19
|
|
|
|
77,305
|
|
|
|
212,375
|
|
|
|
364,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,443
|
|
|
|
2,886
|
|
|
|
5,772
|
|
|
|
|
|
|
|
114,973
|
|
|
|
(4)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
|
|
|
|
2,886
|
|
|
|
5,772
|
|
|
|
|
|
|
|
135,094
|
|
|
|
(5)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,887
|
|
|
|
120,109
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Pustulka
|
|
(2)
|
|
|
12/9/19
|
|
|
|
301,210
|
|
|
|
827,500
|
|
|
|
1,376,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,002
|
|
|
|
24,003
|
|
|
|
48,006
|
|
|
|
|
|
|
|
956,233
|
|
|
|
(4)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924
|
|
|
|
24,003
|
|
|
|
48,006
|
|
|
|
|
|
|
|
1,123,580
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. McGinnis
|
|
(2)
|
|
|
12/9/19
|
|
|
|
165,527
|
|
|
|
613,063
|
|
|
|
1,023,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,614
|
|
|
|
13,228
|
|
|
|
26,456
|
|
|
|
|
|
|
|
526,978
|
|
|
|
(4)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
509
|
|
|
|
13,228
|
|
|
|
26,456
|
|
|
|
|
|
|
|
619,203
|
|
|
|
(5)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,232
|
|
|
|
550,501
|
|
|
|
|
|
|
|
|
|
|
|
|
Donna L. DeCarolis
|
|
(2)
|
|
|
12/9/19
|
|
|
|
124,212
|
|
|
|
439,688
|
|
|
|
783,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,161
|
|
|
|
6,321
|
|
|
|
12,642
|
|
|
|
|
|
|
|
251,816
|
|
|
|
(4)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243
|
|
|
|
6,321
|
|
|
|
12,642
|
|
|
|
|
|
|
|
295,886
|
|
|
|
(5)
|
|
|
12/9/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,323
|
|
|
|
263,060
|
|
(1)
|
The equity award values reflect the fair value of performance shares and, where applicable, RSUs at the date
of grant, computed in accordance with FASB ASC Topic 718. For performance shares, values are based on the probable outcome of the applicable performance condition. Refer to Note A under the heading Stock-Based Compensation and Note E
under the heading Stock Award Plans in the Companys financial statements in its 2020 Form 10-K.
|
(2)
|
This row represents the annual cash incentive opportunity set in fiscal 2020 under the At Risk Plan. The
amount actually paid for fiscal 2020 is set forth in the Fiscal 2020 Summary Compensation Table under the Non-Equity Incentive Plan Compensation column. Please refer to the CD&A for additional
information about the performance conditions applicable to each payment.
|
(3)
|
The ROC performance shares awarded to named executive officers on December 9, 2019 generally vest at the
end of a three-year performance cycle (October 1, 2019 through September 30, 2022), subject to the achievement of a performance condition tied to relative total return on capital. Please refer to the narrative disclosure under the
Long-Term Incentive Compensation section within this proxy statement for additional information on the performance condition and vesting terms.
|
(4)
|
The TSR performance shares awarded to named executive officers on December 9, 2019 generally vest at the
end of a three-year performance cycle (October 1, 2019 through September 30, 2022), subject to the achievement of a performance condition tied to relative total shareholder return. The threshold number represents a payout of approximately 3.85%
of the target opportunity, which would result from performance at approximately the 30.77 percentile. Performance at the 30.77 percentile would be the lowest achievable percentile above the 30th
percentile, assuming no changes to the 13-member peer group. Please refer to the narrative disclosure under the Long-Term Incentive Compensation section within this proxy statement for additional
information on the performance condition and vesting terms.
|
(5)
|
The RSUs granted on December 9, 2019 to Mr. Bauer, Ms. Camiolo, Mr. McGinnis and
Ms. DeCarolis were granted under the Companys 2010 Equity Compensation Plan and generally vest in one-third increments on the first three anniversaries of the date of grant. Please refer to the
narrative disclosure under the Fiscal 2020 Potential Payments Upon Termination or Change in Control section within this proxy statement for additional information regarding termination prior to and after the vest date of the RSUs.
|
53
Outstanding Equity Awards at Fiscal 2020
Year-End
The following table sets forth, on an
award-by-award basis for each of the named executive officers, the number of securities underlying unexercised SARs, the total number and aggregate market value of
shares of unvested restricted stock, and the number and market value of unvested RSUs and performance shares, as of September 30, 2020. The table also provides the grant price, which is the fair market value (the average of the high and low) on
the grant date, and the date of expiration of each unexercised SAR.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)(1)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
|
|
|
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)(2)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not Vested
(#)(3)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That Have
Not Vested
($)(3)
|
|
David P. Bauer
|
|
|
12/20/10
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
63.87
|
|
|
|
12/20/2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/11
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
55.09
|
|
|
|
12/19/2021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/12
|
|
|
|
10,629
|
|
|
|
0
|
|
|
|
53.05
|
|
|
|
12/19/2022
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/17
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,729
|
|
|
|
191,950
|
|
|
|
|
12/20/17
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,729
|
|
|
|
191,950
|
|
|
|
|
12/20/17
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
1,577
|
|
|
|
64,010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/18
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,200
|
|
|
|
211,068
|
|
|
|
|
12/19/18
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,200
|
|
|
|
211,068
|
|
|
|
|
12/19/18
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
3,467
|
|
|
|
140,726
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
7/1/19
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
10,821
|
|
|
|
439,224
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/9/19
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,171
|
|
|
|
615,791
|
|
|
|
|
12/9/19
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,171
|
|
|
|
615,791
|
|
|
|
|
12/9/19
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
15,176
|
|
|
|
615,994
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Karen M. Camiolo
|
|
|
12/20/10
|
|
|
|
2,500
|
|
|
|
0
|
|
|
|
63.87
|
|
|
|
12/20/2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/11
|
|
|
|
2,500
|
|
|
|
0
|
|
|
|
55.09
|
|
|
|
12/19/2021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/12
|
|
|
|
5,465
|
|
|
|
0
|
|
|
|
53.05
|
|
|
|
12/19/2022
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/17
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,415
|
|
|
|
57,435
|
|
|
|
|
12/20/17
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,415
|
|
|
|
57,435
|
|
|
|
|
12/20/17
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
472
|
|
|
|
19,158
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/18
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,391
|
|
|
|
56,461
|
|
|
|
|
12/19/18
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,391
|
|
|
|
56,461
|
|
|
|
|
12/19/18
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
928
|
|
|
|
37,688
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/9/19
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,886
|
|
|
|
117,143
|
|
|
|
|
12/9/19
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,886
|
|
|
|
117,143
|
|
|
|
|
12/9/19
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
2,887
|
|
|
|
117,183
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
John R. Pustulka
|
|
|
12/20/10
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
63.87
|
|
|
|
12/20/2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/11
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
55.09
|
|
|
|
12/19/2021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/12
|
|
|
|
22,121
|
|
|
|
0
|
|
|
|
53.05
|
|
|
|
12/19/2022
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/17
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,189
|
|
|
|
575,932
|
|
|
|
|
12/20/17
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,189
|
|
|
|
575,932
|
|
|
|
|
12/19/18
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16,694
|
|
|
|
677,609
|
|
|
|
|
12/19/18
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16,694
|
|
|
|
677,609
|
|
|
|
|
12/9/19
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,003
|
|
|
|
974,282
|
|
|
|
|
12/9/19
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,003
|
|
|
|
974,282
|
|
|
|
|
|
|
|
|
|
|
|
John P. McGinnis
|
|
|
09/17/09
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
20,000
|
|
|
|
811,800
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/10
|
|
|
|
7,500
|
|
|
|
0
|
|
|
|
63.87
|
|
|
|
12/20/2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/12
|
|
|
|
20,802
|
|
|
|
0
|
|
|
|
53.05
|
|
|
|
12/19/2022
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/17
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,567
|
|
|
|
307,145
|
|
|
|
|
12/20/17
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,567
|
|
|
|
307,145
|
|
|
|
|
12/20/17
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
2,523
|
|
|
|
102,409
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/18
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
9,790
|
|
|
|
397,376
|
|
|
|
|
12/19/18
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
9,790
|
|
|
|
397,376
|
|
|
|
|
12/19/18
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
6,529
|
|
|
|
265,012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/9/19
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,228
|
|
|
|
536,925
|
|
|
|
|
12/9/19
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,228
|
|
|
|
536,925
|
|
|
|
|
12/9/19
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
13,232
|
|
|
|
537,087
|
|
|
|
0
|
|
|
|
0
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)(1)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
|
|
|
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)(2)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not Vested
(#)(3)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights
That Have
Not Vested
($)(3)
|
|
Donna L. DeCarolis
|
|
|
12/20/10
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
63.87
|
|
|
|
12/20/2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/11
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
55.09
|
|
|
|
12/19/2021
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/12
|
|
|
|
4,940
|
|
|
|
0
|
|
|
|
53.05
|
|
|
|
12/19/2022
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/20/17
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
999
|
|
|
|
40,549
|
|
|
|
|
12/20/17
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
999
|
|
|
|
40,549
|
|
|
|
|
12/20/17
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
334
|
|
|
|
13,557
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/19/18
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,463
|
|
|
|
181,153
|
|
|
|
|
12/19/18
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,463
|
|
|
|
181,153
|
|
|
|
|
12/19/18
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
2,977
|
|
|
|
120,836
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
12/9/19
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,321
|
|
|
|
256,569
|
|
|
|
|
12/9/19
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,321
|
|
|
|
256,569
|
|
|
|
|
12/9/19
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
6,323
|
|
|
|
256,651
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
Awards were granted at an exercise price equal to the fair market value on the grant date.
|
(2)
|
The stock awards granted to Mr. McGinnis consist in part of an award of 20,000 shares of restricted
stock which were granted on September 17, 2009 and which vested on November 14, 2020. The market value of the 20,000 shares is based on the closing market price ($40.59) of the Common Stock as of September 30, 2020.
|
|
The RSUs awarded to Mr. Bauer, Ms. Camiolo, Mr. McGinnis and Ms. DeCarolis on
December 20, 2017, December 19, 2018 and December 9, 2019 generally vest over a period of three years in one-third increments at each anniversary date of the awards. The RSUs awarded to
Mr. Bauer on July 1, 2019 generally vest in one-half increments on the third and fourth anniversaries of the award. The market value represents the number of unvested RSUs multiplied by the closing
market price ($40.59) of the Common Stock as of September 30, 2020.
|
(3)
|
The performance shares awarded on December 20, 2017, December 19, 2018 and December 9, 2019
generally vest after the end of three-year performance cycles ending September 30, 2020, September 30, 2021 and September 30, 2022, respectively, subject to the achievement of a performance condition based on ROC or TSR.
|
|
Estimated performance through September 30, 2020 for each of the outstanding ROC performance share
awards was above threshold but below target. Accordingly, the estimated number of unearned ROC performance shares is reported at the target amount of 100% of each award.
|
|
Estimated performance through September 30, 2020 for each of the outstanding TSR performance share
awards was capped at the target level payout. Accordingly, the estimated number of unearned TSR performance shares is reported at the target amount of 100% of each award.
|
|
As explained in the CD&A, actual performance over the full three-year performance cycle could result in a
lesser or greater payout. The market value of the unearned performance shares represents the estimated number of shares multiplied by the closing market price of the Common Stock as of September 30, 2020 ($40.59). Please refer to the narrative
disclosure under the Long-Term Incentive Compensation section within this proxy statement for additional information on the performance conditions and vesting terms.
|
(4)
|
ROC performance shares.
|
(5)
|
TSR performance shares.
