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
(Amendment No. )
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 |
Atmos Energy Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
☐ | Fee paid previously with preliminary materials. |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
![]() |
December 20, 2019
Notice of Annual MeetingDEAR SHAREHOLDER:
and Proxy Statement
Annual Meeting of Shareholders
Wednesday, February 7, 2018
December 22, 2017
Dear Atmos Energy Shareholder:
YouWe are cordially invitedpleased to invite you to attend the annual meeting of shareholders on Wednesday, February 7, 2018,5, 2020, at 9:00 a.m. Central Standard Time, at the Charles K. Vaughan Center, 3697 Mapleshade Lane, Plano, Texas 75075.Westin Galleria Dallas, 13340 Dallas Parkway, Dallas, TX 75240.
The annual meeting will include a report on our operations and consideration of the matters to be acted upon at the meeting are describedset forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement. In addition, we will review the affairs and progressAll shareholders of the Company during the past year and discuss the resultsrecord as of operations for the first quarter of our 2018 fiscal year.December 13, 2019, are entitled to vote.
Your vote is very important regardless of the number of shares you hold. .Whether or not you plan to attend the meeting in person, please cast your vote as instructed in the Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card, over the Internet,internet, by telephone or on theby mailing back a proxy card as promptlysoon as possible. If you received only a Notice in the mail or by email, you may also request a paper proxy card to submit your vote by mail, if you prefer. However, we encourage you to vote over the Internet or by telephone because it is more convenient and conserves natural resources, as well as saves on printing costs and postage fees.
On behalf of your Board of Directors, thank you for your continued support and interest in Atmos Energy Corporation.
Sincerely, | ||||
![]() ![]() | ![]() ![]() | |||
Kim R. Cocklin | ||||
Executive Chairman of the Board | President and Chief Executive Officer |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 7, 2018:
This Proxy Statement, along with the Company’s Annual Report, which includes our Annual Report on Form10-K for the fiscal year ended September 30, 2017, are available on the Internet atwww.proxyvote.com.
ATMOS ENERGY CORPORATION
P.O. Box 650205
Dallas, Texas 75265-0205
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
To Our Shareholders:
The annual meeting of the shareholders of Atmos Energy Corporation will be held at the Charles K. Vaughan Center, 3697 Mapleshade Lane, Plano, Texas 75075 on February 7, 2018, at 9:00 a.m. Central Standard Time for the following purposes:
2020 ANNUAL MEETING INFORMATION
|
|
| ||||||||||||||||||||||
Meeting Date: February 5, 2020 | Meeting Place: Westin Galleria Dallas 13340 Dallas Parkway Dallas, TX 75240 | Meeting Time: 9:00 a.m. (Central) | Record Date: December 13, 2019 |
ANNUAL MEETING BUSINESS
Atmos Energy Corporation’s annual meeting of shareholders will be held February 5, 2020 to:
1. | elect the 13 directors named in the proxy statement forone-year terms expiring in | 2021; |
2. | ratify the Audit Committee’s appointment of Ernst & Young LLP (“Ernst & Young” or “E&Y”) to serve as the Company’s independent registered public accounting firm for fiscal | 2020; |
3. | approve, on an advisory basis, the compensation of the named executive officers of the Company for fiscal |
4. | transact such other business as may properly come before the meeting or any adjournment thereof. |
VOTING
YOUR VOTE IS VERY IMPORTANT TO US.Shareholders of record of our common stock at the close of business on December 15, 2017,13, 2019, will be entitled to notice of, and to vote at, our meeting. The stock transfer books willWhether or not be closed. Your vote is very importantyou plan to us. Regardless of the number of shares you own, please vote. All shareholders of record may vote (i) over the Internet, (ii) by toll-free telephone (please see the proxy card for instructions), (iii) by written proxy by signing and dating the proxy card and mailing it to us or (iv) by attending the annual meeting and voting in person. These various options for voting are described in the Notice or proxy card.
For all shareholders who participate in our Retirement Savings Plan and Trust (“RSP”), your vote over the Internet, by telephone or on your proxy card will serve as voting instructions to the trustee of the RSP, the Atmos Energy Corporation Qualified Retirement Plans and Trusts Committee (“RSP Trustee”). If you own shares through the RSP, only the RSP Trustee may vote your plan shares even if you attend the annual meeting in person. Yourperson, we urge you to vote will remain confidential. as soon as possible by one of these methods.
By Internet www.proxyvote.com | By Telephone 1.800.690.6903 | By Mail Follow the instructions on your proxy card or voting instruction form |
If you do not instruct the RSP Trustee, the unvotedare a beneficial owner of shares allocated to your account will be voted by the RSP Trustee in its best judgment. In addition, State Street Global Advisors Trust Company, an affiliate of State Street Corporation (“State Street”), is the independent fiduciary for the RSP for the purpose of ensuring the confidentiality of the RSP participant voting process. Please notify State Street if you have specific confidentiality concerns relating to exercising your right to direct the RSP Trustee by writing to Sydney Marzeotti, Vice President, State Street Global Advisors Trust Company, One Lincoln Street, Boston, Massachusetts 02111.
All shareholders who hold shares in “street name” in the name ofheld through a broker, bank or other nominee (“broker”) may submit your written votes through voting instruction forms provided by your brokers. Ifholder of record, you hold shares in street name, you may also generally vote your proxy overmust follow the Internet or by telephone, in accordance with voting instructions provided by your broker. Brokers do not haveyou receive from the discretion to vote the sharesholder of customers or clients who fail to provide voting instructions on any of the proposals listed above, except the proposal to ratify the Audit Committee’s appointment of Ernst & Young to serve as the Company’s independent registered public accounting firm for fiscal 2018. Therefore, if you do not provide instructions to your brokerrecord to vote your shares, the brokershares. Shareholders may vote your shares only on that one proposal at our annual meeting. In addition, if you own your shares in street name and you intend toalso vote in person at the meeting, you must first obtain a legal proxy fromannual meeting. For more information on how to vote your broker and bring itshares, please refer to “Information About the annual meeting.
We encourage you to receive all proxy materials in the future electronically to help us saveMeeting” beginning on printing costs and postage fees, as well as to conserve natural resources in producing and distributing these materials. If you wish to receive these materials electronically for next year’s annual meeting, please follow the instructions on the proxy card or on our website atwww.atmosenergy.comunder the “Investors” tab.page 61.
|
![]() |
Karen E. Hartsfield |
Senior Vice President, General Counsel and Corporate Secretary |
December 22, 201720, 2019
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON FEBRUARY 5, 2020:
This Proxy Statement, along with the Company’s Annual Report, which includes our Annual
Report on Form10-K for the fiscal year ended September 30, 2019, are available atwww.proxyvote.com.
TABLE OF CONTENTSTable of Contents
2020 Proxy Statement |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider before casting your vote. Please read this entire proxy statement carefully before voting.
2020 Annual Meeting Information
For additional information about our Annual Meeting, see “Information About the Meeting” on page 61.
![]() | ![]() | ![]() | ![]() | |||
Meeting Date: February 5, 2020 | Meeting Place: Westin Galleria Dallas 13340 Dallas Parkway Dallas, TX 75240 | Meeting Time: 9:00 a.m. (Central) | Record Date: December 13, 2019 | |||
iMeeting Agenda and Voting Recommendations
The Atmos Energy Corporation Board of Directors asks shareholders to vote on these matters:
Items of Business | Board Recommendation | Page Number | ||||
1. |
Election of the 13 directors named as nominees in the proxy statement |
FOR |
17 | |||
2. |
Ratification of selection of independent registered public accounting firm |
FOR |
28 | |||
3. |
Approval, on an advisory basis, of the compensation of our named executive officers |
FOR |
30 |
In addition to the above matters, we will transact any other business that is properly brought before the shareholders at the annual meeting.
Advance Voting Methods Even if you plan to attend the 2020 annual meeting of shareholders in person and you are a shareholder of record, we urge you to vote in advance of the meeting using one of these advance voting methods. | ||||
![]() | ![]() | ![]() | ||
Via the Internet: www.proxyvote.com | Call Toll-Free: 1.800.690.6903 | Mail Signed Proxy Card: Follow the instructions on your proxy card or voting instruction form | ||
If you are a beneficial owner of shares held through a broker, bank or other holder of record, you must follow the voting instructions you receive from the holder of record to vote your shares.
2020 Proxy Statement | 1 |
About Atmos Energy
An S&P 500 company headquartered in Dallas, Atmos Energy (the “Company”) serves more than 3 million distribution customers in over 1,400 communities across eight states and manages proprietary pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. As part of our vision to be the safest provider of natural gas services, we are modernizing our business and our infrastructure while continuing to invest in safety, innovation, environmental sustainability and our communities.
Our Vision | Our Strategy | |||||||||||||||
We are the nation’s largest fully regulated, natural | Our vision is for Atmos Energy to be thesafest provider of natural gas services. We will be recognized forexceptional customer service, for being agreat employer, and for achievingsuperior financial results. | |||||||||||||||
Atmos Energy’s strategy is to:
• invest in ourpeople and ourinfrastructure • enhance ourculture |
2019 Financial Results and Accomplishments
2019 was a strong year for Atmos Energy. Earnings and earnings per share increased for a 17th consecutive year. In fiscal 2019, we generated net income of $511.4 million or $4.35 per diluted share, compared with net income of $603.1 million, or $5.43 per diluted share, in the prior year. Adjusted net income for the year ended September 30, 2018, was $444.3 million, or $4.00 per diluted share, after excluding the effects of implementing the Tax Cuts and Jobs Act of 2017 (“TCJA”) from the prior year.* Capital expenditures for fiscal 2019 totaled approximately $1.7 billion, with approximately 87% of this amount invested to improve the safety and reliability of our distribution and transmission systems.
In August 2019, consistent with the long-term leadership succession plan conducted by our Board of Directors (the “Board”), we announced that J. Kevin Akers, Executive Vice President, would assume the role of President and Chief Executive Officer, effective October 1, 2019. Mr. Akers and his leadership team are committed to maintaining Atmos Energy’s vision to be the safest provider of natural gas services.
DILUTED EARNINGS PER SHARE* | DECLARED DIVIDENDS PER SHARE | TOTAL SHAREHOLDER RETURN | ||||||||||||||
$4.35 | $2.10 | 23.8% | ||||||||||||||
17th Consecutive Year of EPS Growth | Up from $1.94 for FY2018 | 3-year cumulative total shareholder return of 63.3% |
| Significant Regulatory Developments | |||
✓ EPS of $4.35*; 17th consecutive year of EPS ✓ FY 2019 Dividend of $2.10; 8.2% growth over FY 2018 ✓ Capital spending of $1.7 billion ✓ Maintained strong balance sheet; equity capitalization of 59% as of September 30, 2019 | ✓Implemented $117 million of annualized regulatory outcomes during fiscal 2019 ✓Continued to implement tax reform into customer bills | |||
| ||||
| ||||
* | Represents a measure of performance that is calculated and presented other than in accordance with generally accepted accounting principles (“GAAP”). See Appendix A for an explanation of these non-GAAP measures, a full reconciliation of these non-GAAP results to our GAAP net income and diluted net income per share results, and a brief discussion of why we use these non-GAAP performance measures. |
ii
2 | ATMOS ENERGY |
PROXY STATEMENT OVERVIEWTotal Shareholder Return
This overview provides only highlights of information contained elsewhere in this proxy statement to assist you in reviewing the proposals to be acted upon at our annual meeting of shareholders. Please read the entire proxy statement before voting because this overview does not contain all the information you should consider.
Fiscal 2017 Financial Highlights
![]() | ![]() | ![]() | ||
∎ Atmos Energy |
The Atmos Energy peer group used in this chart is the same peer group used for executive compensation benchmarking for fiscal 2019, as approved by our Board, and is comprised of the following companies: Alliant Energy Corporation; Ameren Corporation; CenterPoint Energy, Inc.; CMS Energy Corporation; DTE Energy Company; National Fuel Gas Company; NiSource Inc.; ONE Gas, Inc.; Spire, Inc.; WEC Energy Group, Inc.; and Xcel Energy Inc. See “Competitive Executive Compensation Benchmarking,” beginning on page 40 below for further information on these peer group companies.
Corporate Governance Highlights
Our corporate governance policies and practices promote the long-term interests of our shareholders, strengthen the accountability of our Board and management, and help build public trust in the Company. Below is a summary of some of the highlights of our corporate governance framework.
BOARD PRACTICES ✓ independent lead director ✓ separation of board chair and CEO ✓ 10 of 13 director nominees are independent ✓ annual election of all directors ✓ regular executive sessions of independent directors ✓ comprehensive and strategic risk oversight ✓ mandatory retirement age for directors ✓ annual board and committee evaluations ✓ all committees chaired by independent directors SHAREHOLDER MATTERS ✓ robust shareholder engagement ✓ annualsay-on-pay voting ✓ majority voting for director elections ✓ no poison pill in force | OTHER GOVERNANCE PRACTICES ✓ executive and director stock ownership guidelines ✓���clawback policy ✓ prohibition on hedging or pledging stock |
2020 Proxy Statement | 3 |
Director Nominees
We have included summary information about each director nominee in the table below. Each director is $1.94elected annually by a majority of votes. See“Nominees for fiscal 2018, which represents almost an 8% increase over fiscal 2017.
Highlights of Executive Compensation ProgramDirector” beginning on page 18 for more information regarding our director nominees.
