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NiSource Inc. | |
801 E. 86th Avenue • Merrillville, IN 46410 • (877) 647-5990 |
(1) | To elect three members of the board of directors to serve for a term of three years; | |
(2) | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent public accountants for the year 2006; | |
(3) | To consider the board of directors’ proposal to amend the Company’s Certificate of Incorporation to declassify the board of directors and to provide for annual election of all directors (the “Charter Amendment Proposal”); | |
(4) | To consider a stockholder proposal relating to the election of directors by a majority vote (the “Majority Vote Proposal”); and | |
(5) | To transact any other business that may properly come before the meeting. |
Gary W. Pottorff | |
Corporate Secretary |
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• | Telephoning the toll-free number listed on the proxy card; | |
• | Using the Internet site listed on the proxy card; or | |
• | Marking, dating, signing and returning the enclosed proxy card. |
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Name, Age and Principal Occupations | Has Been a | |||||
for Past Five Years and Present Directorships Held | Director Since | |||||
Nominees For Terms to Expire in 2009 | ||||||
Gary L. Neale, 66 | ||||||
Chairman of the Board of NiSource Inc. Prior to his retirement, Mr. Neale served as Chief Executive Officer of the Company from 1993 to 2005. Mr. Neale also served as President of the Company from 1993 to November 2004. Mr. Neale also is a director of Modine Manufacturing Company and Chicago Bridge and Iron Company. | 1989 | |||||
Robert J. Welsh, 71 | ||||||
Chairman of the Board and Chief Executive Officer of Welsh Holdings, LLC, Merrillville, Indiana, a real estate holding company. Prior to its sale in 2001, Mr. Welsh was Chairman and Chief Executive Officer of Welsh, Inc., Merrillville, Indiana, a marketer of petroleum products through convenience stores and travel centers. | 1988 | |||||
Roger A. Young, 60 | ||||||
Prior to his retirement in 2003, Mr. Young served as Chairman of Bay State Gas Company, Westborough, Massachusetts. Bay State Gas Company has been a subsidiary of the Company since 1999. | 1999 | |||||
Directors Whose Terms Expire in 2008 | ||||||
Peter McCausland, 56 | ||||||
Chairman and Chief Executive Officer of Airgas, Inc., Radnor, Pennsylvania, a distributor of industrial, medical and specialty gases, welding equipment and safety supplies. | 2006 | |||||
Steven R. McCracken, 52 | ||||||
Chairman, President and Chief Executive Officer of Owens-Illinois, Inc., Toledo, Ohio, a manufacturer of glass containers and plastic packaging. Prior to joining Owens-Illinois in 2004, Mr. McCracken served as President of Invista, the global fibers and related intermediates business subsidiary of E.I. DuPont de Nemours and Company (“DuPont”) from 2003 to 2004, DuPont Group Vice President from 2001 to 2003 and Vice President and General Manager of DuPont Lycra® from 1997 to 2001. Mr. McCracken also is a director of Owens-Illinois, Inc. | 2005 |
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Name, Age and Principal Occupations | Has Been a | |||||
for Past Five Years and Present Directorships Held | Director Since | |||||
Ian M. Rolland, 72 | ||||||
Prior to his retirement in 1998, Mr. Rolland served as Chairman and Chief Executive Officer of Lincoln National Corporation, Ft. Wayne, Indiana, a provider of financial products and services. Mr. Rolland also is a director of Bright Horizons Family Solutions. | 1978 | |||||
Robert C. Skaggs, Jr., 51 | ||||||
Chief Executive Officer of the Company since July 2005. President of the Company since October 2004. Prior thereto Mr. Skaggs served as Executive Vice President, Regulated Revenue from October 2003 to October 2004, President of Columbia Gas of Ohio, Inc. from February 1997 to October 2003; President of Columbia Gas of Kentucky, Inc. from January 1997 to October 2003; President of Bay State Gas Company and Northern Utilities from November 2000 to October 2003; and President of Columbia Gas of Virginia, Inc. Columbia Gas of Maryland, Inc. and Columbia Gas of Pennsylvania, Inc. from December 2001 to October 2003. | 2005 | |||||
Directors Whose Terms Expire in 2007 | ||||||
Steven C. Beering, 73 | ||||||
President Emeritus of Purdue University, West Lafayette, Indiana. Dr. Beering was President of Purdue University from 1983 to 2000. | 1986 | |||||
Dennis E. Foster, 65 | ||||||