|
55
Option Exercises and Stock Vested in Fiscal 2020
The following table sets forth, as to each named executive officer, information with respect to exercises of SARs and vesting
of RSUs and performance shares during the fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)(1)
|
|
|
Value
Realized
on
Exercise
($)(2)
|
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
|
Value
Realized
on
Vesting
($)(3)
|
|
David P. Bauer
|
|
|
0
|
|
|
|
0
|
|
|
|
16,006
|
|
|
|
730,859
|
|
Karen M. Camiolo
|
|
|
0
|
|
|
|
0
|
|
|
|
4,406
|
|
|
|
201,233
|
|
John R. Pustulka
|
|
|
0
|
|
|
|
0
|
|
|
|
30,295
|
|
|
|
1,366,456
|
|
John P. McGinnis
|
|
|
0
|
|
|
|
0
|
|
|
|
23,097
|
|
|
|
1,056,817
|
|
Donna L. DeCarolis
|
|
|
0
|
|
|
|
0
|
|
|
|
4,772
|
|
|
|
219,727
|
|
(1)
|
Represents the aggregate number of shares of Common Stock as to which awards were exercised.
|
(2)
|
Represents the aggregate difference between the grant price and the fair market value of the Common Stock at
exercise.
|
(3)
|
Represents the fair market value of the Common Stock on the vest date multiplied by the number of RSUs or
performance shares that vested.
|
Fiscal 2020 Pension Benefits
The following table sets forth information with respect to the pension benefits as of September 30, 2020 of each of the
named executive officers. The Company sponsors a non-qualified executive retirement plan, a qualified retirement plan, and a non-qualified tophat plan. The named
executive officers participate in these plans to the extent indicated below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited
Service
(#)(1)
|
|
Present Value
of
Accumulated
Benefit
($)(1)
|
|
|
Payments
During
Last
Fiscal Year
($)
|
|
David P. Bauer
|
|
Executive Retirement Plan
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Retirement Plan
|
|
18
|
|
|
1,070,722
|
|
|
|
0
|
|
|
|
Retirement-Related Tophat
|
|
18
|
|
|
2,345,648
|
|
|
|
0
|
|
|
|
|
|
|
Karen M. Camiolo
|
|
Executive Retirement Plan
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Retirement Plan
|
|
25
|
|
|
1,848,259
|
|
|
|
0
|
|
|
|
Retirement-Related Tophat
|
|
25
|
|
|
1,622,063
|
|
|
|
0
|
|
|
|
|
|
|
John R. Pustulka
|
|
Executive Retirement Plan
|
|
40
|
|
|
9,845,837
|
|
|
|
0
|
|
|
|
Retirement Plan
|
|
40
|
|
|
2,280,787
|
|
|
|
0
|
|
|
|
Retirement-Related Tophat
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
John P. McGinnis
|
|
Executive Retirement Plan
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Retirement Plan
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Retirement-Related Tophat
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
Donna L. DeCarolis
|
|
Executive Retirement Plan
|
|
38
|
|
|
3,129,187
|
|
|
|
0
|
|
|
|
Retirement Plan
|
|
37
|
|
|
2,732,311
|
|
|
|
0
|
|
|
|
Retirement-Related Tophat
|
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
(1)
|
For actuarial assumptions, please refer to Note H, Retirement Plan and Other Post-Retirement Benefits, to
the Companys 2020 Form 10-K. The Executive Retirement Plan recognizes participants first year of service, but the National Fuel Gas Company Retirement Plan excludes the first year. Benefit service
under each plan is capped at 40 years.
|
56
Retirement Plan
The National Fuel Gas Company Retirement Plan (the Retirement Plan) is a
tax-qualified defined benefit plan. The base benefit under the Retirement Plan is a life annuity that is calculated by multiplying the employees final average pay by 1.5% and then multiplying such
product by the employees years of credited service up to a maximum of 40 years. Final average pay is the average of the participants total pay during the five consecutive years of highest pay from the last ten years of participation.
Total pay only includes base salary, certain lump sum payments, and annual At Risk Plan and EACIP payments. Credited service is the period that an employee is a participant in the Retirement Plan and receives pay from the Company or one of its
participating subsidiaries.
The Retirement Plan provides unreduced retirement benefits at or after age 65, or, for
participants with at least ten years of service, at or after age 60. Participants may otherwise retire with no reduction in their accrued benefit on or after the date on which the sum of their age plus years of service equals ninety (rule of
90). Participants who are at least age 55 with 10 years of service and who do not meet the rule of 90 are eligible for and may commence early retirement with a benefit reduction of .4167% per whole month prior to age 60. The Retirement
Plan does not permit the granting of extra years of credited service to the participants. The retirement benefit is available as a single life annuity or in various other annuity forms, including joint and survivor and term-certain annuities. All
are calculated on an actuarially equivalent basis using a 6% interest rate and the RP-2014 Mortality Table for healthy annuitants blended 50% male and 50% female.
Ms. Camiolo, Mr. Pustulka and Ms. DeCarolis are currently eligible for an unreduced benefit. Mr. Bauer is a
participant in the Retirement Plan, but is not yet eligible for either an unreduced or reduced retirement benefit. Mr. McGinnis is not a participant in the Retirement Plan.
Executive Retirement Plan
The National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (the ERP) is a non-qualified defined benefit plan. Although the CEO of the Company is authorized to designate all participants of the ERP, no such designation has occurred since 2001.
The ERP provides a two-part benefit: a tophat benefit and a supplemental benefit. The
tophat benefit makes an ERP participant whole for any reduction in the regular pension he or she receives under the Retirement Plan resulting from Internal Revenue Code limitations. The supplemental benefit provides an additional retirement benefit
to the Retirement Plan. Participants in the Retirement Plan who are not designated to participate in the ERP will receive a retirement-related tophat benefit under a separate Tophat Plan (discussed below under Fiscal 2020 Nonqualified Defined
Contribution and Other Nonqualified Deferred Compensation Plans), if appropriate based on the Internal Revenue Code limitations.
The tophat benefit under the ERP vests in the same manner and subject to the same service requirements that apply to the
Retirement Plan. The supplemental benefit under the ERP vests at age 55 and completion of five years of credited service. An ERP participant who vests in the tophat benefit, but does not vest in the supplemental benefit, receives only a tophat
benefit. A participant who is vested in both the tophat benefit and the supplemental benefit and who terminates service with the Company before age 65 receives the tophat benefit and a portion of the supplemental benefit that is based upon the
participants age and years of credited service. For the ERP, credited service is the number of years the participant has been employed by the Company or one of its participating subsidiaries, not to exceed 40 years.
57
The tophat benefit is stated as a life annuity that is calculated as the
difference between (a) and (b), where (a) is the benefit the ERP participant would have received under the Retirement Plan but for the limitations imposed by the Internal Revenue Code and (b) is the base benefit the participant
receives under the Retirement Plan.
Assuming retirement at age 65, the supplemental benefit is stated as a life annuity
that is calculated using the following formula:
(a) 1.97% of final average pay for each year of service not in excess of
30 years; plus
(b) 1.32% of final average pay for each of the next 10 years of service that are in excess of 30 (but not
to exceed 10); minus
(c) 1.25% of an assumed Social Security benefit (calculated as if the participant had no future
wages) for each year of service not in excess of 40 years; minus
(d) the participants base benefit under the
Retirement Plan; minus
(e) the participants tophat benefit.
Final average pay under the ERP is the same as under the Retirement Plan, but without the compensation limitations imposed by
the Internal Revenue Code.
If a participant retires on or after age 62, but before age 65, the supplemental benefit is
reduced by 1/2 of 1% for each whole month prior to age 65. If a participant retires before age 62, the supplemental benefit is further reduced by 1% for each whole month between age 55 years and 2 months and age 62. Furthermore, the members
supplemental benefit shall be increased by .125% for each whole calendar month by which a members years of service exceed 30, subject to a maximum of 40 years.
The normal form of benefit under the ERP is a four-year period certain annuity that is actuarially equivalent to the lump-sum present value (calculated using the most recently published mortality table that is generally accepted by American actuaries and reasonably applicable to the ERP, and a six percent discount rate) of
the sum of the participants tophat benefit and supplemental benefit (if the participant is vested therein). Other available forms of payment include single life, ten-year period certain and life, and
joint and survivor annuities.
Fiscal 2020 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation
Plans
The Deferred Compensation Plan (the DCP) is a non-qualified
deferred compensation plan, which was instituted for certain high-level management employees of the Company and certain subsidiaries. The DCP is not an active plan and has been closed with no deferrals since July 31, 2002. The purpose of the
DCP was to provide retirement/savings financial planning opportunities, which were not available to the officers in the qualified retirement plans due to Internal Revenue Code limitations. All account balances are subject to the general creditors of
the Company.
DCP participants were able to defer receipt of portions of their salaries and bonuses, to be paid to them
following retirement, termination of employment, death or earlier in certain circumstances. The participants were eligible to elect a Savings and/or a Retirement account. The participant signed a contract selecting the amount
to be deferred for the upcoming deferral period, the type of account (Savings and/or Retirement), annuity term (5, 10 or 15 years) if a Retirement account and up to three payment dates with percentages and/or dollar amounts if a Savings account. The
annuity for the Retirement account is determined by setting the interest rate on all outstanding balances at 135% of the average of the Moodys Index (as defined below) in effect for the 60-month period
that ends with the month preceding the month of retirement.
Beginning with deferrals after May 1, 1994, the
participants could select a Savings and/or a Retirement account. The two investment choices were the Moodys Composite Average of Yields on
58
Corporate Bonds (Moodys Index) in effect for the month of May prior to the plan year beginning August 1 and a return equal to the total return of the Standard and
Poors 500 stock index minus 1.2% per annum (S&P 500 Minus 1.2% Election). The participant could select either the Moodys Index or the S&P 500 Minus 1.2% Election, but not both within the same account. In
addition, participants with deferrals after May 1, 1994 could elect to defer their Savings and Retirement account balance past their retirement date, but not past age 70.
The DCP deferral contract indicates the participants investment selection and future payouts or retirement choices
regarding the term of the annuity (5, 10 or 15 years). A participant who selected the S&P 500 Minus 1.2% Election for his Retirement account may, after he reaches age 55, switch once to the Moodys Index. For a participant who retires and
elected to invest in the S&P 500 Minus 1.2% Election, the investments return will assume the Moodys Index six months prior to his retirement date in order to determine the final benefit.
The Company also maintains a non-qualified Tophat Plan (the Tophat Plan)
that provides restoration of benefits lost under the Retirement Plan (see Fiscal 2020 Pension Benefits) and/or the Tax-Deferred Savings Plan (the 401(k) plan) due to the effect of Internal Revenue Code limits.
See notes (b) and (c) under the All Other Compensation Table. The Company pays the 401(k) tophat benefit and the RSA tophat benefit under the Tophat Plan no later than March 15 of the calendar year following the year in which the
benefits were earned.