COMMITTEES
| ||||||||||||||||
Name and Primary Occupation
| Age
|
Director Since
| Independent
| AC
| HR
| NC
| CR
| EC
| ||||||||
J. Kevin Akers(a) President and Chief Executive Officer, Atmos Energy
|
56 |
2019 | ||||||||||||||
Robert W. Best Director, Associated Electric & Gas Insurance Services Limited
|
73 |
1997 |
● |
M | ||||||||||||
Kim R. Cocklin(a) Executive Chairman of Board, Atmos Energy
|
68 |
2009 | ||||||||||||||
Kelly H. Compton Executive Director, Hoglund Foundation
|
62 |
2016 |
● |
M |
M | |||||||||||
Sean Donohue Chief Executive Officer, DFW International Airport
|
58 |
2018 |
● |
M |
M | |||||||||||
Rafael G. Garza President and Founder, RGG Capital Partners, LLC
|
59 |
2016 |
● |
M |
M | |||||||||||
Richard K. Gordon General Partner, Juniper Capital LP, Juniper Energy LP, Juniper Capital II, and Juniper Capital III
|
70 |
2001 |
● Lead |
M |
M |
C |
C | |||||||||
Robert C. Grable Founding Partner, Kelly Hart & Hallman LLP
|
73 |
2009 |
● |
M |
C |
M | ||||||||||
Nancy K. Quinn Director, Helix Energy Solutions Group, Inc.
|
66 |
2004 |
● |
M |
C |
M |
M | |||||||||
Richard A. Sampson General Partner and Founder, RS Core Capital, LLC
|
69 |
2012 |
● |
C |
M |
M | ||||||||||
Stephen R. Springer(a) Director, Atmos Energy
|
73 |
2005 |
M | |||||||||||||
Diana J. Walters Founder and Managing Member, Amichel, LLC
|
56 |
2018 |
● |
M |
M | |||||||||||
Richard Ware II Chairman, Amarillo National Bank
|
73 |
1994 |
● |
M |
M |
AC = Audit HR = Human Resources NC = Nominating and Corporate Governance CR = Corporate Responsibility, Sustainability, & Safety EC = Executive
M = Member C = Chair
(a) | The director is not independent and accordingly is not eligible to be a member of any of the committees except the Executive Committee and/or the Corporate Responsibility, Sustainability, & Safety Committee, pursuant to the rules of the New York Stock Exchange. |
4 | ATMOS ENERGY |
Objectives of ProgramDirector Nominee Composition
Gender Diversity | Tenure | Independence | ||
![]() | ![]() |
Compensation Highlights
Our compensation (base salary, annual incentive compensationprograms are designed to both attract and the value of long-term compensation granted) paid (or granted) to namedretaintop-level executive officers each year is targeted at the 50th percentile of competitive market practice, if performance targets are reached.
ourNo Significant Changes to Executive Compensation Program“Say-on-Pay” vote in Fiscal 2017
Our shareholders overwhelmingly approved the compensation of2019, which our named executive officers for fiscal 2016 at our 2017 annual meeting of shareholders, with about 94 percent of the shares voted in favor of such compensation. Accordingly, the Human Resources Committee (“HR Committee”)considers to be among the most important items of feedback about our compensation programs. We recognize and our Board decided to not make any significant changes toreward our executive officers through compensation programsarrangements that directly link their pay to the Company’s performance, and policies overwe ensure a strong alignment of interests with our shareholders by including a significant amount of equity in the last fiscal year.
Compensationoverall mix of Chief Executive Officer
The Board awarded our Chief Executive Officer (“CEO”), Kim R. Cocklin, in addition to hispay. Our pay mix includes base salary, of $996,640 paid during fiscal 2017, an amount of annual incentive cash bonus plan (“Incentive Plan”), and a long-term incentive compensation for fiscal 2017 that was commensurate with our business results andpay-for-performance philosophy. Such compensation included an award under our Annual Incentive Plan for Management (“Incentive Plan”) of $1,245,800 and long-term equity compensation awards under our 1998 Long-Term Incentive Planplan (“LTIP”), comprised of under which we grant time-based and performance-based restricted stock units (“RSUs”) with a grant date fair value of $1,166,517 and time-lapse RSUs with a grant date fair value of $1,221,338 during fiscal 2017. Consistent with our executive compensation philosophy, a majority of Mr. Cocklin’s total direct compensation of $4,630,295 for fiscal 2017 was incentive-based and at risk, as illustrated by the following chart:.
Fiscal 2019 Target Compensation Mix
Compensation of Other Named Executive Officers
Consistent with its approach to the compensation of our CEO, the Board awarded each of our other named executive officers an amount of annual and long-term incentive compensation for fiscal 2017 that was also commensurate with our business results andpay-for-performance executive compensation philosophy. A significant portion of each of their amounts of total direct compensation for fiscal 2017 was also incentive-based and at risk, as shown on the following table and as illustrated by the chart below, in which the components of their average total direct compensation is presented:
Name and Principal Position | Base Salary | Annual Incentive Plan Award | Performance- Based Restricted Stock Units Award Value | Time-Lapse Restricted Stock Units Award Value | Total Direct Compensation | |||||||||
Michael E. Haefner President and Chief Operating Officer | $ | 593,077 | $630,144 | $521,916 | $521,916 | $ | 2,267,053 | |||||||
Christopher T. Forsythe Senior Vice President and Chief Financial Officer | $ | 344,231 | $236,659 | $204,475 | $204,474 | $ | 989,839 | |||||||
David J. Park Senior Vice President, Utility Operations | $ | 321,328 | $220,913 | $204,475 | $209,898 | $ | 956,614 | |||||||
John K. Akers Senior Vice President, Safety and Enterprise Services | $ | 332,049 | $228,284 | $204,475 | $204,474 | $ | 969,282 |
![]() | ![]() |
2020 Proxy Statement | 5 |
Proposals to be voted on by our Shareholders
Proposal One—ElectionKey Features of DirectorsOur Executive Compensation Program
You will find in this proxy statement important information about the qualifications, skills and experience of each of the 13 director nominees that you are being asked to elect at our annual meeting of shareholders. Our Nominating and Corporate Governance Committee (“Nominating and CG Committee”) performs an annual assessment of the performance of each member of the Board of Directors to ensure that our directors have the qualifications, skills and experience to continue to serve effectively. The committee has determined that all 13 director nominees possess the qualifications, skills, experience and other qualities important to the continued success of the Company.Accordingly, our Board recommends that our shareholders vote in favor of each nominee forre-election.
Proposal Two—Ratification of Appointment of our Independent Registered Public Accounting Firm
You will also find in this proxy statement important information about our independent registered public accounting firm, Ernst & Young. We believe Ernst & Young continues to provide high quality professional services to the Company.Our Board of Directors recommends that shareholders vote in favor of ratification of the firm’s appointment by the Audit Committee for fiscal 2018.
Proposal Three—Advisory Vote to Approve Executive Compensation(“Say-on-Pay”)
Our shareholders again have the opportunity to cast anon-binding, advisory vote to approve the compensation of our named executive officers for fiscal 2017. Since an annual frequency for thesay-on-pay vote was first recommended by our Board and overwhelmingly approved by our shareholders at our 2011 annual meeting and again at our 2016 annual meeting, we have provided our shareholders with an opportunity to vote each year on our executive compensation. We were pleased that at last year’s annual meeting, about 94 percent of our shareholders voted to approve the compensation of our named executive officers for fiscal 2016. In evaluating thisSay-on-Pay proposal, we recommend that you review our“Compensation Discussion and Analysis” in this proxy statement, which explains how and why the HR Committee and our Board arrived at decisions concerning our fiscal 2017 executive compensation.Our Board of Directors recommends that our shareholdersapprove, on an advisory basis, the compensation of our named executive officers for fiscal 2017.
![]() | Executive Incentive Plan awards are capped at 200% of target. |
![]() | Fifty percent of long-term incentive compensation is performance-contingent. |
![]() | We have in place a clawback policy that provides for the repayment or forfeiture of all incentive-based compensation in certain circumstances. |
![]() | Executives and directors are subject to stock ownership guidelines and retention requirements. |
![]() | Our change in control severance arrangements do not exceed three times the sum of a named executive officer’s base salary and their most recent annual award of incentive compensation. |
![]() | Our change in control severance arrangements are triggered only by an involuntary job loss or substantial diminution of duties. |
![]() | We have no employment agreements with our officers. |
![]() | We prohibit hedging and pledging of our securities at any time by any employees and directors. |
![]() | There is no single trigger, immediate vesting of outstanding grants of awards under our LTIP upon a change in control. |
![]() | Our change in control severance arrangements do not contain excise taxgross-up payments. |
![]() | We have no excessive perquisites for executives. |
![]() | We pay dividends on performance-contingent stock awards when vesting is complete and then only if performance targets are met. |
6 | ATMOS ENERGY |
ATMOS ENERGY CORPORATION
P.O. Box 650205
Dallas, Texas 75265-0205
PROXY STATEMENT
for the
2018 ANNUAL MEETING OF SHAREHOLDERS
to be Held on February 7, 2018
Date, Time, Place and Purpose of Meeting
Our 2018 annual meeting of shareholders will be held on February 7, 2018, at 9:00 a.m. Central Standard Time at the Charles K. Vaughan Center, 3697 Mapleshade Lane, Plano, Texas 75075. The purpose of the 2018 annual meeting is set forth in the Notice of Annual Meeting of Shareholders to which this proxy statement is attached. Atmos Energy Corporation is referred to as “Atmos Energy,” the “Company,” “our,” “us” or “we” in this proxy statement.
Internet Availability of Proxy Materials
Under rules of the Securities and Exchange Commission (“SEC”), we are furnishing proxy materials to our shareholders primarily over the Internet, rather than mailing paper copies of the materials (including our Annual Report, which includes our Form10-K for fiscal 2017) to each shareholder. If you received only a Notice by mail or email, you will not receive a paper copy of these proxy materials unless you request one. Instead, the Notice will instruct you as to how you may access and review the proxy materials over the Internet. The Notice will also instruct you on how you may access your proxy card to vote over the Internet. If you received a Notice by mail or email and would like to receive a paper copy of our proxy materials, free of charge, please follow the instructions included in the Notice.
We anticipate that the mailing of the Notice to our shareholders will commence on or about December 22, 2017 and will be sent by email to our shareholders who have opted for such means of delivery on or about December 26, 2017.
Revocability and Voting of Proxies
Any shareholder of record submitting a proxy has the power to revoke the proxy at any time prior to its exercise by (i) submitting a new proxy with a later date or time, including a proxy given over the Internet or by telephone; (ii) notifying our Corporate Secretary in writing before the meeting or (iii) voting in person at the meeting. Any shareholder owning shares in street name who wishes to revoke voting instructions previously given to a broker should contact such broker for further instructions. Any shareholder who holds our shares as a participant in the RSP and who wishes to revoke voting instructions previously given to the RSP Trustee may submit new voting instructions byre-voting his or her proxy card or by written notice to the RSP Trustee on or before February 6, 2018 at the following address: Atmos Energy Qualified Retirement Plans and Trusts Committee, Attn: Phillip Allbritten, Legal Dept., P.O. Box 650205, Dallas, Texas 75265-0205.
An independent inspector of election will count the votes. Your vote will not be disclosed to us and will remain confidential except under special circumstances. For example, a copy of your proxy
card will be sent to us if you add any written comments to the card. If you are a shareholder of record and give us your signed proxy, but do not specify how to vote on any particular proposal, we will vote your shares in favor of the nominees for the election of directors (see “Proposal One—Election of Directors,” beginning on page 17); in favor of the proposal to ratify the Audit Committee’s appointment of Ernst & Young as the independent registered public accounting firm for the Company for fiscal 2018 (see “Proposal Two—Ratification of Appointment of Independent Registered Public Accounting Firm,” beginning on page 32) and in favor of the advisory proposal to approve executive compensation for fiscal 2017 (see “ProposalThree—Non-Binding, Advisory Vote to Approve Executive Compensation,” beginning on page 35).
The proxy accompanying this statement is solicited by the management of the Company at the direction of our Board of Directors. It is expected that these materials will be first sent to our shareholders on or about December 22, 2017. We expect to solicit proxies primarily by mail, but our directors, officers, employees and agents may also solicit proxies in person or by telephone or other electronic means. We will pay for all costs of preparing, assembling and distributing the proxies and accompanying materials for the annual meeting of shareholders, including the costs of reimbursing brokers for forwarding proxies and proxy materials to their principals. We will ask brokers to prepare and send a Notice to each of their customers or clients for whom they hold shares and forward copies of the proxy materials to such beneficial owners who request a paper copy. In addition, Morrow Sodali, LLC, 470 West Avenue, Stamford, Connecticut 06902 (“Morrow Sodali”), will assist us in the solicitation of proxies. We will pay approximately $7,500 in fees, plus expenses and disbursements, to Morrow Sodali for its proxy solicitation services.
Common Stock Information; Record Date
As of December 15, 2017, our record date, there were 110,958,181 shares of our common stock, no par value, issued and outstanding, all of which are entitled to vote. These shares constitute the only class of our stock issued and outstanding. As stated in the Notice, only shareholders of record at the close of business on December 15, 2017 will be entitled to vote at the meeting, with each share being entitled to one vote.
In accordance with Texas and Virginia law, our bylaws provide that if the holders of a majority of the issued and outstanding shares of our common stock entitled to vote are present in person or represented by proxy, there will be a quorum. The aggregate number of votes entitled to be cast by all shareholders present in person or represented by proxy at the annual meeting, whether those shareholders vote for, against or abstain from voting on any matter, will be counted for purposes of determining whether a quorum exists. Brokernon-votes, which are described below, will also be considered present for purposes of determining whether a quorum exists.