Prior to his retirement in 2000, Mr. Foster was Vice Chairman of ALLTEL Corporation, Little Rock, Arkansas, a full service telecom and information service provider. Mr. Foster also is a director of ALLTEL Corporation and Yellow Corporation. | 1999 | |||||
Richard L. Thompson, 66 | ||||||
Prior to his retirement in 2004, Mr. Thompson was Group President, Caterpillar Inc., Peoria, Illinois, a leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. Mr. Thompson also is a director of Gardner Denver, Inc. and Vice Chairman of the board of directors of Lennox International, Inc. | 2004 | |||||
Carolyn Y. Woo, 51 | ||||||
Martin J. Gillen Dean and Ray and Milann Siegfried Professor of Entrepreneurial Studies, Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana. Dr. Woo also is a director of AON Corporation and Circuit City, Inc. | 1998 |
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• | Communications to the board of directors may be made to the board of directors generally, any director individually, the non-management directors as a group or the lead director of the non-management group by writing to the following address: |
NiSource Inc. | |
Attention: [Board of Directors]/[Board | |
Member]/[Non-management Directors]/[Lead Director] | |
c/o Gary W. Pottorff, Corporate Secretary | |
801 East 86th Avenue | |
Merrillville, Indiana 46410 |
• | The Audit Committee has approved procedures with respect to the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters. Communications regarding such matters may be made by contacting the Company’s Ethics Officer atethics@nisource.com, calling the business ethics program hotline at1-800-457-2814, or writing to: |
NiSource Inc. | |
Attention: Gary W. Pottorff, Ethics Officer | |
801 East 86th Avenue | |
Merrillville, Indiana 46410 |
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• | Executive, | |
• | Audit, | |
• | Corporate Governance, | |
• | Environmental, Health and Safety, | |
• | Officer Nomination and Compensation, and | |
• | Public Affairs and Career Development. |
Executive Committee |
Audit Committee |
• | the integrity of the Company’s financial statements, | |
• | the independent auditors’ qualifications and independence, | |
• | the performance of the Company’s internal audit function and the independent auditors, and | |
• | the compliance by the Company with legal and regulatory requirements. |
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Corporate Governance Committee |
• | identifying individuals qualified to become board members, consistent with criteria approved by the board, | |
• | recommending to the board director nominees for the next annual meeting of the stockholders, | |
• | developing and recommending to the board a set of corporate governance principles applicable to the Company, and | |
• | overseeing the evaluation of the board. |
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Environmental, Health and Safety Committee |
Officer Nomination and Compensation Committee |
• | approves the CEO’s compensation level based on the Corporate Governance Committee’s report on its evaluation of the CEO’s performance; | |
• | considers (1) the Company’s performance and relative stockholder return, (2) the value of similar incentive awards to CEOs at comparable companies, and (3) the awards given to the Company’s CEO in past years when determining the long-term component of the CEO’s compensation; | |
• | makes recommendations to the Board with respect to (1) compensation of executive officers of the Company and (2) incentive-compensation plans and equity-based plans; | |
• | reviews and approves periodically a general compensation policy for other officers of the Company and officers of its principal subsidiaries; | |
• | recommends Company officer candidates for election by the Board; | |
• | oversees the evaluation of management; and | |
• | produces the Officer Nomination and Compensation Committee Report on Executive Compensation included in this proxy statement. |
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Public Affairs and Career Development Committee |
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Amount and Nature of | Percent of Class | |||||||
Name and Address of Beneficial Owner | Beneficial Ownership | Outstanding | ||||||
T. Rowe Price Associates, Inc. | 25,298,485 | 9.2 | (1) | |||||
100 East Pratt Street | ||||||||
Baltimore, Maryland 21202 | ||||||||
Barclays Global Investors, NA | 19,467,361 | 7.15 | (2) | |||||
45 Fremont Street | ||||||||
San Francisco, California 94105 | ||||||||
Lord, Abbett & Co. LLC | 14,744,225 | 5.41 | (3) | |||||
90 Hudson Street | ||||||||
Jersey City, JN 07302 |
