DEF 14A 1 d74621ddef14a.htm DEF 14A DEF 14A
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

NATIONAL FUEL GAS COMPANY

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.

  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.

  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


Table of Contents

NATIONAL FUEL GAS COMPANY

 

 

Notice of Annual Meeting

and

Proxy Statement

 

 

Annual Meeting of Stockholders

to be held on

March 11, 2021

 


Table of Contents

NATIONAL FUEL GAS COMPANY

6363 MAIN STREET

WILLIAMSVILLE, NEW YORK 14221

January 22, 2021

Dear Stockholders of National Fuel Gas Company:

Each year, our proxy statement provides you with a brief summary of the Company’s recent operations and detailed information relating to the items on the agenda for you to vote on at the Annual Meeting of Stockholders. While these Annual Meetings have always taken place in person, upon careful consideration and in the interest of maintaining the health and safety of our stockholders and our Company representatives, our Board of Directors has determined to hold the 2021 Annual Meeting virtually, via a live webcast. We are facing truly unprecedented times, with the global coronavirus pandemic affecting our communities, organizations, colleagues and families. While we will miss holding this meeting in person, we have made arrangements to hold an electronic webcast meeting that will afford stockholders the same rights and access as if the meeting were held in person, including the ability to vote shares electronically during the meeting. We appreciate your understanding as we navigate these unique times.

The meeting will be held at 10:30 a.m. Eastern Time on March 11, 2021, conducted via live webcast at www.virtualshareholdermeeting.com/NFG2021. The matters on the agenda for the meeting are outlined in the enclosed Notice of Annual Meeting and Proxy Statement.

At the meeting, you will be asked to consider and vote on four proposals, all as explained in more detail in the proxy statement: (1) the election of four directors, (2) advisory approval of named executive officer compensation, (3) the Company’s proposal to amend the Restated Certificate of Incorporation to have annual elections of the Directors, and (4) ratification of the appointment of the Company’s independent public accounting firm. Your Board of Directors unanimously recommends that you vote FOR each of these proposals.

So that you may elect Company directors and secure the representation of your interests at the Annual Meeting, we urge you to vote your shares. The preferred methods of voting are by telephone, by Quick Response Code (“QR Code”) or by Internet as described on the proxy card. These methods are both convenient for you and reduce the expense of soliciting proxies for the Company. If you prefer not to vote by telephone, QR Code or the Internet, please complete, sign and date your proxy card and mail it in the envelope provided. The Proxies are committed by law to vote your shares as you instruct on the proxy card, by telephone, by QR Code or by Internet.

Your vote is always important. Stockholder voting is the primary means by which stockholders can influence a company’s operations and its corporate governance. In fact, stockholders who do vote can influence the outcome of proposals in greater proportion than their percentage share ownership.

Please make your voice heard by voting your shares.

Even if you plan to attend the Annual Meeting virtually, we encourage you to promptly vote your shares in advance of the meeting, by telephone, by QR Code or by Internet, or to complete, sign, date and return your proxy card. If you later wish to vote at the Annual Meeting, you can revoke your proxy by giving written notice to the Secretary of the Annual Meeting and/or the Trustee (as described on the second page of the proxy statement), and/or by casting your ballot at the Annual Meeting.

Please review the proxy statement and take advantage of your right to vote.

Sincerely yours,

David P. Bauer

President and Chief Executive Officer


Table of Contents

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on March 11, 2021

To the Stockholders of National Fuel Gas Company:

Notice is hereby given that the Annual Meeting of Stockholders of National Fuel Gas Company (the “Company”) will be held at 10:30 a.m. Eastern Time on March 11, 2021, conducted via live webcast at www.virtualshareholdermeeting.com/NFG2021. At the meeting, action will be taken with respect to:

 

  (1)

The election of four directors to hold office for three-year terms, as provided in the attached proxy statement and until their respective successors have been elected and qualified;

 

  (2)

Advisory approval of named executive officer compensation;

 

  (3)

Approval of an amendment of the Restated Certificate of Incorporation to declassify the Board of Directors;

 

  (4)

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal 2021;

and such other business as may properly come before the meeting or any adjournment or postponement thereof.

Stockholders of record at the close of business on January 11, 2021, will be entitled to vote at the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

SARAH J. MUGEL

General Counsel and Secretary

January 22, 2021

Attending the Annual Meeting

Due to concerns relating to COVID-19, National Fuel Gas Company is holding the Annual Meeting in a virtual meeting format only, conducted via live webcast. Stockholders will not be able to attend the meeting in person.

 

Please visit www.virtualshareholdermeeting.com/NFG2021 in order to attend and to participate in the virtual meeting, where you will be prompted to enter the 16-digit control number found on your proxy card or your voting instruction form provided by your broker, bank, or other nominee.

If you receive your Annual Meeting materials electronically and wish to attend the virtual meeting, please follow the instructions provided online for attendance. Once you have joined the virtual meeting, you may vote your shares electronically during the meeting by following the instructions available on the meeting website, although we encourage you to vote in advance of the meeting. Only stockholders or their valid proxy holders may participate in the meeting. If you plan on attending the virtual meeting, we encourage you to allow ample time to log in online and recommend that you do so fifteen minutes before the meeting start time to ensure that you are logged in when the meeting begins.

Important Notice Regarding The Availability Of Proxy Materials For The Stockholder

Meeting To Be Held On March 11, 2021

The proxy statement and summary annual report to security holders and financial statements

are available on the Internet at

http://investor.nationalfuelgas.com/proxy


Table of Contents

YOUR VOTE IS IMPORTANT

Please vote by telephone, by QR Code or by Internet.

 

Whether or not you plan to attend the meeting, and whatever the number of shares you own, please vote your shares by telephone, by QR Code or by Internet as described in the proxy/voting instruction card and reduce National Fuel Gas Company’s expense in soliciting proxies. Alternatively, you may complete, sign, date and promptly return the enclosed proxy/voting instruction card in the accompanying envelope, which requires no postage if mailed in the United States.

WHY YOUR VOTE IS IMPORTANT

Q: Who is asking for my vote and why am I receiving this document?

A: The Board of Directors asks that you vote on the matters listed in the Notice of Annual Meeting, which are more fully described in this proxy statement. This proxy statement is a document that Securities and Exchange Commission regulations require we give you when we ask you to sign a proxy designating individuals to vote on your behalf. A proxy, if duly executed and not revoked, will be voted and, if it contains any specific instructions, will be voted in accordance with those instructions.

Q: How many shares are not voted at the Annual Meeting on non-routine matters (proposals other than the ratification of accountant)?

A: At recent Annual Meetings, approximately 19% of our shares have not been voted on non-routine matters. IF YOU HOLD YOUR SHARES AT A BROKERAGE FRIM, YOU MUST TELL YOUR BROKER HOW TO VOTE YOUR SHARES. Since 2010, brokers have not been able to vote customer shares on non-routine matters. Stockholder voting is the primary means by which stockholders can influence a company’s operations and its corporate governance, so your vote is important.

Q: How can I vote?

A: There are four ways to vote by proxy:

 

   

Vote by Phone by calling 1-800-690-6903: You will need information from your proxy card to vote; have it available and follow the instructions provided.

 

   

Vote by scanning the Quick Response Code LOGO (“QR Code”) on the proxy card: By accessing the QR site through the proxy card you can vote your shares.

 

   

Vote by Internet by going to www.proxyvote.com: You will need information from your proxy card to vote; have it available and follow the instructions provided.

 

   

Vote by Mail: Complete and return the separate enclosed proxy card in the prepaid and addressed envelope.

You may also vote at the Annual Meeting. However, if you are the beneficial owner of the shares, you must obtain a legal proxy from the stockholder of record, usually your bank or broker. A legal proxy identifies you, states the number of shares you own, and gives you the right to vote those shares. Without a legal proxy we cannot identify you as the owner, and will not know how many shares you have to vote.

 

To attend and vote at the Annual Meeting, you will need the 16-digit control number found on your proxy card or your voting instruction form provided by your broker, bank, or other nominee.

Please visit www.virtualshareholdermeeting.com/NFG2021 on the date and at the time specified in the Notice of Annual Meeting of Stockholders. You will be prompted to enter your 16-digit control number to attend the meeting.


Table of Contents

TABLE OF CONTENTS

 

PROXY STATEMENT OVERVIEW & FISCAL 2020 SUMMARY

     i  

GENERAL INFORMATION

     1  

• PROPOSAL 1. ELECTION OF DIRECTORS

     4  

Nominees for Election as Directors at the 2021 Annual Meeting of Stockholders

     4  

Continuing Directors Whose Terms Expire in 2023

     9  

Continuing Director Whose Term Expires in 2022

     12  

Corporate Governance

     16  

Diversity

     16  

Director Independence

     16  

Board Leadership Structure

     16  

Annual Meeting Attendance

     17  

Meetings of the Board of Directors and Standing Committees

     17  

Method of Evaluating Board and Committee Effectiveness

     20  

Process for Nominating Directors

     20  

Charitable Contributions by Company

     20  

Compensation Committee Interlocks and Insider Participation

     21  

Risk Oversight

     21  

Related Person Transactions

     21  

Code of Ethics

     22  

Director Compensation

     22  

Director Compensation Table — Fiscal 2020

     23  

Audit Fees

     24  

Audit Committee Report

     25  

Security Ownership of Certain Beneficial Owners and Management

     27  

Equity Compensation Plan Information

     30  

Executive Compensation

     31  

Compensation Committee Report

     31  

Compensation Discussion and Analysis

     31  

Fiscal 2020 Summary Compensation Table

     51  

Grants of Plan-Based Awards in Fiscal 2020

     53  

Outstanding Equity Awards at Fiscal 2020 Year-End

     54  

Option Exercises and Stock Vested in Fiscal 2020

     56  

Fiscal 2020 Pension Benefits

     56  

Fiscal 2020 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

     58  

Fiscal 2020 Potential Payments Upon Termination or Change in Control

     59  

CEO Pay Ratio

     67  

Executive Officer and Director Hedging

     67  

•   PROPOSAL 2. ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION

     68  

•   PROPOSAL 3. APPROVAL OF AN AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS

     69  

•   PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     70  

IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS

     71  

PROPOSALS OF SECURITY HOLDERS FOR THE 2022 ANNUAL MEETING

     71  

OTHER BUSINESS

     71  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     72  

YOUR VOTE IS IMPORTANT!

PLEASE VOTE BY PHONE, BY QR CODE OR BY INTERNET, OR COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD.


Table of Contents

This proxy statement contains certain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements should be read with the cautionary statements and important factors included under the heading “Safe Harbor for Forward-Looking Statements” in National Fuel Gas Company’s (“National Fuel” or the “Company”) Form 10-K at Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the information included in the Company’s Form 10-K at Item 1A “Risk Factors”. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated capital expenditures, completion of construction and other projects, projections for pension and other post-retirement benefit obligations, impacts of the adoption of new accounting rules, and possible outcomes of litigation or regulatory proceedings, as well as statements that are identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions.

Proxy Statement Overview & Fiscal 2020 Summary

This overview and summary highlights information contained elsewhere in this proxy statement and also includes certain additional information regarding business performance and corporate responsibility, including environmental, social and governance matters. This overview and summary does not contain all of the information that you should consider, and you should read the Company’s Summary Annual Report and Form 10-K and this entire proxy statement carefully before voting.

 

Annual Meeting Voting Matters

The table below summarizes the matters that will be subject to the vote of stockholders at the 2021 Annual Meeting of Stockholders of National Fuel Gas Company:

 

Proposals

Board Vote

Recommendation

Page Number

(for additional details)

     

1.  Election of Directors

FOR ALL NOMINEES Page 4
     

2.  Advisory Approval of Named Executive Officer Compensation

FOR Page 68
     

3.  Approval of an Amendment of the Restated Certificate of Incorporation to Declassify the Board of Directors

FOR Page 69
     

4.  Ratification of Appointment of Independent Registered Public Accounting Firm

FOR Page 70

 

i


Table of Contents

Annual Meeting of Stockholders

 

Ø    Date and Time

   March 11, 2021 at 10:30 a.m. Eastern Time

Ø    Website

   www.virtualshareholdermeeting.com/NFG2021

Ø    Record Date

   January 11, 2021

Ø    Voting Details

   Stockholders as of the record date are entitled to one vote for each share of common stock for each director nominee and each other proposal to be voted.

Ø    Voting Deadline

  

Votes must be received by March 10, 2021 (unless attending virtually).

For stock that is held in employee benefit plans votes must be received by March 9, 2021.

Ø    Attending the Virtual

Meeting

   National Fuel stockholders as of the record date are entitled to attend the annual meeting virtually. To participate in the meeting, please visit www.virtualshareholdermeeting.com/NFG2021, where you will be prompted to enter the 16-digit control number found on your proxy card or your voting instruction form provided by your broker, bank, or other nominee. Please see “Attending the Meeting” on page 2.

 

National Fuel Gas Company Fiscal 2020 Summary

National Fuel turned a challenging 2020 fiscal year into one of opportunity, with several important milestones achieved. Against the backdrop of the COVID-19 pandemic, the Company completed a highly-strategic Appalachian acquisition, brought online a $129 million pipeline expansion project, and obtained the FERC certificate for its $279 million FM100 Project. We expect these achievements to provide significant growth opportunities in the years ahead. In addition, our utility business completed its annual system modernization program, through which over 150 miles of older vintage pipelines were replaced, driving enhanced safety and further reductions in our greenhouse gas emissions. In September, the Company published its initial Corporate Responsibility Report, an important step in the continuous improvement of our environmental, social, and governance initiatives and disclosures.

These milestones were not possible without the significant efforts of National Fuel’s 2,100 dedicated and hard-working employees, who have continued to meet the increased demands of our business during the pendency of the COVID-19 pandemic. Throughout the year, as we confronted the constantly evolving landscape of the pandemic, as well as significant commodity price headwinds, our integrated, diversified business model continued to provide an important measure of stability and predictability.

As we move into fiscal 2021, we believe that National Fuel is well-positioned for growth, and we expect our Appalachian acquisition, which included significant, highly-economic drilling inventory, as well as the substantial growth of our FERC-regulated pipelines, to drive long-term value for our stockholders. Combining this with a large base of stable, regulated cash flows, we believe that we are poised to generate strong consolidated returns, while maintaining the strength of the Company’s investment-grade balance sheet and our focus on the sustainability of our operations.

 

ii


Table of Contents

2020 Financial and Operating Highlights:

 

   

Maintained Continuity of Diversified Businesses While Safely Operating our Integrated Assets: Against the backdrop of the COVID-19 pandemic, National Fuel has not experienced any significant operational or financial impacts, has continued our long-standing focus on safety, achieving a 35% reduction in Occupational Safety and Health Administration (“OSHA”) recordable injuries in our regulated businesses, and has remained committed to our employees, with no furloughs or workforce reductions.

 

   

Increased Dividend for 50th Consecutive Year: In June, the Board of Directors increased the Company’s annual dividend rate by 2.3 percent to $1.78 per share, marking a half-century of consecutive dividend increases and our 118th year of uninterrupted dividend payments.

 

   

Completion of Significant Appalachian Acquisition: In July, the Company completed an approximately $506 million acquisition of Royal Dutch Shell’s integrated upstream and midstream gathering assets within Appalachia, much of which are contiguous to, and synergistic with, the Company existing’s Tioga County development activities and operations.

 

   

Meaningfully Growing Appalachian Natural Gas Production and Gathering Throughput: E&P segment net production increased to 241.5 billion cubic feet equivalent (“Bcfe”), up 14% from the prior year, driving a corresponding 13% increase in Gathering segment throughput.