BrokerNon-Votes and Vote Required
If a broker holds your shares and you have previously elected to receive a paper copy of your proxy materials, a paper copy of this proxy statement and other proxy materials have been sent to your broker. You may have received this proxy statement directly from your broker, together with a voting instruction form as to how to direct the broker to vote your shares. If you desire to have your vote
counted, it is important that you return your voting instruction form to your broker. Rules of the New York Stock Exchange (“NYSE”) determine whether proposals presented at shareholder meetings are considered “routine” or“non-routine.” If a proposal is routine, a broker holding shares for an owner in street name may vote on the proposal without having received voting instructions from the owner. If a proposal isnon-routine, the broker may vote on the proposal only if the owner has provided voting instructions. A “brokernon-vote” occurs when the broker is unable to vote on a proposal because the proposal isnon-routine and the owner does not provide instructions. Brokernon-votes have no effect on the vote on such a proposal because they are not considered present and entitled to vote. Proposals One and Three are considerednon-routine proposals; therefore, brokers may vote on these proposals only if voting instructions are provided by the owner of the shares. Only Proposal Two, the proposal to ratify the appointment of Ernst & Young as the independent registered public accounting firm for the Company for fiscal 2018, is considered a routine proposal under the rules of the NYSE. As a result, brokers holding shares for an owner in street name may vote on this proposal, even if no voting instructions are provided by the owner of the shares.
Generally, in accordance with Texas and Virginia law, under our bylaws, the number of votes required for the approval of a proposal is a majority of the shares of our common stock present or represented by proxy and entitled to vote at the meeting. Abstentions will have the same effect as an “against” vote but, as discussed above, brokernon-votes will have no effect on the vote for these proposals. If any other proposals are properly presented to the shareholders at the meeting, the number of votes required for approval will depend on the nature of the proposal. The proxy gives discretionary authority to the proxy holders to vote on any matter not included in this proxy statement that is properly presented to the shareholders at the meeting. The persons named as proxies on the proxy card are Richard K. Gordon and Richard A. Sampson.
CORPORATE GOVERNANCE AND OTHER BOARD MATTERS
In accordance with, and pursuant to, the corporate governance standards of the NYSE, the Board has adopted and periodically updated our Corporate Governance Guidelines (“Guidelines”), which govern the structure and proceedings of the Board and contain the Board’s position on many governance issues. The Board has also adopted and periodically updated the Code of Conduct for our directors, officers and other employees. The Code of Conduct provides guidance to the Board and management in areas of ethical business conduct and risk, and provides guidance to employees and directors by helping them to recognize and deal with ethical issues including, but not limited to (i) conflicts of interest, (ii) gifts and entertainment, (iii) confidential information, (iv) fair dealing, (v) protection of corporate assets and (vi) compliance with rules and regulations. We have also provided to our directors, officers, other employees, customers and any other member of the public a toll-free compliance hotline and a website by which they may report on an anonymous basis any observation of unethical behavior or any suspected violations of our Code of Conduct. In addition, the Board has adopted and periodically updated the charters for its Audit Committee, HR Committee, and Nominating and CG Committee. All of the foregoing documents are posted on the Corporate Governance page under the Investors tab of our website atwww.atmosenergy.com.
The Board is comprisedOur Corporate Governance Guidelines and the listing requirements of the New York Stock Exchange (“NYSE”) each require that a majority of independentthe Board be comprised of “independent” directors, in accordance withas defined from time to time by law, NYSE corporate governance standards. In accordance with rules ofstandards, and any specific requirements established by the SEC and the NYSE, as well as our
Guidelines,Board. A director may be determined to be considered independent a director must not have a directonly if the Board has determined that he or indirectshe has no material relationship with the Company, either directly or its management, other than as a director.partner, shareholder, or officer of the Company. To assist it in making its determination of the independence of each of itsnon-employee members, the Board has adopted its Categorical Standards of Director Independence (“Standards”). The Standards specify the criteria by which the independence of ournon-employee directors will be determined and the types of relationships the Board has determined to be categorically immaterial, including relationships of such directors and their immediate families with respect to past employment or affiliation with the Company, our management or our independent registered public accounting firm. For purposes of the Standards, the Board has adopted the definition of an “immediate family member” as set forth by the NYSE, which includes a director’s spouse, parents, children, siblings andin-laws, as well as anyone else (other than any domestic employees) who shares such director’s home. The Standards and our Guidelines are posted on our website at www.atmosenergy.com/esg/corporate-governance.
The Nominating Committee considers all relevant facts and circumstances in evaluating the Corporate Governance pageindependence of directors, including without limitation, written responses to submitted questionnaires completed annually by each of our website atwww.atmosenergy.com.
Based ondirectors. On the basis of this information, the Nominating Committee advised the full Board of its review ofconclusions regarding director independence. After considering the Standards, as well as applicable SEC rules and regulations, NYSE corporate governance standards, and taking into consideration all business relationships betweencommittee’s recommendation, the Company and eachnon-employee director andnon-employee director nominee, the Board has concluded that none of such relationships are material, other than the relationship with Mr. Springer described below. Accordingly, the Board has affirmatively determined that Ms. Compton, Ms. Quinn, and Messrs. Best, Douglas, Esquivel, Garza, Gordon, Grable, Sampson and Ware are independent members of the Board. In addition, the Board has affirmatively determined that each member of the Audit Committee, HR Committee and Nominating and CG Committee are independent under the Standards, as well as applicable SEC rules and regulations and NYSE corporate governance standards.
In recommending to the Board that eachnon-employee director be found independentCompany’s directors other than Mr. Akers, Mr. Cocklin, and Mr. Springer foris independent in accordance with applicable NYSE and Securities and Exchange Commission (“SEC”) independence rules and requirements and the reasonsstandards described below,above. The Board determined that Mr. Akers is not independent because he is the NominatingPresident and CG Committee reviewed and considered the following transactions, relationships or arrangements during the past three fiscal years, as discussed below. All matters described below fall within the Standards, including the monetary thresholds set forth in such Standards. Such matters are more fully discussed below under “Related Person Transactions.”
Because Mr. Springer’snot independent because hisson-in-law is a partner with the firm of Ernst & Young,E&Y, our independent registered public accounting firm, the Board has determined that Mr. Springer may not be considered independent from the Company under the Standards. However,firm. Mr. Springer’sson-in-law is not involved in our audit and is not considered a “covered person” with respect to us, as defined under the SEC’s independence-related rules and regulations for auditors. Thus, this relationship has no effect on Ernst & Young’sE&Y’s independence as our independent registered public accounting firm. Further, Mr. Springer does not serve on our Audit Committee, HR Committee or Nominating and CG Committee.
In accordance with applicable SEC rules and in recognition that transactions into which we enter with related persons may present potential or actual conflicts of interest, our Board has adopted and periodically reviews written guidelines with respect to related person transactions. For purposes of these guidelines, a reportable “related person transaction” is a transaction between the Company and any “related person” (i) involving more than $120,000 when aggregated with all similar transactions during any fiscal year and (ii) where such “related person” has or will have a direct or indirect material interest in such transaction (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A “related person” is any (a) person who is or was (since the beginning of the last fiscal year) an executive officer, director or nominee for election as a director of the Company; (b) person who beneficially owns more than five percent (5%) of the Company’s common stock or (c) immediate family member of any of the foregoing. An immediate family member includes a person’s spouse, parents, children, siblings,in-laws and anyone else (other than any domestic employees) sharing such person’s home.
Under the guidelines, all named executive officers, directors and director nominees are required to identify, to the best of their knowledge after reasonable inquiry, business and financial affiliations involving themselves or their immediate family members, which could reasonably be expected to give rise to a related person transaction. Named executive officers, directors and director nominees are required to advise the Corporate Secretary of the Company promptly of any change in the information provided and are asked periodically to review and reaffirm this information.
The Nominating and CG Committee reviews the material facts of all related person transactions and either approves or disapproves of the entry into any such transaction. However, if advance committee approval of a related person transaction is not feasible, then it shall be considered and, if the committee determines it to be appropriate, ratified at the committee’s next regularly scheduled meeting. In determining whether to approve or ratify a related person transaction, the committee takes into account, among other factors it deems appropriate, whether the related person transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
No director is allowed to participate in any discussion or approval of a related person transaction for which he or she is a related person, except that the director shall provide all material information concerning the transaction to the committee. If a related person transaction will be ongoing, the committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the related person. Thereafter, the committee, on at least an annual basis, will review and assess ongoing relationships with the related person to see that they remain in compliance with the Company’s related person transactions guidelines and that the related person transaction remains appropriate. In addition, the committee will periodically review the related person transactions guidelines to determine if changes or modifications may be appropriate.
The committee also makes a recommendation to the Board as to whether an identified transaction is required to be reported as a related person transaction under SEC rules. Under SEC rules, certain transactions are deemed not to involve a material interest and thus are not reportable (including transactions in which the amount involved in any12-month period is less than $120,000 and transactions with entities where a related person’s interest is limited to service as anon-employee director). In determining materiality for this purpose, information is considered material if, in light of all the facts and circumstances of the transaction, there is a substantial likelihood a reasonable investor
would consider the information important in deciding whether to buy, sell or vote shares of the Company’s common stock. The types of transactions specified below, which arepre-approved by the committee, are presumed not to involve a material interest.
The committee reviewed all business transactions during fiscal 2017 between the Company and companies for which related persons serve as employees or directors, including the transactions described below, which represent the only significant transactions of this type during fiscal 2017. In addition, as discussed above under “Independence of Directors,” the committee noted the relationship that Mr. Springer has with our independent registered public accounting firm, Ernst & Young, through hisson-in-law who is a partner with such firm. The total amount of fees paid to Ernst & Young during fiscal 2017 was $3,494,000, as more particularly described under “Audit and Related Fees,” beginning on page 32 below.
In addition, Mr. Springer has a son employed by ConocoPhillips in anon-officer capacity in its commercial group. For fiscal 2017, the Company’s former marketing and trading affiliate, Atmos Energy Marketing, LLC (“AEM”), both purchased from and sold natural gas to ConocoPhillips for the benefit of AEM’s customers during the period of October through December 2016, which was prior to the sale of AEM by the Company. In addition, the Company’s Atmos Pipeline–Texas Division provided natural gas transportation services to ConocoPhillips. Total net revenue received from ConocoPhillips during fiscal 2017 for all transactions was approximately $3,626,000. All transactions with ConocoPhillips were made in the ordinary course of business and on substantially the same terms as other comparable transactions with third parties. The total amount of transactions engaged in by both AEM and Atmos Pipeline–Texas with ConocoPhillips during fiscal 2017 represents less than two percent (2%) of the gross revenues of ConocoPhillips for that period. Because these transactions with ConocoPhillips fall within the types of transactions that have beenpre-approved by the committee, such transactions are presumed to not involve a material interest.
Mr. Esquivel is Vice President for Community and Corporate Relations for UT Southwestern Medical Center in Dallas, Texas (“UT Southwestern”). For fiscal 2017, the Company received total
revenues from UT Southwestern of approximately $2,069,000 for natural gas marketing, distribution and transportation services provided to UT Southwestern. All such services provided to UT Southwestern were made in the ordinary course of business and on substantially the same terms as other comparable transactions with third parties. The committee has received written confirmation from UT Southwestern that the total amount of revenues received by the Company from UT Southwestern during fiscal 2017 represents less than two percent (2%) of the gross revenues of UT Southwestern for that period. Because these transactions with UT Southwestern fall within the types of transactions that have beenpre-approved by the committee, such transactions are presumed to not involve a material interest.
As noted above, in the discussion on the independence of our directors, Mr. Ware is Chairman and President of Amarillo National Bank in Amarillo, Texas, which provides a $25 million short-term line of credit to the Company and serves as a depository bank for us. During fiscal 2017, we paid a total of approximately $189,000 to Amarillo National Bank for these services, which amount is reasonable and customary for these types of services and such services are substantially on the same terms as comparable transactions with third parties. The committee has received written confirmation from Amarillo National Bank that such amount represents less than two percent (2%) of the gross revenues of the Bank for the applicable period. Because these transactions with Amarillo National Bank fall within the types of transactions that have beenpre-approved by the committee, such transactions are presumed to not involve a material interest.
The Vanguard Group, Inc., BlackRock, Inc. and State Street were each the beneficial owners of more than five percent (5%) of the Company’s common stock outstanding (see “Beneficial Ownership of Common Stock,” beginning on page 30). However, only State Street and its affiliates provided services to the Company or our Master Retirement Trust (“Master Trust”) during fiscal 2017. For the Company, State Street (i) acted as trustee of several benefits plans and trusts; (ii) provided fiduciary services for a benefits plan; and (iii) provided retiree benefit payment processing services for several benefits plans and trusts, for which the Company paid a total of approximately $165,000 in fees during fiscal 2017. For the Master Trust, State Street (i) acted as trustee; (ii) provided fiduciary services for a benefits plan; (iii) provided retiree benefit processing services for a benefit plan whose assets are held in the Master Trust; and (iv) provided investment management services relating to assets held in the Master Trust. For such services, the Master Trust paid a total of approximately $305,000 in fees during fiscal 2017. All such services provided to the Company and the Master Trust were made in the ordinary course of business and on substantially the same terms as other comparable transactions with third parties.
Finally, Mr. Best, a director and former Chairman of the Board, has ason-in-law employed by the Company in anon-executive officer position. The total value of the family member’s compensation for fiscal 2017, including base salary, incentive compensation and equity awards appropriate for his position, exceeds the SEC’s reporting threshold for disclosure of $120,000 per fiscal year. However, consistent with our guidelines on related person transactions, the committee determined such relationship was not material.