(1) | As reported on statements made on Schedule 13G filed with the Securities and Exchange Commission on behalf of T. Rowe Price Associates, Inc. on February 14, 2006. These securities are owned by various individual investors to which T. Rowe Price Associates, Inc. serves as investment advisor with power to direct investment and/or sole power to vote securities. T. Rowe Price Associates, Inc. expressly disclaims that it is, in fact, the beneficial owner of these securities. |
(2) | As reported on statements made on Schedule 13G filed with the Securities and Exchange Commission on behalf of Barclays Global Investors, NA, Barclays Global Fund Advisors, Barclays Global Investors, LTD, Barclays Capital Securities Limited, Palomino Limited, and other affiliated entities on January 26, 2006. |
(3) | As reported on statements made on Schedule 13G filed with the Securities and Exchange Commission on behalf of Lord, Abbett & Co. LLC on February 14, 2006. |
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Amount and Nature of | ||||
Name of Beneficial Owner | Beneficial Ownership(1)(2) | |||
Steven C. Beering | 12,178 | |||
Dennis E. Foster | 17,151 | |||
Jeffrey W. Grossman | 146,787 | |||
Christopher A. Helms | 48,777 | |||
Peter McCausland | 1,000 | |||
Steven R. McCracken | 0 | |||
Samuel W. Miller, Jr. | 958 | |||
Gary L. Neale | 2,790,143 | |||
Michael W. O’Donnell | 431,386 | |||
Ian M. Rolland(3) | 26,777 | |||
Robert C. Skaggs, Jr. | 333,510 | |||
Richard L. Thompson | 5,000 | |||
David J. Vajda | 195,552 | |||
Robert J. Welsh | 16,600 | |||
Carolyn Y. Woo | 4,000 | |||
Roger A. Young | 35,639 | |||
S. LaNette Zimmerman | 248,387 | |||
All directors and executive officers as a group | 4,313,845 |
(1) | The number of shares owned includes shares held in the Company’s Automatic Dividend Reinvestment and Share Purchase Plan, shares held in the Company’s Retirement Savings Plan (the “401(k)”), shares held in the Company’s Employee Stock Purchase Plan and restricted shares awarded under the Company’s 1994 Long-Term Incentive Plan (the “Incentive Plan”) and Nonemployee Director Stock Incentive Plan, where applicable. The percentage of common stock owned by all directors and executive officers as a group is approximately 1.59% percent of the common stock outstanding as of March 1, 2006. |
(2) | The totals include shares for which the following individuals have a right to acquire beneficial ownership, within 60 days after March 1, 2006, by exercising stock options granted under the Incentive Plan: Gary L. Neale — 2,130,950 shares; Robert C. Skaggs, Jr. — 281,479 shares; S. LaNette Zimmerman — 194,611 shares; Michael W. O’Donnell — 368,152 shares; Christopher A. Helms — 28,571 shares; Jeffrey W. Grossman — 124,849 shares; David J. Vajda — 140,947 shares; and all executive officers as a group — 3,255,309 shares. |
(3) | The number of shares owned by Mr. Rolland includes 9,277 shares owned by the Ian and Miriam Rolland Foundation over which Mr. Rolland maintains investment control, but for which Mr. Rolland disclaims beneficial ownership. |
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Compensation for 2005 |
Compensation of the Chief Executive Officer |
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Incentive Opportunities |
Incentive at | Incentive at | |||
Trigger | Maximum | |||
Chief Executive Officer (Neale) | 40.0% | 120.0% | ||
Chief Executive Officer (Skaggs) and Executive Vice President, Chief Operating Officer | 35.0% | 105.0% | ||
Other Executive Vice Presidents and Senior Vice Presidents | 20.0% to 32.5% | 60.0% to 97.5% | ||
Other Vice Presidents | 20.0% to 25.0% | 60.0% to 75.0% |
Long-Term Incentive Plan |
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Changes for 2006 |
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Officer Nomination and Compensation Committee | |
Steven C. Beering, Chairman | |
Steven R. McCracken | |
Robert J. Welsh |
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2000 | 2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||||||||
NiSource | 100.00 | 78.33 | 72.06 | 83.71 | 90.82 | 86.47 | ||||||||||||||||||
S & P 500 | 100.00 | 88.12 | 68.65 | 88.34 | 97.95 | 102.76 | ||||||||||||||||||
DJ Utilities | 100.00 | 73.91 | 56.85 | 73.49 | 95.62 | 119.58 |
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Annual Compensation(1) | Long-Term Compensation | ||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Securities | Long-Term | ||||||||||||||||||||||||||||||||
Restricted | Underlying | Incentive | |||||||||||||||||||||||||||||||