 

   

Increased Proved Reserves: Seneca’s total proved natural gas and crude oil reserves at September 30, 2020 increased to approximately 3.5 trillion cubic feet equivalent, an increase of 12% versus fiscal 2019, driven largely by the Company’s recent Appalachian acquisition, which added 684 billion cubic feet of proved developed and undeveloped natural gas reserves at a cost of $0.36 per thousand cubic feet.

 

   

Continued Expansion of Interstate Pipeline Systems: In September, the Empire North project, an approximately $129 million investment by Empire Pipeline, Inc. (“Empire”), was placed into service. Empire North creates 205,000 dekatherms per day of new transportation capacity on the Empire system, providing much-needed natural gas supply to the Northeast U.S., including New York State, as well as Eastern Canada.

 

   

Utility Continued Focus on System Improvement: Our Utility segment invested approximately $71 million in modernization and reliability, bringing our 5-year modernization total to over $341 million.

 

 

LOGO

 

iii


Table of Contents

Our Commitment to Corporate Responsibility and Sustainability

Sustainability is embodied in the Company’s guiding principles of safety, environmental stewardship, community, innovation, satisfaction, and transparency, which form the foundation of our daily operations. Over the past year, the Company has made significant efforts to ensure its operations have minimal environmental impacts on the communities in which it operates, and that we continue to have positive impacts with the communities and the numerous stakeholders with whom we continuously interact.

 

   

Publication of Initial Corporate Responsibility Report: In September, National Fuel issued its first Corporate Responsibility Report (“Report”), which highlights the Company’s environmental, social, and governance initiatives (“ESG”), and enhances our ESG disclosures.

 

   

Disclosures Aligned to SASB Standards and GRI Framework: As an integrated, diversified energy company, the Company’s initial Report focused on the relevant Sustainability Accounting Standards Board (“SASB”) disclosures for each of its primary business segments—Gas Utilities and Distributors, Oil & Gas Midstream, and Oil & Gas Exploration and Production. In order to capture appropriate social and governance metrics and disclosures, the Company’s Report also provided supplemental disclosures under the Global Reporting Initiative (“GRI”) framework, including workforce attraction and retention, diversity and development disclosures.

 

   

Enhanced Governance of Corporate Responsibility: During fiscal 2020, National Fuel took several significant steps to enhance its governance of ESG matters, moving oversight of corporate responsibility and ESG to the Board’s Nominating/Corporate Governance Committee, creating an executive steering committee of senior Company management who are accountable for integrating applicable sustainability practices in their respective areas, and appointing a Vice President of Corporate Responsibility who is responsible for ESG disclosures and identifying further sustainable business practices for the Company.

 

   

Environmental and Social Performance Goals: For fiscal 2021, the Compensation Committee has established short-term performance goals focused on environmental stewardship, including the Company’s greenhouse gas emissions, as well as goals promoting diversity and inclusion among the Company’s workforce.

 

   

Furthered Ongoing Utility System Modernization Efforts: Our Utility business completed the replacement of over 150 miles of older vintage main distribution lines within our New York and Pennsylvania service territories, driving enhanced safety and further reductions in our greenhouse gas emissions. Overall, our Utility business has lowered its EPA Subpart W emissions by 13% since the close of calendar 2016, and 60% since the close of calendar 1990.

 

   

Participated in the Low-Carbon Resources Initiative (“LCRI”): Our Utility business became an anchor sponsor of the LCRI, a joint effort of The Electric Power Research Institute and the Gas Technology Institute to address the need to accelerate development and demonstration of low- and zero-carbon energy technologies. Over the course of the next five years, the LCRI expects to identify, research, develop, and demonstrate the technology advancements needed to achieve this decarbonized future.

 

   

Constructed Company’s First Electric Drive Compressor Station: As part of the Company’s Empire North expansion project, our Pipeline & Storage business placed into service our first electric motor drive compressor station, virtually eliminating emissions from the operation of this 32,000 horsepower facility.

 

   

Furthered Participation in the Renewable Natural Gas (“RNG”) Market: Over the course of the past year, our Pipeline & Storage and Utility businesses took meaningful steps to participate in the growing RNG market, including the development of gas quality standards and interconnection agreements to facilitate the transportation of RNG across their respective pipeline networks. In addition, Empire completed the construction of interconnection facilities for

 

iv


Table of Contents
 

an anaerobic digestion facility in New York, allowing the transportation of RNG produced with dairy and food waste to access the interstate pipeline gird.

 

   

Maintained Focus on Water Handling and Water Management: In fiscal 2020, National Fuel recycled 96% of Seneca’s produced fluids, or 5.7 million barrels, plus an additional 1.0 million barrels of fluids that were generated by and received from third-party operators. We manage the movement of approximately 1.1 million barrels of fluid every month, more than 85% of which is transported by Company-owned water pipelines directly to Seneca’s Marcellus and Utica development pads. As a result, Seneca was able to avoid an estimated 100,000 truck trips in fiscal 2020, eliminating the associated air emissions and reducing the impact on local roads and public infrastructure.

 

   

Continued Participation in the EPA’s Methane Challenge: Each of the Company’s major operating segments is a participant the U.S. Environmental Protection Agency’s Natural Gas STAR Methane Challenge Program, a voluntary program designed to provide a platform for utilities, pipeline and storage companies, and energy producers to make, track, and communicate commitments to reduce methane emissions. In connection with this program, and in furtherance of our longstanding commitment to safe and responsible operations, the Company continues to analyze new and innovative approaches for further emission reduction and explore the expansion of current best management practices and the applicability of future best practices.

 

 

LOGO

Our Commitment to our Employees

At National Fuel, we go above and beyond to create a culture that rewards hard work and supports promotion from within. Our 2,100-plus employees continue to be the most important part of our Company and have made us who we are today.

 

   

Committed to Our Workforce: During the COVID-19 pandemic, National Fuel has remained committed to our workforce and has not instituted any furloughs or workforce reductions. With a large portion of employees working remotely, the Company implemented a number of initiatives to provide flexibility to our workforce, including additional paid time off to address child care needs, and encouraging the use of alternative work schedules.

 

   

Focused on Workforce Safety: Our efforts during the ongoing COVID-19 pandemic have included numerous actions to protect the health and safety of our workers as well as our customers and has enabled us to ensure adequate staffing for provision of essential services. As a result of the pandemic, the Company has instituted telecommuting for all employees, where possible, to minimize employee exposure. For any employees who could not work remotely, the

 

v


Table of Contents
 

Company: developed COVID-19 reporting and screening procedures; implemented staggered start times and/or satellite work locations, where possible, to allow for social distancing; developed sequestering plans for critical service employees; and provided necessary PPE in line with directives from federal, state, and local agencies.

 

   

Achieved Significant Reduction in OSHA Recordable Injuries: During fiscal 2020, National Fuel’s regulated businesses experienced a 35% reduction in OSHA recordable injuries versus the prior fiscal year, an indication of the Company’s continued improvement of our safety culture.

 

   

Maintaining our Commitment to Inclusivity and Enhancing Workforce Diversity: As we plan for future human resource needs, National Fuel continues to target a number of diversity-focused groups in our communities for employment opportunities across the organization. In furtherance of our commitment, the Company recently required all officers to participate in racial equity analysis training. In addition, today, four of the Company’s ten designated executive officers are women who hold the following important policy-making positions: President of the Company’s Utility segment; General Counsel and Secretary, who also serves as the Company’s Compliance Officer; Treasurer and Principal Financial Officer; and Controller and Principal Accounting Officer.

 

 

LOGO

Our Commitment to our Communities

Going back to the first natural gas well drilled in Dunkirk, N.Y., National Fuel and our predecessor companies have deep roots in both the natural gas industry and in the regions where we operate. Today, National Fuel’s investments and operations continue to contribute significantly to the economic health and vitality of our local communities.

 

   

Investing in critical energy infrastructure: Over the last 10 years, we have invested more than $7 billion in energy development, investing in real, long-lived assets that support good-paying jobs and provide a significant tax base for local schools and municipalities.

 

   

Large local employer: We employ over 2,100 people, paying nearly $270 million in annual compensation and pension benefits.

 

   

Provider of local tax revenues: Over the past five years, we have paid $301 million in state and local property taxes, providing revenues that support school districts and the social services that many in our communities have come to rely on. Additionally, Seneca has paid $47 million over the last five years in Pennsylvania impact fees which support the maintenance and repair of local infrastructure and investment in new community facilities.

 

   

Supporter of local vendors and contractors: We support the employment of thousands more in our local communities by using the products and services of local vendors, contractors and labor. Over the last five years, we have paid $529 million and $213 million to local vendors and contractors in New York and Pennsylvania, respectively.

 

   

Fair landowner compensation: We provide fair and reasonable compensation to local landowners for acreage leases, mineral rights and pipeline rights of way and easements. Over the

 

vi


Table of Contents
 

last five years, Seneca has paid local Pennsylvania landowners more than $194 million in royalties on natural gas production.

 

   

Charitable giving: Each year, hundreds of National Fuel employees donate thousands of dollars to local and national charitable organizations. The National Fuel Foundation matches dollar for dollar, up to $750 per employee, doubling the impact of each employee’s contribution. Since 2005, our employees and the foundation have given more than $21 million to charitable organizations.

 

 

LOGO

Our Diverse, Experienced, and Independent Board of Directors

National Fuel’s commitment to diversity also extends to our Board of Directors, and our Board has continued its efforts to attract qualified, diverse candidates whose expertise and personal characteristics align with the Company’s long-term business strategy.

 

   

Increasing Diversity on Our Board of Directors: Our Nominating/Corporate Governance Committee, chaired by Rebecca Ranich, makes recommendations to the full Board on nominees for director positions, and has invited qualified gender and racially diverse candidates to stand for election to the Board, with successful results. Three of the Company’s last six Directors have increased Board diversity.

 

   

Diverse and Extensive Experience: The Company’s Board of Directors consists of individuals with extensive and diverse leadership experience within the energy industry, as well as complementary industries, including manufacturing and consulting. Our eleven Board members have experience in the following areas, among others:

 

  ¡   

CEO/Senior Leadership Position (11)

 

  ¡   

Energy Industry Experience (10)

 

  ¡   

Other Public Board of Directors Experience (9)

 

  ¡   

Legal/Compliance/Enterprise Risk Management (7)

 

  ¡   

Operational/Safety/Environmental (7)

 

  ¡   

Consumer/Customer Relations (6)

 

vii


Table of Contents
  ¡   

Federal and State Regulatory/Government Relations (6)

 

  ¡   

Financial/Accounting (5)

 

   

Strong Corporate Governance Practices: Our Board has implemented strong governance practices, including maintaining a significant complement of independent directors (currently nine out of eleven directors), designating a Lead Independent Director, holding regular meetings of the non-management and/or independent directors, separating the roles of Chairman of the Board and Chief Executive Officer, and providing a process for stockholders meeting certain requirements to have nominees included in the Company’s proxy materials.

 

 

LOGO

 

Proposal 1 — Election of Directors

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR THE BOARD OF DIRECTORS.

Nominees for three-year term:

David H. Anderson — age 59

Principal Occupation: President and Chief Executive Officer of Northwest Natural Holdings Corporation

Expertise: Leadership, Industry, Environmental, SEC Financial Expert

David P. Bauer — age 51

Principal Occupation: President and Chief Executive Officer of National Fuel Gas Company

Expertise: Leadership, Industry, Financial, Regional

Barbara M. Baumann — age 65

Principal Occupation: President, Cross Creek Energy Corporation

Expertise: Leadership, Exploration and Production, Investment Advisory, SEC Financial Expert

Rebecca Ranich — age 63

Principal Occupation: Former Director of Deloitte Consulting, LLP

Expertise: Leadership, Industry, Sustainability, Technology

For complete information on this proposal, please refer to page 4 and following.

 

viii


Table of Contents

Proposal 2 — Advisory Approval of Named Executive Officer Compensation

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.

This proposal allows stockholders to take part in a non-binding, advisory vote to approve the compensation of the Company’s named executive officers. The summary below and the discussion in the Compensation Discussion and Analysis (as well as the proposal for the advisory vote to approve the compensation of the Company’s named executive officers (the “Say-on-Pay” vote)) provide information about the Company’s compensation programs. Unless otherwise indicated, we intend capitalized and abbreviated terms to have the same meaning in this section as in the Compensation Discussion and Analysis.

No Modifications to Fiscal 2020 Compensation

Despite the COVID-19 pandemic, 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.

Objectives of the Compensation Committee

When setting compensation for the Company’s executives, the Compensation Committee’s primary goal is to provide balanced incentives for creating value for stockholders in both the near-term and long-term. In order for this to occur, the Compensation Committee awards a combination of cash and equity components that are designed to:

 

Ø

  

Focus management efforts on both near-term and long-term drivers of stockholder value, including financial, safety, environmental, and customer service metrics;

Ø

  

Tie executive compensation to long-term total shareholder return (“TSR”) and long-term total return on capital (“ROC”) by linking a significant portion of named executive officers’ potential compensation to the future price of the Company’s common stock (and the payment of dividends) and the future returns on capital achieved by the Company, both relative to peers; and

Ø

  

Attract, motivate, reward and retain management talent in the highly competitive energy industry in order to achieve the objectives that contribute to the overall success of the Company.

Elements of Compensation

The Compensation Committee has developed the Company’s compensation policies and procedures to align the interests of executives with those of the Company’s stockholders and, where appropriate, other stakeholders, including customers. The main elements of the executive compensation program are as follows:

 

Ø

  

Base Salary (Cash) — Provides a predictable base compensation for day-to-day job performance;

Ø

  

Short-Term Performance Incentives (Cash) — Utilizes metrics specific to each executive in order to motivate them to deliver near-term financial, safety, environmental, and customer service results, generally over a period that is no longer than two years; and

Ø

  

Long-Term Performance Incentives (Equity) — Focuses the attention of executives on delivering long-term stockholder value and on maintaining a significant personal investment in the Company through stock ownership.

 

ix


Table of Contents

Executive Compensation Aligned with Stockholders’ Interests

The Company recognizes and rewards executives through compensation arrangements that directly link executive pay to the Company’s 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 Company’s CEO, was at-risk compensation, with 52% tied to equity and 24% tied to short-term performance goals.

 

 

LOGO

Key Compensation Features

 

Ø

  

Annual performance incentives of the named executive officers are based entirely on objective performance goals;

Ø

  

Long-term performance incentives are composed entirely of equity;

Ø

  

Long-term performance goals consist of three-year TSR and three-year total ROC, each relative to a peer group;

Ø

  

The Company does not provide tax “gross-ups”;

Ø

  

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);

Ø

  

Executive officers may not hedge or pledge Company stock;

Ø

  

Equity incentive plans prohibit the repricing of equity awards without stockholder approval;

Ø

  

The Compensation Committee engaged two independent compensation consultants to assist in setting compensation;

Ø

  

All change-in-control agreements are double triggered; and

Ø

  

The Board has adopted a clawback provision (see “Recovery of Funds” in the Company’s Corporate Governance Guidelines, included as Appendix B to this proxy statement).

 

x


Table of Contents

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 Company’s named executive officers. The Board generally considered this outcome an indicator of stockholder support for the overall philosophy and structure of the Company’s 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 Company’s 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 important viewpoints.

The Board of Directors believes that the Company’s compensation policies and procedures, as developed following engagement with stockholders, encourage a culture of pay for performance and are strongly aligned with the interests of the Company’s stockholders. Accordingly, the Board recommends a vote FOR the advisory approval of named executive officer compensation.