The committee also reviewed all other transactions between the Company and other related persons, and determined that the transactions described above represent the only significant transactions of this type during fiscal 2017. In addition, the Company is not aware of any related person transactions required to be reported under applicable SEC rules since the beginning of the last fiscal year where our policies and procedures did not require review or where such policies and procedures were not followed.
The Company’s bylaws andCorporate Governance Guidelines provide that our Board of Directors has the right to exercise its discretion to either separate or combine the offices of the Chairman of the Board and the CEO. This decision is based upon the Board’s determination of what is in the best interests of the Company and its shareholders, in light of the circumstances and taking into consideration succession planning, skills and experience of the individuals filling those positions and other relevant factors. The current leadership structure is based on the experienced leadership provided by an Executive Chairman of the Board (currently Mr. Cocklin) and a full-time President and CEO (currently Mr. Haefner)Akers), with both positions being subject to oversight and review by the Company’s independent directors. The Board recognizes that if the circumstances change in the future, other leadership structures might also be appropriate and it has the discretion to revisit this determination of the Company’s leadership structure. A combined Chairman and CEO Board leadership structure has previously worked well for the Company and its shareholders and may do so in the future.
The Board’s leadership structure is designed so that independent directors exercise oversight of the Company’s management and key issues related to strategy and risk. Only independent directors serve on our Audit Committee, Human Resources Committee (“HR CommitteeCommittee”) and Nominating and CGCorporate Governance Committee of the Board,(“Nominating Committee”), and all standing Board committees are chaired by independent directors. Additionally, independent directors regularly hold executive sessions of the Board led by the Lead Director (defined below) outside the presence of the Executive Chairman, the President and CEO or any other Company employee, and they generally meet in a private session with the Executive Chairman and the President and CEO at regularly scheduled Board meetings.
2020 Proxy Statement | 7 |
Each year, the independent directors of the Board select an independent director to serve as a lead director (the “Lead Director”). The Lead Director performs the following duties:
In performing the duties described above, the Lead Director is expected to consult with the chairs of the appropriate Board committees and solicit their participation. The Lead Director also has the authority to call meetings of the independent directors as well as thenon-management directors; and if requested by major shareholders, will ensure that he or she is available for consultation and direct communication. In 2019, the independent directors of the Board designated Mr. Richard K. Gordon as the Lead Director.
OurRisk Management and Oversight Framework
The Board is actively involved in the oversight of Directorsrisks that could affect the Company. This oversight is conducted primarily through committees of the Board pursuant to the charters of each committee, as described in the summaries of each of the committees beginning on page 10. The full Board has theretained responsibility for oversight of strategic risks. The Board satisfies this responsibility through reports by each committee chair regarding the committee’s consideration and actions, as well as through regular reports directly from officers responsible for management of particular risks within the Company.
8 | ATMOS ENERGY |
While the Board and its committees have responsibility for general risk oversight, ofCompany management is charged with managing risk. Through the Company’s Risk Management and Compliance Committee, the Company ashas a whole. However, the Board has delegated primary risk oversight responsibility to the Audit Committee. The Audit Committee is responsible for overseeing risks associated with financialrobust strategic planning and accounting matters, including compliance with all legal and regulatory requirements and internal control over financial reporting. In addition, the Audit Committee has oversight responsibility for the Company’s overall businessenterprise risk management process which includesthat facilitates the identification assessment, mitigation and monitoringmanagement of key business risks on a company-wide basis.risks. Our enterprise risk management program is supported by regular internal audits and audits by our independent public accounting firm. KPMG LLP (“KPMG”), which serves as the Company’s internal auditor, presents a report to the Audit Committee at its regularly scheduled quarterly meetings on its internal audit activities. The report includesactivities, including the audit activities performed the previous quarter, which address the key business risks identified by the Audit Committee, including evaluations and assessments of internal controls and procedures.
The Board has charged the HR Committee with ensuring that our executive compensation policies and practices support the retention and development of executive talent with the experience required to manage risks inherent to our business and do not encourage or reward excessive risk-taking by our executives. See the discussion in “Compensation Risk Assessment,” beginning on page 51, for more information on the specific processes used by the HR Committee to assess the risk profile of our compensation programs. The Nominating and CG Committee oversees risks associated with corporate governance, including Board leadership structure, succession planning and other matters. The Board’s role in risk oversight has had no significant effect on the Board’s leadership structure. In addition, we believe that the current leadership structure of the Board supports effective oversight of the Company’s risk management processes described above by providing independent leadership at the Board committee level, with ultimate oversight by the full Board as led by the Executive Chairman, the President and CEO and the Lead Director.
Lead Director and Communications with DirectorsCorporate Governance Guidelines
In accordance with, and pursuant to, the corporate governance standards of the NYSE, the independent directorsBoard has adopted and periodically updates our Corporate Governance Guidelines, which govern the structure and proceedings of the Board have designated Mr. Gordon asand contain the Lead DirectorBoard’s position on many governance issues. The Corporate Governance Guidelines are available on our website at all meetings of both independent directors andnon-management directors, which meetings will continue to be held by the Board on a regular basis. Shareholders and other interested parties may communicate with the Lead Director, individual non-management directors, or thenon-management directors as a group, by writing to Board of Directors, Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas, 75265-0205 or by email atboardofdirectors@atmosenergy.com. Our Senior Vice President, General Counsel and Corporate Secretary, Karen E. Hartsfield, receives all such communications initially and forwards the communications to Mr. Gordon, as Lead Director, or another individualnon-management director, if applicable, as she deems appropriate. Interested parties may also contact by email our directors who are members of management, Kim R. Cocklin, Executive Chairman, atkim.cocklin@atmosenergy.com and Michael E. Haefner, President and CEO atmike.haefner@atmosenergy.com. Messrs. Cocklin and Haefner may also be reached by mail at Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas 75265-0205 or by telephone at972-934-9227.www.atmosenergy.com/esg/corporate-governance.
2020 Proxy Statement | 9 |
Committees of the Board of Directors
Atmos Energy’s Board committee structure is organized around key strategic issues to facilitate oversight of management. Committee chairs regularly coordinate with one another to ensure appropriate information sharing. To further facilitate information sharing, all committees provide a summary of significant actions to the full Board. As required under our Corporate Governance Guidelines, each standing committee conducts an annual self-assessment and review of its charter.
The following table identifies
AUDIT COMMITTEE Richard A. Sampson (Chair) Kelly H. Compton Rafael G. Garza Robert C. Grable Nancy K. Quinn Richard Ware II Meetings Held in Fiscal 2019: 4 | The Audit Committee oversees our accounting and financial reporting processes and procedures, reviews the scope and procedures of the internal audit function, appoints our independent registered public accounting firm and is responsible for the oversight of its work and the review of the results of its independent audits. The Audit Committee charter is available on our website at www.atmosenergy.com/esg/corporate-governance. The Board has determined that each member of the Audit Committee satisfies the independence requirements of the NYSE and SEC applicable to members of an audit committee. All members arefinancially literate within the meaning of stock exchange listing rules. The Board has determined that the following individuals are each anaudit committee financial expert, as defined by the SEC: Mr. Garza, Ms. Quinn, Mr. Sampson, and Mr. Ware. | |
HUMAN RESOURCES COMMITTEE Nancy K. Quinn (Chair) Kelly H. Compton Richard K. Gordon Richard A. Sampson Diana J. Walters Meetings Held in Fiscal 2019: 4 | The Human Resources Committee reviews and makes recommendations to the Board regarding executive compensation policy and strategy, and specific compensation recommendations for the Executive Chairman, the President and CEO, as well as our other officers. In addition, the committee determines, develops and makes recommendations to the Board regarding severance agreements, succession planning and other related matters concerning our Executive Chairman, the President and CEO, as well as other officers. This committee also administers our LTIP and our Incentive Plan. The Human Resources Committee charter is available on our website at www.atmosenergy.com/esg/corporate-governance. The Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC applicable to members of a compensation committee. | |
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE Robert C. Grable (Chair) Sean Donohue Rafael G. Garza Richard K. Gordon Richard Ware II Meetings Held in Fiscal 2019: 2 | The Nominating and Corporate Governance Committee makes recommendations to the Board regarding the nominees for director to be submitted to our shareholders for election at each annual meeting of shareholders, selects candidates for consideration by the full Board to fill any vacancies on the Board which may occur from time to time and oversees all of our corporate governance matters. The Nominating and Corporate Governance Committee charter is available on our website at www.atmosenergy.com/esg/corporate-governance. The Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. | |
10 | ATMOS ENERGY |
CORPORATE RESPONSIBILITY, SUSTAINABILITY, & SAFETY COMMITTEE Richard K. Gordon (Chair) Robert W. Best Sean Donohue Nancy K. Quinn Stephen R. Springer Diana J. Walters Meetings Held in Fiscal 2019: 2 | The Corporate Responsibility, Sustainability, & Safety Committee oversees matters relating to responsibility, sustainability, and the Company’s vision, values, culture, and diversity. The Committee also assists management in setting strategy, establishing goals and integrating responsibility and sustainability into strategic and tactical business activities across the Company to create long-term shareholder value. The Corporate Responsibility, Sustainability, & Safety Committee charter is available on our website at www.atmosenergy.com/esg/corporate-governance. | |
EXECUTIVE COMMITTEE Richard K. Gordon (Chair) Robert C. Grable Nancy K. Quinn Richard A. Sampson Meetings Held in Fiscal 2019: 0 | The Executive Committee has, and may exercise, all of the powers of the Board of Directors during the intervals between the Board’s meetings, subject to certain limitations and restrictions as set forth in the bylaws or as may be established by resolution of the Board from time to time. The Executive Committee charter is available on our website at www.atmosenergy.com/esg/corporate-governance. |
Board and Committee Meetings in 2019
In fiscal 2019, each of the chairperson (C) anddirectors attended at least 75% of the current membership (M) of each standing committeetotal meetings of the Board and the number of committee meetings held in Fiscal 2017.
Director | Audit Committee | Human Resources Committee | Nominating and Corporate Governance Committee | Executive Committee | Work Session/Annual Meeting Committee | |||||
Robert W. Best | C | |||||||||
Kim R. Cocklin(a) | ||||||||||
Kelly H. Compton | M | M | ||||||||
Richard W. Douglas | M | M | M | |||||||
Ruben E. Esquivel | M | M | M | C | ||||||
Rafael G. Garza | M | M | ||||||||
Richard K. Gordon | M | M | ||||||||
Robert C. Grable | M | C | M | M | ||||||
Michael E. Haefner(a) | ||||||||||
Nancy K. Quinn | M | C | M | |||||||
Richard A. Sampson | C | M | M | |||||||
Stephen R. Springer(a) | M | |||||||||
Richard Ware II | M | M | M | |||||||
Number of meetings in Fiscal 2017 | 4 | 4 | 1 | 0 | 2 |
Audit Committee. The Board has established a separately-designated standing Audit Committee in accordance with applicable provisions of the Securities Exchange Act of 1934 (“Exchange Act”). The Audit Committee consists of Ms. Compton and Ms. Quinn, as well as Messrs. Esquivel, Garza, Grable, Sampson and Ware, with Mr. Sampson serving as chair of the committee. As discussed in “Independence of Directors,” beginningCommittees on page 7, the Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC applicable to members of an audit committee. The Audit Committee oversees our accounting and financial reporting processes and procedures, reviews the scope and procedures of the internal audit function, appoints our independent registered public accounting firm and is responsible for the oversight of its work and the review of the results of its independent audits. The Audit Committee held four meetings during the last fiscal year and has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website atwww.atmosenergy.com.
Human Resources Committee. This committee consists of Ms. Compton and Ms. Quinn, as well as Messrs. Douglas, Esquivel, Gordon and Sampson, with Ms. Quinn serving as chair of the
committee. The Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. This committee reviews and makes recommendations to the Board regarding executive compensation policy and strategy, and specific compensation recommendations for the Executive Chairman, the President and CEO, as well as our other officers and division presidents. This committee retained the consulting firm of Pay Governance LLC (“Pay Governance”) during fiscal 2017 to serve as its executive compensation consultant, which was directly accountable to the committee for the performance of its consulting services. In addition, the committee determines, develops and makes recommendations to the Board regarding severance agreements, succession planning and other related matters concerning our Executive Chairman, the President and CEO, as well as other officers and division presidents. This committee also administers our LTIP and our Incentive Plan. During the last fiscal year, the committee held four meetings. The committee has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website atwww.atmosenergy.com.
Nominating and Corporate Governance Committee. This committee consists of Messrs. Douglas, Garza, Gordon, Grable and Ware, with Mr. Grable serving as chair of the committee. The Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. This committee makes recommendations to the Board regarding the nominees for director to be submitted to our shareholders for election at each annual meeting of shareholders, selects candidates for consideration by the full Board to fill any vacancies on the Board which may occur from time to time and oversees all of our corporate governance matters. The committee held one meeting during the last fiscal year. The committee has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website atwww.atmosenergy.com.
Executive Committee. This committee consists of Mr. Best and the chairs of each of our standing committees. Current members of the Executive Committee are Ms. Quinn, Messrs. Best, Esquivel, Grable and Sampson. Mr. Best serves as chair of the committee. In accordance with our bylaws, the Executive Committee has, and may exercise, all of the powers of the Board of Directors during the intervals between the Board’s meetings, subject to certain limitations and restrictions as set forth in the bylaws or as may be established by resolution of the Board from time to time. The Executive Committee held no meetings during fiscal 2017.