Other Annual | Stock | Options/ | Plan | All Other | |||||||||||||||||||||||||||||
Salary | Bonus | Compensation | Award(s) | SARS | Payouts | Compensation | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(2) | ($)(3) | ($)(4) | (#) | ($)(6) | ($)(7) | |||||||||||||||||||||||||
Gary L. Neale, | 2005 | 575,000 | 0 | 157,592 | 0 | 600,000 | 1,339,409 | 2,623 | |||||||||||||||||||||||||
Chairman(8) | 2004 | 950,000 | 380,000 | 6,156 | 5,207,849 | 353,352 | 2,084,462 | 8,628 | |||||||||||||||||||||||||
2003 | 950,000 | 436,050 | 62,620 | 4,586,120 | 373,157 | 0 | 9,950 | ||||||||||||||||||||||||||
Robert C. Skaggs, Jr.(9) | 2005 | 675,000 | 0 | 117,063 | 0 | 171,429 | 127,961 | 26,983 | |||||||||||||||||||||||||
President and Chief | 2004 | 425,000 | 148,750 | 385 | 720,463 | 48,883 | 201,152 | 28,890 | |||||||||||||||||||||||||
Executive Officer | 2003 | 325,000 | 111,800 | 0 | 335,360 | 27,287 | 0 | 18,000 | |||||||||||||||||||||||||
Michael W. O’Donnell | 2005 | 400,000 | 0 | 8,422 | 0 | 169,714 | 212,628 | 24,000 | |||||||||||||||||||||||||
Executive Vice President and | 2004 | 400,000 | 130,000 | 593 | 1,018,926 | 69,135 | 638,867 | 27,805 | |||||||||||||||||||||||||
Chief Financial Officer | 2003 | 400,000 | 149,200 | 0 | 897,300 | 73,009 | 384,694 | 26,080 | |||||||||||||||||||||||||
Christopher A. Helms | 2005 | 356,250 | 100,000 | 142,334 | 454,200 | (5) | 28,571 | 0 | 1,781 | ||||||||||||||||||||||||
Pipeline Group President | 2004 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
2003 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Samuel W. Miller, Jr. | 2005 | 337,121 | 193,683 | 231,559 | 0 | 0 | 250,041 | 7,375 | |||||||||||||||||||||||||
Executive Vice President and | 2004 | 500,000 | 175,000 | 0 | 720,463 | 48,883 | 0 | 12,350 | |||||||||||||||||||||||||
Chief Operating Officer(10) | 2003 | 500,000 | 200,500 | 29 | 815,720 | 66,372 | 0 | 2,600 | |||||||||||||||||||||||||
S. LaNette Zimmerman | 2005 | 325,000 | 431,620 | 99,690 | 0 | 106,800 | 167,343 | 20,172 | |||||||||||||||||||||||||
Executive Vice President, | 2004 | 325,000 | 105,624 | 8,809 | 641,211 | 43,506 | 775,168 | 16,315 | |||||||||||||||||||||||||
Human Resources and | 2003 | 325,000 | 121,225 | 0 | 565,340 | 46,000 | 465,475 | 14,625 | |||||||||||||||||||||||||
Communications(11) | |||||||||||||||||||||||||||||||||
Jeffrey W. Grossman | 2005 | 235,000 | 30,000 | 0 | 0 | 59,486 | 78,740 | 14,100 | |||||||||||||||||||||||||
Vice President & Controller | 2004 | 235,000 | 58,750 | 0 | 357,145 | 24,232 | 123,799 | 17,075 | |||||||||||||||||||||||||
2003 | 235,000 | 92,445 | 0 | 273,438 | 20,281 | 0 | 14,700 | ||||||||||||||||||||||||||
David J. Vajda | 2005 | 215,000 | 20,000 | 0 | 0 | 46,286 | 49,246 | 1,554 | |||||||||||||||||||||||||
Vice President & Treasurer | 2004 | 214,280 | 53,750 | 0 | 277,893 | 18,855 | 76,715 | 1,443 | |||||||||||||||||||||||||
2003 | 200,000 | 82,400 | 0 | 218,741 | 16,225 | 0 | 1,332 |
(1) | Compensation deferred at the election of the Named Officer is reported in the category and year in which such compensation was earned. | |
(2) | Traditionally bonuses are paid to the Company’s executive officers pursuant to the NiSource Corporate Incentive Plan. The amount shown for Ms. Zimmerman in 2005 reflects payments made to Ms. Zimmerman in connection with her retirement from the Company, which include a special retirement bonus of $100,000, a lump sum severance payment of $325,000 and $6,620, which equals 130% of 52 weeks of COBRA coverage premiums. The amount shown for 2005 for Mr. Miller reflects payments made to Mr. Miller in connection with his resignation, which include a lump sum severance payment of $175,000 and $18,683, which equals 130% of 52 weeks of COBRA coverage premiums. The amounts shown for 2005 for Messrs. Grossman and Vajda represent discretionary bonuses awarded in recognition of their respective contributions to the successful completion of specific corporate initiatives: for Mr. Grossman the amounts relate to the receipt of a $10,000 bonus for the successful implementation of new financial reporting systems, and a $20,000 bonus for his role in the due diligence process and |
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the negotiation of the Company’s contract with IBM; and for Mr. Vajda the amounts relate to the receipt of a $20,000 bonus for his role in the successful refinancing of certain of the Company’s long-term debt. |