For complete information on this proposal, please refer to the Compensation Discussion and Analysis, accompanying compensation tables and related narrative discussion, starting at page 31, and to the proposal at page 68.

 

Proposal 3 — Approval of an Amendment of the Restated Certificate of Incorporation to Declassify the Board of Directors

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

Our Restated Certificate of Incorporation (the “Certificate”) currently provides for a classified board divided into three classes, with approximately one-third of our directors standing for election each year. At last year’s 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. After careful consideration, 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.

If the proposed amendments to the Certificate are approved by stockholders, beginning at the Company’s 2022 annual meeting, directors standing for election will be elected to one-year terms. By the 2024 annual meeting, the Board would be completely declassified and all directors would stand for election annually.

For complete information on this proposal, please refer to page 69.

 

Proposal 4 — Ratification of Appointment of Independent Registered Public Accounting Firm

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS APPOINTMENT.

As a matter of good governance, it is important that stockholders vote to ratify the selection of the Company’s independent auditor. The Company has selected PricewaterhouseCoopers LLP as the Company’s independent auditor for fiscal 2021.

For complete information on this proposal, please refer to page 70.

 

 

xi


Table of Contents

NATIONAL FUEL GAS COMPANY

6363 MAIN STREET

WILLIAMSVILLE, NEW YORK 14221

PROXY STATEMENT

GENERAL INFORMATION

Introduction

This proxy statement is furnished to the holders of National Fuel Gas Company (“National Fuel” or the “Company”) common stock (the “Common Stock”) in connection with the solicitation of proxies on behalf of the Board of Directors of the Company (the “Board of Directors” or the “Board”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on March 11, 2021, or any adjournment or postponement thereof. This proxy statement and the accompanying proxy/voting instruction card are first being mailed to stockholders on or about January 22, 2021.

Solicitation of Proxies

All costs of soliciting proxies will be borne by the Company. MacKenzie Partners, Inc., 1407 Broadway, 27th Floor, New York, NY 10018, has been retained to assist in the solicitation of proxies by mail, telephone, and electronic communication and will be compensated in the estimated amount of $18,500 plus reasonable out-of-pocket expenses. A number of regular employees of the Company and its subsidiaries, and one or more retirees of the Company and its subsidiaries, may solicit proxies in person, by telephone or by other methods. Costs, if any, associated with solicitation by retirees are expected to be de minimis.

Record Date, Outstanding Voting Securities and Voting Rights

Only stockholders of record at the close of business on January 11, 2021, will be eligible to vote at the Annual Meeting or any adjournment or postponement thereof. As of that date, 91,163,380 shares of Common Stock were issued and outstanding. The holders of 45,581,691 shares will constitute a quorum at the meeting.

Each share of Common Stock entitles the holder thereof to one vote with respect to each matter that is subject to a vote at the Annual Meeting. Shares may not be voted unless the owner is present or represented by proxy. In order to grant a proxy, a stockholder can use the telephone, QR Code or Internet voting procedures or return a signed proxy card. All shares that are represented by effective proxies received by the Company in time to be voted shall be voted by the authorized Proxy at the Annual Meeting or any adjournment or postponement thereof.

If you hold your shares through a broker, bank or other nominee (in “street name”), you will receive instructions from them on how to vote your shares. If you do not give the broker specific instructions on how you would like your shares to be voted, your broker may only vote your shares on “routine” matters, such as Proposal 4 — Ratification of Appointment of Independent Registered Public Accounting Firm. However, your broker is prohibited from voting uninstructed shares on “non-routine” matters such as: Proposal 1 — Election of Directors; Proposal 2 — Advisory Approval of Named Executive Officer Compensation; and Proposal 3 — Approval of an Amendment of the Restated Certificate of Incorporation to Declassify the Board of Directors. The absence of voting instruction results in what is called a “broker non-vote” on those proposals and will not be counted. Your vote is important. PLEASE MAKE YOUR VOICE HEARD BY VOTING YOUR SHARES ON THESE IMPORTANT MATTERS.

Where stockholders direct how their votes shall be cast, shares will be voted in accordance with such directions. Proxies submitted with abstentions and broker non-votes will be included in determining whether or not a quorum is present. Abstentions and broker non-votes will not be counted in tabulating

 

1


Table of Contents

the number of votes cast on proposals submitted to stockholders and therefore will not have the effect of a vote cast for or against any proposal.

The proxy also confers discretionary authority to vote on all matters that may properly come before the Annual Meeting, or 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 annual meeting of stockholders; (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 this proxy statement pursuant to Rule 14a-8 or 14a-9 of the Securities and Exchange Commission’s (the “SEC”) proxy rules; and (v) all matters incident to the conduct of the meeting.

With respect to Proposal 1, the affirmative vote of a plurality of the votes cast by the holders of shares of Common Stock entitled to vote is required to elect each of the nominees for director. Approval of each other proposal requires a majority of the votes cast by the holders of shares of Common Stock entitled to vote on the proposal.

Attending the Meeting

In an effort to protect the health and safety of the Company’s stockholders, employees, directors and communities amidst the COVID-19 pandemic, the Company is holding the Annual Meeting in a virtual meeting format only on March 11, 2021 at 10:30 a.m. Eastern Time. Stockholders as of the close of business on January 11, 2021, the record date, are entitled to participate in the Annual Meeting, including to vote their shares and ask questions.

To participate in the virtual Annual Meeting, please visit www.virtualshareholdermeeting.com/NFG2021, where you will be prompted to enter the 16-digit control number found on your proxy card or your voting instruction form provided by your broker, bank, or other nominee. If you receive your Annual Meeting materials electronically and wish to participate in the virtual meeting, please follow the instructions provided online for attendance. Once you have joined the virtual meeting, you may vote your shares electronically during the meeting by following the instructions available on the meeting website.

Questions for the Meeting

Stockholders as of the record date who participate in the virtual Annual Meeting using their control number (as described above) will have an opportunity to submit questions during the meeting. The Company will try to answer as many stockholder-submitted questions that comply with the posted rules of conduct as time permits. If the Company receives substantially similar questions, the Company will group such questions together and provide a single response to avoid repetition.

Additional Information about the Meeting

Additional information regarding the rules of conduct and procedures for participating in the virtual Annual Meeting will be posted prior to and during the meeting at www.virtualshareholdermeeting.com/NFG2021.

Revoking a Proxy

Any stockholder giving a proxy may revoke it at any time prior to the voting thereof by mailing a revocation or a subsequent proxy to National Fuel Gas Company, Attn: Sarah J. Mugel, Secretary of the Company, 6363 Main Street, Williamsville, NY 14221, by voting a subsequent proxy by phone, QR Code or by Internet, or by filing written revocation at the meeting with Ms. Mugel, Secretary of the meeting, or by casting a ballot at the meeting. If you are an employee stockholder or retired employee stockholder, you may revoke voting instructions given to the Trustee by following the instructions under “Employee and Retiree Stockholders” in this proxy statement.

 

2


Table of Contents

Employee and Retiree Stockholders

If you are a participant in the Company’s Employee Stock Ownership Plan or any of the Company’s Tax-Deferred Savings Plans (the “Plans”), the proxy card will also serve as a voting instruction form to instruct Vanguard Fiduciary Trust Company (the “Trustee”) for the Plans, as to how to vote your shares. All shares of Common Stock for which the Trustee has not received timely directions shall be voted by the Trustee in the same proportion as the shares of Common 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 the Employee Retirement Income Security Act (“ERISA”). If the voting instruction form is returned signed but without directions marked for one or more items, regarding the unmarked items you are instructing the Trustee and the Proxies to vote FOR all of the Director nominees named in this proxy statement, and FOR Proposals 2, 3 and 4. Participants in the Plan(s) may also provide those voting instructions by telephone, QR Code or the Internet. Those instructions may be revoked by re-voting or by written notice to the Trustee on or before March 9, 2021 in care of the following address:

To: Vanguard Fiduciary Trust Co.

c/o National Fuel Gas Company

Attn: Legal Department

6363 Main Street

Williamsville, NY 14221

Multiple Copies of Proxy Statement

The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name may receive only one copy of the proxy statement and the Company’s annual report. However, if any stockholder wishes to revoke consent for householding and receive a separate summary annual report, financial statements or proxy statement for the upcoming Annual Meeting or in the future, he or she may telephone, toll-free, 1-866-540-7095. The stockholder will need their 16-digit control number and should simply follow the prompts. Stockholders may also write Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Stockholders sharing an address who wish to receive a single set of reports may do so by contacting their banks or brokers if they are the beneficial holders, or by contacting Broadridge at the address provided above if they are the record holders. This procedure will reduce our printing costs and postage fees, and reduce the quantity of paper arriving at your address.

Stockholders who participate in householding will continue to receive separate proxy cards. Householding will not affect your dividend check mailings.

For additional information on householding, please see “IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS” in this proxy statement.

Other Matters

The Board of Directors does not know of any other matter that will be presented for consideration at the Annual Meeting. If any other matter does properly come before the Annual Meeting, the Proxies will vote in their discretion on such matter.

Annual Report

Mailed herewith is a copy of the Company’s Summary Annual Report for the fiscal year ended September 30, 2020 (“fiscal 2020”). Also enclosed is a copy of the Company’s Annual Report on Form 10-K for fiscal 2020. The Company will furnish any exhibit to the Form 10-K upon request to the Secretary at the Company’s principal office, and upon payment of $5 per exhibit.

 

3


Table of Contents

PROPOSAL 1. ELECTION OF DIRECTORS

Your Company’s Board of Directors consists of eleven individuals with extensive and diverse leadership experience within the energy industry as well as complementary industries, including manufacturing and consulting. Our Board members bring insights, experience and perspectives that come with significant tenures in senior leadership positions at major business enterprises. They have experience in the following areas, among others:

 

   

CEO/Senior Leadership Position (11)

 

   

Energy Industry Experience (10)

 

   

Other Public Board of Directors Experience (9)

 

   

Legal/Compliance/Enterprise Risk Management (7)

 

   

Operational/Safety/Environmental (7)

 

   

Consumer/Customer Relations (6)

 

   

Federal and State Regulatory/Government Relations (6)

 

   

Financial/Accounting (5)

Your Company’s commitment to diversity also extends to the Board of Directors. Your Board has continued its efforts to attract qualified, diverse candidates whose expertise and personal characteristics align with the Company’s long-term business strategy. Our Nominating/Corporate Governance Committee, which makes recommendations to the full Board on nominees for director positions, has invited qualified gender and racially diverse candidates to stand for election to the Board, with successful results. Three of the Company’s last six Directors have increased Board diversity.

Nominees for Election as Directors at the 2021 Annual Meeting of Stockholders

At the Annual Meeting, four individuals will be elected to serve as directors for three-year terms expiring in 2024. The nominees for the four directorships are: David H. Anderson, David P. Bauer, Barbara M. Baumann and Rebecca Ranich. The nomination process is discussed under “Process for Nominating Directors” below.

The Company’s Restated Certificate of Incorporation (the “Certificate”), as currently in effect, provides that the Board of Directors shall be divided into three classes, and that each class shall be as nearly equal in number as may be possible. In general, at each annual meeting, the members of the class of directors whose term expires at the annual meeting (or the individuals nominated to succeed them) run for election for a three-year term. Directors of a particular class hold office until the annual meeting of the year in which the term of the class expires or, in the case of directors elected by the Board to fill vacancies or newly-created directorships, until the next annual meeting following their election. In addition, all directors hold office until their respective successors are elected and qualify, subject to prior death, resignation, retirement, disqualification or removal from office. The Company’s Certificate also provides that if the number of directors is changed by resolution of the Board, any increase or decrease shall be apportioned by the Board among the classes so as to maintain the number of directors in each class as nearly equal as possible, provided that a decrease in the number of directors may not shorten the term of any incumbent director.

As more fully described in Proposal 3, at the Annual Meeting, stockholders will have an opportunity to vote on the Company’s proposal to amend the Certificate to declassify the Board of Directors. If that proposal is approved, the Company will amend the Certificate to phase out the three-year staggered terms of our directors and transition to the annual election of directors. Because the declassification process, if approved, will commence after the Annual Meeting, the term for directors to be elected at the Annual Meeting is three years.

 

4


Table of Contents

It is intended that the Proxies will vote for the election of Mr. Anderson, Mr. Bauer, Ms. Baumann and Ms. Ranich as directors, unless they are otherwise directed by the stockholders. Although the Board has no reason to believe that any of the nominees will be unavailable for election or service, stockholders’ proxies confer discretionary authority upon the Proxies to vote for the election of another nominee for director in the event any nominee is unable to serve, or for good cause will not serve. Each of the nominees has consented to being named in this proxy statement and to serve if elected.

The affirmative vote of a plurality of the votes cast by the holders of shares of Common Stock entitled to vote is required to elect each of the nominees for director.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR

THE ELECTION OF EACH OF THE FOUR NOMINEES NAMED BELOW.

 

     

David H. Anderson

Portland, Oregon

                  Age:* 59                                

Tenure: Director since 2019

 

Professional Experience:

 

Mr. Anderson is President and Chief Executive Officer of Northwest Natural Holding Company (“Northwest Holdings”) and Northwest Natural Gas Company, a local distribution company that provides natural gas service to approximately 2.5 million people in Oregon and Southwest Washington. In addition, Northwest Holdings’ subsidiaries provide water distribution and wastewater services to communities throughout the Pacific Northwest and Texas, serving approximately 65,000 people through 26,000 connections. Mr. Anderson has held a series of positions with increasing responsibility at Northwest Holdings since joining the company in 2004, including Chief Operating Officer and Chief Financial Officer. Previously, he was Senior Vice President and Chief Financial Officer at TXU Gas Company and Chief Accounting Officer at TXU Corporation, an energy services company that included electricity generation and the transmission and distribution of electricity and natural gas. Mr. Anderson serves as a director of Northwest Holdings. He is also First Vice Chair of the Board of Directors of the American Gas Association (AGA) through December 31, 2020, and Chair effective January 1, 2021. He is past chairman of the AGA’s Audit Committee, past co-chairperson of the AGA’s Carbon Policy Task Force, a member of the AGA’s Finance Committee and Safety, Resilience/Reliability and Security Task Force, and a board trustee of the American Gas Foundation. Additionally, he serves as a director of the Oregon Business Council. Mr. Anderson also serves on Oregon Governor Kate Brown’s Global Warming Commission and is a member of the Founders’ Circle of SOLVE, an Oregon non-profit dedicated to environmental stewardship.

 

Qualifications:

 

Mr. Anderson’s extensive financial and operational experience in the electric and natural gas industries and leadership roles on environmental matters provide the Board with important perspectives with respect to the Company’s business operations, sustainability, and financial positioning. The combined professional skills and energy industry insights Mr. Anderson brings to the Board strengthen the Board’s collective knowledge, capabilities, and experience. Mr. Anderson’s experience in highly regulated industries impacted by emerging climate initiatives enables him to provide valuable perspective and management oversight on subjects including public policy, government relations, and regulatory compliance. In addition, the significant roles he has held in accounting and finance qualify Mr. Anderson as an “Audit Committee Financial Expert” under the Securities and Exchange Commission’s rules.

 

      

 

LOGO

   
   

 

Board Committees

 

Audit

Compensation

 

Public Company Directorships

 

Northwest Natural Holding Company

 

Education

 

Texas Tech University, B.B.A. in Accounting

Certified Public Accountant (retired)

Chartered Global Management Accountant

   
   
   
   
*

All ages are as of the Annual Meeting date.