Work Session/Annual Meeting Committee. This committee consists of Messrs. Douglas, Esquivel, Grable, Springer and Ware, with Mr. Esquivel serving as chair of the committee. This committee selects the site and plans the meeting and agenda for the work session meeting of the Board held each year for the purpose of focusing on long-range planning and corporate strategy issues and selects the site for the annual meeting of shareholders. During the last fiscal year, the committee held two meetings.
Independence of Audit Committee Members, Financial Literacy and Audit Committee Financial Experts
In addition to being declared as independent under the NYSE corporate governance standards, applicable NYSE and SEC rules and regulations require that each member of an audit committee satisfy additional independence and financial literacy requirements and at least one of these members must satisfy the additional requirement of having accounting or related financial management expertise. This additional requirement can be satisfied if the Board determines that at least one Audit
Committee member is an “audit committee financial expert,” within the meaning of applicable SEC rules and regulations. Generally, the additional independence requirements provide that (i) a member of the Audit Committee, or his or her immediate family members, are prohibited from receiving any direct or indirect compensation or fee from the Company or its affiliates, other than in such Audit Committee member’s capacity as a member of the Audit Committee, the Board or any other Board committee; and (ii) he or she may not be an affiliated person of the Company or any of its subsidiaries. An “immediate family member” is defined by applicable NYSE rules to include a director’s spouse, parents, children, siblings andin-laws of the director, as well as anyone else (other than any domestic employee) who shares the director’s home.
Generally, the financial literacy requirements provide that the Board, in its business judgment, shall determine if each member is financially literate, taking into account factors such as the member’s education, experience and ability to read and understand financial statements of public companies. Audit committee financial experts must have the following five additional attributes: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal control over financial reporting and (v) an understanding of how an audit committee functions.
Based on its review of the independence, financial literacy and audit committee financial expert requirements previously discussed, as well as its review of their individual backgrounds and qualifications, the Board has determined that all members of the Audit Committee satisfy the additional independence and financial literacy requirements of the SEC and NYSE for members of an audit committee. The Board has also designated Ms. Quinn and Messrs. Garza, Sampson and Ware each as an “audit committee financial expert,” as such term is defined by applicable rules and regulations of the SEC. As provided by the safe harbor contained in applicable SEC rules and regulations, our audit committee financial experts will not be deemed “experts” for any purpose as a result of being so designated. In addition, such designation does not impose on such persons any duties, obligations or liabilities that are greater than the duties, obligations and liabilities imposed on such persons as members of the Audit Committee or the Board in the absence of such designation. This designation also does not affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.
Independence of Human Resources Committee Members
The Board has affirmatively determined that each member of the HR Committee has no relationship to the Company which is material to that director’s ability to be independent from management of the Company in connection with the duties of an HR Committee member. In doing so, the Board considered all factors set forth in the NYSE corporate governance standards (and any exceptions thereto) and any other relevant factor, including, but not limited to (i) the source of all compensation paid by the Company to each member of the HR Committee during fiscal 2017, including any consulting, advisory, or other compensatory fees and (ii) whether each HR Committee member is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.
Other Board and Board Committee Matters
Human Resources Committee Interlocks and Insider Participation. As discussed above, the members of the HR Committee during the last fiscal year were Ms. Compton and Ms. Quinn, along with Messrs. Douglas, Esquivel, Gordon and Sampson. None of the HR Committee members were, during fiscal 2017 or previously, an officer or employee of the Company or any of our subsidiaries. In addition, there was no interlocking relationship between any named executive officer of the Company and any other corporation during fiscal 2017.
Attendance at Board Meetings and Annual Meeting of Shareholders. During fiscal 2017, our Board held nine meetings and each director attended at least 75 percent of the aggregate of (a) all meetings of the Board and (b) all meetings of the committees of the Board on which such director served. In addition, all members of the Board attended our annual meeting of shareholders in person on February 8, 2017. Wewe strongly support and encourage each member of our Board to attend our annual meeting of shareholders. All members of the Board attended our annual meeting of shareholders in person on February 6, 2019.
The Board is actively engaged and involved in succession planning. This includes a detailed discussion of the Company’s leadership and succession plans with a focus on key positions at the senior officer level. As part of these activities, the Board engages in a robust CEO succession planning process, including reviewing development plans for potential CEO candidates and engaging with potential successors at board meetings and in less formal settings to allow directors to personally assess candidates.
2020 Proxy Statement | 11 |
We believe that maintaining an active dialogue with our shareholders is important to our commitment to deliver sustainable, long-term value to our shareholders. We engage with shareholders on a variety of topics throughout the year to ensure we are addressing questions and concerns, to seek input, and to provide perspective on our policies and practices. We also engage with proxy and other advisory firms that represent the interests of various shareholders. Shareholder feedback is regularly reviewed and considered by the Board and is reflected in adjustments or enhancements to our policies and practices. We remain committed to investing time with our shareholders to maintain transparency and to better understand their views on key issues.
Corporate Responsibility and Sustainability
Operating our business safely, ethically, and transparently, and meeting our responsibilities to the environment, to our employees, and to the communities in which we operate and live, are among our highest priorities. To learn more about our corporate responsibility and sustainability efforts, see our 2019 Corporate Responsibility and Sustainability Report on our website at www.atmosenergy.com/esg/reports.
The Board has also adopted and periodically updates the Code of Conduct for our directors and employees. The Code of Conduct provides guidance to the Board and management in areas of ethical business conduct and risk, and provides guidance to employees and directors by helping them to recognize and deal with ethical issues including, but not limited to (i) conflicts of interest, (ii) gifts and entertainment, (iii) confidential information, (iv) fair dealing, (v) protection of corporate assets and (vi) compliance with rules and regulations. We have provided to our directors, employees, customers, and any other member of the public a toll-free compliance helpline and website by which they may report on an anonymous basis any suggestions, recommendations, questions, observations of unethical behavior, or any suspected violations of our Code of Conduct. A copy of the Code of Conduct may be found at www.atmosenergy.com/esg/corporate-governance.
Executive and Director Share Ownership Requirements
We have share ownership guidelines for our named executive officers and directors that require each named executive officer and director to hold a multiple of his or her base salary (or annual retainer) in shares of Company stock. The HR Committee believes that executive share ownership promotes better alignment of the interests of our
12 | ATMOS ENERGY |
named executive officers with those of our shareholders, and it monitors compliance with the ownership guidelines each year. Minimum ownership levels are as follows:
Position | Holding Requirement | |
Executive Chairman | 5X base salary value | |
President and CEO | 5X base salary value | |
Other Named Executive Officers | 3X base salary value | |
Non-Employee Directors | 5X annual retainer | |
Ownership Sources Included | ||
● Direct or indirect ownership of common stock ● Unvested time-lapse RSUs ● Share units held under our Directors Plan (defined on page 25) and the LTIP |
Our Board has adopted an incentive compensation clawback policy to help ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive targets. Our policy addresses recoupment of amounts from performance-based awards paid to employees under the Incentive Plan and LTIP to the extent that they would have been materially less due to inaccurate financial statements, fraud, or intentional, willful or gross misconduct.
Anti-Hedging and Pledging Policy
Our Insider Trading Policy prohibits our directors and employees (including officers) from engaging in transactions that hedge or offset, or are designed to hedge or offset any decrease in the market value of Company stock including engaging in short sales or trading in options, puts, calls, or other derivative instruments related to Company stock or debt. The policy also prohibits directors and executive officers from pledging Company stock, borrowing against an account in which our common stock is held, or trading Company stock on margin.
Related Party Transactions Review and Approval Policy
The Board recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest and may create the appearance that Company decisions are based on considerations other than the best interests of the Company and its shareholders. As a result, the Board prefers to avoid related party transactions, while also recognizing that there are situations where related party transactions may be in the best interests of or may not be inconsistent with the best interests of the Company and its shareholders. The Board has adopted and periodically reviews written guidelines with respect to related party transactions delegated to the Nominating Committee the responsibility to review and, if not adverse to the Company’s best interests, approve, related party transactions.
A related party transaction is any transaction (or series of related transactions) involving the Company and in which the amount involved exceeds $120,000 and a related person has a direct or indirect material interest. A “related person” is:
A director or executive officer of the Company;
A shareholder who beneficially owns more than 5% of the Company’s stock or any immediate family member of such shareholder;
An immediate family member of any of the Company’s directors or executive officers; or
A company or charitable organization or entity in which any of these persons has a role similar to that of an officer or general partner or beneficially owns 10% or more of the entity.
2020 Proxy Statement | 13 |
Under the guidelines, all named executive officers, directors and director nominees are required to identify, to the best of their knowledge after reasonable inquiry, business and financial affiliations involving themselves or their immediate family members, which could reasonably be expected to give rise to a related person transaction. Named executive officers, directors and director nominees are required to advise the Corporate Secretary promptly of any change in the information provided and are asked periodically to review and reaffirm this information.
In accordance with the guidelines, the Nominating Committee reviews the material facts of all related person transactions and either approves or disapproves of the entry into any such transaction. However, if advance committee approval of a related person transaction is not feasible, then it shall be considered and, if the committee determines it to be appropriate, ratified at the committee’s next regularly scheduled meeting.
The Nominating Committee has considered and adopted standing pre-approvals under the guidelines for limited types of transactions that meet specific criteria. Such pre-approved transactions are limited to:
● | certain transactions in the ordinary course of business with an entity for which a related person serves as an employee or director, provided the aggregate amount involved in any such transactions during any particular fiscal year does not exceed the greater of (a) $1 million or (b) two percent (2%) of the entity’s gross revenues for the most recently completed fiscal year; |
● | certain charitable contributions made to a foundation, university or other charitable organization for which a related person serves as an employee or a director, provided the aggregate amount of contributions during any particular fiscal year does not exceed the greater of (a) $500,000 or (b) two percent (2%) of the charitable organization’s annual receipts for its most recently completed fiscal year; |
● | employment by the Company of a family member of a named executive officer, provided the named executive officer does not participate in decisions regarding the hiring, performance evaluation or compensation of the family member; and |
● | payments under the Company’s employee benefit plans and other programs that are available generally to the Company’s employees. |
Mr. Cocklin and Mr. Best each have ason-in-law employed by the Company in anon-executive officer position whose total compensation exceeds the SEC’s reporting threshold of $120,000 per fiscal year. Kevin Freel, Mr. Cocklin’s son-in-law, received $147,482 in total compensation for fiscal 2019. Robert Cook, Mr. Best’s son-in-law, received $279,838 in total compensation for fiscal 2019.
State Street is a beneficial owner of more than five percent (5%) of the Company’s common stock outstanding as of the record date of December 13, 2019. During fiscal 2019, State Street (i) acted as trustee of several benefits plans and trusts; (ii) provided fiduciary services for a benefits plan; and (iii) provided retiree benefit payment processing services for several benefits plans and trusts, for which the Company paid a total of approximately $200,000 in fees. For the Master Trust, State Street (i) acted as trustee; (ii) provided fiduciary services for a benefits plan; (iii) provided retiree benefit processing services for a benefit plan whose assets are held in the Master Trust; and (iv) provided investment management services relating to assets held in the Master Trust. For such services, the Master Trust paid a total of approximately $220,000 in fees during fiscal 2019. All such services provided to the Company and the Master Trust were made in the ordinary course of business and on substantially the same terms as other comparable transactions with third parties.
14 | ATMOS ENERGY |
The Board is committed to assessing its own performance as a board in order to identify its strengths as well as areas in which it may improve its performance. The self-evaluation process, which is established by the Nominating Committee, involves the completion of annual written questionnaires of the Board and its committees, review and discussion of the results of the evaluations by both the committee and full board, and consideration of action plans to address any issues.
Identifying and Evaluating Nominees for Directors
The Nominating Committee uses a variety of methods for identifying and evaluating nominees for director. In the event vacancies are anticipated, or arise, the Nominating Committee considers various potential candidates for director, considering the skill areas and characteristics discussed above and qualifications of the individual candidate. The Nominating Committee will consider candidates that come to their attention through current board members, professional search firms, shareholders, or other persons. The Nominating Committee may interview potential candidates to further assess the qualifications possessed by the candidates and their ability to serve as a director. The Committee then determines the best qualified candidates based on the established criteria and recommends those candidates to the Board for election at the next annual meeting of shareholders.
If a shareholder wishes to nominate a candidate for election to the Board at the annual meeting, he or she should write to the Corporate Secretary, Atmos Energy Corporation, 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240, no later than the close of business on January 14, 2020, the 25th day following the day on which notice of the meeting is to be sent, December 20, 2019. Such notice should set forth (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such shareholder as of the record date for the meeting (December 13, 2019) and of the date of such notice; (iii) a representation that the shareholder is a record holder of the Company’s stock entitled to vote at the meeting and that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iv) a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such shareholder; (v) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations for proxies for election of directors pursuant to the proxy rules of the Securities and Exchange Commission; and (vi) the consent of each nominee to serve as director of the Company if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
2020 Proxy Statement | 15 |
Communications to the Board, any Board committee, the independent directors, or any individual director (including the Lead Director) may be sent to the Board of Directors, Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas 75265-0205. Communications may also be sent by email toboardofdirectors@atmosenergy.com. If you wish to contact the Lead Director or the independent directors on an anonymous and confidential basis, you may do so by contacting the Company’s Compliance Helpline at 1-866-543-4065 orhttps://www.compliance-helpline.com/welcomeAtmosEnergy.jsp.