The following table reflects the contributions, earnings, distributions and total balance of the DCP
and the 401(k) and RSA benefits under the Tophat Plan:
Fiscal 2020 Nonqualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last FY
($)
|
|
|
Registrant
Contributions
in Last FY
($)(1)
|
|
|
Aggregate
Earnings (Loss)
in Last FY
($)(2)
|
|
|
Aggregate
Withdrawals/
Distributions
($)(3)
|
|
|
Aggregate
Balance at
Last FYE
($)(4)
|
|
David P. Bauer Tophat Plan
|
|
|
0
|
|
|
|
98,343
|
|
|
|
0
|
|
|
|
61,205
|
|
|
|
90,543
|
|
Karen M. Camiolo Tophat Plan
|
|
|
0
|
|
|
|
23,240
|
|
|
|
0
|
|
|
|
23,645
|
|
|
|
21,215
|
|
John R. Pustulka Tophat Plan
|
|
|
0
|
|
|
|
99,750
|
|
|
|
0
|
|
|
|
86,396
|
|
|
|
92,100
|
|
DCP
|
|
|
0
|
|
|
|
0
|
|
|
|
15,532
|
|
|
|
0
|
|
|
|
211,627
|
|
John P. McGinnis Tophat Plan
|
|
|
0
|
|
|
|
66,105
|
|
|
|
0
|
|
|
|
68,472
|
|
|
|
55,730
|
|
Donna L. DeCarolis Tophat Plan
|
|
|
0
|
|
|
|
58,423
|
|
|
|
0
|
|
|
|
43,713
|
|
|
|
54,448
|
|
(1)
|
All amounts in this column are reported as fiscal 2020 compensation in the Fiscal 2020 Summary Compensation
Table. Refer to notes (b) and (c) to the All Other Compensation Table.
|
(2)
|
This column represents the net earnings during the fiscal year for the DCP. For fiscal 2020, there were no
above-market earnings under the DCP and, therefore, the amounts in this column are not disclosed in the Fiscal 2020 Summary Compensation Table.
|
(3)
|
This column represents the annual payment of the 401(k) and RSA benefits under the Tophat Plan for the
calendar year ended December 31, 2019, which were paid in January 2020.
|
(4)
|
This column includes the balance of the 401(k) and RSA benefits under the Tophat Plan for each named
executive officer and the DCP balance for Mr. Pustulka, the only named executive officer in the DCP. These balances reflect amounts previously reported as compensation to the named executive officers in the Companys Summary Compensation
Tables for prior years.
|
Fiscal 2020 Potential Payments Upon Termination or Change in Control
The information below describes and quantifies certain compensation that would become payable under existing plans and
arrangements if the named executive officers employment had terminated on September 30, 2020 (the last business day of the Companys fiscal year), assuming each named executive officers compensation and service levels as of
that date and, if applicable, based on the closing price of the Common Stock on that date ($40.59 per share). These benefits are in addition to benefits available
59
generally to most salaried employees. Due to the number of factors that affect the nature and amount of any benefit provided upon the events discussed below, any actual amounts paid or
distributed in the future may be different from the amounts contained in the following tables. Factors that could affect these amounts include the timing during the year of any such event, the market value of the Common Stock and the named executive
officers age.
National Fuel Gas Company 1997 Award and Option Plan
Awards outstanding to named executive officers at September 30, 2020 under the National Fuel Gas Company 1997 Award and
Option Plan included SARs (all of which were vested) and restricted stock.
Stock Appreciation Rights
(SARs) A change in ownership and certain terminations within three years following a change in control, as described below, will trigger payment of the value of vested SARs.
Restricted Stock Mr. McGinnis was awarded 20,000 shares of restricted stock on September 17,
2009. The vesting restrictions on these shares lapsed on November 14, 2020. If Mr. McGinnis employment had terminated by reason of death or disability on September 30, 2020, the restrictions would have lapsed at that time. In
addition, if a change in ownership had occurred on September 30, 2020 or Mr. McGinnis had been terminated due to a change in control as described below, the restrictions stock would have lapsed. The estimated value of the 20,000 shares of
restricted stock on September 30, 2020 was $811,800, based on the closing price of the Common Stock on that date.
Change in Ownership and Change in Control If there is a change in ownership or a named executive
officers employment terminates within three years following a change in control, unless the termination is due to death, disability, retirement, cause, or resignation by the named executive officer other than for good reason, then all terms
and conditions on outstanding awards would lapse, and all unvested awards become vested. In addition, any outstanding awards are cashed out based on the fair market value of the Common Stock.
SARs outstanding to the named executive officers under the 1997 Award and Option Plan did not have any value as of
September 30, 2020, as the grant price of the SARs exceeded the fair market value of the Companys common stock on that date.
Under the 1997 Award and Option Plan, change in ownership means a change which results in the Common Stock ceasing
to be actively traded on a national securities exchange or the National Association of Securities Dealers Automated Quotation System.
A change in control generally occurs when (a) any person other than the Company, a subsidiary or any employee
benefit plan sponsored by the Company is the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the voting power of the outstanding stock of the Company; (b) a consolidation or merger occurs and the persons who,
immediately prior to the consolidation or merger, held the capital stock of the Company do not hold, immediately following, (i) at least a majority of the stock entitled to vote in the election of directors of the surviving corporation, or
(ii) stock in the surviving corporation that represents at least 50% of the fair market value of all classes of stock of that entity, in either case, in substantially the same proportionate ownership as immediately before the consolidation or
merger; (c) there is any sale, lease, exchange or other transfer of all or substantially all the assets of the Company; or (d) individuals who constituted the Board of Directors of the Company on January 1, 1997 (the Incumbent
Board) have ceased to constitute at least a majority, provided that any person becoming a director subsequent to January 1, 1997, whose election, or nomination for election by the Companys stockholders, was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board, shall be considered as though such person was a member of the Incumbent Board.
Good reason means a good faith determination made by a named executive officer that the Company has materially
reduced the responsibilities, prestige or scope of the named executive officers position. Examples include the assignment to the named executive officer of duties inconsistent with the named executive officers position, assignment of the
executive to another place of employment more
60
than 30 miles from the named executive officers current place of employment, or reduction in the named executive officers total compensation or benefits. The named executive officer
must specify the event relied upon for his or her determination by written notice to the Board of Directors within six months after the occurrence of the event.
National Fuel Gas Company 2010 Equity Compensation Plan
Awards outstanding to named executive officers at September 30, 2020 under the National Fuel Gas Company 2010 Equity
Compensation Plan included SARs (all of which were vested), performance shares and RSUs.
SARs In
connection with a change in control as described below, the Compensation Committee may provide that each SAR shall be canceled in exchange for a cash payment equal to the excess of fair market value over the grant price of the SAR.
Performance Shares Termination of employment due to death, disability or retirement, or due to a
divestiture by the Company of one or more subsidiaries that does not amount to a change in control, results in the vesting of a conditional right. Payment of the performance shares remains subject to satisfaction of the applicable performance
conditions, and the named executive officer would be entitled to a distribution of the same number of performance shares that would be payable for the performance period had the named executive officers service with the Company continued until
the end of the applicable performance period, pro-rated to reflect the time period from the commencement of the performance period through the date of termination.
The following table represents the estimated value of performance shares at September 30, 2020, assuming a qualifying
termination on that date, performance at the target level of performance, and the closing price of the Common Stock on that date.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Value of
Performance
Shares
($)
|
|
|
Name
|
|
Value of
Performance
Shares
($)
|
|
David P. Bauer
|
|
|
1,075,851
|
|
|
John P. McGinnis
|
|
|
1,502,075
|
|
Karen M. Camiolo
|
|
|
268,247
|
|
|
Donna L. DeCarolis
|
|
|
493,681
|
|
John R. Pustulka
|
|
|
2,704,864
|
|
|
|
|
|
|
|
In connection with a change in control as described below, performance shares are deemed earned
at the target level of performance, and the Compensation Committee may provide that the performance shares be settled in cash.
Restricted Stock Units (RSUs) Termination of employment due to death, disability, or divestiture by the
Company of one or more subsidiaries that does not amount to a change in control, results in the vesting of RSUs.
The
following table represents the estimated value of RSUs at September 30, 2020, assuming a qualifying termination on that date and the closing price of the Common Stock on that date.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Value of RSUs
($)
|
|
|
Name
|
|
Value of RSUs
($)
|
|
David P. Bauer
|
|
|
1,259,954
|
|
|
John P. McGinnis
|
|
|
904,508
|
|
Karen M. Camiolo
|
|
|
174,009
|
|
|
Donna L. DeCarolis
|
|
|
391,044
|
|
John R. Pustulka
|
|
|
N/A
|
|
|
|
|
|
|
|
Change in Control If there is a change in control, no acceleration of
exercisability, vesting, cash settlement or other payment shall occur with respect to any award if the Compensation Committee reasonably determines in good faith, prior to the change in control, that the award will be honored or
61
assumed, or new rights substituted (an Alternative Award), by the named executive officers employer following the change in control; provided that any Alternative Award must:
(a) be based on stock traded on an established U.S. securities market;
(b) provide the named executive officer with substantially equivalent rights, entitlements and economic value;
and
(c) provide that, if the named executive officers employment is involuntarily terminated (other
than for cause) or is constructively terminated, in either case within 24 months after the change in control, then all of the named executive officers awards shall vest and be paid in cash or immediately transferable, publicly-traded
securities in an amount equal to, in the case of a SAR, the excess of the fair market value on the date of termination over the grant price, and in the case of other awards, the fair market value of the number of shares of stock subject to the
award.
If the Compensation Committee cannot make the above determination, then: each SAR then outstanding shall be
exercisable regardless of the exercise schedule otherwise applicable; each outstanding RSU shall become fully vested and payable; and each outstanding performance share award shall be deemed earned at the target level of performance for the award.
In addition, in connection with a change in control, the Compensation Committee may provide that each SAR shall be canceled in exchange for a cash payment equal to the excess of fair market value over the grant price of the SAR. The Compensation
Committee may also direct that each RSU and performance share shall be settled in cash with its value determined based on the value received by stockholders in the change in control transaction.
The following table represents the value of awards outstanding under the 2010 Equity Compensation Plan which, upon a change in
control as of September 30, 2020, would have been exercisable (in the case of SARs), would have become vested and payable (in the case of RSUs), or would have been deemed earned at the target level of performance (in the case of performance
shares), in each case, assuming an Alternative Award is not provided. The amounts below are based on the closing price of the Common Stock on September 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payment Due on
Vested & Unvested
Awards ($)
|
|
|
Name
|
|
Payment Due on
Vested & Unvested
Awards ($)
|
|
David P. Bauer
|
|
|
3,297,572
|
|
|
John P. McGinnis
|
|
|
3,387,400
|
|
Karen M. Camiolo
|
|
|
636,087
|
|
|
Donna L. DeCarolis
|
|
|
1,347,586
|
|
John R. Pustulka
|
|
|
4,455,646
|
|
|
|
|
|
|
|
The 2010 Equity Compensation Plan provides that, if a named executive officer engages in any
business or activity competitive with that of the Company, without the Companys written consent, or the named executive officer performs any act that is against the best interests of the Company, all unexercised, unearned or unpaid awards are
forfeited.
For purposes of this section, change in control has a meaning similar to the definition of change
in control set out in the National Fuel Gas Company 1997 Award and Option Plan section. The main difference is that the 2010 Equity Compensation Plan provides that a change in control shall be deemed to have occurred at such time as
individuals who constitute the Board of Directors of the Company at the beginning of the twelve-month period ended on the date of determination (the Incumbent Board) have ceased to constitute at least a majority, provided that any person
becoming a director subsequent to that date whose election, or nomination for election by the Companys stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, shall be considered as
though such person was a member of the Incumbent Board.
62
National Fuel Gas Company Tophat Plan
Under the Companys Tophat Plan, the Company restores to the named executive officers benefits that may be lost under the
Companys qualified retirement benefit plans (Retirement Plan, traditional 401(k) and RSA) due to the Internal Revenue Code or qualified plan limits.
The following table represents the aggregate amount payable for the 401(k) tophat benefit and RSA tophat benefit if termination
occurred September 30, 2020 due to retirement, death, disability, or involuntary termination (other than for cause), or if there was a change in control and the Company terminated the named executive officer without cause or the named executive
officer terminated for good reason.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payment ($)
|
|
|
Name
|
|
Payment ($)
|
|
David P. Bauer
|
|
|
90,543
|
|
|
John P. McGinnis
|
|
|
55,730
|
|
Karen M. Camiolo
|
|
|
21,215
|
|
|
Donna L. DeCarolis
|
|
|
54,448
|
|
John R. Pustulka
|
|
|
92,100
|
|
|
|
|
|
|
|
The value of the tophat benefits for all other forms of termination for Mr. Bauer,
Ms. Camiolo, Mr. Pustulka, Mr. McGinnis and Ms. DeCarolis would have been $27,175, $6,370, $24,725, $33,083 and $13,900, respectively.
Deferred Compensation Plan (the DCP)
Mr. Pustulka is the only named executive officer who is a participant in the DCP. Under the DCP, in the event of a
termination for any reason, other than death or retirement, prior to a change in control, the participant is entitled to receive his or her retirement account balance in the form of a lump sum payment. Note, the term change in control
under the DCP has a similar definition as provided in the 2010 Equity Compensation Plan, discussed above, except in the DCP the reference period for changes in the Board of Directors is 24 months. Mr. Pustulkas retirement account balance
at September 30, 2020 was $211,627.