 

5


Table of Contents
     

David P. Bauer

Buffalo, New York

                  Age: 51                                

Tenure: Director since 2020

 

 

Professional Experience:

 

Mr. Bauer has been President and Chief Executive Officer of the Company since 2019. He previously served as President of National Fuel Gas Supply Corporation, the Company’s principal pipeline and storage subsidiary, from 2016 to 2019, and as Treasurer and Principal Financial Officer of the Company from 2010 to 2019. Mr. Bauer joined the Company in 2001, after more than 10 years in public accounting at PricewaterhouseCoopers LLP, and served as Assistant Treasurer or Treasurer of the Company’s various operating subsidiaries from 2004 to 2019. He is a director of the American Gas Association, Invest Buffalo Niagara and YMCA Buffalo Niagara, where he chairs the finance committee. He also serves as chairman of the audit committee of D’Youville College and as a member of the Canisius College Business Advisory Council, the Diocese of Buffalo Investment Committee and the Canisius High School Finance and Investment Committee.

 

Qualifications:

 

As a member of the Company’s executive team since 2004, Mr. Bauer brings to the Board substantial management experience and in-depth knowledge of the Company’s operations and strategic direction. His oversight of key infrastructure modernization and expansion projects, together with his leadership role in maintaining the Company’s fiscal strength, will assist the Board with investment strategy, capital allocation and risk management. In addition, Mr. Bauer’s deep ties to Western New York, the location of the Company’s corporate headquarters, will enhance the Board’s understanding of local and regional issues.

 

      

 

LOGO

   
   

 

Board Committees

 

Executive

Financing

 

Education

 

Boston College, B.S. in Accounting

   
   

 

6


Table of Contents
     

Barbara M. Baumann

Denver, Colorado

                  Age: 65                                

Tenure: Director since 2020

 

 

Professional Experience:

 

Ms. Baumann is a former BP Amoco executive who currently serves as President and Owner of Cross Creek Energy Corporation, an energy advisory firm with investments in the domestic oil and gas business. Prior to founding her own firm in 2003, Ms. Baumann was Executive Vice President of Associated Energy Managers, a private equity firm investing in energy companies. Ms. Baumann began her 18-year career with Amoco (later BP Amoco) in 1981. She served in various areas of finance and operations, including Chief Financial Officer of Ecova Corporation, Amoco’s wholly-owned environmental remediation business, and Vice President of Amoco’s San Juan Basin business unit. She is a member of the Board of Directors of Devon Energy Corporation and a member of the independent Board of Trustees of Putnam Mutual Funds. In addition, she is a senior advisor for First Reserve Corporation, a private equity firm focused on energy, and serves as a director of privately held companies Ascent Resources and Texas American Resources II (TARC II). Ms. Baumann previously served on the boards of Buckeye Partners, L.P., SM Energy Company, CVR Energy, Inc., UNS Energy Corporation, and privately held Hat Creek Energy Corporation. She is a former board member and treasurer of The Denver Foundation and current member of its investment committee; a member of the finance committee of Children’s Hospital Colorado; and a board member of the National Association of Corporate Directors, Colorado Chapter, where she chairs the Nominating and Governance Committee. She is also a past member and past chair of the Board of Trustees of Mount Holyoke College.

 

Qualifications:

 

Ms. Baumann brings to the Board extensive knowledge of the energy industry, including particular expertise in the oil and gas exploration and production business. Over the course of her distinguished career, she has gained broad strategic planning, economic evaluation, operational, natural gas marketing, and human resources management skills and experience, which are important to the oversight of financial, operational, and compensation management functions. She also has significant financial, accounting and risk management experience, qualifying her as an “Audit Committee Financial Expert” under the Securities and Exchange Commission’s rules. Ms. Baumann’s service on other public and private company boards enhances her strong corporate governance background, and her position as an independent trustee of a large family of mutual funds provides insight into the perspective of institutional stockholders.

 

      

 

LOGO

   
   

 

Board Committees

 

Audit

Financing

 

Public Company Directorships / Private Company Trusteeships

 

Devon Energy Corporation

Putnam Mutual Funds

 

Former Public Company Directorships

 

Buckeye Partner, L.P.

 

SM Energy Company

 

CVR Energy, Inc.

 

UNS Energy Corporation

 

Education

 

Mount Holyoke College, B.A.

 

Wharton School of the University of Pennsylvania, MBA

   

 

7


Table of Contents
     

Rebecca Ranich

Baltimore, Maryland

                  Age: 62                                

Tenure: Director since 2016

 

 

Professional Experience:

 

Ms. Ranich is a former director at Deloitte Consulting, LLP, where she led the firm’s Energy and Sustainability Investment Advisory Services for public sector clients, providing counsel on more than $1 billion of investments. Her practice focused on strategic energy investments designed to mitigate and manage risks related to energy supply, demand and climate change issues. Preceding her position at Deloitte, Ms. Ranich worked at PSG International, where she was a member of the management team leading negotiations to implement the Trans-Caspian Gas Pipeline, a multi-billion dollar, 1,700-kilometer pipeline project transporting natural gas from Turkmenistan to Turkey. She was previously a Vice President at Michael Baker Corporation, an international engineering, energy and environmental services firm. While at Baker, she held executive responsibility for delivering energy and environmental engineering services in Europe, Russia and the Caspian region, overseeing projects with a construction value in excess of $40 billion. She managed offices in London, Naples, Wiesbaden and Moscow. Ms. Ranich served as a member of the Board of Directors of Questar Corporation from 2013 to 2016, when Questar was acquired by Dominion Resources, Inc. At Questar she was Chair of the Board’s Governance and Nominating Committee. She is a member of the Board of Directors of Cardno Limited, an Australian infrastructure and environmental services company, and a former member of the Supervisory Board at Uniper SE, a German power generation and energy supply chain corporation. She serves as Chair of the Board of the Gas Technology Institute and Chair of its Investment Committee, and she is an advisory board member of Yet Analytics, an xAPI data analytics platform. In addition to being an investor in and advisor to emerging technology companies, Ms. Ranich is a member of the Technology Commercialization Panel for the Johns Hopkins University Applied Physics Laboratory.

 

Qualifications:

 

Ms. Ranich’s wealth of experience and formidable skills in strategic energy investments, project development and risk management contribute significantly to the Board. With her work on sustainable environmental practices and extensive global industry experience, including first-hand involvement in high-risk environments and large-scale projects designed to effect significant advancements in the delivery of energy, Ms. Ranich complements the diverse backgrounds on the Board, adds a keen understanding of risk, and provides a unique global perspective. Ms. Ranich also brings to the Board her successful track record of establishing, building and leading energy-focused businesses.

 

      

 

LOGO

   
   

 

Board Committees

 

Audit

Nominating/Corporate

Governance, Chair

 

Public Company Directorships

 

Cardno Limited

 

Former Public Company Directorships

 

Questar Corporation

 

Uniper SE

 

Education

 

Northwestern University, B.A. in Soviet Studies

 

University of Detroit Mercy, MBA

   
   
   
   

 

8


Table of Contents

Continuing Directors Whose Terms Expire in 2023

 

     

Jeffrey W. Shaw

Highland, Utah

                  Age: 62                                

Tenure: Director since 2014

 

 

Professional Experience:

 

Mr. Shaw retired as Chief Executive Officer of Southwest Gas Corporation (“Southwest”) on March 1, 2015. He was named Chief Executive Officer and a director of Southwest in 2004 and also served as President of Southwest at various times from 2003 to 2014. Previously Mr. Shaw, a CPA, held various positions at Southwest, including Director of Internal Audit, Controller and Chief Accounting Officer, Vice President/Controller and Chief Accounting Officer, Vice President and Treasurer, Senior Vice President/Finance and Treasurer, and Senior Vice President/Gas Resources and Pricing. He worked for Arthur Anderson & Co. in its Dallas and Las Vegas offices in the audit division prior to joining Southwest in May of 1988. He is a member of the American Institute of Certified Public Accountants, the Nevada Society of CPAs and the Leadership Las Vegas Alumni Association. Mr. Shaw is a member of the Advisory Board of the University of Utah David Eccles School of Business and is a member and past Chairman of the Broadcast Leadership Council at Brigham Young University. He is a past director of Southwest Gas Corporation and the American Gas Association, past Chairman and director of the Western Energy Institute and past President and trustee of the Las Vegas Area Council of the Boy Scouts of America.

 

Qualifications:

 

Mr. Shaw’s extensive executive management and financial experience at an energy company with regulated natural gas businesses similar to those of the Company provides the Board with valuable perspective and understanding of state regulatory activities. In particular, Mr. Shaw’s accounting and finance background, and the significant roles he has held in these areas over his career, qualify him as an “Audit Committee Financial Expert” under the Securities and Exchange Commission’s rules and enable him to play a key role in performing the Board’s audit oversight function. In addition, Mr. Shaw’s background and financial expertise contribute to the Board’s understanding and guidance on financial matters. Mr. Shaw is the Company’s Lead Independent Director.

 

      

 

LOGO

   
   

 

Board Committees

 

Audit, Chair

Nominating/Corporate Governance

 

Former Public Company Directorships

 

Southwest Gas Corporation

 

Education

 

University of Utah, B.S. in Accounting

 

Certified Public Accountant

 

   
   
   

 

9


Table of Contents
     

Thomas E. Skains

Charlotte, North Carolina

                  Age: 64                                

Tenure: Director since 2016

 

 

Professional Experience:

 

Mr. Skains is the former Chairman of the Board, Chief Executive Officer and President of Piedmont Natural Gas Company, Inc., serving from 2002 as President and from 2003 as Chairman and CEO, until his retirement in October 2016. Previously, Mr. Skains held various positions at Piedmont, including Chief Operating Officer and Senior Vice President — Marketing and Supply Services. Mr. Skains held positions of increasing responsibility with Transcontinental Gas Pipe Line Corporation, which he joined in 1981 as an attorney and served as corporate and senior attorney before being named Vice President in 1986 and Senior Vice President — Transportation and Customer Services in 1989. In October 2016, Mr. Skains became a director at Duke Energy Corporation, where he chairs its Regulatory Policy Committee and serves on its Finance and Risk Management Committee, and where he previously served on its Nuclear Oversight Committee. Mr. Skains has served as a director of Truist Financial Corporation and its predecessor BB&T Corporation since 2009, where he chairs its Executive Committee and serves on its Risk Committee and Nominating and Governance Committee, and where he previously chaired its Nominating and Corporate Governance Committee and its Risk Committee. Mr. Skains has also served as a director at Truist Financial Corporation’s subsidiary, Truist Bank (formerly Branch Banking and Trust Company), since 2013, where he chairs its Executive Committee and serves on and previously chaired its Risk Committee. Mr. Skains previously served on the Charlotte Chamber of Commerce Board of Directors and was Chairman in 2015. He also served on the boards of several industry and community organizations, including Gas Technology Institute, the American Gas Association (as Chairman in 2009), the Southern Gas Association (as Chairman in 2006) and the American Gas Foundation (a not-for-profit energy research group).

 

Qualifications:

 

Mr. Skains’ strong leadership and strategic management skills provide the Board with a valuable perspective on the complexities, challenges and opportunities facing the natural gas industry. Through his experiences at Piedmont and Transco, Mr. Skains contributes significant knowledge of the legal and regulatory issues encountered by project sponsors in developing natural gas pipeline projects. Mr. Skains brings to the Board extensive knowledge of the natural gas industry and is able to use his legal training and experience as a corporate energy attorney to provide insight on legal and regulatory compliance matters and contribute to corporate governance matters.

 

      

 

LOGO

   
   

 

Board Committees

 

Compensation

Nominating/Corporate Governance

 

Public Company Directorships

 

Duke Energy Corporation

 

Truist Financial Corporation

 

Former Public Company Directorships

 

Piedmont Natural Gas Company, Inc.

 

Education

 

Sam Houston State University, B.B.A

 

University of Houston Law School, J.D.

   
   
   

 

10


Table of Contents
     

Ronald J. Tanski

Buffalo, New York

                  Age: 68                                

Tenure: Director since 2014

 

 

Professional Experience:

 

Mr. Tanski was President and Chief Executive Officer of the Company from 2013 until his retirement in 2019. He previously served as President and Chief Operating Officer of the Company from 2010 to 2013 and as Treasurer and Principal Financial Officer from 2004 to 2010. Mr. Tanski was President of National Fuel Gas Supply Corporation from 2008 to 2010 and President of National Fuel Gas Distribution Corporation from 2006 to 2008. He was previously Treasurer of those and other subsidiaries of the Company, and he also served in management roles at Seneca Resources Corporation (now Seneca Resources Company, LLC) and Horizon Energy Development, Inc. (sold in 2010). He is a member of the Board of Directors of CMS Energy Corporation. He previously served as a director of the Interstate Natural Gas Association of America (“INGAA”) and was INGAA Chairman in 2015. Mr. Tanski was a director of the American Gas Association and a member of the Council on Accountancy at Canisius College.

 

Qualifications:

 

Mr. Tanski has over four decades of industry experience, beginning his career as an attorney for the Company, and thereafter serving in various management capacities across the Company’s diversified energy business. Through his broad range of experience, including numerous senior leadership positions in both the Company’s regulated utility, and interstate natural gas transmission and storage businesses, as well as within the Company’s exploration and production subsidiary, he gained hands-on, practical knowledge about the natural gas industry, and virtually every aspect of the Company’s operations. Mr. Tanski’s role as CEO and substantial management experience with the Company’s subsidiaries, his detailed understanding of the Company’s integrated operations, and in particular, his financial and legal background with the Company, assist the Board with management of the Company’s operations. Mr. Tanski’s leadership roles at the Company during periods of regulatory change and through several commodity price cycles, as well as his participation with industry trade associations, including the prior chairmanship of a national pipeline trade association, also provide important insight into the business climates and regulatory environments in which the Company’s subsidiaries operate.

 

      

 

LOGO

 

   
   

 

Board Committees

 

Executive

Financing

 

Public Company Directorships

 

CMS Energy Corporation

 

Education

 

State University of New

York at Buffalo, B.A. in

Biology

 

State University of New

York at Buffalo, MBA

 

State University of New

York at Buffalo School of

Law, J.D.

   
   
   

 

11


Table of Contents

Continuing Directors Whose Terms Expire in 2022

 

     

David C. Carroll

Des Plaines, Illinois

                  Age: 64                                

Tenure: Director since 2012

 

 

Professional Experience:

 

Mr. Carroll is the President and CEO of Gas Technology Institute (“GTI”), a position he has held since 2006. From 2001 through 2006, he served as the Vice President of Business Development for GTI. From 1996 to 2001, he worked for Praxair, Inc., serving as Director of Business Development from 1999 to 2001. Prior to that, Mr. Carroll held positions of increasing responsibility with Liquid Carbonic Industries, a subsidiary of Chicago Bridge & Iron, from 1994 to 1996, and Air Products and Chemicals, Inc. from 1980 to 1994. All of these companies are industrial gas producers and manufacturers. He is a trustee of the American Gas Foundation, a member of the Governing Board of Stanford University’s Natural Gas Initiative, and a member of the Society of Gas Lighting. He was also Chairman of the steering committee for the 17th International Conference and Exhibition on Liquefied Natural Gas in Houston (2013). In June 2015, Mr. Carroll was named President of the International Gas Union, a term that concluded in June 2018 as the United States held the 2018 World Gas Conference in Washington, D.C

 

Qualifications:

 

Mr. Carroll is a highly respected, nationally and internationally recognized leader in the research and development of natural gas technologies and market solutions. His multi-faceted knowledge of the natural gas industry brings economic, technological and leadership experience to the Board. Through his professional career, Mr. Carroll has developed expertise on unconventional gas production, transmission and distribution pipeline integrity and end use technologies as well as insight into market and industry developments and conditions. This unique combination of skills contributes to the Board’s oversight of our integrated natural gas operations, including the deployment of technology to enhance safety and reliability, and provides valuable insight into risks and opportunities for the continued growth of the Company’s various business segments, as well as insight into global energy trends and emerging industries. Mr. Carroll is heavily involved in both the domestic and international natural gas business communities, providing the Board with a broad perspective on emerging technical, regulatory and economic issues, including climate initiatives and the positioning of natural gas among future global energy supplies.