16 | ATMOS ENERGY |
PROPOSAL ONE—ELECTION OF DIRECTORS
The Board is nominating Ms. Compton and Ms. Quinn, as well as Messrs. Best, Cocklin, Douglas, Esquivel, Garza, Gordon, Grable, Haefner, Sampson, Springer and Warethe 13 individuals below to continue serving as directors and whoseone-year terms will expire in 2019.2021. All nominees were recommended for nomination by the Nominating and CG Committee of the Board.We did not pay a fee to any third party to identify, evaluate or assist in identifying or evaluating potential nominees for the Board. In addition, the Nominating and CG Committee did not receive any recommendations from a shareholder or a group of shareholders who, individually or in the aggregate, beneficially owned greater than five percent (5%) of our common stock for at least one year.
TheCommittee.The names, ages, biographical summaries and qualifications of the persons who have been nominated to serve as our directors are set forth under “Nominees for Director,” beginning on page 19.18. Each of the nominees has consented to be a nominee and to serve as a director if elected. If we receive proxies that are signed but do not specify how to vote, we will vote those shares FOR all of the nominees. In accordance with Texas and Virginia law, to be elected as a director, our bylaws require a nominee to receive the vote of a majority of the shares of our common stock entitled to vote and represented in person or by proxy at a meeting of shareholders at which a quorum is present. Abstentions will have the same effect as an “against” vote for each nominee for director, but, as discussed above, brokernon-votes will have no effect on the vote for any nominee.
Procedures for Nomination of Candidates for Director
There are no differences in the manner in which the Nominating and CG Committee evaluates nominees for director based on whether or not the nominee is presented by a shareholder. All director candidates shall, at a minimum, possess the qualifications for director discussed below. According to our bylaws, any shareholder may make nominations for the election of directors if notice of such nominations is delivered to, or mailed and received by the Corporate Secretary of the Company at our principal executive offices no later than the close of business on January 16, 2018, the 25th day following the day on which notice of the meeting is to be sent, December 22, 2017. Our principal executive offices are located at 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240.
If no nominations are so made, only the nominations made by the Board of Directors may be voted upon at the 2018 annual meeting.
Each notice of a director nomination should include the following: (i) name, address and number of shares owned by the nominating shareholder, (ii) the nominee’s name and address, (iii) a listing of the nominee’s background and qualifications, (iv) a description of all arrangements between such shareholder and each nominee and any other person and (v) all other information relating to such person that is required to be disclosed in the solicitations for proxies for election of directors under applicable SEC and NYSE rules and regulations. A signed statement from the nominee should accompany the notice of nomination indicating that he or she consents to being considered as a nominee and that, if nominated by the Board and elected by the shareholders, he or she will serve as a director.
The Nominating and CG Committee uses a variety of methods to identify nominees for director, including considering potential director candidates who come to the committee’s attention through current officers, directors, professional search firms, shareholders or other persons. Nominees for director must possess, at a minimum, the level of education, experience, sophistication and expertise required to perform the duties of a member of the board of directors of a public company of our size and scope. Once a person is nominated, the committee will assess the qualifications of the nominee, including an evaluation of his or her judgment and skills. The Board has adopted guidelines outlining the qualifications sought when consideringnon-employee director nominees, which are discussed in our Corporate Governance Guidelines postedon our website at www.atmosenergy.com/esg/corporate-governance.
Based on the Corporate Governance page of our website atwww.atmosenergy.com.
Based on the Guidelines, the specific qualifications and skills the Board seeks across its membership to achieve a balance of experiences important to the Company include, but are not limited to, outstanding achievement in personal careers; prior board experience; wisdom, integrity and ability to make independent, analytical inquiries; understanding of our business environment and a willingness to devote adequate time to Board duties. Other required specific qualifications and skills include a basic understanding of principal operational and financial objectives, and plans and strategies of a corporation or organization of our stature; results of operations and financial condition of an organization and of any significant subsidiaries or business segments and a relative understanding of an organization and its business segments in relation to its competitors.
The Board is committed to diversified membership and does not discriminate based on the basis of race, color, national origin, gender, religion or disability in selecting nominees. Although the Board has not established a formal policy on diversity, theThe Board and the committeeNominating Committee believe it is important that our directors represent diverse viewpoints and backgrounds. Our Corporate Governance Guidelines provide that the committeeNominating Committee shall evaluate each director’s continued service on the Board, at least annually, by considering the appropriate skills and characteristics of members of the Board of Directors in the context of the then current makeup of the Board. This assessment includes the following factors: diversity (including diversity of skills, background and experience); age; business or professional background; financial literacy and expertise; availability and commitment; independence and other criteria that the committee or the full Board finds to be relevant. It is also the practice of the committee to consider these factors when screening and evaluating candidates for nomination to the Board.
2020 Proxy Statement | 17 |
Director Nominees’ Skills and Experience
Each of the following current directors has been nominated to serve an additionalone-year term on the Board of Directors with such term expiring in 2019.2021.
| ||
![]() Director since 2019 Age:56 | President and Chief Executive Officer since October 1, 2019; formerly Executive Vice President from November 2018 through September 2019; Senior Vice President, Safety and Enterprise Services from January 2017 through November 2018; President of theKentucky/Mid-States Division of the Company from May 2007 through December 2016; and President of the Company’s Mississippi Division from 2002 to 2007 Qualifications: Mr. Akers has more than 30 years’ experience in the natural gas industry, including 28 with the Company. Over the course of his career, he has gained extensive management and operational experience. Such experience and management skills, as well as his demonstration of those attributes discussed in the “Qualifications for Directors” section, has led the Board to nominate Mr. Akers to continue serving as a director of Atmos Energy. |
18 | ATMOS ENERGY |
Robert W. Best | ||
![]() Director since1997 Age:73 | Formerly Chairman of the Board of Atmos Energy from April 2013 through September 2017 and Executive Chairman of the Board of Atmos Energy from October 2010 through March Board Committees: Corporate Responsibility, Sustainability, &
Qualifications: Mr. Best led the senior management team of Atmos Energy from March 1997 until his retirement as the Executive Chairman in April 2013. Prior to joining Atmos Energy, Mr. Best had an extensive background in the natural gas industry, especially in the interstate pipeline, gas marketing and gas distribution segments of the industry, while serving in leadership roles at Consolidated Natural Gas Company, Transco Energy Company and Texas Gas Transmission Corporation during his almost40-year career. Mr. Best also has outside board experience as a member of the boards of Mr. Best’s knowledge and expertise in the energy industry and leadership abilities developed while with Atmos Energy, other energy companies and industry associations, as well as his demonstration of those attributes discussed in the “Qualifications for Directors” section, has led the Board to nominate Mr. Best to continue serving as a director of Atmos Energy. |
| ||
![]() Director since2009 Age:68 |
Qualifications: Mr. Cocklin was appointed as Executive Chairman of the Board, effective October 1, 2017, after having served as Chief Executive Officer or President and Chief Executive Officer from October 2010 through September 2017. Mr. Cocklin has served on the Company’s senior management team since June 2006, having served as President and Chief Operating Officer from October 2008 through September 2010, Senior Vice President, Regulated Operations from October 2006 through September 2008 and Senior Vice President from June 2006 through September 2006. Mr. Cocklin has over Due to his professional experience in the energy industry and leadership roles with Atmos Energy, other energy companies and industry associations, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Cocklin to continue serving as a director of Atmos Energy. |
2020 Proxy Statement | 19 |
| ||
![]() Director since2016 Age:62 |
Board Committees: Audit and Human Resources Qualifications: Ms. Compton has been a philanthropic leader for over As a result of Ms. Compton’s leadership abilities and experience in public and private finance, development and strategic matters, in addition to displaying those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Ms. Compton to continue serving as a director of Atmos Energy. |
|
| |||
![]() Director since2018
| Chief Executive Officer of Dallas Fort Worth International Airport since 2013
In his As a result of |
20 | ATMOS ENERGY |
| ||
![]() Director since2016 Age:59 |
Board Committees: Audit and Nominating and Corporate Governance Qualifications: For Bravo Equity Partners and RGG Capital Partners, LLC, private investment Mr. Garza’sin-depth experience with financial management and strategic planning, his leadership abilities and his display of the attributes discussed in the “Qualifications for Directors” section have resulted in the Board’s nomination of Mr. Garza to continue serving as a director of Atmos Energy. |
| ||
![]() Director since2001 Age:70 |
Board Committees: Human Resources, Nominating and Corporate Governance, Executive (Chair), Corporate Responsibility, Sustainability, & Safety (Chair) Other Public Company Boards: ExoStat Medical, Inc.
Qualifications: For private equity funds Juniper Capital LP, Juniper Energy LP, Juniper Capital II and Juniper Capital Based upon his extensive business experience in investment banking and the energy industry, hisin-depth leadership experience as the Lead Director of the Company and as the former Chair of the HR Committee and as a member of the board of ExoStat Medical, Inc., as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Gordon to continue serving as a director of Atmos Energy. |
2020 Proxy Statement | 21 |
| ||
![]() Director since2009 Age:73 |
Board Committees: Audit, Nominating and Corporate Governance (Chair), and Executive Qualifications: Mr. Grable possesses advanced leadership skills developed as a partner and one of seven founders of Kelly Hart & Hallman LLP, a large regional law firm. Mr. Grable has extensive experience in representing companies in the oil and gas industry, having represented oil and gas producers, pipelines and utilities in transactions, regulatory matters and litigation, for over 40 years. Mr. Grable also has outside board experience as a Trustee of the University of Texas Law School Foundation and as an advisory board member for the local division of a global financial services firm. Mr. Grable is also a member of the McDonald Observatory and Astronomy Board of Visitors at the University of Texas at Austin. As a result of his extensive legal experience with clients in the energy industry and leadership experience with boards offor-profit andnon-profit organizations, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Grable to continue serving as a director of Atmos Energy. | |
|
|
| ||
![]() Director since2004 Age:66 |
Board Committees: Audit, Human Resources (Chair), Corporate Responsibility, Sustainability, & Safety, and Other Public Company Boards: Helix Energy
Qualifications: Ms. Quinn provides senior financial and strategic advice, primarily to clients in the energy and natural resources industries. Prior to The Board has nominated Ms. Quinn, based upon her considerable experience in the natural gas industry, her demonstrated leadership abilities as a board leader in several public companies and her exhibition of those attributes discussed in the “Qualifications for Directors” section, to continue serving as a director of Atmos Energy. |
22 | ATMOS ENERGY |
| ||
![]() Director since2012 Age:69 |
Board Committees: Audit (Chair), Human Resources, and Executive Qualifications: Mr. Sampson held numerous senior leadership positions with JPMorgan Chase, a global financial services firm, through which he gained extensive knowledge of portfolio management, investment concepts, strategies and analytical methodologies. Mr. Sampson’s experience of over 30 years in investment management has provided him with an understanding of global and domestic macroeconomics and capital market issues, financial markets, securities and a solid understanding of state and federal laws, regulations and policies. In addition to his display of the attributes discussed in the “Qualifications for Directors” section, his substantial experience in investment management, his leadership as Chair of the Audit Committee and his knowledge of complex financial transactions, has led the Board to nominate Mr. Sampson to continue |
| ||
![]() Director since2005 Age:73 |
Board Committees: Corporate Responsibility, Sustainability, & Safety Qualifications: Mr. Springer’s professional career includes 32 years of experience in the regulated and nonregulated energy industry, while holding leadership roles at Texas Gas Transmission Corporation, Transco Energy Company and The Williams Companies. Mr. Springer’s knowledge of the natural gas industry is based on his experience in the natural gas transmission, marketing, supply, transportation, business development, distribution and gathering and processing segments of the industry. Mr. Springer has outside board experience as an honorary director on the Indiana University Foundation Board and formerly on the board of DCP Midstream Partners, LP, a New York Stock Exchange company. The Board has nominated Mr. Springer to continue serving as a director of Atmos Energy in light of his considerable experience in the natural gas industry, his leadership abilities developed while with The Williams Companies and service on the boards of other public companies, andnon-profit institutions, as well as his exhibition of those attributes discussed in the “Qualifications for Directors” section. |
2020 Proxy Statement | 23 |
| ||
![]() Director since2018 Age:56 | Founder and Managing Member of Amichel, LLC since 2019 Board Committees: Human Resources and Corporate Responsibility, Sustainability, & Safety Other Public Company Boards: Alta Mesa Resources, Inc., Platinum Group Metals Ltd., Trilogy Metals, Inc. Qualifications: Ms. Walters has more than 30 years of experience in the natural resources sector, as an equity investor and investment banker, and in other roles within the sector. Ms. Walters is the owner and sole manager of Amichel, LLC, a company that provides advisory services in the field of natural resources. She was the founder of 575 Grant, LLC, a natural resources advisory firm, from 2014 to 2019. She served as the President of Liberty Metals & Mining Holdings, LLC managing direct equity investments in the mining sector and as a member of senior management of Liberty Mutual Asset Management from 2010 to 2014. Ms. Walters has extensive investment experience with both debt and equity through various leadership roles at Credit Suisse, HSBC and other firms. She also served previously as Chief Financial Officer of Tatham Offshore Inc., an independent oil and gas company with assets in the Gulf of Mexico. As a result of Ms. Walters’ leadership abilities and investments experience, in addition to displaying those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Ms. Walters to continue serving as a director of Atmos Energy. |
Richard Ware II | ||
![]() Director since1994 Age:73 | Chairman
Board Committees: Audit and Nominating and Corporate Governance Qualifications: Mr. Ware has developed substantial knowledge of the financial services industry during his over45-year career with a nationally recognized banking institution. Mr. Ware has a strong background in assessing and overseeing complex financial matters, as well as leadership experience in supervising principal financial officers and experience on the audit or finance committees of Atmos Energy, Southwest Coca Cola Bottling Company and the board of trustees of Southern Methodist University. Due to his valuable insight into financial-related matters gained through his extensive banking industry experience and demonstrated leadership, |
The Board of Directors recommends that our shareholders vote
![]() | The Board of Directors recommends that our shareholders voteFOR each of the nominees named above for election to the Board. |
each of the nominees named above for election to the Board.