(3) | For Mr. Neale, the amount shown for 2005 includes $109,615 for unused, pro rata and banked vacation paid at the time of his retirement and the amount shown for 2003 includes $10,462 for financial advisory services, $14,159 for fair market value gain resulting from the purchase of a company vehicle and $9,479 for taxes paid by the Company as a result of such gain. For Mr. Skaggs, the amount shown for 2005 includes a relocation allowance of $67,820. For Ms, Zimmerman, the amount shown for 2005 includes $57,500 for unused and pro rata vacation paid at the time of retirement. For Mr. Miller, the amount shown for 2005 includes $163,462 for unused, pro rata and banked vacation paid at the time of termination. For Mr. Helms, the amount shown for 2005 includes a relocation allowance of $137,818. | |
(4) | Represents restricted and contingent stock awarded under the Company’s Time Accelerated Restricted Stock Award Program (“TARSAP”). The amounts shown are based on the closing sale price of the Company’s common stock on December 31, 2003, December 31, 2004, and December 30, 2005, respectively, as reported on the New York Stock Exchange Composite Transactions Tape. Vesting of restricted stock under the Long Term Incentive Plan in prior years was performance based and is shown under the Long-Term Incentive Plan Payouts column. See Note 5 below. As of December 31, 2005, the total shares outstanding under the TARSAP (including those shares held by the Named Officers) was 1,152,169 with an aggregate value of $24,034,245, based on the Company’s closing market price on such date ($20.86). For more information regarding the restricted and contingent stock awards under the TARSAP please see page 15. | |
(5) | The amount shown represents a grant of 20,000 shares of restricted stock made to Mr. Helms in connection with the commencement of employment with the Company in 2005. The amount shown is based on the closing sale price of the Company’s common stock on March 15, 2005, as reported on the New York Stock Exchange Composite Transactions Tape. For more information on the restricted stock grants, please see the footnotes to the Long-Term Incentive Plan Table and its accompanying footnotes on page 21. | |
(6) | The payouts shown are based on the value, at date of vesting, of restricted stock awarded under the Long-Term Incentive Plan which vested during the years shown. Total shares of restricted stock and contingent stock held (assuming 100% vesting) and aggregate market value at December 31, 2005 (based on the closing sale price of the common stock on that date as reported on the New York Stock Exchange Composite Transactions Tape) for the Named Officers were as follows: Mr. Neale, 899,484 shares valued at $18,763,236; Mr. Miller, zero shares; Mr. Skaggs, 48,395 shares valued at $1,009,519; Mr. O’Donnell, 89,594 shares valued at $1,868,930; Ms. Zimmerman, 56,415 shares valued at $1,176,816; Mr. Helms, 20,000 shares values at $417,200; Mr. Grossman, 28,141 shares valued at $587,021; and Mr. Vajda, 22,169 shares valued at $462,445. Dividends on the restricted and contingent stock are paid in cash to the Named Officers. | |
(7) | “All Other Compensation” represents Company contributions in 2005 to the 401(k) Plan of $532 for Mr. Neale, $13,500 for Mr. Skaggs, $12,000 for Mr. O’Donnell, $7,375 for Mr. Miller, $1,781 for Mr. Helms, $14,625 for Ms. Zimmerman, $12,041 for Mr. Grossman, and $1,554 for Mr. Vajda. The amount shown for Mr. Neale also includes $2,090 term insurance costs for 2005. The amount shown for 2005 for Messrs. Skaggs, Grossman, and O’Donnell and Ms. Zimmerman also includes $13,483, $2,058, $12,000 and $5,547, respectively, paid to the Savings Restoration Plan for NiSource Inc. and Affiliates. | |
(8) | Mr. Neale served as Chief Executive Officer through June 30, 2005. | |
(9) | Mr. Skaggs became President of the Company on October 26, 2004. The amounts shown include compensation received by Mr. Skaggs as the Company’s Executive Vice President, Regulated Revenue. |
(10) | Mr. Miller resigned his executive officer position March 31, 2005. |
(11) | Ms. Zimmerman resigned her executive officer position October 5, 2005. |
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Number of | Percent of Total | |||||||||||||||||||
Securities | Options/SARS | Exercise | ||||||||||||||||||
Underlying | Granted to | or Base | Grant Date | |||||||||||||||||
Options/SARS | Employees in | Price | Expiration | Present | ||||||||||||||||
Name | Granted (#)(1) | Fiscal Year (2) | ($/sh)(3) | Date | Value ($)(4) | |||||||||||||||
Gary L. Neale | 600,000 | 20.63 | 22.62 | 1/3/2015 | 2,832,000 | |||||||||||||||
Robert C. Skaggs, Jr. | 171,429 | 5.89 | 22.62 | 1/3/2015 | 809,145 | |||||||||||||||
S. LaNette Zimmerman | 106,800 | 3.67 | 22.62 | 1/3/2015 | 504,096 | |||||||||||||||