In the case of retirement, including disability retirement, at any time, a
participant in the DCP is entitled to a monthly payment (a 15-year annuity, unless the participant elected to receive a 5- or
10-year annuity) beginning the first of the month following retirement based on his retirement account balance. If the participant dies before the commencement of the retirement annuity, the entire DCP balance
will be paid in full as a lump sum payment to the participants beneficiary. If the participant dies after commencement of the annuity, the annuity will continue to be paid to the participants beneficiary for the remainder of its original
term.
If termination is due to retirement or disability, the final account balance is calculated with a plan-mandated
switch to the Moodys index rate six months prior to retirement or disability for those participants who elected a return based on the S&P 500 Minus 1.2% Election. For those participants, DCP retirement and disability benefits will be
different than DCP benefits provided upon death or voluntary termination other than retirement. Upon retirement or disability, Mr. Pustulka would have received a ten-year annuity of $2,601 per month for
the first five years, then $1,319 per month thereafter, with a present value of $191,955.
Employment Continuation and
Noncompetition Agreement
Pursuant to each named executive officers Employment Continuation and
Noncompetition Agreement with the Company, if there is a change in control, and the named executive officer remains employed thereafter, the named executive officers annual salary and employee benefits are preserved for at least three years at
the levels then in effect. The agreement also provides for a severance benefit and the continuation of health, welfare and fringe benefits, as described below.
Severance Benefit In the event of termination of a named executive officer within three years of a
change in control without cause or by the named executive officer for good reason, the named executive
63
officer is entitled to a single lump sum cash payment equal to 1.99 times the sum of the named executive officers annual base salary and the average of the annual cash bonus for the
previous two fiscal years. The 1.99 multiplier is reduced on a pro-rata basis if termination occurs between age 62 and age 65, at which point no amount is payable. The named executive officers are also
entitled to their base salary through the date of termination and to any vested benefits under the employee benefit plans, including any compensation previously deferred and not yet paid and any amounts payable pursuant to any agreement with the
named executive officer.
The following table represents the estimated severance benefit payable as a lump sum payment.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payment ($)
|
|
|
Name
|
|
Payment ($)
|
|
David P. Bauer
|
|
|
2,933,527
|
|
|
John P. McGinnis
|
|
|
2,947,721
|
|
Karen M. Camiolo
|
|
|
1,384,043
|
|
|
Donna L. DeCarolis
|
|
|
1,848,254
|
|
John R. Pustulka
|
|
|
N/A
|
|
|
|
|
|
|
|
Cause means the named executives gross misconduct, fraud or dishonesty, which
has resulted or is likely to result in material economic damage to the Company or its subsidiaries as determined in good faith by a vote of at least two-thirds of the
non-employee directors of the Company at a meeting of the Board.
Change in
control generally occurs when: (a) any person (as such term is used in Section 13(d) of the 1934 Act) is the beneficial owner, directly or indirectly, of 20% or more of the outstanding stock of the Company;
(b) a consolidation or merger occurs and the persons who, immediately prior to the consolidation or merger, held the capital stock of the Company do not hold, immediately following, (i) the same proportionate ownership of common stock
of the surviving corporation (where the Company is not the surviving corporation), or (ii) at least a majority of the common stock of the Company (where the Company is the surviving corporation); (c) there is any sale, lease, exchange or
other transfer of all or substantially all the assets of the Company; or (d) there is a change in the majority of the members of the Board of Directors of the Company within a 24-month period, unless the
election or nomination for election by the Companys stockholders of each new director was approved by the vote of at least two-thirds of the directors then still in office who were in office at the
beginning of the 24-month period. However, Mr. McGinnis agreement provides, in place of the above, that a Change in Control occurs if the Company ceases to own more than 50% ownership of Seneca, or
if the Company sells, leases, exchanges or otherwise transfers all or substantially all the assets of Seneca.
Good
reason means there is a material diminution in the named executive officers responsibilities, base compensation or budget, or in the responsibilities of the person to whom the named executive officer is required to report. Good
reason also means a requirement that the named executive officer relocate to an office outside the United States or more than 30 miles from the location at which the executive performed his services immediately prior to the change in control,
or any other action or inaction that constitutes a material breach by the Company of the agreement. The Company has a period of 30 days to cure any acts which would otherwise give the executive the right to terminate his employment for good reason.
Continuation of Health, Welfare and Fringe Benefits In addition to the severance payment, named
executive officers who have not reached age 65 will be entitled to continued participation in the Companys employee and executive health, welfare and fringe benefit plans and arrangements, excluding any vacation benefits, for eighteen months
following termination (or, in the case of Mr. McGinnis, until the end of the second calendar year following termination for purposes of any non-health-related benefit) or until the named executive officer
becomes eligible for comparable benefits at a subsequent employer. The estimated value of the continuation of health benefits due to a qualifying termination of employment of an eligible named executive officer following a change in control is
$41,496 for family coverage or $15,385 for single coverage. This amount was based on 18 months of COBRA rates for the medical, drug and dental benefits. During fiscal 2020, Mr. Bauer, Ms. Camiolo, Mr. McGinnis and Ms. DeCarolis
participated in an arrangement providing for an allowance related to tax preparation and financial
64
planning, and received a payment for life insurance under the ExecutiveLife Insurance Plan. The estimated value of the continuation of these benefits at the same rates for eighteen months is
$19,515 for Mr. Bauer, $19,635 for Ms. Camiolo, $20,573 for Mr. McGinnis and $20,499 for Ms. DeCarolis.
The Employment Continuation and Noncompetition Agreements also provide as follows:
Retirement Except for Mr. McGinnis, if the named executive officer is at least fifty-two years old at the date of termination, the named executive officer will be deemed to have earned and be vested in the retirement benefits that are payable to the named executive officer under the Company
retirement plans. Mr. McGinnis is vested in his benefit in the RSA.
Termination for Cause or the Executive
Voluntarily Terminates If the named executive officers employment is terminated for cause, death, disability, or the named executive officer voluntarily terminates his or her employment other than for good reason, the
named executive officer will not be entitled to the severance benefit discussed above. The named executive officer (or his or her beneficiary) will be entitled to his or her base salary through the date of termination and to any vested benefits
under the employee benefit plans, including any compensation previously deferred and not yet paid and any amounts payable pursuant to any agreement between the named executive officer and the Company. The named executive officer will also be
entitled to any other benefits provided in the Companys plans for death or disability.
Non-competition Unless the named executive officer has elected not to be bound by the non-compete provisions of the agreement, the Company will make a
lump sum payment within 30 days following the named executive officers date of termination equal to one times the sum of (i) the named executive officers annual base salary and (ii) the average of the annual cash bonus for the
previous two fiscal years. The non-compete payment will not be paid to the named executive officer if his or her employment is terminated by reason of death, disability, cause, or retirement.
Under the non-compete provisions of the agreement, the named executive officer may not,
during the one year period following termination, directly or indirectly engage in, become employed by, serve as an agent or consultant to, or become a partner, principal or stockholder (other than a holder of less than 1% of the outstanding voting
shares of any publicly held company) of any business or entity that is engaged in any activity which is competitive with the business of the Company or its subsidiaries or affiliates in any geographic area in which the Company or its subsidiaries
are engaged in competitive business.
The following table represents the estimated
non-compete payment payable upon termination following a change in control as compensation for the covenant not to compete for all forms of termination except for death, disability, cause or retirement.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Payment ($)
|
|
|
Name
|
|
Payment ($)
|
|
David P. Bauer
|
|
|
1,474,134
|
|
|
John P. McGinnis
|
|
|
1,481,267
|
|
Karen M. Camiolo
|
|
|
695,495
|
|
|
Donna L. DeCarolis
|
|
|
928,771
|
|
John R. Pustulka
|
|
|
1,783,776
|
|
|
|
|
|
|
|
National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (the ERP)
Mr. Bauer, Ms. Camiolo and Mr. McGinnis are not participants in the ERP and will not receive any
benefit under this plan upon termination. Under the ERP, no benefits will be payable to a named executive officer whose employment is terminated or could have been terminated for serious, willful misconduct in respect of his or her obligations to
the Company, including the commission of a felony or a perpetration of a common law fraud damaging to the Company.
In
addition, except when a change in control has already occurred, rights under the ERP are forfeited if the named executive officer is employed by anyone who engages in a business competitive with the Company; engages, or advises or assists others
engaged in such business; endeavors to interfere with the
65
relations between the Company and any customer; or engages in any activity the committee administering the ERP (ERP Committee) deems detrimental to the Companys best interests.
From and after 60 days following cessation of such activity by the named executive officer and provision of written notice to the ERP Committee, the right to receive benefits under the ERP will be restored, unless the ERP Committee determines that
the prior activity caused substantial damage to the Company.
The following table gives the estimated value of the first
payment payable under the ERP that would have been due for all forms of termination except for death or termination for cause.
|
|
|
|
|
Name
|
|
Payment ($)
|
|
John R. Pustulka
|
|
|
2,681,021
|
|
Donna L. DeCarolis
|
|
|
858,635
|
|
The default form of benefit payment to the named executive officers is a four-year certain
annuity; therefore, if a payment is shown above, three additional payments of the same amount would be made under the ERP, one in each of the next three years as elected by the named executive officer.
If termination is due to death, a reduced payment will be calculated as a straight life annuity payment to the named executive
officers surviving spouse/beneficiary until his or her death. The first annualized reduced payment would be $457,789 for Mr. Pustulka and $111,716 for Ms. DeCarolis.
Post-Employment Benefits for John P. McGinnis
Post-employment medical and prescription drug benefits will be provided to Mr. McGinnis subject to the same terms and
conditions applicable to then-retiring officers of the Companys utility subsidiary, including the same monthly cost and same levels and types of benefits. Mr. McGinnis will forfeit these benefits if the Company or one of its subsidiaries
terminates his employment at any time.
Summary of Potential Payments Upon Termination or Change in Control
The following table provides estimated values of total benefits for each named executive officer if termination had occurred on
September 30, 2020. As disclosed in the table above under National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan (the ERP), the ERP benefit included in the following estimated values
represents the first payment due upon termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination Other than in
Connection with a Change in Control
|
|
|
Potential Payments Upon Termination
Following a Change in Control
|
|
Executive Benefits
and Payments
Upon Termination
For:
|
|
Voluntary
Termination
($)
|
|
|
Retirement
($)(1)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Company
Terminates
Without
Cause
and/or
Executive
Terminates
for Good
Reason
($)
|
|
|
Company
Terminates
for Cause
($)
|
|
|
Executive
Terminates
Voluntarily
Other
than for
Good
Reason
($)
|
|
David P. Bauer
|
|
|
27,175
|
|
|
|
N/A
|
|
|
|
2,426,349
|
|
|
|
2,426,349
|
|
|
|
7,856,788
|
|
|
|
1,501,309
|
|
|
|
2,761,263
|
|
Karen M. Camiolo
|
|
|
6,370
|
|
|
|
289,461
|
|
|
|
463,470
|
|
|
|
463,470
|
|
|
|
2,771,863
|
|
|
|
701,869
|
|
|
|
875,878
|
|
John R. Pustulka
|
|
|
2,917,373
|
|
|
|
5,669,939
|
|
|
|
3,446,379
|
|
|
|
5,699,939
|
|
|
|
9,224,169
|
|
|
|
2,020,128
|
|
|
|
4,701,149
|
|
John P. McGinnis
|
|
|
33,083
|
|
|
|
55,730
|
|
|
|
3,274,111
|
|
|
|
3,274,111
|
|
|
|
8,745,985
|
|
|
|
1,514,350
|
|
|
|
2,418,858
|
|
Donna L. DeCarolis
|
|
|
872,535
|
|
|
|
1,406,766
|
|
|
|
1,050,891
|
|
|
|
1,797,810
|
|
|
|
5,099,691
|
|
|
|
942,671
|
|
|
|
2,192,350
|
|
(1)
|
Retirement will be N/A if the named executive officer was not eligible to retire on
September 30, 2020. In that case, the Company would have accrued benefits payable to the named executive officer; the accrued amounts are included in the other columns for the different types of terminations.
|
CEO Pay Ratio
Pursuant to SEC rules, we are providing information about the relationship of the annual total compensation of Mr. Bauer,
our President and Chief Executive Officer, and the median of the annual total
66
compensation of all of our employees other than Mr. Bauer. We identified our median employee by examining fiscal year base wages plus cash bonuses of all individuals employed by us and our
consolidated subsidiaries on September 30, 2020 (other than Mr. Bauer), whether full-time, part-time, or on a seasonal or temporary basis. We annualized wages and salaries for all permanent employees, as permitted by SEC rules. Once we
identified our median employee, we added together all of the elements of that employees compensation for fiscal 2020 in the same way that we calculate the annual total compensation of our named executive officers in the Summary Compensation
Table.