24 | ATMOS ENERGY |
As compensation for serving as a director during fiscal 2017, each of ournon-employee directors received an annual retainer of $75,000, payable in advance on a quarterly basis. Mr. Best received an additional annual fee of $125,000, payable in advance on a quarterly basis, for the additional services he provided in connection with being the Chairman of the Board. In addition, our Lead Director, Mr. Gordon, received an additional annual fee of $25,000, also payable in advance on a quarterly basis, for additional services he provided in connection with being the Lead Director. As chair of the Audit Committee, Mr. Sampson was paid an additional annual fee of $9,000 for additional services provided in connection with his committee duties and responsibilities while the chairs of the remainder of the Board committees were each paid an additional annual fee of $8,500 for such additional services provided.
The Board of Directors makesbelieves that the final determination, typically at its August meeting each year, on alllevel ofnon-employee director compensation including without limitation, the annual retainer, additional annual fees for serving as Chairman, Lead Directorshould be based on Board and chairs of Board Committees, as well as long-term equity compensation.committee responsibilities and be competitive with comparable companies. The Board makes its determination based on recommendations fromgenerally targets compensation near the HR Committee, which is provided a report from its executive compensation consultant, Pay Governance, on competitive director compensation information. The report includes a comprehensive reviewmedian of director compensation programs of companies in the Company’sour proxy peer group. The HR Committee may not delegate to any third party its authority to recommendgroup (discussed below). In addition, the Board believes that a significant portion ofnon-employee director and executive officer compensation.compensation should be awarded in the form of equity to align director interests with the long-term interests of shareholders.
In fiscal 2019, our director fees included the following components:
Retainer and Fees | ||
Annual Board Retainer | $100,000 | |
Committee Chair Annual Fees | $15,000 Audit | |
$12,500 Human Resources | ||
$10,000 Nominating & Corporate Governance | ||
$10,000 Corporate Responsibility, Sustainability, & Safety | ||
Lead Director Fee | $25,000 | |
Annual Grant of Share Units | $150,000 |
The Company provides ournon-employee directors the option to receive all or part of their director fees (in 10 percent10% increments) in Atmos Energy common stock through the LTIP in order to increase the proprietary interest of ournon-employee directors in the Company’s long-term prospects and the strategic growth of our business.LTIP. The selected common stock portion of the fee earned in each quarter is issued as soon as possible following the first business day of each quarter. The number of shares issued is equal to the amount of the cash fee that would have been paid to thenon-employee director during a quarter divided by the fair market value (average of the highest and lowest prices as reported on the NYSE Consolidated Tape) on the first business day of such quarter. Only whole numbers of shares of common stock may be issued; fractionalissued. Fractional shares are paid in cash. Two of our directors elected this option during fiscal 2017.2019.
With respect to other director compensation matters, allAll directors are reimbursed for reasonable expenses incurred in connection with attendance at Board and committee meetings. A director who is also an officer or employee receives no compensation for his or her service as a director. We provide business travel accident insurance fornon-employee directors and their spouses. The policy provides $100,000 coverage to directors and $50,000 coverage to their spouses per accident while traveling on Company business.
Eachnon-employee director is also eligible to participate in the Atmos Energy Corporation Equity Incentive and Deferred Compensation Plan forNon-Employee Directors (“Directors Plan”). This plan allows each such director to defer receipt of his or her annual retainer fee or other director fees and to invest such deferred fees in either a cash account or a stock account (in 10 percent10% increments). The
Directors Plan is intended to encourage qualified individuals to accept nominations as directors of the Company and to better align the interests between thenon-employee directors and the Company’s shareholders.
The amount of the fee allocated as a credit to the cash account is converted to a cash balance as of the first business day of each quarter to be credited with interest at a rate equal to two and a half percent (2.5%)2.5% plus the annual yield reported on a10-year U.S. Treasury Note for the first business day of January for each plan year. Interest on the accumulated balance of the cash account is credited monthly. The amount of the fee allocated as a credit to the stock account is converted to share units. The fee payable for the quarter is converted to a number of whole and, if applicable, fractional share units on the first business day of that quarter. Share units are also
2020 Proxy Statement | 25 |
credited with dividend equivalents whenever dividends are declared on shares of the Company’s common stock. Such dividend equivalent credits are converted to whole and, if applicable, fractional share units on the same day on which such dividends are paid. At the time of a participating director’s retirement,separation from service, plan benefits paid from the cash account are paid in the form of cash. PlanAt this time, plan benefits paid from the stock account are paid in the form of shares of common stock issued, which are equal in number to whole share units in the director’s stock account. Any fractional share units are rounded up to a whole share unit prior to distribution.
Eachnon-employee director also receives an annual grant of share units (currently 3,000 units) under the LTIP each year he or she serves on the Company’s Board of Directors. The grants generally occur on the 30th day following the Company’s annual meeting of shareholders each year and must be held until the director’s retirement,separation from service. Such share units accrue dividend equivalents and are settled in the same manner as share units under the Directors Plan.
To create more On November 5, 2019, the Board approved a change to the annual grant of share units for Directors. Beginning in January 2020, Directors may elect to receive restricted stock units with a direct linkage with the financial performanceone-year vest period in lieu of share units of the Company and to further align the interestssame dollar amount.
Annual Review of the members of the Board with those of our shareholders, the Board has adopted share ownership guidelines for ournon-employeeCompensation directors that are set forth in the Guidelines. Within five years of his or her initial election to the Board, each
The Company’snon-employee director is required to acquire ownershipcompensation program reflects best practices, as follows:
● | Retainer-only compensation with no fees for attending meetings, which is an expected part of board service; |
● | Additional retainers for special roles such as lead director and committee chairs to recognize incremental time and effort involved; |
● | Equity delivered in the form of full-value shares; and |
● | Director stock ownership requirements of five times the annual cash retainer. |
Together with its independent compensation consultant, the Company’s common stock with a value equal to at least three timesHR Committee annually reviews the amount of such director’s annual retainer. Share ownership positions include all shares held directly or indirectly by ournon-employee directors as well as their share units held under our Directors Plan and the LTIP. Allnon-employee directors are in compliance with the Guidelines.
Summary of Cash and Other Compensation
The following table sets forth all compensation paid to ournon-employee directors for fiscal 2017:2019:
Director Compensation for Fiscal Year 2017(a)2019(a)
Name | Fees Earned or Paid in Cash ($)(b) | Stock Awards ($)(c) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(d) | All Other Compensation ($)(e) | Total ($) | Fees Earned or Paid in Cash ($)(b) | Stock Awards ($)(c) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(d) | All Other Compensation ($)(e) | Total ($) | ||||||||||||||||||||||||||||||
Robert W. Best | 200,000 | 231,585 | — | — | 431,585 |
| 100,000 |
| 150,000 |
| — |
| — |
| 250,000 | |||||||||||||||||||||||||
Kelly H. Compton | 68,750 | 231,585 | — | — | 300,335 |
| 100,000 |
| 150,000 |
| — |
| — |
| 250,000 | |||||||||||||||||||||||||
Richard W. Douglas | 75,000 | 231,585 | — | — | 306,585 | |||||||||||||||||||||||||||||||||||
Sean Donohue |
| 93,750 |
| 150,000 |
| — |
| — |
| 243,750 | ||||||||||||||||||||||||||||||
Ruben E. Esquivel | 80,667 | 231,585 | 7,866 | 11,218 | 331,336 |
| 35,125 |
| 150,000 |
| 9,559 |
| 57,245 |
| 251,929 | |||||||||||||||||||||||||
Rafael G. Garza | 75,000 | 231,585 | — | — | 306,585 |
| 100,000 |
| 150,000 |
| — |
| — |
| 250,000 | |||||||||||||||||||||||||
Richard K. Gordon | 104,250 | 231,585 | — | — | 335,835 |
| 129,011 |
| 150,000 |
| — |
| — |
| 279,011 | |||||||||||||||||||||||||
Robert C. Grable | 80,667 | 231,585 | — | — | 312,252 |
| 110,000 |
| 150,000 |
| — |
| — |
| 260,000 | |||||||||||||||||||||||||
Dr. Thomas C. Meredith(f) | 29,921 | 222,675 | 1,930 | 37,337 | 291,863 | |||||||||||||||||||||||||||||||||||
Nancy K. Quinn | 83,750 | 231,585 | 3 | 5 | 315,343 |
| 112,500 |
| 150,000 |
| 4 |
| 5 |
| 262,509 | |||||||||||||||||||||||||
Richard A. Sampson | 81,000 | 231,585 | — | — | 312,585 |
| 115,000 |
| 150,000 |
| — |
| — |
| 265,000 | |||||||||||||||||||||||||
Stephen R. Springer | 75,000 | 231,585 | — | — | 306,585 |
| 100,000 |
| 150,000 |
| — |
| — |
| 250,000 | |||||||||||||||||||||||||
Diana J. Walters |
| 93,750 |
| 150,000 |
| 169 |
| 269 |
| 244,188 | ||||||||||||||||||||||||||||||
Richard Ware II | 79,250 | 231,585 | — | — | 310,835 |
| 100,000 |
| 150,000 |
| — |
| — |
| 250,000 |
26 | ATMOS ENERGY |
(a) | No stock options were awarded to our directors and nonon-equity incentive plan compensation was earned by our directors in fiscal |
(b) | Non-employee directors may defer all or a part of their annual cash retainer under our Directors Plan. During fiscal |
(c) | The amounts in this column represent the fair market value on the date of grant, calculated in accordance with FASB ASC Topic 718, of the |
(d) | The amounts in this column represent the amount of above-market interest earned during fiscal |
(e) | The amounts in this column represent the market rate of interest accrued during fiscal |
at the aggregate incremental cost to the Company. |
(f) | Mr. Esquivel elected to receive distributions of cash from his deferred cash account and share units |
The following table sets forth, for each participatingnon-employee director, the amount of director compensation deferred during fiscal 20172019 and cumulative deferred compensation as of September 30, 2017:2019:
Director Deferred Board Fees for Fiscal Year 20172019
Name | Board Fees Deferred to Stock Account ($)(a) | Dividend Equivalents Earned on Stock Account and Reinvested ($)(b) | Cumulative Board Fees Deferred to Stock Account at September 30 ($) | Board Fees Deferred to Cash Account ($) | Interest Earned on Cash Account ($)(c) | Cumulative Board Fees Deferred to Cash Account at September 30 ($) | Board Fees Deferred to Stock Account ($)(a) | Dividend Equivalents Earned on Stock Account and Reinvested ($)(b) | Cumulative Board Fees Deferred to Stock Account at September 30 ($) | Board Fees Deferred to Cash Account ($) | Interest Earned on Cash Account ($)(c) | Cumulative Board Fees Deferred to Cash Account at September 30 ($) | |||||||||||||||||||||||||||||||||||||
Ruben E. Esquivel | — | — | — | 64,534 | 19,084 | 424,959 |
| — |
| — |
| — |
| 17,000 |
| 24,450 |
| 449,119 | |||||||||||||||||||||||||||||||
Dr. Thomas C. Meredith(d) | — | 2,922 | 62,166 | — | 4,661 | 81,216 | |||||||||||||||||||||||||||||||||||||||||||
Nancy K. Quinn | 16,750 | 9,004 | 214,049 | — | 8 | 160 |
| 40,625 |
| 12,088 |
| 294,586 |
| — |
| 9 |
| 177 | |||||||||||||||||||||||||||||||
Stephen R. Springer |
| 32,500 |
| 370 |
| 32,870 |
| — |
| — |
| — | |||||||||||||||||||||||||||||||||||||
Diana J. Walters |
| — |
| — |
| — |
| 16,250 |
| 438 |
| 16,688 |
(a) | Ms. Quinn elected to receive |
(b) | Dividend equivalents earned on the accumulated amount of share units in the stock account are reinvested in additional share units based on the fair market value of the shares on the quarterly dividend payment dates. Such fair market values |
(c) | The amounts in this column represent interest earned during fiscal |
2020 Proxy Statement | 27 |
BENEFICIAL OWNERSHIP OF COMMON STOCK
Security Ownership of Certain Beneficial Owners
The following table lists the beneficial ownership with respect to each person known by us to be the beneficial owner of more than five percent (5%) of any class of our voting securities as of December 15, 2017:
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent (%) of Class(a) | |||
Common stock | The Vanguard Group, Inc.(b) 100 Vanguard Blvd. Malvern, PA 19355 | 9,411,375 | 8.48 | |||
Common stock | BlackRock, Inc.(c) 55 East 52nd Street New York, NY 10055 | 9,022,032 | 8.13 | |||
Common stock | State Street Corporation(d) State Street Financial Center One Lincoln Street Boston, MA 02111 | 6,595,562 | 5.94 |
State Street is currently considered a related person under our related person transactions guidelines as a result of being a beneficial owner of more than five percent (5%) of our common stock outstanding. As discussed above under “Related Person Transactions,” beginning on page 9, State Street and its affiliates provide certain services to the Company and our Master Trust, including providing payment services for certain of our benefit plans, acting as trustee of our Master Trust and other benefits plans-related trusts, as well as providing investment management and payment processing services. Although Vanguard and BlackRock, Inc. are also each considered a related person under our related person transactions guidelines as a result of being a beneficial owner of more than five percent (5%) of our common stock outstanding, the Company engaged in no transactions with either of these firms during fiscal 2017.