 

      

 

LOGO

   
   

 

Board Committees

 

Executive

Nominating/Corporate

Governance

 

Former Company Directorships

 

Versa Power Systems, Inc. (wholly-owned subsidiary of Fuel Cell Energy, Inc.)

 

Education

 

University of Pittsburgh, B.S. in Chemical Engineering

 

Lehigh University, MBA

 

Stanford University Graduate School of Business, Stanford Executive Program

   

 

12


Table of Contents
     

Steven C. Finch

Buffalo, New York

                  Age: 62                                

Tenure: Director since 2018

 

 

Professional Experience:

 

Mr. Finch is the former Plant Manager of the General Motors (“GM”) Tonawanda Engine Plant, one of Western New York’s largest manufacturers with approximately 1,600 employees. Mr. Finch, a Western New York native, began his 41-year career with GM in 1976 as a General Motors Institute co-op student at the Chevrolet Gear and Axle Plant in Buffalo, N.Y. Over the course of 30 years, he held several assignments with increasing responsibility at various GM facilities outside Buffalo before becoming Tonawanda Engine Plant Manager in 2007. Following his 2017 retirement from GM, Mr. Finch joined the Automobile Association of America Western and Central New York as Senior Vice President of Automotive Services. Mr. Finch currently serves as Chairman of the Board of Directors of the Buffalo Urban League and as a member of the Board of Directors of the Community Foundation for Greater Buffalo, serving on its Racial Equity Roundtable initiative. He was a previous Chairman of the Board of the United Way of Buffalo and Erie County, and a previous board member of AAA Western and Central New York.

 

Qualifications:

 

With a career spanning more than four decades, Mr. Finch has a proven track record of leadership during a period of significant evolution for the automotive industry. Mr. Finch helped navigate the GM workforce through economic downturn and bankruptcy. After a reorganization, he successfully secured the addition of three new engine product lines, ultimately overseeing investments at the plant totaling more than $3 billion during his 10-year tenure. Through his extensive GM career, Mr. Finch developed expansive and diverse experience in manufacturing and customer relations, as well as in capital and labor management. Mr. Finch’s success in managing highly technical operations and delivering a quality product in a safe, environmentally responsible and cost-effective manner has direct application to National Fuel’s work in the energy industry, including the Company’s focus on employee safety and commitment to the provision of outstanding service to residential customers. Mr. Finch’s experience in senior level oversight during periods of significant industry challenge and disruption provides an important perspective on organizational transformation and the management of regulatory and economic change. Furthermore, Mr. Finch’s strong community presence positions him to provide guidance and insight to the Board on local and regional matters, and provides an important connection between the Company and the communities it serves.

 

      

 

LOGO

   
   

 

Board Committees

 

Audit

Nominating/Corporate Governance

 

Education

 

Kettering University (formerly General Motors Institute), B.S. in Electrical Engineering

   
   
   
   
   
   
   
   
   
   
   
   
   
   

 

13


Table of Contents
     

Joseph N. Jaggers

Horseshoe Bay, Texas

                  Age: 67                                

Tenure: Director since 2015

 

 

Professional Experience:

 

Mr. Jaggers is the founder and former President, Chief Executive Officer and Chairman of Jagged Peak Energy Inc., formerly an independent oil and natural gas exploration and production company. Before forming Jagged Peak Energy in 2013, Mr. Jaggers served as President and Chief Executive Officer and as director of Ute Energy, LLC, from 2010 until its sale in 2012. From 2006 to 2010, he served as director, President and Chief Operating Officer of Bill Barrett Corporation. From 2001 to 2006, he was Vice President, Exploration & Production, for Williams Companies. Previously, he served as President and Chief Operating Officer of Barrett Resources, from 2000 until its sale to Williams in August 2001. From 1981 through 2000, he worked for BP Amoco in various domestic and international assignments of increasing responsibility culminating in executive oversight for the Northern North Sea, one of BP’s largest producing assets at the time. Mr. Jaggers is a member of the Board of Directors of QEP Resources, Inc. He is past President of the Colorado Oil and Gas Association, past Executive Director of the Independent Producers Association of the Mountain State and an inductee into the Rocky Mountain Oil and Gas Hall of Fame.

 

Qualifications:

 

With more than 35 years of experience in the oil and gas industry, including a long record of creating value through efficiently achieving production and reserve growth, Mr. Jaggers has familiarity with market cycles and dynamics and contributes significantly to the Board’s oversight of our exploration and production business. Mr. Jaggers’ extensive operational experience in diverse producing basins provides the Board with substantial insight in assessing various risks that may affect oil and gas operations at the Company. With experience as a senior leader in a number of large, publicly-traded exploration and production companies, Mr. Jaggers adds significant operational depth to the Board as well as an understanding of effective and efficient resource development. These attributes assist the Board in its oversight of the ongoing development of the Company’s various oil and gas assets and evaluation of the continued advancement of the Company’s Appalachian drilling program.

 

      

 

LOGO

   
   

 

 

 

 

Board Committees

 

Audit

Compensation, Chair

Executive

 

Public Company Directorships

 

QEP Resources, Inc.

 

Former Public Company Directorships

 

Jagged Peak Energy Inc.

Bill Barrett Corporation

Mission Resources Corporation

 

Education

 

United States Military Academy at West Point, B.S.

 

 

14


Table of Contents
     

David F. Smith

Scottsdale, Arizona

                  Age: 67                                

Tenure: Director since 2007

 

 

Professional Experience:

 

Mr. Smith has been Chairman of the Board of the Company since 2010 (from 2013 to 2014 he served as Executive Chairman of the Board). He also served as Chief Executive Officer of the Company from 2008 to 2013; as President of the Company from 2006 to 2010; and as Chief Operating Officer of the Company from 2006 to 2008. Mr. Smith was also President and/or Chairman of each of the Company’s major subsidiaries over the course of his career. He is a Board member of Gas Technology Institute (Executive Committee and Audit Committee), Emeritus Board member of the State University of New York at Buffalo Law School Dean’s Advisory Council, a former director of the American Gas Association and former Chairman of the Board of Directors of the Business Council of New York State. He is also past Chairman of the Northeast Gas Association and Buffalo Niagara Enterprise.

 

Qualifications:

 

Mr. Smith brings to the Board significant industry and Company expertise and leadership experience. His 36-year tenure with the Company, which included key leadership positions within all of the Company’s business segments has resulted in significant knowledge of the Company’s history and strategies during its substantial growth from a regional utility to a much larger diversified energy company. He also brings a long and active participation in industry groups that identify and address important issues facing the Company and has well-established relationships of trust with other industry leaders. In addition, Mr. Smith has deep ties to businesses and civic organizations in Western New York (the location of the Company’s corporate headquarters and most of its business units). His experience as an active participant during decades of regulatory evolution at the state and federal levels provides valuable perspective and insight into the political and regulatory trends impacting the Company’s regulated interstate pipeline and storage, and utility businesses.

 

      

 

LOGO

   
   

 

Board Committees

 

Executive, Chair

Financing, Chair

 

Education

 

State University of New York at Fredonia, B.A. in Political

Science

State University of New York at Buffalo School of Law, J.D.

   
   
   
   

 

15


Table of Contents

CORPORATE GOVERNANCE

The Board of Directors is committed to effective corporate governance. The Board has adopted Corporate Governance Guidelines that provide a framework for the governance of the Company, and it regularly reviews corporate governance developments. The Board has implemented many strong governance practices, including maintaining a significant complement of independent directors (currently nine out of eleven), designating a Lead Independent Director, holding regular meetings of the non-management and/or independent directors, separating, at the Board’s discretion, the roles of Chairman of the Board and Chief Executive Officer, and providing a process for stockholders meeting certain requirements to have nominees included in the Company’s proxy materials. In addition, the Company’s Code of Business Conduct and Ethics, which applies to all directors, officers and employees, sets forth standards for conducting business in an honest and ethical manner.

Diversity

National Fuel’s commitment to diversity extends both to its workforce and your Board of Directors. Under the Company’s Corporate Governance Guidelines, the Board of Directors is required, when selecting candidates for re-election and candidates for Board membership, to consider factors that include diversity of perspectives, including all aspects of diversity, to be brought to the Board by the individual members. In recent years, National Fuel’s Nominating/Corporate Governance Committee, which makes recommendations to the full Board on nominees for director positions, has invited qualified gender and racially diverse candidates to stand for election to the Board, with successful results. The Board will continue its efforts to attract qualified diverse Board candidates whose expertise and personal characteristics align with the Company’s long term business strategy. The Board also believes it noteworthy that Board member Rebecca Ranich serves as Chair of the Nominating/Corporate Governance Committee and that women have long occupied National Fuel’s top corporate levels. Today, four of the Company’s ten designated executive officers are women who hold the following important policy-making positions: President of the Company’s Utility segment; General Counsel and Secretary, who also serves as the Company’s Compliance Officer; Treasurer and Principal Financial Officer; and Controller and Principal Accounting Officer.

Director Independence

The Board of Directors has determined that directors Anderson, Baumann, Carroll, Finch, Jaggers, Ranich, Shaw, Skains and Smith are independent, that Mr. Tanski is not independent due to his recent employment relationship with the Company, and that Mr. Bauer is not independent due to his current employment relationship with the Company. The Board of Directors previously determined that Stephen E. Ewing, who retired from the Board March 11, 2020, was independent. The Board’s determinations of director independence were made in accordance with the listing standards of the New York Stock Exchange (the “NYSE”) and SEC regulations. In making its independence determinations, the Board considered that Mr. Carroll is President and Chief Executive Officer of GTI, an organization that receives payments from the Company for dues and fees to support research and development, and that such payments in each of GTI’s last three fiscal years were less than (i) $1,000,000 or (ii) 2% of GTI’s consolidated gross revenues for the applicable fiscal year.

Board Leadership Structure

Non-management directors meet at regularly scheduled executive sessions without management. In addition, the independent directors met during fiscal 2020, in accordance with NYSE listing standards. The sessions were chaired by Stephen E. Ewing, as Lead Independent Director until his retirement from the Board on March 11, 2020, and by Jeffrey W. Shaw, as Lead Independent Director since March 11, 2020.

In March 2020, the Board of Directors re-elected Mr. Smith as Chairman of the Board and re-elected Mr. Bauer as President and Chief Executive Officer. The Board believes that Mr. Smith’s role as

 

16


Table of Contents

Chairman and Mr. Bauer’s position as Chief Executive Officer constitute an effective leadership model, given Mr. Smith’s past experience in the role of CEO and experience as Chairman of the Board and Mr. Bauer’s recent appointment as CEO. The Board believes this is the optimal leadership structure at this time and reviews and considers this structure at least annually. As in the past, it is the Board’s opinion that the stockholders’ interests are best served by allowing the Board to retain flexibility to determine the optimal organizational structure for the Company at a given time, including whether the roles of Chairman and CEO should be filled by the same person. At times in the past the roles have been separate and at other times they have been combined. The members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company faces, have significant industry experience and are in the best position to evaluate its needs and how best to organize the capabilities of the directors and management to meet those needs.

The Board of Directors provides a process for stockholders and other interested parties to send communications to the Board or to certain directors. Communications to the Lead Independent Director, to the non-management directors as a group, or to the entire Board should be addressed as follows: Lead Independent Director, c/o 6363 Main Street, Williamsville, NY 14221. For the present, all stockholder and interested parties’ communications addressed in such manner will go directly to the indicated directors. If the volume of communication becomes such that the Board determines to adopt a process for determining which communications will be relayed to Board members, that process will appear on the Company’s website at www.nationalfuel.com.

Annual Meeting Attendance

Last year, all directors then serving on the Board attended the 2020 Annual Meeting. This year, all directors are expected to attend, via remote communication, the 2021 Annual Meeting.

Meetings of the Board of Directors and Standing Committees

In fiscal 2020, there were five meetings of the Board of Directors. In addition, directors attended meetings of standing or pro tempore committees. The Audit Committee held nine meetings, the Compensation Committee held four meetings, the Executive Committee held two meetings, the Financing Committee held two meetings, and the Nominating/Corporate Governance Committee held four meetings. During fiscal 2020, all directors attended at least 75% of the aggregate of meetings of the Board and of the committees of the Board on which they served. In addition, Board members regularly attend meetings of committees on which they do not serve, although committee decision-making is reserved to committee members.

 

17


Table of Contents

The table below shows the number of committee meetings conducted in fiscal 2020 and the directors who served on these committees as of September 30, 2020.

 

    BOARD COMMITTEES

DIRECTOR

  Audit   Compensation   Executive   Financing   Nominating/
Corporate
Governance

David H. Anderson

  X   X      

David P. Bauer

      X   X  

Barbara M. Baumann

  X       X  

David C. Carroll

      X     X

Steven C. Finch

  X         X

Joseph N. Jaggers

  X   Chair   X    

Rebecca Ranich

  X         Chair

Jeffrey W. Shaw

  Chair         X

Thomas E. Skains

    X       X

David F. Smith

      Chair   Chair  

Ronald J. Tanski

      X   X  

Number of Meetings in Fiscal 2020

  9   4   2   2   4

Audit Committee

The Audit Committee is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee held nine meetings during fiscal 2020 in order to review the scope and results of the annual audit, to receive reports of the Company’s independent registered public accounting firm and chief internal auditor, to monitor compliance with the Company’s Reporting Procedures for Accounting and Auditing Matters (included in this proxy statement as Appendix A), to review the Company’s enterprise risk management program and to prepare a report of the Audit Committee’s findings and recommendations to the Board of Directors. A current copy of the charter of the Audit Committee is available to security holders on the Company’s website at www.nationalfuel.com. The members of the Audit Committee are independent as independence for audit committee members is defined in NYSE listing standards and in SEC regulations. No Audit Committee member simultaneously serves on the audit committees of more than three public companies. The Board limits the number of audit committees on which an Audit Committee member can serve to three, unless the Board has determined that such simultaneous service would not impair the ability of such members to serve effectively. The Company’s Board of Directors has determined that the Company has three audit committee financial experts (as defined by SEC regulations) serving on its Audit Committee, namely Mr. Shaw, Mr. Anderson and Ms. Baumann. The Board has also determined, in its business judgment in accordance with NYSE listing standards, that all members of the Audit Committee are financially literate.

In connection with its review of the Company’s internal audit function, the Audit Committee in 2016 had an external quality assessment performed by IIA Quality Services, LLC under the Institute of Internal Auditors’ (the “IIA”) International Standards for the Professional Practice of Internal Auditing (the “Standards”). The assessment concluded that the Company’s Audit Services Department generally conforms to the Standards, the IIA Code of Ethics, and the Definition of Internal Auditing. “Generally conforms” is the IIA’s highest rating. The Standards state that an external quality assessment should be conducted at least once every five years.

Further information relating to the Audit Committee appears in this proxy statement under the headings “Audit Fees” and “Audit Committee Report.”