Samuel W. Miller, Jr. | 0 | 0 | 22.62 | 1/3/2015 | 0 | |||||||||||||||
Michael W. O’Donnell | 169,714 | 5.84 | 22.62 | 1/3/2015 | 801,050 | |||||||||||||||
Christopher A. Helms | 28,571 | .98 | 22.91 | 4/1/2015 | 99,998 | |||||||||||||||
Jeffrey W. Grossman | 59,486 | 2.05 | 22.62 | 1/3/2015 | 280,774 | |||||||||||||||
David J. Vajda | 46,286 | 1.59 | 22.62 | 1/3/2015 | 218,470 |
(1) | All options granted in 2005 vested immediately but have a one year hold period before they are exercisable. The exercise price may be paid by delivery of already owned shares of common stock, and any tax withholding obligations related to exercise may be paid by delivery of already owned shares of common stock or by reducing the number of shares of common stock received on exercise, subject to certain conditions. |
(2) | Based on an aggregate of 2,908,378 options granted to all employees in 2005. |
(3) | Except with respect to Mr. Helms, all options were granted on January 3, 2005 at the average of high and low sale prices of the Company’s common stock on December 30, 2004 as reported on the New York Stock Exchange Composite Transactions Tape. Mr. Helms’ options were granted on April 1, 2005 at the average of high and low sale prices of the common stock on April 1, 2005 as reported on the New York Stock Exchange Composite Transactions Tape. |
(4) | Grant date present value is determined using the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model for all of the grants represented in the table above were as follows: expected volatility — (30%) (estimated stock price volatility for the term of the grant); risk-free rate of return — (4.15%) (the rate for a ten-year U.S. treasury); discount for risk of forfeiture — (10%); estimated annual dividend — ($.92); expected option term — ten years; and vesting — 100% one year after date of grant. No assumption was made relating to non-transferability. Actual gains, if any, on option exercises and common shares are dependent on the future performance of the common stock and overall market condition. The amounts reflected in this table may not be achieved. |
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Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised In- | |||||||||||||||||||||||
Shares | Options/SARS at Fiscal | The-Money Options/SARS | ||||||||||||||||||||||
Acquired on | Value | Year-End (#) | at Fiscal Year-End ($)(1) | |||||||||||||||||||||
Exercise | Realized | |||||||||||||||||||||||
Name | (#) | ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Gary L. Neale | 40,000 | 272,053 | 1,530,950 | 600,000 | 898,621 | 0 | ||||||||||||||||||
Robert C. Skaggs, Jr. | 0 | 0 | 110,050 | 171,429 | 32,935 | 0 | ||||||||||||||||||
S. LaNette Zimmerman | 46,000 | 140,760 | 87,811 | 106,800 | 606 | 0 | ||||||||||||||||||
Samuel W. Miller, Jr. | 48,883 | 115,467 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Michael W. O’Donnell | 0 | 0 | 198,438 | 169,714 | 87,651 | 0 | ||||||||||||||||||
Christopher A. Helms | 0 | 0 | 0 | 28,571 | 0 | 0 | ||||||||||||||||||
Jeffrey W. Grossman | 0 | 0 | 65,363 | 57,486 | 24,420 | 0 | ||||||||||||||||||
David J. Vajda | 5,000 | 33,781 | 80,411 | 46,286 | 45,571 | 0 |
(1) | Represents the difference between the option exercise price and $20.665, the average of high and low sale prices of the common shares on December 31, 2005, as reported on the New York Stock Exchange Composite Transactions Tape. |
Number of | Performance | |||||||||||||||||||
Shares, | Or Other | Estimated Future Payouts Under | ||||||||||||||||||
Units or | Period Until | Non-Stock Price-Based Plans | ||||||||||||||||||
Other | Maturation or | |||||||||||||||||||
Name | Rights | Payout | Threshold(#) | Target(#) | Maximum(#) | |||||||||||||||
Gary L. Neale | — | — | — | — | — | |||||||||||||||
Robert C. Skaggs, Jr. | — | — | — | — | — | |||||||||||||||
S. LaNette Zimmerman | — | — | — | — | — | |||||||||||||||
Samuel W. Miller, Jr. | — | — | — | — | — | |||||||||||||||
Michael W. O’Donnell | — | — | — | — | — | |||||||||||||||
Christopher A. Helms | 10,000 | (1) | 32 months/ | 10,000 | 10,000 | 10,000 | ||||||||||||||
68 months | ||||||||||||||||||||
10,000 | (2) | 3 years | 10,000 | 10,000 | 10,000 | |||||||||||||||
Jeffrey W. Grossman | — | — | — | — | — | |||||||||||||||
David J. Vajda | — | — | — | — | — |