Security Ownership of Management and Directors
The following table lists the beneficial ownership of our common stock, the only class of securities issued and outstanding, with respect to all our directors and nominees for director, our chief executive officer, chief financial officer and our three other most highly compensated executive officers (our “named executive officers”), all our directors and executive officers as a group as of December 15, 2017. Except as otherwise noted, the directors, nominees and executive officers, individually or as a group, have sole voting and investment power with respect to the shares listed.
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(#)(a) | Percent (%) of Class(b) | ||||||
John K. Akers | 39,243(c) | |||||||
Robert W. Best | 642,715(d) | |||||||
Kim R. Cocklin | 386,994(c) | |||||||
Kelly H. Compton | 3,066(d) | |||||||
Richard W. Douglas | 40,306(d) | |||||||
Ruben E. Esquivel | 31,753(d) | |||||||
Christopher T. Forsythe | 21,050(c) | |||||||
Rafael G. Garza | 6,203(d) | |||||||
Richard K. Gordon | 59,973(d) | |||||||
Robert C. Grable | 34,020(d) | |||||||
Michael E. Haefner | 103,048(c) | |||||||
Nancy K. Quinn | 50,874(d) | |||||||
David J. Park | 10,744(c) | |||||||
Richard A. Sampson | 19,201(d) | |||||||
Stephen R. Springer | 41,394(d) | |||||||
Richard Ware II | 78,175(d) | |||||||
All directors, nominees and executive officers as a group (16 individuals)(b)(c)(d) | 1,568,759 | 1.41 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10 percent of our common stock to file with the SEC initial reports of ownership and reports of changes in their ownership in our common stock. Directors, executive officers andgreater-than-ten-percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such reports furnished to us, we believe that, during fiscal 2017, all of our directors, executive officers andgreater-than-ten-percent beneficial owners were in compliance with the Section 16(a) filing requirements.
PROPOSAL TWO—RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has appointed Ernst & YoungE&Y to continue as our independent registered public accounting firm for the fiscal year ending September 30, 2018.2020. The firm of Ernst & YoungE&Y (and its predecessors) has been our independent registered public accounting firm since our incorporation in 1983. It is expected that representatives of Ernst & YoungE&Y will be present at the annual meeting. The representatives of Ernst & YoungE&Y will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
In accordance with good corporate governance practices, the Company submits the Audit Committee’s appointment of Ernst & YoungE&Y as its independent registered public accounting firm to our shareholders for ratification each year. If the appointment of Ernst & YoungE&Y is not so ratified, the Audit Committee will take into accountconsider the outcome of the vote in its future selection of an independent registered public accounting firm.
As discussed in“Audit CommitteePre-Approval Policy” below, all professional services provided by Ernst & YoungE&Y werepre-approved by the Audit Committee in accordance with itspre-approval policy.
The Board of Directors recommends that our shareholders vote FOR the
ratification of the appointment of Ernst & Young as the Company’s
independent registered public accounting firm for fiscal 2018.
![]() | The Board of Directors recommends that our shareholders voteFOR the ratification of the appointment of E&Y as the Company’s independent registered public accounting firm for fiscal 2020. |
Fees for professional services provided by our independent registered public accounting firm, Ernst & Young,E&Y, in each of the last two fiscal years, in each of the following categories are:
September 30 | September 30 | |||||||||||||||
2017 | 2016 | 2019 | 2018 | |||||||||||||
($ In thousands) | ($ In thousands) | |||||||||||||||
Audit Fees | 3,494 | 3,578 |
| 3,522 |
|
| 3,365 |
| ||||||||
Audit-Related Fees | — | — |
| — |
|
| — |
| ||||||||
Tax Fees | — | 38 |
| — |
|
| 15 |
| ||||||||
All Other Fees | — | — |
| — |
|
| — |
| ||||||||
|
|
|
| |||||||||||||
Total Fees | 3,494 | 3,616 |
| 3,522 |
|
| 3,380 |
| ||||||||
|
|
|
|
Audit FeesFees.. Fees for audit services include fees associated with the audit of our annual reportAnnual Report on Form10-K, the assessment by the firm of our design and operating effectiveness of internal control over financial reporting and the reviews of our quarterly reports on Form10-Q. In addition, this amount includes fees associated with the issuance of consents and comfort letters relating to the registration of Company securities and assistance with the review of documents filed with the SEC, as well as fees for an audit provided in connection with a statutory filing.
28 | ATMOS ENERGY |
Tax Fees. Tax fees include fees relating to reviews of tax returns, tax consulting, and assistance with sales and use tax filings and audits.
Audit CommitteePre-Approval Policy
The Audit Committee has adopted apre-approval policy relating to the provision of both audit andnon-audit services by Ernst & Young.E&Y. Our Audit CommitteePre-Approval Policy provides for the pre- approvalpre-approval of audit, audit-related, tax and other services specifically described in appendices to the policy on an annual basis. Such services arepre-approved up to a specified fee limit. All other permitted services, as well as proposed services exceeding thepre-approved fee limit, must be separatelypre-approved by the Audit Committee. Requests for services that require separate approval by the Audit Committee must be submitted to the Audit Committee by both our Chief Financial Officer and our independent registered public accounting firm and must include a joint statement as to whether, in their view, the request is consistent with the SEC’s rules on auditor independence. The policy authorizes the Audit Committee to delegate to one or more of its memberspre-approval authority with respect to permitted services. The Audit Committee did not delegatepre-approval authority to any members during fiscal 20172019 andpre-approved all audit and tax fees for services performed by Ernst & YoungE&Y in fiscal 20172019 in accordance with suchpre-approval policy. The Audit Committee further concluded that the provision of these services by Ernst & YoungE&Y was compatible with maintaining its independence. The Audit CommitteePre-Approval Policy is available on the Corporate Governance page of our website atwww.atmosenergy.com. www.atmosenergy.com/esg/corporate-governance.
The Audit Committee of the Board of DirectorsManagement is composed of seven directors who are independent directors as required by and in compliance with all applicable listing standards of the NYSE as well as all applicable rules and regulations of the SEC, as discussed in the “Corporate Governance and Other Board Matters” section of this proxy statement, beginning on page 7. The Audit Committee acts under a written charter adopted by the Board of Directors, which sets forth its detailed responsibilities and duties, as well as requirementsresponsible for the Audit Committee’s compositionCompany’s internal controls and meetings. A copy of the charterfinancial reporting process. E&Y is available on the Corporate Governance pageresponsible for performing an independent audit of the Company’s website atwww.atmosenergy.com.
The primary purpose of the Audit Committee is to oversee the Company’s financial reporting processstatements in accordance with generally accepted auditing standards and for issuing audit reports on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the financial reporting processesassessment of the Company, including systemseffectiveness of internal control over financial reportingreporting. The Audit Committee’s responsibility is to monitor and disclosure controls and procedures. Ernst & Young is responsible for (i) expressing an opinion, basedoversee these processes on its audit, as to the conformitybehalf of the audited financial statements with generally accepted accounting principles and (ii) expressing an opinion, based on its audit, on the effectiveness of the Company’s internal control over financial reporting.Board.
In fulfillingdischarging its oversight responsibilities,responsibility for the year ended September 30, 2019:
● | The Audit Committee has reviewed and discussed the audited financial statements of the Company with management. |
● | The Audit Committee has discussed with E&Y the matters required to be discussed
|
● | The Audit Committee has received the written disclosures and the letter from E&Y required by the Public Company Accounting Oversight Board
|
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (which the Board has approved) that the Company’s audited financial statements be included in its Annual Report on Form10-K for the year ended September 30, 2019 for filing with the SEC.
Respectfully submitted by the members of the Audit Committee.
Richard A. Sampson, Chair
Kelly H. Compton
Rafael G. Garza
Robert C. Grable
Nancy K. Quinn
Richard Ware II
2020 Proxy Statement | 29 |
PROPOSAL THREE—APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
It has been our practice since our February 2011 annual meeting to ask our shareholders to vote to approve the compensation of our named executive officers(“Say-on-Pay”) at every annual meeting. At our annual meeting of shareholders in February 2011 and again in February 2016, our shareholders voted by a substantial margin to adopt the recommendation of our Board to vote on theSay-on-Pay proposal every year at our annual meeting until the next frequency vote on theSay-on-Pay proposal is held, which is expected at our 2021 annual meeting.
As discussed below in the “Compensation Discussion and Analysis” section of this proxy statement, the Board believes that our current executive compensation program directly links executive compensation to our financial performance and aligns the interests of our named executive officers with those of our shareholders and customers. Our Board also believes that our executive compensation program provides our named executive officers with a balanced compensation package that includes a reasonable base salary along with annual and long-term incentive compensation plans that provide compensation based on the Company’s financial performance.
The HR Committee annually reviews the Company’s overall approach to executive compensation to see that the Company’s current benefits, perquisites, policies and practices continue to be in line with the best practices of companies in the natural gas distribution industry and to assist us with the hiring and retention of a high-quality management team. The“Compensation Discussion and Analysis” section, beginning on page 31, includes additional details about our executive compensation program. We ask that our shareholders indicate their support for ourSay-on-Pay proposal by voting “FOR” the following resolution:
RESOLVED, that the shareholders of Atmos Energy Corporation approve, on an advisory basis, the compensation of its named executive officers for fiscal 2019, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the related compensation tables, notes and narrative.
ThisSay-on-Pay vote is advisory, therefore it will not be binding on the Company. However, the HR Committee and the Board value the opinions of our shareholders and will take into account the outcome of the vote when considering future executive compensation arrangements.
![]() | The Board of Directors shareholders vote
|
30 | ATMOS ENERGY |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides an overview of our executive compensation program objectives and strategy, and the elements of compensation that we provide to our named executive officers, including the process we employed in reaching the decisions to pay the specific amounts and types of executive compensation discussed. Our named executive officers for fiscal 2019 are listed below:
Name | Title | |
Kim R. Cocklin(a) | Executive Chairman of the | |
Michael E. Haefner(b) | Past President and Chief Executive Officer | |
J. Kevin Akers(c) | President and Chief Executive Officer | |
Christopher T. Forsythe(d) | Senior Vice President and Chief Financial Officer | |
David J. Park(e) | Senior Vice President, Utility Operations |
(a) | Mr. Cocklin, who served as
|
(b) | Mr. Haefner, who served as President and
|
(d) | Mr. Forsythe, who |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and our Annual Report, including our Form 10-K, are available at
www.proxyvote.com.
Please date, sign and mail your proxy card back as soon as possible!
Annual Meeting of Shareholders
ATMOS ENERGY CORPORATION
February 5, 2020
-Please Detach and Mail in Envelope Provided-
E87411-P30110-Z75855
ATMOS ENERGY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 5, 2020
The undersigned hereby appoints Richard K. Gordon and Richard A. Sampson, or either of them, each with full power of substitution, to represent the undersigned at the Annual Meeting of Shareholders of Atmos Energy Corporation to be held at 9:00 a.m. Central Standard Time on February 5, 2020, at the Westin Galleria Dallas, 13340 Dallas Parkway, Dallas, TX 75240, and at any adjournment or postponement thereof, and to vote the number of shares the undersigned would be entitled to vote if personally present at the meeting on the matters listed on the reverse side.
THISPROXYISSOLICITEDONBEHALFOFTHEBOARDOFDIRECTORSOFATMOSENERGYCORPORATION.THISPROXYWILLBEVOTEDASDIRECTED.INTHEABSENCEOFDIRECTION,THISPROXYWILLBEVOTEDFORTHENOMINEESFORELECTIONTOTHEBOARDANDFORPROPOSALS2AND3.Intheirdiscretion,theproxyholdersareauthorizedtovoteuponsuchotherbusinessasmayproperlycomebeforethemeeting,andatanyadjournmentor postponementthereof,totheextentauthorizedbyRule14a-4(c)promulgatedbytheSecuritiesandExchangeCommission,andbyapplicablestatelaws(includingmattersthattheproxyholdersdonotknow,areasonabletimebeforethissolicitation,aretobepresented).
RetirementSavingsPlanParticipants.This card also constitutes voting instructions by the undersigned participant to the trustee of the Atmos Energy Corporation Retirement Savings Plan and Trust (“Plan”) for all shares votable by the undersigned Plan participant. The undersigned on the reverse side of this card authorizes and instructs the Atmos Energy Corporation Qualified Retirement Plans and Trusts Committee, as trustee of the Plan (“Trustee”), to vote all shares of the common stock of Atmos Energy Corporation allocated to the undersigned’s account under the Plan (as shown on the reverse side) at the 2020 annual meeting of shareholders, or at any adjournment thereof, in accordance with the instructions on the reverse side. The Trustee will vote these shares as directed, provided your voting instructions are received over the Internet, by telephone or through the mail on your proxy card by 11:59 p.m. Eastern Time on January 30, 2020. All shares of Atmos Energy common stock for which the Trustee has not received timely instructions shall be voted or exercised by the Trustee in its best judgment. All voting instructions for shares held in the Plan shall be confidential. State Street Global Advisors Trust Company (“State Street”) is the independent fiduciary for purposes of ensuring the confidentiality of the Plan participant voting process. Please notify State Street, in writing, if you have specific confidentiality concerns relating to exercising your right to direct the Trustee to: Sydney Marzeotti, Vice President, State Street Global Advisors Trust Company, 1 Iron Street, Boston, MA 02210.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE THIS PROXY BY MAIL BY DATING, SIGNING AND PROMPTLY MAILING THIS PROXY IN THE ENCLOSED RETURN ENVELOPE SO THAT THE SHARES MAY BE REPRESENTED AT THE MEETING.
Address Changes/Comments: | ||||||
| ||||||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side