 

18


Table of Contents

Compensation Committee

As described in the Compensation Discussion and Analysis in this proxy statement, the Compensation Committee held four meetings during fiscal 2020 in order to review and determine the compensation of Company executive officers and to review reports and/or grant awards under the Company’s 2010 Equity Compensation Plan, the 2012 Annual At Risk Compensation Incentive Program (“AARCIP” or the “At Risk Plan”), and the Executive Annual Cash Incentive Program (“EACIP”). The members of the Compensation Committee are independent under NYSE listing standards and “non-employee directors” as defined in SEC regulations. A current copy of the charter of the Compensation Committee is available to security holders on the Company’s website at www.nationalfuel.com.

The Compensation Committee is responsible for various aspects of executive compensation, including approval of the base salaries and incentive compensation of the Company’s executive officers. The Compensation Committee is authorized to evaluate director compensation and make recommendations to the full Board regarding director compensation. The Compensation Committee may form subcommittees and delegate to those subcommittees such authority as the Compensation Committee deems appropriate, other than authority required to be exercised by the Compensation Committee as a whole. The Compensation Committee also administers the Company’s 2010 Equity Compensation Plan, the 1997 Award and Option Plan, and the At Risk Plan and approves performance conditions and target incentives for executive officers who are participants in the EACIP. As described more fully in the Compensation Discussion and Analysis, the Compensation Committee retained Korn Ferry (a unit of Korn/Ferry International) and Meridian Compensation Partners, LLC, both independent compensation consulting firms, to assist in determining executive compensation. In addition, as set forth in the Compensation Committee’s charter, the Chief Executive Officer may and does make, and the Compensation Committee may and does consider, recommendations regarding the Company’s compensation and employee benefit plans and practices, including the compensation of executive officers other than himself. The Compensation Committee then approves executive compensation as it deems appropriate. The Compensation Committee has assessed the independence of the compensation consultants under NYSE listing standards and has determined their work presents no conflicts of interest under SEC regulations. For more information regarding the role of the compensation consultants and the Chief Executive Officer in determining or recommending the amount or form of executive compensation, see the Compensation Discussion and Analysis.

Executive Committee

The Executive Committee held two meetings during fiscal 2020. The Executive Committee has, and may exercise, the authority of the full Board, except as may be prohibited by New Jersey corporate law (N.J.S.A. § 14A:6-9).

Financing Committee

The Financing Committee held two meetings during fiscal 2020. The Financing Committee may exercise Board authority with respect to specific financing matters for which the Board has delegated responsibility to it.

Nominating/Corporate Governance Committee

All the members of the Nominating/Corporate Governance Committee are independent, as independence is defined in NYSE listing standards. The Nominating/Corporate Governance Committee makes recommendations to the full Board on nominees for the position of director. The Nominating/Corporate Governance Committee also has duties regarding corporate governance matters as required by law, regulation or NYSE rules. Additionally, the Nominating/Corporate Governance Committee oversees the Company’s strategy and reporting with respect to corporate responsibility matters, including

 

19


Table of Contents

environmental, social, and corporate governance (“ESG”) factors, that are of significance to the Company and its stakeholders. The Nominating/Corporate Governance Committee provides guidance to management on corporate responsibility issues and makes recommendations to the Board regarding corporate responsibility initiatives and strategies. A current copy of the charter of the Nominating/Corporate Governance Committee is available to stockholders on the Company’s website at www.nationalfuel.com and in print to stockholders who request a copy from the Company’s Secretary at its principal office. The Nominating/Corporate Governance Committee held four meetings during fiscal 2020.

Method of Evaluating Board and Committee Effectiveness

Annually, the Board and each of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee take part in a self-evaluation process to determine their effectiveness and opportunities for improvement. Questionnaires are provided to each director soliciting comments with respect to dynamics of the full Board and each of the above committees, on which the director serves, as well as director performance and adequacy of Board materials. The confidential responses are summarized for Board and Nominating/Corporate Governance committee review. Board members are requested to report dissatisfaction with individual performance to the Chairman of the Board and the Chairman of the Nominating/Corporate Governance Committee. At a Board and Nominating/Corporate Governance Committee meeting, time is allocated to discuss the summary and review any comments or inadequacies.

Process for Nominating Directors

Stockholders may recommend individuals to the Nominating/Corporate Governance Committee to consider as potential nominees. Procedures by which stockholders may make such recommendations are set forth in Exhibit B to the Company’s Corporate Governance Guidelines, described in the following paragraph. In addition, the Company’s By-Laws provide a process for stockholders meeting certain requirements to have nominees included in the Company’s proxy materials.

In general, the Nominating/Corporate Governance Committee’s charter provides for the Nominating/Corporate Governance Committee to develop and recommend to the Board criteria for selecting new director nominees and evaluating unsolicited nominations, which criteria are included in this proxy statement as part of the Company’s Corporate Governance Guidelines. A current copy of the Corporate Governance Guidelines is included in this proxy statement as Appendix B, and is available to stockholders on the Company’s website at www.nationalfuel.com. Appendix B also addresses the qualifications and skills the Nominating/Corporate Governance Committee believes are necessary in a director, and the Nominating/Corporate Governance Committee’s consideration of stockholder recommendations for director. Pursuant to the Corporate Governance Guidelines, stockholder recommendations identifying a proposed nominee and setting out his or her qualifications should be delivered to the Company’s Secretary at its principal office no later than September 24, 2021 in order to be eligible for consideration in connection with the 2022 Annual Meeting of Stockholders.

Under the process for selecting new Board candidates, the Chairman and the Chief Executive Officer and the Nominating/Corporate Governance Committee discuss the need to add a new Board member or to fill a vacancy on the Board. The Nominating/Corporate Governance Committee will initiate a search, working with staff support and seeking input from Board members and senior management, hiring a search firm if necessary, and considering candidates recommended by stockholders in accordance with Exhibit B to the Corporate Governance Guidelines.

Charitable Contributions by Company

Within the preceding three years, the Company did not make any charitable contributions to any charitable organization in which a director served as an executive officer which exceeded the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues in a single fiscal year.

 

20


Table of Contents

Compensation Committee Interlocks and Insider Participation

There are no “Compensation Committee interlocks” or “insider participation” which SEC regulations or NYSE listing standards require to be disclosed in this proxy statement.

Risk Oversight

The Board retains oversight of safety, environmental, social, operational and corporate governance risks, among other areas central to corporate responsibility, including strategic, financial and regulatory risks and opportunities. An important aspect of the Board’s oversight role is the enterprise risk management process, under which major enterprise-wide risks have been identified, along with the mitigative measures to address and manage such risks. Management reports quarterly to the Board on significant risk categories. In addition, management provides a detailed presentation on a topic related to one or more risk categories at each Board meeting. Additional review or reporting on enterprise risks is conducted as needed or as requested by the Board. The Board and management consider enterprise risks and opportunities in their strategic and capital spending decision process, and the Board directs management to integrate corporate responsibility concerns into decision-making throughout the organization.

The Nominating/Corporate Governance Committee specifically has oversight responsibility for corporate responsibility matters that are significant to the Company and its stakeholders. The Company understands that our stockholders trust us to conduct business consistent with our six guiding principles of safety, environmental stewardship, community, innovation, satisfaction, and transparency. To that end, corporate responsibility and ESG matters are now a standing agenda item at Nominating/Corporate Governance Committee meetings. In September 2020, the Company published our initial Corporate Responsibility Report which built on past disclosures, highlighting the Company’s ESG-related initiatives, programs, and actions.

The Audit Committee discusses guidelines and policies governing management’s process for assessing and managing the Company’s exposure to risk. The Audit Committee also oversees the scope of work of the Audit Services Department, which includes review of the internal audit function’s annual risk-based audit plan. The Audit Services Department considers significant risk categories identified through the enterprise risk management process when creating its internal audit plan. Additionally, in conjunction with its review of the integrity of the Company’s financial statements, the Audit Committee discusses with management major financial risk exposures and the steps taken to monitor and control those exposures.

Related Person Transactions

The Company had no related person transactions in fiscal 2020. The Company’s Code of Business Conduct and Ethics (the “Code of Conduct”) (which is in writing and available to stockholders as described at the end of this proxy statement) identifies the avoidance of any actual or perceived conflicts between personal interests and Company interests as an essential part of the responsibility of the Company’s directors, officers and employees. The Code of Conduct provides that a conflict of interest may arise when a director, officer or employee receives improper personal benefits as a result of his or her position in the Company, or when personal situations tend to influence or compromise a director’s, officer’s or employee’s ability to render impartial business decisions in the best interest of the Company. Potential conflicts of interest under the Code of Conduct would include but not be limited to related person transactions. The Audit Committee administers the Code of Conduct as it relates to the Company’s directors and executive officers.

The Company’s policies and procedures for the review, approval or ratification of related person transactions are set forth in writing in the charter of the Audit Committee. The charter provides that the Audit Committee will review and, if appropriate, approve or ratify any transaction between the Company and a related person which is required to be disclosed under SEC rules. In the course of its review of a

 

21


Table of Contents

transaction, the Audit Committee will consider the nature of the related person’s interest in the transaction, the material terms of the transaction, the significance of the transaction to the related person and to the Company, whether the transaction would affect the independence of a director, and any other matters the Audit Committee deems appropriate. The Audit Committee will approve or ratify only those transactions that it considers to be in, or not inconsistent with, the best interests of the Company and its stockholders, as the Audit Committee determines in good faith. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, principal executive officer, principal financial officer, controller, other officers and employees that is designed to deter wrongdoing and to promote honest and ethical conduct. The code deals with a variety of corporate matters, including compliance with laws, conflicts of interest, corporate opportunities, use of company resources, fair dealing and confidentiality of company information. The text of the code is available on the Company’s website at www.nationalfuel.com. Upon request, the Company will provide to any person without charge a copy of the code. Requests must be made to the Secretary at the principal offices of the Company.

DIRECTOR COMPENSATION

The 2009 Non-Employee Director Equity Compensation Plan was approved at the 2009 Annual Meeting of Stockholders and reapproved at the 2016 and 2019 Annual Meetings of Stockholders (“Director Equity Compensation Plan”). This plan provides for the issuance of shares on a quarterly basis to non-employee directors in such amounts as the Board may determine from time to time. In addition, non-employee directors receive a portion of their compensation in cash, as determined by the Board from time to time. Directors who are not Company employees or retired employees do not participate in any of the Company’s employee benefit or compensation plans. Directors who are current employees receive no compensation for serving as directors.

For the first quarter of fiscal 2020, non-employee directors were paid a cash retainer of $22,500, plus fees for meetings during such quarter of committees on which they served at a rate of $1,500 per meeting. Effective January 1, 2020 (the start of the Company’s second fiscal quarter), the Board eliminated all meeting fees and increased the rate of the cash retainer from $22,500 to $27,500 per quarter, or $110,000 per year. In fiscal 2020, non-employee directors were also paid shares of Common Stock equal in value to approximately $175,000, except that the shares paid to Ms. Baumann and Mr. Ewing were pro-rated based on their period of actual service during fiscal 2020. Common Stock issued to non-employee directors under the Director Equity Compensation Plan is nontransferable until the later of two years from issuance or six months after the recipient’s cessation of service as a director of the Company, except that transferability restrictions lapse upon the death of the recipient.

The Lead Independent Director (Mr. Shaw, effective March 11, 2020) was paid an additional annual retainer of $15,000, and the Chairpersons of the Audit, Compensation and Nominating/Corporate Governance Committees (Mr. Shaw, Mr. Jaggers and Ms. Ranich, respectively) were each paid an additional annual retainer of $15,000. These payments were made in July 2020. Mr. Smith was paid an additional retainer of $20,000 per quarter for his service as Chairman of the Board.

The Company requires that each director, in order to receive compensation for service as a director, must beneficially own at least 2,000 shares of Common Stock at the end of the first year of service as a director, at least 4,000 shares at the end of the second year of service and at least 6,000 shares at the end of the third year of service. All directors are in compliance with this requirement.

 

22


Table of Contents

The following table sets forth the compensation paid to each non-employee director for service during fiscal 2020:

DIRECTOR COMPENSATION TABLE — FISCAL 2020

 

Name

   Fees
Earned or
Paid in
Cash
($)(1)
     Stock
Awards
($)(2)
     All Other
Compensation
($)(3)
   Total
($)
 

David H. Anderson

     112,500        175,086      7      287,593  

Barbara M. Baumann

     61,346        97,653      4      159,003  

David C. Carroll

     106,500        175,086      7      281,593  

Stephen E. Ewing

     51,456        77,945      3      129,404  

Steven C. Finch

     111,000        175,086      7      286,093  

Joseph N. Jaggers

     127,500        175,086      7      302,593  

Rebecca Ranich

     126,000        175,086      7      301,093  

Jeffrey W. Shaw

     141,000        175,086      7      316,093  

Thomas E. Skains

     109,500        175,086      7      284,593  

David F. Smith

     185,000        175,086      7      360,093  

Ronald J. Tanski

     105,000        175,086      7      280,093  

 

(1)

Represents the portion of the annual retainer paid in cash, plus meeting fees, plus additional retainers, as applicable, for service as a committee Chairperson, Lead Independent Director, or Chairman of the Board.

 

(2)

Represents the aggregate fair value on the date of issuance of the Common Stock issued under the Director Equity Compensation Plan, in accordance with Financial Accounting Standards Board (“FASB”) authoritative guidance for stock compensation. The average of the high and low stock price on each date of issuance was used to compute the fair value. The average prices (and resultant values of the Stock Awards) were as follows: $46.17 for October 1, 2019 (stock in total valued at $43,769.16); $45.69 for January 2, 2020 (stock in total valued at $43,771.02 or, for the pro-rated grant to Mr. Ewing, $34,176.12); $35.715 for March 13, 2020 (stock in total valued at $10,107.345 for the pro-rated grant to Ms. Baumann); $36.105 for April 1, 2020 (stock in total valued at $43,759.26); and $41.23 for July 1, 2020 (stock in total valued at $43,786.26). As of September 30, 2020, the aggregate shares paid for all years of director service under director compensation plans to directors Anderson, Baumann, Carroll, Ewing, Finch, Jaggers, Ranich, Shaw, Skains, Smith and Tanski were 5,173, 2,557, 22,785, 28,178, 8,079, 16,448, 13,962, 19,232, 12,873, 14,654 and 5,007, respectively.

 

(3)

Represents premiums paid on a blanket travel insurance policy, which covers each director up to a maximum benefit of $500,000. This insurance provides coverage in case of death or injury while on a trip for Company business.

 

23


Table of Contents

AUDIT FEES

In addition to retaining PricewaterhouseCoopers LLP to report on the annual consolidated financial statements of the Company for fiscal 2020, the Company retained PricewaterhouseCoopers LLP to provide various non-audit services in fiscal 2020. The aggregate fees billed for professional services by PricewaterhouseCoopers LLP for each of the last two fiscal years were as follows:

 

     2020      2019  

Audit Fees(1)

   $ 2,203,600      $ 1,872,500  

Audit-Related Fees(2)

   $ 0      $ 0  

Tax Fees

     

Tax advice and planning(3)

   $ 218,400      $ 8,200  

Tax compliance(4)

   $ 11,450      $ 41,815  

All Other Fees(5)

   $ 2,284      $ 3,589  
  

 

 

    

 

 

 

TOTAL

   $ 2,435,734      $ 1,926,104  
  

 

 

    

 

 

 

 

(1)

Audit Fees include audits of consolidated financial statements and internal control over financial reporting, reviews of financial statements included in quarterly Forms 10-Q, comfort letters and consents, and audits of certain of the Company’s wholly-owned subsidiaries to meet statutory or regulatory requirements.