For the fiscal year ended September 30, 2020:
|
|
|
the median of the annual total compensation of all employees of the Company other than the CEO was reasonably
estimated to be $77,963;
|
|
|
|
the annual total compensation of the CEO was $4,959,915; and
|
|
|
|
based on this information, the ratio of the annual total compensation of the CEO to the median of the annual
total compensation of all other employees is estimated to be 64 to 1.
|
Executive Officer and Director
Hedging
The Companys policy regarding hedging or offsetting any decrease in the market value of Company
securities is set forth in the Companys Corporate Governance Guidelines, included as Appendix B to this proxy statement (see Hedging or Pledging of Company Stock). The policy applies to the Companys directors and executive
officers. Under the policy, the Companys directors and executive officers should not purchase or sell options on Company stock, and should not engage in short sales with respect to Company common stock. Trading by the Companys executive
officers and directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Company stock is prohibited. Further, the Companys directors and executive officers may not pledge Company equity as
security for an extension of credit. In addition, the Companys insider trading policy prohibits employees, officers and directors, when in possession of material nonpublic information, from conducting any open market or private purchase or
sale of Company securities, or any derivative of such a security whether or not issued by the Company (put or call options, equity swaps, collars, prepaid variable forward sales contracts, exchange funds, etc., that are
designed to hedge a Company security). The insider trading policy also provides that any purchases or sales of Company securities intended by an employee, officer or director to qualify as transactions pursuant to a Rule 10b5-1 plan must occur without entrance into or alteration of a hedging transaction or position with respect to the Company securities that are subject to the plan.
67
PROPOSAL 2. ADVISORY APPROVAL OF NAMED
EXECUTIVE OFFICER COMPENSATION
In accordance with Section 14A of the Securities Exchange Act of 1934, we are
asking stockholders for approval of the following advisory resolution on executive compensation:
RESOLVED, that the compensation paid to the Companys named executive officers, as disclosed herein
pursuant to Item 402 of Regulation S-K and described in the Compensation Discussion and Analysis, accompanying compensation tables and related narrative discussion, is hereby APPROVED.
This proposal allows stockholders to take part in a non-binding, advisory vote to
approve the compensation of the Companys named executive officers. The Board recommends a vote FOR this resolution because it believes that the Companys compensation policies and procedures encourage a culture of pay for
performance and are strongly aligned with the interests of the Companys stockholders.
The Companys executive
compensation is described and explained in the CD&A, in the tabular disclosure starting with the Fiscal 2020 Summary Compensation Table, and in the Proxy Statement Overview & Summary included at the front of this proxy statement. We
urge stockholders to carefully review this information to understand how the Companys executive compensation is designed and how it compares with other similar companies.
Approval of this proposal requires a majority of the votes cast with respect to this proposal. This non-binding, advisory vote is currently scheduled to be conducted every year, and it is anticipated that the next non-binding advisory vote will take place at the
2022 Annual Meeting of Stockholders. Consistent with SEC rules, the vote on this proposal is advisory and is not binding on the Board. The vote on this proposal will not be construed as overruling any decision by the Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
COMPANYS NAMED EXECUTIVE OFFICER COMPENSATION.
68
PROPOSAL 3. APPROVAL OF AN AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS
Our Restated Certificate of Incorporation
(the Certificate) currently provides for a classified board divided into three classes, with each class serving a staggered three-year term. Under this board structure, approximately one-third of
our directors stand for election each year. As the Company operates an integrated natural gas business that spans the entirety of the energy value chain, including the exploration and production, gathering, pipeline and storage, and utility
industries, each with planning horizons well in excess of one year, the Company believes that its current board structure appropriately allows our directors to focus on the long-term interests of our business and of all of its stockholders.
The Company acknowledges that many of its stockholders support the annual election of all directors, and is mindful of the
evolving landscape of corporate governance practices. At last years annual meeting, a Company stockholder presented a non-binding proposal requesting that our Board take the steps necessary to declassify
the Board and transition to all directors ultimately standing for election annually. The proposal requested that declassification be completed in a manner that would not affect the unexpired terms of directors who were previously elected by the
Companys stockholders.
After careful consideration by the Nominating/Corporate Governance Committee and the full
Board, the Board has approved proposed amendments to Article SIXTH of the Certificate to phase out the three-year staggered terms of our directors and transition to the annual election of directors. While
the Board continues to recognize that there can be benefits to the Company, its stockholders and other stakeholders from a classified board, the Board also recognizes that annually elected boards are perceived by many stockholders as a way to
increase the accountability of directors to stockholders. In addition, the Board feels that it is important to consider the views of the Companys stockholders as it continuously evaluates and develops its corporate governance practices. These
proposed amendments would not take effect unless they are first approved by the requisite vote of our stockholders.
If the
proposed amendments to the Certificate are approved, beginning at the Companys 2022 annual meeting, directors standing for election at such meeting will be elected to one-year terms. Directors elected to
three-year terms prior to the effectiveness of the amendments, including directors elected at the 2020 and 2021 annual meetings, would complete the three-year terms for which they were elected, and thereafter
would be eligible for annual re-election. Beginning with the 2024 annual meeting, the Board would be completely declassified and all directors would stand for election annually. Directors elected by the Board
to fill newly created directorships resulting from an increase in the number of directors or any vacancies on the Board would serve until the next annual meeting, and upon election by the stockholders, until the completion of the unexpired terms of
the class in which the vacancy was filled, if applicable.
Approving the amendments requires the affirmative vote of a
majority of votes cast by the holders of shares entitled to vote on this proposal. The full text of the proposed amendments is attached as Appendix C to this proxy statement.
If stockholders approve this proposal, Article SIXTH of the Certificate will be amended and restated as shown in Appendix
C to this proxy statement. If stockholders approve this proposal, the Company will file a Certificate of Amendment with the New Jersey Department of the Treasury following the 2021 annual meeting. If stockholders do not approve this proposal, the
present classification of the Board will continue.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
69
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the Annual Meeting, stockholders will be asked to ratify the Audit
Committees appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Companys fiscal year ending September 30, 2021 (fiscal 2021). The independent registered public accounting
firm will examine the financial statements of the Company and its subsidiaries and report upon the annual consolidated financial statements for fiscal 2021. PricewaterhouseCoopers LLP served as the Companys independent registered public
accounting firm for fiscal 2020.
One or more representatives of PricewaterhouseCoopers LLP are expected to attend the
Annual Meeting. They will have an opportunity to make a statement if they wish and are expected to be available to respond to appropriate stockholder questions.
The affirmative vote of a majority of the votes cast with respect to the ratification of the appointment of the independent
registered public accounting firm by the holders of shares of Common Stock entitled to vote is required for ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm.
If the necessary votes are not received, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP and
may retain PricewaterhouseCoopers LLP or appoint another independent registered public accounting firm, without resubmitting the matter to stockholders. Even if the appointment is ratified, the Audit Committee in its discretion may appoint a
different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. Unless they are otherwise directed by the stockholders, the
Proxies intend to vote for ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THIS APPOINTMENT.
70
IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
Only one copy of this proxy statement, the Companys Summary Annual Report and financial statements for the 2020 fiscal
year are being delivered to some multiple stockholders who share an address unless the Company has received contrary instructions from one or more of the stockholders. A separate proxy card and a separate notice of the Annual Meeting are being
included for each account at the shared address.
Registered stockholders who share an address and would like to receive a
separate annual report to stockholders and/or a separate proxy statement for the Annual Meeting or future Annual Meetings of Stockholders, or have questions regarding the householding process, may call Broadridge, toll-free at 1-866-540-7095. You will need your 16-digit control number. Simply follow the prompts. You may
also write to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Promptly upon request, additional copies of the Companys Summary Annual Report and financial statements for fiscal 2020 and separate proxy statements for
the Annual Meeting will be sent. By contacting Broadridge, registered stockholders sharing an address can also request delivery of a single copy of annual reports to stockholders or proxy statements in the future if registered stockholders at the
shared address are receiving multiple copies.
Many brokerage firms and other holders of record have also instituted
householding procedures. If your family has one or more street name account under which you beneficially own shares of Common Stock, you may have received householding information from your broker, financial institution or other nominee
in the past. Please contact the holder of record directly if you have questions, require additional copies of this proxy statement or our Summary Annual Report to Stockholders and financial statements for fiscal 2020 or wish to revoke your decision
to household and thereby receive multiple copies. You should also contact the holder of record if you wish to institute householding and see the section Multiple Copies of Proxy Statement within this proxy statement. These options are
available to you at any time.
PROPOSALS OF SECURITY HOLDERS FOR THE 2022 ANNUAL MEETING
Proposals that security holders intend to present at the 2022 Annual Meeting of Stockholders must be received by the Secretary
at the principal offices of the Company no later than September 24, 2021, in order to be considered for inclusion, pursuant to SEC Rule 14a-8 under the Exchange Act, in the Companys proxy statement
and proxy for that meeting. Notice of a stockholder proposal submitted outside the processes of SEC Rule 14a-8 under the Exchange Act, or a notice of a stockholders intent to nominate one or more
directors, for consideration at the 2022 Annual Meeting of Stockholders, shall be considered untimely unless received by the Secretary at the Companys principal office between October 12, 2021 and November 11, 2021.
OTHER BUSINESS
The Board of Directors does not know of any business that will be presented for consideration at the Annual Meeting except as
set forth above. However, if any other business is properly brought before the Annual Meeting, or any adjournment or postponement thereof, the Proxies will vote in regard thereto according to their discretion.
71
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file periodic reports and other information with the SEC. Our SEC filings are available to the public at the SECs
website at www.sec.gov and at the Companys website at www.nationalfuel.com.
Statements contained in
this proxy statement, or in any document incorporated in this proxy statement by reference regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to
that contract or other document filed as an exhibit with the SEC. The SEC allows the Company to incorporate by reference the information that it files with the SEC. Incorporation by reference means that the Company can disclose important information
to you by referring you to other documents filed separately with the SEC that are legally considered to be part of this document, and such documents are automatically updated and superseded by this proxy statement. Later information that is filed by
the Company with the SEC will automatically update and supersede the information in this document.
BY
ORDER OF THE BOARD OF DIRECTORS
SARAH J. MUGEL
General Counsel and Secretary
January 22, 2021
72
APPENDIX A TO PROXY STATEMENT
NATIONAL FUEL GAS COMPANY
REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
National Fuel Gas Company (Company) has a longstanding commitment to comply with federal and state securities laws
and regulations, accounting standards, accounting controls and audit practices. In furtherance of this commitment, the Audit Committee of the Companys Board of Directors has established these Reporting Procedures for Accounting and Auditing
Matters (Procedures), which provide for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding accounting or auditing matters.