(1) | This award for Mr. Helms consists of a grant of restricted stock under the TARSAP. Restrictions with respect to the TARSAP award will lapse on December 31, 2009; however, if at the end of the three year performance cycle (that began on January 1, 2004 and that will end on December 31, 2006) the Company meets both a peer group target (60th percentile for relative total stockholder return ranking) and an absolute target (a 12% annualized compound total stockholder return), the restrictions with respect to the award will lapse on December 31, 2006. Upon the death or disability of the grantee, the grantee will receive a distribution of the restricted stock awarded on a pro rata basis based on a quarterly |
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distribution schedule continued in the restricted stock agreement between the Company and the grantee with respect to each grant. The restrictions with respect to TARSAP award will lapse and the Named Officer will be entitled to the underlying stock only to the extent that the value of shares for which the restrictions lapse in any calendar year, when added to other non-performance based compensation for that year, does not exceed $999,999. |
(2) | This award for Mr. Helms consists of a grant of restricted stock that vests 3 years from the date of the grant provided that performance criteria relating to certain financial, safety and operational goals for the Company’s pipeline business unit are met, including the development of regulated pipeline and storage projects and the successful execution of the pipeline unit’s business plan measured against expected operational, financial and safety targets. |
Years of Service | ||||||||||||||||||||
Remuneration | 15 | 20 | 25 | 30 | 35 | |||||||||||||||
$ 100,000 | $ | 28,134 | $ | 37,512 | $ | 42,500 | $ | 51,000 | $ | 54,000 | ||||||||||
150,000 | 50,634 | 67,512 | 71,262 | 76,500 | 81,000 | |||||||||||||||
200,000 | 73,134 | 97,512 | 102,512 | 107,512 | 108,000 | |||||||||||||||
250,000 | 95,634 | 127,512 | 133,762 | 140,012 | 140,012 | |||||||||||||||
300,000 | 118,134 | 157,512 | 165,012 | 172,512 | 172,512 | |||||||||||||||
350,000 | 140,634 | 187,512 | 196,262 | 205,012 | 205,012 | |||||||||||||||
400,000 | 163,134 | 217,512 | 227,512 | 237,512 | 237,512 | |||||||||||||||
500,000 | 208,134 | 277,512 | 290,012 | 302,512 | 302,512 | |||||||||||||||
600,000 | 253,134 | 337,512 | 352,512 | 367,512 | 367,512 | |||||||||||||||
700,000 | 298,134 | 397,512 | 415,012 | 432,512 | 432,512 | |||||||||||||||
800,000 | 343,134 | 457,512 | 477,512 | 497,512 | 497,512 | |||||||||||||||
900,000 | 388,134 | 517,512 | 540,012 | 562,512 | 562,512 | |||||||||||||||
1,000,000 | 433,134 | 577,512 | 602,512 | 627,512 | 627,512 | |||||||||||||||
1,100,000 | 478,134 | 637,512 | 665,012 | 692,512 | 692,512 | |||||||||||||||
1,200,000 | 523,134 | 697,512 | 727,512 | 757,512 | 757,512 | |||||||||||||||
1,300,000 | 568,134 | 757,512 | 790,012 | 822,512 | 822,512 | |||||||||||||||
1,400,000 | 613,134 | 817,512 | 852,512 | 887,512 | 887,512 | |||||||||||||||
1,500,000 | 658,134 | 877,512 | 915,012 | 952,512 | 952,512 | |||||||||||||||
1,600,000 | 703,134 | 937,512 | 977,512 | 1,017,512 | 1,017,512 | |||||||||||||||
1,700,000 | 748,134 | 997,512 | 1,040,012 | 1,082,512 | 1,082,512 | |||||||||||||||
1,800,000 | 793,134 | 1,057,512 | 1,102,512 | 1,147,512 | 1,147,512 | |||||||||||||||
1,900,000 | 838,134 | 1,117,512 | 1,165,012 | 1,212,512 | 1,212,512 | |||||||||||||||
2,000,000 | 883,134 | 1,177,512 | 1,227,512 | 1,277,512 | 1,277,512 |
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Audit Committee | |
Ian M. Rolland, Chairman | |
Dennis E. Foster | |
Richard L. Thompson | |
Roger A. Young | |
Carolyn Y. Woo |
2004 | 2005 | |||||||
Deloitte & Touche LLP | Deloitte & Touche LLP | |||||||
Audit Fees(1) | $ | 4,431,638 | $ | 4,710,641 | ||||
Audit-Related Fees(2) | 407,480 | 460,200 | ||||||
Tax Fees(3) | 121,332 | 76,540 | ||||||
All Other Fees(4) | 0 | 0 |
(1) | Audit Fees ��� These are fees for professional services performed by Deloitte & Touche LLP for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s 10-Q filings, and services that are normally provided in connection with statutory and regulatory filings or engagements. |
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(2) | Audit-Related Fees — These are fees for the assurance and related services performed by Deloitte & Touche LLP that are reasonably related to the performance of the audit or review of the Company’s financial statements. |
(3) | Tax Fees — These are fees for professional services performed by Deloitte & Touche LLP with respect to tax compliance, tax advice and tax planning. |
(4) | All Other Fees — These are fees for permissible work performed by Deloitte that does not meet the above categories. |
Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Future Issuance Under | ||||||||||||
Number of Securities to | Weighted-Average | Equity Compensation | ||||||||||
be Issued Upon Exercise | Exercise Price of | Plans (Excluding | ||||||||||
of Outstanding Options, | Outstanding Options, | Securities Reflected in | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights(2) | Column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders(1) | 12,093,517 | 22.6248 | 26,220,530 | |||||||||
Equity compensation plans not approved by security holders | 0 | 0 | 0 | |||||||||
Total | 12,093,517 | 22.6248 | 26,220,530 |
(1) | Stockholder Approved Plans. This Plan category includes the following plans: the 1988 Long Term Incentive Plan, as amended and restated effective as of April 14, 1999 (No shares remain available for issuance under the plan), the 1994 Long Term Incentive Plan, as approved by the stockholders on May 10, 2005 (25,470,023 shares remain available for issuance under the plan), the Nonemployee Director Stock Incentive Plan, amended and restated effective as of January 1, 2004 (313,754 shares remain available for issuance under the plan), and the NiSource Inc. Employee Stock Purchase Plan, last amended by the stockholders on May 10, 2005 (436,753 shares remain available for purchase under the plan). |
(2) | In calculating the weighted-average exercise price of outstanding options, warrants and rights shown in column (b), stock units and contingent stock which can convert into shares of common stock upon |
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maturity have been excluded. Stock units and contingent stock are payable at no cost to the grantee on a one-for-one basis. |
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By Order of the Board of Directors | |
Gary W. Pottorff | |
Corporate Secretary |
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(i) The director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer, of the Company. | |
(ii) The director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). | |
(iii) (A) The director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor; |
(B) the director is a current employee of such a firm; | |
(C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or | |
(D) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the Company’s audit within that time. |
(iv) The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation committee. | |
(v) The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds 1% of such other company’s consolidated gross revenues. |
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PROXY | PROXY |
This Proxy is Solicited on Behalf of the Board of Directors of NiSource Inc.
for its Annual Meeting of Stockholders, May 10, 2006
Address Change/Comments (Mark the corresponding box on the reverse side) | ||||
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Please Mark Here for Address Change or Comments | o | |
SEE REVERSE SIDE |
The Board of Directors recommends a vote “FOR” Proposals I, II and III: | The Board of Directors recommends a vote “AGAINST” Proposal IV: |
Proposal I. | To elect three directors to serve on the Board of Directors, each for a three-year term and until their respective successors are elected and qualified. |
FOR | WITHHELD | FORall except * | ||
o | o | o |
02 Robert J. Welsh
03 Roger A. Young
* | Instruction: To withhold authority to vote for any nominee, write that nominee’s name on the line below. |
Proposal II. | Ratification of Independent Public Accountants. | FOR o | AGAINST o | ABSTAIN o | ||||
FOR | AGAINST | ABSTAIN | ||||||
Proposal III. | Board of Directors’ Charter Amendment Proposal to Declassify Board of Directors. | o | o | o |
Proposal IV. | Stockholder’s Majority Vote Proposal. | FOR o | AGAINST o | ABSTAIN o |
MARK HERE IF YOU PLAN TO ATTEND THE MEETING | o |
PLEASE RETURN THIS PROXY CARD PROMPTLY. | ||||||||||
Signature | Signature | Date | ||||||||
Vote by Internet or Telephone or Mail
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet | Telephone | |||||||
http://www.proxyvoting.com/ni | 1-866-540-5760 | Mark, sign and date | ||||||
Use the internet to vote your proxy. | OR | Use any touch-tone telephone to | OR | your proxy card and | ||||
Have your proxy card in hand | vote your proxy. Have your proxy | return it in the | ||||||
when you access the web site. | card in hand when you call. | enclosed postage-paid | ||||||
envelope. | ||||||||
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
You can view the Annual Report and Proxy Statement
on the internet at www.nisource.com