 

(2)

Audit-Related Fees include audits of certain of the Company’s wholly-owned subsidiaries not required by statute or regulation, and consultations concerning technical financial accounting and reporting standards.

 

(3)

Tax advice and planning includes consultations on various federal and state tax matters.

 

(4)

Tax compliance includes tax return preparation and tax audit assistance.

 

(5)

All Other Fees relate to permissible fees other than those described above and include consulting fees and the software-licensing fee for an accounting and financial reporting research tool.

The Audit Committee’s charter (available on the Company’s website at www.nationalfuel.com and in print to stockholders who request a copy from the Company’s Secretary at its principal office) references its pre-approval policies and procedures. The Audit Committee has pre-approved the use of PricewaterhouseCoopers LLP for specific types of services, including various audit and audit-related services and certain tax services, among others. The chair of the Audit Committee and, in his absence, another specified member of the committee are authorized to pre-approve any audit or non-audit service on behalf of the committee. Each pre-approval is to be reported to the full committee at the first regularly scheduled committee meeting following such pre-approval.

For fiscal 2020, none of the services provided by PricewaterhouseCoopers LLP were approved by the Audit Committee in reliance upon the “de minimis exception” contained in Section 202 of Sarbanes-Oxley and codified in Section 10A(i)(1)(B) of the Exchange Act and in 17 CFR 210.2-01(c)(7)(i)(C).

 

24


Table of Contents

AUDIT COMMITTEE REPORT

The Audit Committee is composed solely of six directors who meet the independence and financial literacy requirements of the New York Stock Exchange and the Securities and Exchange Commission (SEC). The Audit Committee Chairman, Jeffrey W. Shaw, and members David H. Anderson and Barbara M. Baumann, each qualify as an “audit committee financial expert” as defined by the SEC. The responsibilities of the Audit Committee are set forth in the Audit Committee Charter, last amended June 15, 2017, a copy of which is available on the Company’s website at https://investor.nationalfuelgas.com/governance/governance-guidelines-and-committee-charters/default.aspx.

The Audit Committee reviews the integrity of the Company’s financial statements and discusses with management major financial risk exposures and the steps taken to monitor and control those exposures. The Audit Committee also oversees the scope of work of the Audit Services Department. That scope includes reviewing the accuracy, reliability and integrity of financial and operational information and the means used to identify, measure, classify and report such information. To that end, management reports quarterly to the Board of Directors on significant risk categories identified through the enterprise risk management process, which the Audit Services Department considers when creating its internal audit plan. The Audit Committee also directly appoints, retains, compensates, evaluates, terminates and oversees the work of the independent auditor for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and such firm must report directly to the Audit Committee. In addition to those responsibilities, with respect to the independent auditor, the Audit Committee:

 

   

reviews and evaluates the annual engagement letter, including the independent auditor’s proposed fees;

 

   

reviews, evaluates and monitors the annual audit plan and its progression, including the timing and scope of audit activities;

 

   

annually reviews and evaluates the qualifications, performance and independence of the independent auditor, including the lead partner, and ensures that the lead partner and any other audit partners are rotated at appropriate intervals in compliance with applicable laws, rules and regulations;

 

   

reviews and evaluates the independent auditor report describing internal quality-control procedures and any material issues raised by the most recent internal quality-control review of the independent auditors or outside inquiry or investigation; and

 

   

reviews the independent auditor report describing all relationships between the independent auditor and the Company, including a list of the fees billed for each category, in order to assess the independent auditor’s independence.

Management is responsible for the Company’s consolidated financial statements and for establishing, maintaining, and assessing internal control over financial reporting. PricewaterhouseCoopers LLP, the Company’s independent auditor, is responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on the Company’s internal control over financial reporting.

As part of its auditor engagement process, the Audit Committee considers whether to rotate the independent auditor. PricewaterhouseCoopers LLP has been the Company’s independent auditor since 1941. PricewaterhouseCoopers LLP rotates its lead audit engagement partner every five years; the Audit Committee interviews proposed candidates and selects the lead audit engagement partner. The Audit Committee believes that there are significant benefits to having an independent auditor with an extensive history with the Company. These include:

 

   

Higher quality audit work and accounting advice, due to the independent auditor’s institutional knowledge of our business and operations, accounting policies and financial systems, and internal control framework; and

 

25


Table of Contents
   

Operational efficiencies because of the independent auditor’s history and familiarity with our business.

In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the Company’s audited financial statements for fiscal 2020 with management. The Audit Committee has also reviewed with management its evaluation of the structure and effectiveness of the Company’s internal control over financial reporting. The Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC. The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the PCAOB regarding PricewaterhouseCoopers LLP’s communications with the audit committee concerning independence, and has discussed with PricewaterhouseCoopers LLP that firm’s independence. The Audit Committee also has considered whether PricewaterhouseCoopers LLP’s level of fees and provision of non-audit services to the Company and its affiliates are compatible with PricewaterhouseCoopers LLP’s independence and has concluded that PricewaterhouseCoopers LLP is independent from the Company and its management.

Based on the review, discussions and considerations referred to in the preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for fiscal 2020 for filing with the SEC.

AUDIT COMMITTEE

JEFFREY W. SHAW, Chairman

DAVID H. ANDERSON

BARBARA M. BAUMANN

STEVEN C. FINCH

JOSEPH N. JAGGERS

REBECCA RANICH

 

26


Table of Contents

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth for each current director, each nominee for director, each of the executive officers named in the Fiscal 2020 Summary Compensation Table, and for all directors, nominees and executive officers as a group, information concerning beneficial ownership of Common Stock. The Common Stock is the only class of Company equity securities outstanding. Unless otherwise noted, to the best of the Company’s knowledge, each person has sole voting and investment power with respect to the shares listed. Security holdings are as of December 10, 2020. As of that date, 91,013,923 shares of Common Stock were issued and outstanding.

 

Name of Beneficial

Owner

  Exercisable
SARs(1)
  Shares Held
in ESOP(2)
  Shares Held in
401(k)
Plan(3)
  Shares Otherwise
Beneficially Owned(4)
  Percent of
Class(5)

David H. Anderson

      0       0       0       6,445 (6)       *

David P. Bauer

      0       0       11,043       47,444       *

Barbara M. Baumann

      0       0       0       5,845       *

Karen M. Camiolo

      0       0       15,022       40,609       *

David C. Carroll

      0       0       0       26,712 (7)       *

Donna L. DeCarolis

      0       257       20,700       62,919       *

Steven C. Finch

      0       0       0       9,192 (7)       *

Joseph N. Jaggers

      0       0       0       18,036       *

John P. McGinnis

      0       0       10,802       93,121 (8)       *

John R. Pustulka

      0       3,927       23,321       114,734       *

Rebecca Ranich

      0       0       0       16,091 (7)       *

Jeffrey W. Shaw

      0       0       0       20,420 (9)       *

Thomas E. Skains

      0       0       0       14,061 (7)       *

David F. Smith

      0       1,984       20,321       301,987 (10)       *

Ronald J. Tanski

      0       2,995       27,610       550,474 (11)       *

Directors, Nominees and Executive Officers as a Group (20 Total)

      0       14,495       155,753       1,406,397       1.73 %

 

 *

Represents beneficial ownership of less than 1% of issued and outstanding Common Stock.

 

(1)

A stock appreciation right (“SAR”) granted under an equity compensation plan of the Company in respect of one or more shares of Common Stock generally entitles the holder thereof the right to receive, either in Common Stock, or in cash or Common Stock as determined by the Compensation Committee in its discretion, an amount per share of Common Stock equal to the excess, if any, of (i) the fair market value of a share of Common Stock on the date the SAR is exercised, over (ii) the grant price of the SAR. As of December 10, 2020, the fair market value of a share of Common Stock was less than the grant price of each outstanding SAR. As a result, no shares were acquirable as of that date through the exercise of SARs.

 

(2)

This column lists shares held in the National Fuel Gas Company Employee Stock Ownership Plan (“ESOP”). The beneficial owners of these shares have sole voting power with respect to shares held in the ESOP, but do not have investment power respecting most of those shares until they are distributed.

 

(3)

This column lists shares held in the Company Tax-Deferred Savings Plan for Non-Union Employees (“TDSP”), a 401(k) plan. The beneficial owners of these shares have sole voting and investment power with respect to shares held in the TDSP.

 

27


Table of Contents
(4)

This column includes shares held of record and any shares beneficially owned through a bank, broker or other nominee.

 

(5)

This column lists the sum of the individual’s (or individuals’) holdings shown on this table, expressed as a percentage of the Company’s outstanding shares.

 

(6)

Includes 184 shares held through a family trust, as to which Mr. Anderson shares voting and investment power, and 1,088 shares deferred under the Company’s Non-Employee Directors Deferred Compensation Plan, as to which Mr. Anderson does not have voting or investment power.

 

(7)

Includes 1,088 shares deferred under the Company’s Non-Employee Directors Deferred Compensation Plan, as to which the director does not have voting or investment power.

 

(8)

Includes 78,832 shares held through a limited liability company of which Mr. McGinnis and his wife are the sole members, and as to which Mr. McGinnis shares voting and investment power; and 2,520 shares held by Mr. McGinnis and his wife as trustees for a family member, as to which Mr. McGinnis shares voting and investment power.

 

(9)

Includes 100 shares held through a family trust, as to which Mr. Shaw shares voting and investment power.

 

(10)

Includes 81,828 shares held through a family partnership, as to which Mr. Smith shares voting and investment power, 50,357 shares owned by Mr. Smith’s wife, as to which Mr. Smith shares voting and investment power, and 1,088 shares deferred under the Company’s Non-Employee Directors Deferred Compensation Plan, as to which Mr. Smith does not have voting or investment power.

 

(11)

Includes 429 shares owned jointly with Mr. Tanski’s wife, as to which Mr. Tanski shares voting and investment power.

As of December 10, 2020, each of the following persons is known to the Company to be the beneficial owner of more than five percent of the Common Stock, as set forth in a Schedule 13G or Schedule 13D filed with the SEC. The Common Stock is the only class of Company stock outstanding.

 

Name and Address of Beneficial Owner

   Shares Held as
Trustee for Company
Employee Benefit
Plans
  Shares
Otherwise
Beneficially Held
  Percent
of
Class(1)

The Vanguard Group

100 Vanguard Boulevard

Malvern, PA 19355

       2,576,438 (2)       8,420,713 (3)       12.08 %

State Street Corporation

One Lincoln Street

Boston, MA 02111

       N/A       9,041,697 (4)       9.93 %

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

       N/A       8,773,684 (5)       9.64 %

Mario J. Gabelli

Gabelli & Company, Inc.

One Corporate Center

Rye, NY 10580

       N/A       4,634,658 (6)       5.09 %

 

(1)

This column lists the sum of the shares shown on this table, expressed as a percentage of the Company’s outstanding shares at December 10, 2020.

 

(2)

This amount represents the shares held by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, in its capacity as trustee for certain employee benefit plans. Vanguard Fiduciary Trust Company held 2,576,438 shares on behalf of the plans as of December 10, 2020, all of which have been allocated to plan participants. The plan trustee votes the shares allocated to participant accounts as directed by those participants. Shares held by the trustee on behalf of the plans as to which participants have made no timely voting directions are voted by the trustee in the

 

28


Table of Contents
 

same proportion as the shares of Common Stock for which the trustee received timely directions, except in the case where to do so would be inconsistent with provisions of Title I of ERISA. Vanguard Fiduciary Trust Company disclaims beneficial ownership of all shares held in trust by the trustee that have been allocated to the individual accounts of participants in the plans for which directions have been received, pursuant to Rule 13d-4 under the Exchange Act.

 

(3)

The number of shares is derived from Amendment No. 7 to Schedule 13G filed on February 12, 2020 by The Vanguard Group. The filing states that The Vanguard Group has sole voting power with respect to 41,740 shares of Common Stock, shared voting power with respect to 14,135 shares of Common Stock, sole dispositive power with respect to 8,374,770 shares of Common Stock, and shared dispositive power with respect to 45,943 shares of Common Stock.

 

(4)

The number of shares is derived from Schedule 13G filed on February 14, 2020 by State Street Corporation. The filing states that State Street Corporation has sole voting power with respect to zero shares of Common Stock, shared voting power with respect to 8,882,245 shares of Common Stock, sole dispositive power with respect to zero shares of Common Stock, and shared dispositive power with respect to 9,041,697 shares of Common Stock. The filing also identifies SSGA Funds Management, Inc. (“SSGA”) as a subsidiary of State Street Corporation and beneficial owner of more than 5% of the Common Stock. SSGA’s shares are included among the 9,041,697 shares beneficially owned by State Street Corporation as reflected in the table. The filing states that SSGA has sole voting power with respect to zero shares of Common Stock, shared voting power with respect to 6,276,070 shares of Common Stock, sole dispositive power with respect to zero shares of Common Stock, and shared dispositive power with respect to 6,305,647 shares of Common Stock.

 

(5)

The number of shares is derived from Amendment No. 8 to Schedule 13G filed on February 10, 2020 by BlackRock, Inc. The filing states that BlackRock, Inc. has sole voting power with respect to 8,478,379 shares of Common Stock, shared voting power with respect to zero shares of Common Stock, sole dispositive power with respect to 8,773,684 shares of Common Stock, and shared dispositive power with respect to zero shares of Common Stock.

 

(6)

The number of shares is derived from Amendment No. 18 to Schedule 13D filed on July 20, 2020 by Gabelli Funds, LLC, GAMCO Asset Management Inc., Gabelli & Company Investment Advisers, Inc., MJG Associates, Inc., Gabelli Foundation, Inc., GGCP, Inc., GAMCO Investors, Inc., Associated Capital Group, Inc., and Mario J. Gabelli.

 

29


Table of Contents

EQUITY COMPENSATION PLAN INFORMATION

As of September 30, 2020

 

Plan category

   Number of securities to be
issued upon exercise of
outstanding options,
warrants and  rights
(a)
  Weighted-average exercise
price of outstanding
options, warrants  and
rights
(b)
  Number of securities
remaining available for
future issuance under
equity compensation  plans
(excluding securities
reflected in column (a))
(c)

Equity compensation plans approved by security holders

       2,034,209 (1)     $ 56.07 (2)       3,453,516 (3)

Equity compensation plans not approved by security holders

       0       0       0
    

 

 

     

 

 

     

 

 

 

Total

       2,034,209     $ 56.07       3,453,516
    

 

 

     

 

 

     

 

 

 

 

(1)

The securities listed in column (a) include 1,185,256 shares of Common Stock which would be issued under performance-based awards outstanding at September 30, 2020 if the maximum level of performance is achieved under those awards. If actual performance falls below the maximum level of performance for these awards, fewer shares would generally be issued. For example, if target performance were achieved, 592,628 shares of Common Stock would be issued under performance-based awards outstanding at September 30, 2020. In that event, the number of shares to be issued noted in column (a) would be 1,441,581.

 

(2)

The weighted-average exercise price in column (b) takes into account outstanding stock appreciation rights. It does not take into account outstanding restricted stock units (RSUs) or performance shares.

 

(3)

Of the securities listed in column (c), 232,988 were available at September 30, 2020 for future issuance pursuant to the Director Equity Compensation Plan and 3,220,528 were available for future issuance under the 2010 Equity Compensation Plan. All securities included in column (c) are available for issuance for awards other than options, warrants or rights.