These Procedures apply to all employees of all divisions and subsidiaries of the Company.
|
A.
|
Making a Report of Accounting and Auditing Matters
|
|
1.
|
An employee with a concern or complaint regarding accounting, internal accounting controls, or auditing
matters (collectively Accounting and Auditing Matters) may report such concerns, on a confidential and anonymous basis if the employee so desires, as follows:
|
|
a.
|
Via the Companys dedicated toll-free hotline (1-800-605-1338) operated by a third party service company; or
|
|
b.
|
Via the Companys dedicated website (www.natfuelgas.ethicspoint.com) operated by a third party
service company; or
|
|
c.
|
In writing in a sealed envelope addressed to the Chairman of the Audit Committee, National Fuel Gas Company,
6363 Main Street, Williamsville, New York 14221. The sealed envelope should be labeled with a legend such as: Submitted pursuant to the Reporting Procedures for Accounting and Auditing Matters.
|
|
2.
|
A sufficiently detailed description of the factual basis for the report should be given in order to allow
appropriate investigation into the matter.
|
|
1.
|
All reports will be forwarded to the Chairman of Audit Committee, the Chief Auditor, and General Counsel.
|
|
2.
|
Upon receipt of a report, the Chief Auditor will determine whether the complaint pertains to Accounting and
Auditing Matters. If the report does not pertain to Accounting and Auditing Matters, the Chief Auditor and General Counsel will decide together on the appropriate disposition.
|
|
3.
|
Reports relating to Accounting and Auditing Matters will be promptly investigated by the Chief Auditor under
the Audit Committees direction and oversight, and may involve the assistance of other Company resources as needed. To the fullest extent possible, such investigations and reports will be kept confidential.
|
|
4.
|
If the results of an investigation indicate that corrective action is required, the Audit Committee will
decide what steps should be taken to rectify the problem and reduce the likelihood of recurrence, and may also recommend appropriate discipline.
|
A-1
|
5.
|
No person making a report under these Procedures shall be subject to retaliation because of making a good
faith report. In addition, any employee of the Company responsible for retaliating against individuals who in good faith report concerns regarding Accounting and Auditing Matters will be subject to disciplinary action, up to and including
termination. Any employee making a bad faith report, including a report made for the purpose of harassing or maliciously injuring the subject of the report, will be subject to disciplinary action, up to and including termination.
|
|
C.
|
Retention of Reports and Investigation Documents
|
The Chief Auditor will maintain, in accordance with the Companys document retention policy, a complete record of all
reports received (including those determined not to pertain to Accounting and Auditing Matters), all records associated with reports of Accounting and Auditing Matters, the treatment of reports of Accounting and Auditing Matters under these
Procedures, and the ultimate disposition of Accounting and Auditing Matters reports. In addition, the Chief Auditor shall prepare an update on the status of (i) all reports of Accounting and Auditing Matters under investigation, and
(ii) those reports of Accounting and Auditing Matters whose investigation has been concluded since the previous status update. Status updates shall be provided as required to the Chairman of the Audit Committee and shall be provided on at least
a quarterly basis for the entire Audit Committee.
IV.
|
Administration of Procedures
|
The Audit Committee is the issuer and owner of these Procedures. These Procedures shall be subject to periodic review and
revision by the Audit Committee as necessary or appropriate. The Audit Committee, in consultation with the Companys Chief Auditor, shall have the authority to make any interpretations regarding the operation of these Procedures.
A-2
APPENDIX B TO PROXY STATEMENT
NATIONAL FUEL GAS COMPANY
CORPORATE GOVERNANCE GUIDELINES
AMENDED EFFECTIVE JUNE 11, 2020
The business of National Fuel Gas Company (the Company) is conducted by its employees, managers and officers, under
the oversight of the Board of Directors (the Board), in order to serve the long-term interests of its stockholders. The Board and management recognize that the long-term interests of stockholders are served by considering the interests
of customers, employees and the communities in which the Company operates. In addition, the Board requires directors, officers and employees to comply with all legal and regulatory requirements and to adhere to the highest ethical standards in the
performance of their duties. To help discharge its responsibilities, the Board has adopted the following guidelines on corporate governance matters.
The Board shall consist of a number of directors, not less than seven nor more than eleven, as determined by a majority vote of
the full Board.
The business and affairs of the Company shall be managed by or under the direction of the Board, acting as
a body, in accordance with Section 14A:6-1 of the New Jersey Business Corporation Act. Individual directors shall have no authority to act for or on behalf of the Company without the express authorization
of the Board, or as may be provided by law, the Certificate of Incorporation or the By-Laws.
A majority of the Board must qualify as independent directors under the listing standards of the New York Stock Exchange. The
Board will annually review the relationship that each director has with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). All determinations of director independence
will be disclosed in the Companys annual proxy statement.
3.
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Director Qualifications
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The Board, with input from the Nominating/Corporate Governance Committee, is responsible for periodically determining the
appropriate skills, perspectives, experiences, and characteristics required of Board candidates, taking into account the Companys needs and current make-up of the Board. This assessment should include
knowledge, experience, and skills in areas critical to understanding the Company and its business; personal characteristics, such as integrity and judgment; and candidates commitments to the boards of other publicly-held companies. Each Board
member is expected to ensure that other existing and planned future commitments do not materially interfere with the members service as a director and that he or she devotes the time necessary to discharge his or her duties as a director.
The Nominating/Corporate Governance Committee is responsible for periodically reviewing these qualification guidelines and
recommending modifications, as appropriate. The Board believes the qualification guidelines included as Exhibit A are currently appropriate, but it may change these guidelines as the Companys and Boards needs warrant.
Directors are expected to carry out the functions of the Board in a professional and diligent manner, and to spend the time and
effort necessary to properly discharge such responsibilities. Accordingly, a director is expected to regularly attend meetings of the Board and Committees on which such director sits, with the understanding that on occasion a director may be unable
to attend a meeting. A director who is unable to attend a meeting is expected to notify the Chairman of the Board or the Chair of the appropriate Committee in advance of such meeting. A director is also expected to review provided materials in
advance of a meeting.
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4.
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Selection of New Directors
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The Board is responsible for selecting Board candidates and nominating them for election by the stockholders and for filling
vacancies on the Board. The Nominating/Corporate Governance Committee will recommend to the Board nominees for election, including, as appropriate, incumbent directors for re-election.
Stockholders may propose candidates for consideration by the Nominating/Corporate Governance Committee in accordance with the
Process for Identifying and Evaluating Nominees for Director included as Exhibit B. In addition, the Companys By-Laws provide a process for stockholders meeting certain requirements to have
nominees included in the Companys proxy materials.
In recommending individuals for nomination, the
Nominating/Corporate Governance Committee will seek the input of the Chairman of the Board and Chief Executive Officer and will evaluate candidates using the qualification guidelines included as Exhibit A and the Process for Identifying and
Evaluating Nominees for Director included as Exhibit B, as they may be supplemented from time to time. Once a candidate is selected to join the Board, the Chairman of the Board and/or the Chair of the Nominating/Corporate Governance Committee
will extend the invitation to join the Board on the Boards behalf.
The Board does not believe it should limit the number of terms for which an individual may serve as a director. While term
limits could help ensure fresh ideas, they also would force the Board to lose the contributions of directors who have developed an insight into the Company. This insight and continuity of directors is an advantage, not a disadvantage. As an
alternative to term limits, the Nominating/Corporate Governance Committee will review a directors continuation on the Board whenever the director experiences a change in professional responsibilities, as a way to assure that the
directors skills and experience continue to match the needs of the Board. In addition, in connection with nomination of the slate of directors that the Board proposes for election by stockholders each year, the Nominating/Corporate Governance
Committee will consider re-nominated directors continuation on the Board and take steps as may be appropriate to ensure that the Board maintains an openness to new ideas.
A director shall normally serve on the Board for a three-year term, except that subject to paragraph 8, a director appointed to
fill a vacancy shall stand for election at the next annual meeting of stockholders.
In an uncontested election of
directors, a nominee for director who fails to receive a majority FOR vote of votes cast, as defined under New Jersey law, for election in accordance with the Companys By-Laws is expected to
tender, promptly following certification of the stockholder vote, his or her resignation from the Board, which resignation may be conditioned upon Board acceptance of the resignation.
The Nominating/Corporate Governance Committee will consider the tendered resignation of a director who fails to receive a
majority of votes cast for election, as well as any other offer to resign that is conditioned upon Board acceptance, and recommend to the Board whether or not to accept such resignation. The Nominating/Corporate Governance Committee in deciding what
action to recommend, and the Board in deciding what action to take, may consider any factors they deem relevant. The director whose resignation is under consideration shall abstain from participating in any decision of the Nominating/Corporate
Governance Committee or the Board regarding such resignation. If the Board does not accept the resignation, the director will continue to serve until his or her successor is elected and qualified. The Board shall publicly disclose its decision
regarding a resignation tendered by a director who fails to receive a majority of votes cast for election within 90 days after certification of the stockholder vote.
6.
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Change in Professional Responsibilities
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It is the view of the Board that each director who experiences a change in his or her business or professional affiliation or
responsibilities should bring this change to the attention of the Board and
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should offer to resign. The Board does not believe that each director who retires or has a change in position or responsibilities should necessarily leave the Board. The Nominating/Corporate
Governance Committee will, however, review the continued appropriateness of Board membership under these circumstances and make a recommendation to the Board.
This same guideline applies to any inside directors, including the Chief Executive Officer of the Company, in the event he or
she no longer serves in that position.
7.
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Service on Other Boards
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It is the view of the Board that directors are expected to ensure that other commitments, including other board memberships, do
not interfere with their duties and responsibilities as members of the Board. Current directors should notify the Chief Executive Officer or Corporate Secretary, who in turn will notify the Chair of the Nominating/Corporate Governance Committee,
when considering a request for service on the board of any other public company or other for-profit entity. The Nominating/Corporate Governance Committee, in consultation with the Chief Executive Officer (or
the Corporate Secretary, in the case of the Chief Executive Officer who is the subject of the request), will consider potential conflicts of interest and whether the service would interfere with such directors ability to properly discharge his
or her duties. The Committee will make a recommendation to the Board, and the Board, exercising its business judgement, will consider any further action.
A Company director must submit his or her resignation from the Board at the annual meeting of stockholders immediately
following his or her 75th birthday. Directors may stand for re-election even though this guideline would prevent them from completing a full term.
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A.
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Chairman of the Board and Chief Executive Officer
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1. The Chairman of the Board, who may also be the Chief Executive Officer, shall be a director and preside at all meetings of
the Board and meetings of the stockholders. The Chairman of the Board is chosen on an annual basis by at least a majority vote of the remaining directors.
2. The Chief Executive Officer, who may also be the Chairman of the Board, shall be appointed by the Board and serve at the
pleasure of the Board.
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B.
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Lead Independent Director
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The Lead Independent Director will preside at all meetings of the non-management
directors at which he or she is present and all meetings of the independent directors at which he or she is present. The Lead Independent Director will perform such other functions as the Board may direct. The Lead Independent Director is chosen on
an annual basis by at least a majority vote of the remaining directors.
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C.
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Succession Planning and Leadership Development
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Each year, the Chief Executive Officer will report to the Compensation Committee on succession planning and his or her
recommendation as to a potential successor, along with a review of any development plans recommended for such individuals. The Committee will make an annual report to the Board on succession planning, and the Board will work with the Committee to
evaluate potential successors to the Chief Executive Officer. When the Compensation Committee and the Board review management succession plans for the Chief Executive Officer, they will consider succession in the event of an emergency or retirement
of the Chief Executive Officer. The Committee and the Board will also review succession candidates for executive officers other than the Chief Executive Officer and other senior managers as it deems appropriate.
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Currently there are five Committees: Executive, Audit, Compensation, Nominating/Corporate Governance, and Financing. The Board
believes the current Committee structure is appropriate. From time to time, depending upon the circumstances, the Board may form a new Committee or disband a current Committee.
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B.
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Assignment of Committee Members
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The Board appoints members of the Committees on an annual basis. Vacancies in the Committees will be filled by the Board. In
making assignments to the Committees, only independent directors may serve on the Audit Committee, the Compensation Committee, or the Nominating/Corporate Governance Committee, and at least one member of the Audit Committee must have accounting or
financial management experience, as defined by the U.S. Securities and Exchange Commission rules or as required under applicable New York Stock Exchange listing requirements. Additionally, a member of the Audit Committee may not sit on more than
three other Audit Committees of other public companies, unless the Board determines that such commitments would not impair his or her effective service to the Company.