 

30


Table of Contents

EXECUTIVE COMPENSATION

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 Company’s 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 Company’s 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 Company’s compensation policies and practices encourage a culture of pay for performance and are strongly aligned with the long-term interests of the Company’s stockholders.

NO MODIFICATIONS TO FISCAL 2020 COMPENSATION

Despite the COVID-19 pandemic, which impacted commodity prices and contributed to lower revenues in the Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s compensation policies and procedures to align the interests of executives with those of the Company’s stockholders. The Company recognizes

 

31


Table of Contents

and rewards executives through compensation arrangements that directly link executive pay to the Company’s 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 Company’s CEO, was at-risk compensation, with 52% tied to equity and 24% tied to short-term performance goals.

 

 

LOGO

Key features of the Company’s executive compensation program include the following:

 

  Ø

Annual performance incentives of the named executive officers are based entirely on objective performance goals;

 

  Ø

Long-term performance incentives are composed entirely of equity;

 

  Ø

Long-term performance goals consist of three-year TSR and three-year total ROC, each relative to a peer group;

 

  Ø

The Company does not provide tax “gross-ups”;

 

  Ø

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);

 

  Ø

Executive officers may not hedge or pledge Company stock;

 

  Ø

Equity incentive plans prohibit the repricing of equity awards without stockholder approval;

 

  Ø

The Compensation Committee engages two independent compensation consultants to assist in setting compensation;

 

  Ø

All change-in-control agreements are double  triggered; and

 

  Ø

The Board has adopted a clawback policy (see “Recovery of Funds” in the Company’s Corporate Governance Guidelines, included as Appendix B to this proxy statement).

TSR PERFORMANCE AND CEO PAY RELATIVE TO PEERS

Relative Total Shareholder Return

For the one-year period ended September 30, 2020, the Company’s 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


Table of Contents

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 Company’s TSR performance shares. For the three-year period ended September 30, 2020, using the same calculation method, the Company’s 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 Ferry’s 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. Bauer’s 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. Bauer’s target total direct compensation for fiscal 2019, as shown in the table, was below that of all of our Korn Ferry peers. Applying Mr. Bauer’s 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. Bauer’s predecessor, Ronald Tanski (not shown in the table below), would have placed the Company at the 58th percentile of the same Korn Ferry peers.

 

        

 

CEO & President

 
  Compared to CEO proxy data for fiscal year 2019  

 

                         Total Direct
Compensation
Company   Title   FYE
Revenue
(millions)
  Market Cap
as of 9/30/19
(millions)
  FYE # of
Employees
  Actual   Target  
   

ATMOS ENERGY CORP

  President, CEO & Director   $2,902   $13,462   4,776   $4,856,786   $4,577,330  
   

CABOT OIL & GAS CORP

  Chairman, CEO & President   $1,985   $7,351   547   $13,472,009   $12,971,509  
   

CNX RESOURCES CORP

  President, CEO & Director   $1,544   $1,362   467   $8,909,570   $7,661,570  
   

EQT CORP

  President & CEO   $3,715   $2,719   647   N/A   N/A  
   

MDU RESOURCES GROUP INC

  President, CEO & Director   $5,337   $5,611   13,359   $5,292,912   $4,749,392  
   

NEW JERSEY RESOURCES CORP

  President & CEO   $2,592   $4,069   1,108   $2,779,381   $3,100,006  
   

RANGE RESOURCES CORP

  CEO, President & Director   $2,601   $936   655   $8,327,208   $7,784,992  
   

SM ENERGY CO

  President, CEO & Director   $1,524   $1,094   530   $5,494,271   $5,398,381  
   

SOUTHWESTERN ENERGY CO

  President, CEO & Director   $3,038   $1,042   923   $10,131,334   $9,956,334  
   

SOUTHWEST GAS HOLDINGS INC

  President, CEO & Director   $3,120   $4,946   8,944   $4,028,934   $3,811,927  
   

SPIRE INC

  CEO, President & Director   $1,952   $4,433   3,536   $4,117,827   $4,120,527  
   

UGI CORP

  Chairman & CEO   $7,320   $10,504   12,800   $6,226,999   $6,857,138  
   

WHITING PETROLEUM CORP

  President & CEO   $1,572   $728   505   $5,425,392   $5,524,007  
             

Summary Statistics

                        
   

75th Percentile

    $3,120   $5,611   4,776   $8,472,799   $7,692,426  
   

Average

    $3,016   $4,481   3,754   $6,588,552   $6,376,093  
   

Median

    $2,601   $4,069   923   $5,459,832   $5,461,194  
   

25th Percentile

    $1,952   $1,094   547   $4,672,046   $4,463,129  
             

NATIONAL FUEL GAS CO

  CEO & President   $1,693   $4,050   2,107   $2,869,875   $2,751,675  
   

Percentile Rank

      19%   50%   62%   1%   Min  

 

LOGO

 

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.

   

 

 

® 2020 Korn Ferry. All rights reserved

  1

 

33


Table of Contents

OBJECTIVES OF THE NAMED EXECUTIVE OFFICER COMPENSATION PROGRAM

The Company’s 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 Company’s named executive officers, the Compensation Committee’s 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:

 

Compensation Component

 

Objectives

 

Key Features in 2020

Base Salary

 

•   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.

Annual Cash Incentive Compensation  

•   Motivate performance toward, and reward achievement on, near-term financial, operating and individual goals.

 

•   Target awards are set as a percentage of base salary.

Long-Term Equity Incentive Compensation  

•   Focus attention on managing the Company from a long-term investor’s 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.

 

•   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.

 

34


Table of Contents

Compensation Component

 

Objectives

 

Key Features in 2020

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:

 

¡   qualified defined contribution plan (401(k));

 

¡    qualified non-contributory defined contribution plan (retirement savings account or “RSA”) or qualified defined benefit plan (depending on year of hire); and

 

¡   non-qualified executive retirement plan and/or non-qualified tophat plan, depending on year of hire.

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.

 

•   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.

PROCESS FOR DETERMINING COMPENSATION

Risk Assessment

The Board conducted a risk assessment of the Company’s compensation programs during fiscal 2020. Based on the assessment, the Board concluded that the Company’s 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 Company’s 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 Company’s cash and equity incentive compensation plans, which include:

Cash Compensation Plans/Short-Term Incentive

 

   

2012 Annual At Risk Compensation Incentive Plan (the “At Risk Plan”), generally for named executive officers

 

   

Executive Annual Cash Incentive Program (the “EACIP”), generally for other executive officers

Equity Compensation Plans/Long-Term Incentive

 

   

2010 Equity Compensation Plan

 

35


Table of Contents

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 Company’s 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 Company’s 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 Committee’s compensation consultants with regard to the responsibilities of the Company’s 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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

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 Ferry’s 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 Ferry’s proprietary databases:

 

  1)

Base Salary;

 

  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.

 

37


Table of Contents

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:

 

       Korn Ferry — Peer Companies for Fiscal 2020

    Exploration    

    &    

    Production    

    Pipeline    

    &    

    Storage    

    and/or    

    Gathering    

    Natural    

    Gas Utility    

1

Atmos Energy Corporation

X X

2

Cabot Oil & Gas Corporation

X

3

CNX Resources Corporation

X X

4

EQT Corporation

X

5

MDU Resources Group, Inc.

X X

6

New Jersey Resources Corporation

X X

7

Range Resources Corporation

X

8

SM Energy Company

X

9

Southwest Gas Holdings, Inc.

X

10

Southwestern Energy Company

X X

11

Spire Inc.

X

12

UGI Corporation

X X

13  

Whiting Petroleum Corporation

X

TOTAL

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 Seneca’s 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 Company’s 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:

 

  1.

Base Salary;

 

  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


Table of Contents

The Meridian analysis was based on data from Meridian’s 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, Seneca’s assets and the Company’s consolidated assets totaled approximately $2.0 and $6.5 billion, respectively. The peer group is:

 

      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 Meridian’s 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 individual’s 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 CEO’s recommendations.

In setting Mr. Bauer’s base salary for calendar year 2020, the Compensation Committee referenced the Korn Ferry report indicating Mr. Bauer’s then-current base salary was below the 25th percentile of Korn Ferry’s Energy Industry market data. Considering Mr. Bauer’s recent promotion, in July 2019, to the

 

39


Table of Contents

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. Bauer’s salary to the 50th percentile level.

In determining Ms. Camiolo’s base salary for calendar year 2020, the Compensation Committee referenced the Korn Ferry report and increased Ms. Camiolo’s salary to a level slightly above the Energy Industry 50th percentile for principal accounting officers. This level maintained Ms. Camiolo’s positioning as of her promotion in July 2019. The increase followed discussion with Mr. Bauer regarding Ms. Camiolo’s 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. Pustulka’s base salary to the Energy Industry 50th percentile for positions comparable to his position as Chief Operating Officer. The increase recognized Mr. Pustulka’s performance managing the operations and development plans of the Company.

For calendar year 2020, consistent with the Compensation Committee’s 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 Seneca’s 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 Company’s 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 Committee’s 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 Company’s 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 executive’s 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


Table of Contents

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. Bauer’s 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 Company’s 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 year’s financial forecast. Thus, the current year’s targets may be lower (or higher) than the prior year’s actual results (to which the averaging applies). In this way, the impact of lower (or higher) natural gas commodity prices on the Company’s 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


Table of Contents

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 Company’s overall profitability, as well as the profitability of certain segments, as appropriate. Performance is averaged with the prior year’s performance to mitigate against short-term action to impact one year’s 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 year’s performance on EBITDA goals. The incentive payments made to the named executive officers were approved by the Compensation Committee.

 

42


Table of Contents

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 officer’s 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 year’s performance as a mechanism to mitigate against short-term action to impact one year’s 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 Company’s natural gas gathering operations.

 

43


Table of Contents
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 segment’s 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


Table of Contents

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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 investor’s 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


Table of Contents

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 Company’s 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 company’s 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 Company’s percentile rank in the Korn Ferry peer group, as follows:

 

Relative TSR Goal

   Percentage of
Target Opportunity Paid

Company’s Percentile Ranking

30th or below

       0 %

40th

       50 %

50th

       100 %

70th

       150 %

90th or above

       200 %

If the Company’s three-year TSR is negative (less than 0.0), the percentage of target opportunity paid is capped at 100%, regardless of the Company’s 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 Company’s 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 Company’s 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 Company’s percentile rank in the Korn Ferry peer group, as follows:

 

Relative ROC Goal

   Percentage of
Target Opportunity Paid

Company’s Percentile Ranking

<45th

       0 %

45th

       50 %

60th

       100 %

75th

       150 %

100th

       200 %

If the Company’s three-year ROC is negative (less than 0.0), the percentage of target opportunity paid is capped at 100%, regardless of the Company’s percentile ranking. For performance between two established performance levels, the percentage of target opportunity paid is determined by mathematical interpolation.

 

46


Table of Contents

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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

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 officer’s 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 Company’s 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 Company’s 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


Table of Contents

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 officer’s 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 officer’s 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 Company’s 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


Table of Contents

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 Company’s 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


Table of Contents

Fiscal 2020 Summary Compensation Table

The following table sets forth a summary of the fiscal 2020 compensation of the Company’s 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 officer’s 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 H under the heading “Stock Award Plans” in the Company’s 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 Company’s financial statements in its 2020 Form 10-K, as described in Note K, “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


Table of Contents

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 Company’s 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 Company’s calendar 2019 payment and calendar 2020 payment fell within the Company’s 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


Table of Contents

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 H under the heading “Stock Award Plans” in the Company’s 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 Company’s 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


Table of Contents

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


Table of Contents
          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.

 

(6)

RSUs.

 

55


Table of Contents

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 K, Retirement Plan and Other Post-Retirement Benefits, to the Company’s 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


Table of Contents

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 employee’s final average pay by 1.5% and then multiplying such product by the employee’s years of credited service up to a maximum of 40 years. Final average pay is the average of the participant’s 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 participant’s 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


Table of Contents

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 participant’s base benefit under the Retirement Plan; minus

(e) the participant’s 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 member’s supplemental benefit shall be increased by .125% for each whole calendar month by which a member’s 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 participant’s 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 Moody’s 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 Moody’s Composite Average of Yields on

 

58


Table of Contents

Corporate Bonds (“Moody’s 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 Poor’s 500 stock index minus 1.2% per annum (“S&P 500 Minus 1.2% Election”). The participant could select either the Moody’s 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 participant’s 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 Moody’s Index. For a participant who retires and elected to invest in the S&P 500 Minus 1.2% Election, the investment’s return will assume the Moody’s 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 Company’s 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 Company’s fiscal year), assuming each named executive officer’s 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


Table of Contents

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 officer’s 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 officer’s 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 Company’s 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 Company’s 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 officer’s position. Examples include the assignment to the named executive officer of duties inconsistent with the named executive officer’s position, assignment of the executive to another place of employment more

 

60


Table of Contents

than 30 miles from the named executive officer’s current place of employment, or reduction in the named executive officer’s 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 officer’s 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


Table of Contents

assumed, or new rights substituted (an “Alternative Award”), by the named executive officer’s 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 officer’s 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 officer’s 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 Company’s 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 Company’s 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


Table of Contents

National Fuel Gas Company Tophat Plan

Under the Company’s Tophat Plan, the Company restores to the named executive officers benefits that may be lost under the Company’s 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. Pustulka’s 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 participant’s beneficiary. If the participant dies after commencement of the annuity, the annuity will continue to be paid to the participant’s 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 Moody’s 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 officer’s 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 officer’s 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


Table of Contents

officer is entitled to a single lump sum cash payment equal to 1.99 times the sum of the named executive officer’s 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 executive’s 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 Company’s 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 officer’s 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 Company’s 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


Table of Contents

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 officer’s 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 Company’s 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 officer’s date of termination equal to one times the sum of (i) the named executive officer’s 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


Table of Contents

relations between the Company and any customer; or engages in any activity the committee administering the ERP (“ERP Committee”) deems detrimental to the Company’s 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 officer’s 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 Company’s 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.

 

66


Table of Contents

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 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 employee’s 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 Company’s policy regarding hedging or offsetting any decrease in the market value of Company securities is set forth in the Company’s Corporate Governance Guidelines, included as Appendix B to this proxy statement (see “Hedging or Pledging of Company Stock”). The policy applies to the Company’s directors and executive officers. Under the policy, the Company’s 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 Company’s 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 Company’s directors and executive officers may not pledge Company equity as security for an extension of credit. In addition, the Company’s 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


Table of Contents

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 Company’s 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 Company’s named executive officers. The Board recommends a vote FOR this resolution because it believes that the Company’s compensation policies and procedures encourage a culture of pay for performance and are strongly aligned with the interests of the Company’s stockholders.

The Company’s 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 Company’s 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

COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.

 

68


Table of Contents

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 year’s 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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

At the Annual Meeting, stockholders will be asked to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company’s 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 Company’s 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


Table of Contents

IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS

Only one copy of this proxy statement, the Company’s 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 Company’s 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 Company’s 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 stockholder’s 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 Company’s 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


Table of Contents

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 SEC’s website at www.sec.gov and at the Company’s 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


Table of Contents

APPENDIX A TO PROXY STATEMENT

NATIONAL FUEL GAS COMPANY

REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS

 

I.

Purpose

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 Company’s 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.

 

II.

Scope

These Procedures apply to all employees of all divisions and subsidiaries of the Company.

 

III.

Procedures

 

  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 Company’s dedicated toll-free hotline (1-800-605-1338) operated by a third party service company; or

 

  b.

Via the Company’s 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.

 

  B.

Treatment of Reports

 

  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 Committee’s 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.