The Board will take into account tenure on a Committee and give consideration to rotating Committee members periodically, but
the Board does not feel that rotation should be mandated as a policy.
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C.
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Committee Charters and Authority
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The Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, each have a written charter, which
has been approved by the Board. Each charter delegates certain responsibilities to the respective Committee.
The Executive
Committee may exercise Board authority with respect to matters other than those for which action of the full Board is required under applicable law. The Financing Committee may exercise Board authority with respect to specific matters for which the
Board has delegated responsibility to it.
Unless delegated to one of the Committees either in the Charter, the By-Laws, a resolution of the Board or a vote of stockholders, each Committee shall make recommendations to the Board and the Board will consider and approve the recommendations. The Committee charters may be changed
from time to time by approval of the Board.
The Board has at least four scheduled meetings per year at which it reviews and discusses reports by management on the
performance of the Company, its plans and prospects, as well as immediate issues facing the Company.
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B.
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Role of the Chairman of the Board
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The Chairman of the Board shall preside at all meetings of the Board. The Chairman of the Board shall determine the agenda for
all Board meetings with the assistance of the Chief Executive Officer. Each director shall be entitled to suggest the inclusion of items on the agenda, with the final determination of the agenda to be made by the Chairman of the Board. The Chairman
of the Board shall also determine the timing and length of Board meetings, and the time to be devoted to each topic on the agenda. All procedural matters with respect to the conduct of Board meetings shall be determined by the
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Chairman of the Board, including whether any individuals other than Board members shall be invited to attend and/or participate in all or any portion of any meetings, and the conditions of such
individuals attendance and/or participation. In the absence of the Chairman of the Board, the Chief Executive Officer shall exercise all powers and authority conferred herein.
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C.
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Distribution of Board Materials in Advance
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Materials for review, discussion and/or action of the Board should be distributed to Board members in advance of meetings
whenever practicable.
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D.
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Non-Management Director Meetings/Independent Director
Meetings
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The non-management directors will meet at
regularly scheduled executive sessions without management. The Audit Committee Chair, Nominating/Corporate Governance Committee Chair and Compensation Committee Chair may call the non-management directors to
additional sessions without management. The independent directors will meet in executive session without management at least once per year. The Board shall not take formal actions at meetings of the
non-management directors or independent directors, although the participating directors may make recommendations for consideration by the full Board.
Pursuant to their fiduciary duties, directors are required to protect and hold confidential all
non-public information obtained by reason of their directorship position absent the express or implied permission of the Board of Directors to disclose such information or the written agreement of the Company
to permit disclosure. No director shall use Confidential Information for his or her own personal benefit or to benefit persons or entities outside the Company. No director shall disclose Confidential Information outside the Company, either during or
after his or her service as a director of the Company, except (i) with authorization of the Board of Directors, (ii) as may be permitted by written agreement with the Company, or (iii) as may be otherwise required by law.
Confidential Information is all non-public information entrusted to or
obtained by a director by reason of his or her position as a director of the Company. It includes, but is not limited to, non-public information that might be of use to competitors or harmful to the Company or
its customers if disclosed, such as
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information about the Companys financial condition, results of operations, prospects, plans, objectives
or strategies, and information relating to mergers and acquisitions, stock splits, stock repurchases, divestitures and other transactions;
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trade secrets, information or techniques, marketing and research and development information, drilling and
exploration data, information concerning customers, suppliers, producers and joint venture partners, payroll and benefits information, current/past employee information, technical and computer/software related information, and legal information;
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information about discussions and deliberations relating to business issues and decisions, between and among
employees, officers and directors.
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To promote a free and unfettered exchange of ideas among directors,
the directors will treat all discussions and deliberations that take place at Board meetings as confidential unless disclosure of those discussions is otherwise required by law or permitted by written agreement with the Company. No video or
electronic recording of Board proceedings shall be made without the consent of the Chairman of the Board and a majority of the Board.
13.
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Board and Committee Performance Evaluations
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The Board and the Audit, Compensation and Nominating/Corporate Governance Committees will perform an annual self-evaluation.
Each year the directors will provide assessments of the effectiveness of
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the Board, and the members of the Audit, Compensation and Nominating/Corporate Governance Committees will provide assessments of the effectiveness of their respective committees. These
evaluations will be submitted to the Nominating/Corporate Governance Committee which will review them and determine if any additional evaluation is necessary. If the Nominating/Corporate Governance Committee determines that additional evaluation is
necessary, it may elect to have such evaluation performed internally, or by an independent corporate governance expert. The Nominating/Corporate Governance Committee will report all evaluation results to the Board and make recommendations for areas
which, in its judgment, require improvement.
The Boards compensation philosophy is that directors (other than those who are also salaried officers of the Company or
any of its subsidiaries) are entitled to receive reasonable compensation for their services and reimbursement for certain expenses, as may be determined by the Board. The Compensation Committee shall have the responsibility for recommending to the
Board changes in compensation levels for non-employee directors. In discharging this duty, the Committee shall be guided by four general principles: compensation should fairly pay directors for work required;
compensation should attract and retain highly qualified candidates for Board membership; compensation should align directors interests with the long-term interests of stockholders; and compensation should be transparent and as simple as
possible within the limitations of tax and legal considerations.
Reasonable compensation also may be paid to any person
(other than a salaried officer or employee of the Company or any of its subsidiaries) formally requested by the Board to attend a meeting.
15.
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Board Access to Company Officers
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Board members will have access to all officers of National Fuel Gas Company. Independent Board members may consult with such
officers without senior corporate management present. Members of committees of the Board will also have such access to management as is provided in committee charters or as may otherwise be authorized by the Board. Management is encouraged to invite
Company personnel to any Board meeting at which their presence and expertise would help the Board to have a full understanding of matters being considered and to introduce managers with significant potential.
16.
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Access to Independent Advisors
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The Board shall have the power at any time by majority vote to retain independent outside financial, legal or other advisors,
at the Companys expense.
17.
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Director Contact with the Companys Constituencies
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Except as otherwise required by New York Stock Exchange listing standards or applicable law, or as authorized by the Board,
communications with parties external to the Company (including but not limited to stockholders, the media, attorneys, vendors, service providers, etc.) shall be the responsibility of the Chief Executive Officer or delegated by the Chief Executive
Officer to the appropriate area of the Company. The directors will be consulted from time to time for their advice, as the Chief Executive Officer so determines.
18.
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Director Orientation and Continuing Education
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All directors, upon their initial appointment to the Board, shall attend an educational session, thereby enabling them to
better perform their duties and recognize and deal with various issues that may arise during their tenure as directors. Subsequently, the directors shall attend ongoing educational programs related to their Board service as the Board deems
appropriate.
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19.
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Risk Oversight and Oversight of Corporate Responsibility (Environmental, Social and Corporate Governance)
Concerns
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The Board retains risk oversight and general oversight of corporate responsibility,
including environmental, social and corporate governance (ESG), concerns, and any related health and safety issues that might arise from the Companys operations. The Boards Nominating/Corporate Governance Committee will
oversee and provide guidance to management concerning the Companys strategy and reporting with respect to ESG concerns. Management is expected to integrate these corporate responsibility considerations into decision-making throughout the
organization.
If the Company is required to restate its financial results due to material noncompliance with any financial reporting
requirement under the securities laws as a result of misconduct by a current or former executive officer, the Board would exercise its business judgment to determine what action it believes is appropriate to address the conduct, prevent its
recurrence, and impose such discipline as would be appropriate. In addition to other potential action, the Board may, in its discretion after considering the costs and benefits of doing so, seek to recover that portion of any incentive-based
compensation received by such officer (including compensation received upon exercise or payment of stock options and other equity awards) during the three-year period preceding the date on which the Company was required to prepare the accounting
restatement, which exceeds the amount or value that the Board determines would have been payable or received in respect of such incentive awards had the revised financial statement(s) reflected in the restatement been applied to determine the
incentive compensation or been available to the market at the time of exercise or payment of any incentive award. Subject to any limits imposed by applicable law, the Board may seek to recover such excess compensation by requiring the officer to pay
such amount to the Company; by set-off; by reducing future compensation; or by such other means or combination of means as the Board determines to be appropriate.
21.
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Hedging or Pledging of Company Stock
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It is the view of the Board that directors and executive officers should not purchase or sell options on Company stock, nor
engage in short sales with respect to Company common stock. Trading by executive officers and directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Company stock is prohibited. Directors and
executive officers may not pledge Company equity as security for an extension of credit.
22.
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Amendment and Interpretation
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These Guidelines are in addition to and are not intended to change or interpret any federal or state law or regulation, or the
Companys Certificate of Incorporation or By-Laws or any Committee Charter reviewed and approved by the Board. The Guidelines are subject to modification from time to time by the Board.
B-7
EXHIBIT A
TO
NATIONAL FUEL GAS
COMPANY
CORPORATE GOVERNANCE GUIDELINES
NATIONAL FUEL GAS COMPANY
DIRECTOR QUALIFICATION GUIDELINES
The Board of Directors in considering qualifications of directors standing for
re-election and candidates for Board membership will consider the following factors, in addition to those other factors it may deem relevant:
1. Strong management experience, ideally with major public companies.
2. Other areas of expertise or experience that are desirable given the Companys business and the current make-up of the Board, such as expertise or experience in: the natural gas industry, information technology businesses, manufacturing, financial or investment banking, scientific research and development, senior
level government experience, and academic administration or teaching.
3. Desirability of range in age, so that retirements
are staggered to permit replacement of directors of desired skills and experience in a way that will permit appropriate continuity of Board members.
4. Independence, as defined by the Board.
5. Diversity of perspectives, including all aspects of diversity, brought to the Board by individual members.
6. Knowledge and skills in accounting and finance, business judgment, general management practices, crisis response and
management, industry knowledge and leadership.
7. Personal characteristics matching the Companys values, such as
integrity, accountability, financial literacy, and high performance standards.
8. Additional characteristics, such as:
a.) willingness to commit the time required to fully discharge their responsibilities to the Board,
including the time to prepare for Board and Committee meetings by reviewing the material supplied before each meeting;
b.) commitment to attend a minimum of 75% of meetings;
c.) ability and willingness to represent the stockholders long and short-term interests;
d.) awareness of the Companys responsibilities to its customers, employees, suppliers, regulatory
bodies, and the communities in which it operates; and
e.) willingness to advance their opinions, but once
a decision is made by a majority of the Board, a willingness to support the majority decision assuming questions of ethics or propriety are not involved.
9. The number of commitments to other entities, with one of the more important factors being the number of other public-company
boards on which the individual serves.
10. In order to qualify for election as a director, a nominee must be a stockholder
of the Company.
B-8
EXHIBIT B
TO
NATIONAL FUEL GAS
COMPANY
CORPORATE GOVERNANCE GUIDELINES
NATIONAL FUEL GAS COMPANY
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
Process for Identifying and Evaluating Nominees for Director
1. The Nominating/Corporate Governance Committee (the Committee) will observe the following procedures in identifying and
evaluating candidates for election to the Companys Board of Directors.
2. The Company believes that the continuing
service of qualified incumbents promotes stability and continuity in the boardroom, contributing to the Boards ability to work as a collective body, while giving the Company the benefit of the familiarity and insight into the Companys
affairs that its directors have accumulated during their tenure. Accordingly, the process of the Committee for identifying nominees shall reflect the Companys practice of re-nominating incumbent
directors who continue to satisfy the Boards criteria for membership on the Board, whom the Committee believes continue to make important contributions to the Board and who consent to continue their service on the Board.
3. Consistent with this policy, in considering candidates for election at annual meetings of stockholders, the Committee will
consider the incumbent directors whose terms expire at the upcoming meeting and who wish to continue their service on the Board.
4. The Board will evaluate the qualifications and performance of the incumbent directors who desire to continue their service.
In particular, as to each such incumbent director, the Committee will
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(a)
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consider if the director continues to satisfy the Director Qualification Guidelines which are Exhibit A to
the Companys Corporate Governance Guidelines;
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(b)
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review any prior assessments of the performance of the director during the preceding term made by the
Committee; and
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(c)
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determine whether there exist any special, countervailing considerations against re-nomination of the director.
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5. If the Committee determines that:
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(a)
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an incumbent director consenting to re-nomination continues to be
qualified and has satisfactorily performed his or her duties as a director during the preceding term; and
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(b)
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there exist no reasons, including considerations relating to the composition and functional needs of the
Board as a whole, why in the Committees view the incumbent should not be re-nominated, the Committee will, absent special circumstances, propose the incumbent director for
re-nomination.
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6. The Committee will identify and evaluate new
candidates for election to the Board, including for the purpose of filling vacancies arising by reason of the resignation, retirement, removal, death or disability of an incumbent director or the desire of the directors to expand the size of the
Board.
7. The Committee will accept recommendations for nominees from persons that the Committee believes are likely to be
familiar with qualified candidates. These persons may include members of the Board, including members of the Committee, and management of the Company. The Committee may also determine to engage a professional search firm to assist in identifying
qualified candidates. If such a firm is engaged, the Committee shall set its fees and the scope of its engagement.
8. As
to each recommended candidate that the Committee believes merits consideration, the Committee will:
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(a)
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cause to be assembled information concerning the background and qualifications of the candidate;
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(b)
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determine if the candidate satisfies the Director Qualification Guidelines which are Exhibit A to the
Companys Corporate Governance Guidelines; if so, then
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(c)
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consider the contribution that the candidate can be expected to make to the overall functioning of the
Board.
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9. The Committee shall solicit the views of the Chief Executive Officer and the Chairman of the
Board, and the views of such other persons as the committee deems appropriate, regarding the qualifications and suitability of candidates to be nominated as directors.
10. In its discretion, the Committee may designate one or more of its members (or the entire Committee) to interview any
proposed candidate.
11. Based on all available information and relevant considerations, the Committee will select a
candidate who, in the view of the Committee, is suited for membership on the Board. The Committee will then recommend to the Board that the candidate be nominated. The Board would then, if it chooses, nominate the candidate by a resolution adopted
by the Board at a meeting or by unanimous written consent.
12. Stockholders may propose candidates for consideration by
the Committee by communication directed to the Companys Secretary at its principal office, received not less than 120 calendar days before the anniversary date of the Companys proxy statement released to stockholders in connection with
the previous years annual meeting of stockholders. However, if the date of the annual meeting is changed more than 30 days from the date corresponding to the date of the prior years annual meeting, then a stockholders communication
must be received not later than the close of business on the tenth day following the date on which notice of the meeting is given by the Company (or, if earlier, by the tenth day following public disclosure of the new date of the annual meeting).
The communication must include all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case under applicable SEC
regulations, including such persons written consent to be named in the proxy statement as a nominee and to serving as a director if elected. In making its selection, the Committee will evaluate candidates proposed by stockholders owning at
least five percent (5%) of the Companys outstanding Common Stock, under criteria similar to the evaluation of other candidates. The Committee shall have no obligation whatsoever to consider other unsolicited recommendations received from
stockholders proposing candidates for the Board. The Committee may consider, as one of the factors in its evaluation of stockholder recommended nominees, the size and duration of the interest of the recommending stockholder or stockholder group in
the equity of the Company, and the candidates relationship to that stockholder or group, in order to determine whether the candidate can effectively represent the interests of all stockholders. The Committee may also consider the extent to
which the recommending stockholder or group intends to continue holding its interest in the Company, including, in the case of nominees recommended for election at an annual meeting of stockholders, whether the recommending stockholder intends to
continue holding its interest at least through the time of such annual meeting.
B-10
APPENDIX C TO PROXY STATEMENT
TEXT OF PROPOSED AMENDMENTS TO ARTICLE SIXTH OF THE
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED,
OF NATIONAL FUEL GAS COMPANY
ARTICLE SIXTH
Board of
Directors
The business and affairs of this corporation shall be managed by under the direction of
a Board of Directors. The number of directors (exclusive of directors, if any, to be elected by the holders of shares of Preferred Stock, voting separately from the Common Stock as provided in any amendment creating any series of Preferred
Stock) shall be not less than 7 seven nor more than 11, the exact number of directors to be determined from time to time by a resolution adopted by the affirmative vote of a majority of the entire Board of Directors.
The directors of this corporation elected prior to the 2024 annual meeting of stockholders shall be divided into
three classes, designated Class I, Class II and Class III, respectively. Each such class shall be as nearly equal in number as may be possible. Except as otherwise provided in this
Article SIXTH, directors of each such class shall hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their respective
successors shall be elected and shall qualify, subject to prior death, resignation, retirement, disqualification or removal from office. Until the classification of the board and its directors terminates at the 2024
annual meeting of stockholders, stockholders shall continue to be entitled to remove directors solely for cause. Notwithstanding the foregoing, the directors elected at each annual meeting of stockholders, commencing with the annual
meeting in 2022, shall hold office for a term expiring at the next annual meeting of stockholders and until their respective successors shall be elected and shall qualify, subject to prior death, resignation, retirement, disqualification or removal
from office.
At the 1985 annual meeting of stockholders, Class I
directors shall be elected for a one-year term, Class II directors for a two-year term and
Class III directors for a threeyear term. At each succeeding annual meeting of stockholders beginning in 1986, the successors to the class of directors whose term expires at that annual meeting shall be
elected for a three-year term, and successors to directors of any other class, including directors elected in any such class by the Board of Directors to fill one or more vacancies or newly-created directorships, shall be elected for the remaining
term of that class. If the number of directors is changed by resolution of the Board of Directors pursuant to this Article SIXTH, any increase or decrease shall be apportioned by the Board of Directors among the classes, if
applicable, so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director.
Any newly-created directorship resulting from an increase in the number of directors by resolution of the Board of Directors
pursuant to this Article SIXTH may be filled by a majority of the directors then in office. Any vacancy on the Board of Directors occurring for any reason, other than an increase in the number of directors as aforesaid, may be filled by a
majority of the directors then in office, although less than a quorum, or by a sole remaining director.
Directors
of any class shall hold office until the annual meeting of the year in which the term of such class expires or, in the case of Notwithstanding the foregoing, directors elected by the Board of Directors to fill vacancies or
newly-created directorships, shall hold office until the next annual meeting following their election, and upon their election by the stockholders, until the completion of the respective unexpired terms of the classes, if
applicable, in which the vacancies were filled, and until their respective successors shall be elected and shall qualify, subject to prior death, resignation, retirement, disqualification or removal from office.
C-1
Notwithstanding the foregoing and except as otherwise provided by law, whenever
the holders of shares of Preferred Stock shall have the right, voting separately from the Common Stock, to elect directors of this corporation, the number, election, term of office, filling of vacancies and other features of such directorships shall
be governed by the terms and provisions of any amendment creating any series of Preferred Stock; and such directors so elected shall not be divided into classes pursuant to this Article SIXTH. During the prescribed term of office of any such
directors, the Board of Directors shall consist of such directors in addition to the number of directors determined as provided in the first paragraph of this Article SIXTH.
C-2
Preliminary Copy
In accordance with Rule 14a-6(d) under Regulation 14A of the Securities Exchange Act of 1934, please be advised that National Fuel Gas
Company intends to release definitive copies of its Proxy Statement to security holders on January 22, 2021.
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NATIONAL FUEL GAS
COMPANY
6363 MAIN STREET
WILLIAMSVILLE, NY 14221
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PROXY VOTING INSTRUCTIONS
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up through March 10, 2021.
Have your proxy card in hand.
VOTE BY MAIL
Mark, sign and date your proxy card and return it (for receipt by March 10, 2021) in the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com/NFG
Use the Internet to transmit your voting instructions and for
electronic delivery of information up through March 10, 2021. Have your proxy card in hand when you access the web site.
During The Meeting - Go to www.virtualshareholdermeeting.com/NFG2021
You may attend the meeting via the Internet and vote during the
meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
Your QR vote, telephone vote or Internet vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed
and returned your proxy card.
FOR EMPLOYEE BENEFIT PLAN
VOTES:
Please note, all votes must be received by 11:59 p.m., Eastern Time on March 9, 2021.
Control Number located in box below:
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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D27842-P47630
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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NATIONAL FUEL GAS COMPANY
The Board of Directors recommends a vote FOR the Election
of Directors
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For
All
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Withhold
All
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For All Except
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the number(s) of the nominee (s) on the line below.
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PROPOSAL 1: ELECTION OF DIRECTORS
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01) David H. Anderson
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03) Barbara M. Baumann
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02) David P. Bauer
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04) Rebecca Ranich
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The Board of Directors recommends a vote FOR
Proposals 2, 3 and 4
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For
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Against
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Abstain
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PROPOSAL 2. Advisory approval of named executive
officer compensation
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☐
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☐
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☐
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PROPOSAL 3. Approval of an amendment of the Restated Certificate of Incorporation to declassify the Board of Directors
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☐
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☐
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☐
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PROPOSAL 4. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for fiscal 2021
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☐
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☐
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☐
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Question 1.
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In appreciation for you casting your
vote prior to the meeting, we will
send you a $5 Dunkin Donuts gift
card.
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To accept the gift card check YES. If you prefer instead a donation to
Make-A-Wish® check NO. If no selection is made, you will receive a card.
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Yes
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No
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Please sign as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, 2020 Summary Annual Report to
Stockholders and
fiscal 2020 financial statements are available at http://investor.nationalfuelgas.com/proxy.
D27843-P47630
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PROXY
NATIONAL FUEL GAS COMPANY
Annual Meeting of Stockholders - March 11, 2021
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints D. P. Bauer and S. J. Mugel, and each of
them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of National Fuel Gas Company Common Stock
which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held March 11, 2021 or at any adjournment or postponement
thereof, respecting (i) matters of which the Company did not have timely notice but that may be presented at the meeting; (ii) approval of the minutes of the prior meeting; (iii) the election of any person as a director if a nominee is unable to
serve or for good cause will not serve; (iv) any stockholder proposal omitted from the enclosed proxy statement pursuant to Rule 14a-8 or 14a-9 of the Securities and Exchange Commissions proxy rules, and (v) all matters incident to the conduct
of the meeting. This proxy may be revoked by notice to the Secretary of the meeting as described in the Proxy Statement.
Employee Benefit Plans. This card also provides voting instructions for shares held in the National Fuel Gas Company Employee Stock Ownership Plan and
the National Fuel Gas Company Tax-Deferred Savings Plans. If you are a participant in any of these plans and have shares of the Common Stock of the Company allocated to your account under these plans, please read the following authorization to the
Trustee of those plans as to the voting of such shares.
Trustees
Authorization. The undersigned on the reverse side of this card authorizes and instructs Vanguard Fiduciary Trust Company as Trustee of the National Fuel Gas Company Tax Deferred Savings Plans and the National Fuel Gas Company Employee Stock
Ownership Plan to vote all shares of the Common Stock of the Company allocated to the undersigneds account under such plan(s) (as shown on the reverse side) at the Annual Meeting, or at any adjournment thereof, in accordance with the
instructions on the reverse side. All shares of Company Stock for which the Trustee has not received timely directions shall be voted or exercised by the Trustee in the same proportion as the shares of Company Stock for which the Trustee received
timely directions, except in the case where to do so would be inconsistent with the provisions of Title I of ERISA. You may revoke your instructions by notice to the Trustee as described in the enclosed Proxy Statement.
This proxy, when properly executed, will be voted as directed by the stockholder. See
below for important provisions and additional instructions.
Incomplete
Directions and Instructions. If this card is returned signed but without directions marked for one or more items, regarding the unmarked items, you are instructing the Trustee and granting the Proxies discretion to vote FOR items 1, 2, 3 and
4.
This proxy may be revoked by notice to the Secretary of the meeting as
described in the Proxy Statement.
THIS PROXY CARD IS CONTINUED ON THE REVERSE
SIDE. PLEASE VOTE BY QR CODE, TELEPHONE, INTERNET OR SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
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(Continued and to be marked, dated and signed, on the other side)
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