Corning Natural Gas Corporation
330 W. William Street
P.O. 58
Corning, New York 14830
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Tuesday, February 5, 2002
Corning, New York
January 2, 2002
To the Common Stockholders of
Corning Natural Gas Corporation
Notice is hereby given that the Annual Meeting of Stockholders of
Corning Natural Gas Corporation (the Company) will be held at the office of the
Company, 330 W. William Street, in the City of Corning, New York on Tuesday,
February 5, 2002 at 10:30 A.M., local time, for the following purposes:
(1) To fix the number of Directors at five and to elect a Board of
Directors for the ensuing year.
(2) To transact such other business as may properly come before
the meeting.
The stock transfer books will not be closed, but only common
stockholders of record at the close of business on December 26, 2001 will be
entitled to vote at the meeting or any adjournment thereof.
You are cordially invited to attend the meeting and vote your shares.
In the event that you cannot attend, please date, sign and mail the enclosed
proxy in the enclosed self-addressed envelope. A stockholder who executes
and returns a proxy in the accompanying form has the power to revoke such
proxy at any time prior to the exercise thereof.
By Order of the Board of Directors
PHYLLIS J. GROEGER, Secretary
CORNING NATURAL GAS CORPORATION
PROXY STATEMENT
January 2, 2002
By Whom Proxy Solicited and Solicitation Expenses. The
accompanying proxy is solicited by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held on Tuesday, February 5,
2002. Proxies in substantially the accompanying form, properly executed and
received prior to or delivered at the meeting and not revoked, will be voted in
accordance with the specification made. The expense of soliciting proxies
will be borne by the Company.
The approximate date upon which this proxy statement and
the accompanying proxy will first be mailed to stockholders is January 2,
2002.
Right to Revoke Proxy. Any stockholder giving the proxy enclosed with this
statement has the power to revoke it at any time prior to the exercise thereof.
Such revocation may be by writing (which may include a later dated proxy)
received by the Office of the Secretary, Corning Natural Gas Corporation,
330 W. William Street, P.O. Box 58, Corning, New York, 14830, no later than
February 4, 2002 if by mail, or prior to the exercise thereof if delivered by
hand. Such revocation may also be effected orally at the meeting prior to
theexercise of the proxy.
Proposals of Stockholders. Stockholders' proposals intended to be
presented at the 2003 Annual Meeting of Stockholders must be received by
the Office of the Secretary, Corning Natural Gas Corporation, 330 W. William
Street, P.O. Box 58, Corning, New York 14830, bySeptember 10, 2002. As
to any proposal that a stockholder intends to present to stockholders
without being included in the Company's proxy statement for the Company's
2003 Annual Meeting of Stockholders, the proxies named in management's
proxy for the meeting will be entitled to exercise their discretionary authority
on that proposal unless the Company receives notice of the matter to be
proposed not later than November 26,2002. Even if proper notice is received
on or prior to November 26, 2002, the proxies named in management's proxy
for that meeting may nevertheless exercise their discretionary authority with
respect to such matter by advising stockholders of such proposals and how
they intend to exercise their discretion to vote on such matter, unless the
stockholder making the proposal solicits proxies with respect to the
proposal as set forth in Rule 14a-4(c)(2) of the Securities Exchange Act of
1934.
Voting Securities Outstanding. There were 460,000 shares of
common stock outstanding and entitled to vote on December 26, 2001
(the "Record Date"). Each share of common stock is entitled to one vote.
Only stockholders of record on the Record Date are entitled to notice of and
to vote at the meeting or any adjournment thereof.
Abstentions and broker non-votes are each included in calculating
the number of shares present and voting for purposes of determining quorum
requirements. However, each is tabulated separately. Abstentions are
counted in tabulating the votes cast on proposals presented to shareholders,
whereas broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
Beneficial Stock Ownership
The following table sets forth the shares of the Company's common
stock, and the percent of total outstanding shares represented thereby,
beneficially owned* by the nominees for director of the Company, the Chief
Executive Officer of the Company, all directors and officers as a group, and all
persons or groups known to the Company to beneficially own more than 5% of
such stock.
*As used in this Proxy Statement, "beneficial ownership" includes direct or
indirect, sole or shared power to vote, or to direct the voting of, and/or
investment power to dispose of, or to direct the disposition of, shares of the
common stock of the Company. Except as otherwise indicated in the
footnotes below, the listed beneficial owners held direct and sole voting and
investment power with respect to the stated shares.
Shares of Stock
Beneficially Owned
Directly od Indirectly Percent
as of September 30, 2001 of Class
Beneficial Owners
J. Edward Barry 45,999(1) 10.0%
330 W. William Street
Corning, New York 14830-2152
Thomas K. Barry (Director and 16,200(2) 3.5%
Chief Executive Officer)
330 W. William Street
Corning, New York 14830-2152
Thomas H. Bilodeau (Director ) 3,788(3) *
1648 Jupiter Cove Dr., Apt 312
Jupiter, Florida 33469-3216
Bradford J. Faxon (Director) 27,210(4) 5.9%
225 Hix Bridge Road
Westport, Massachusetts 02790-1312
Liselotte R. Lull and Robert E. Lull 45,029(5) 9.8%
231 Watauga Avenue
Corning, New York 14830-3233
Donald R. Patnode (Director) 14,194(6) 3.1%
91 Stage Harbor Road
Chatham Massachusetts 02633-2272
Kenneth J. Robinson (Director and 4,186(7) *
Executive Vice President)
330 W. William Street
Corning, New York 14830-2152
All Directors and officers of the 67,308(8) 14.6%
Company, nine persons as a group
* Less than one percent
(1) Includes 25,066 shares held in trust, with respect to which J.
Edward Barry has shared voting and investment power, and
20,933 shares beneficially owned and held in trust on behalf of
Virginia S. Barry, with respect to which J. Edward Barry also has
shared voting and investment power. Percentage reflects
rounding; actual percentage is less than 10 percent.
(2) Includes indirect beneficial ownership of 2,000 shares owned by
children of Thomas K. Barry, and as to which Thomas K. Barr
has shared voting and investment power.
(3) All shares are held in trusts and Mr. Bilodeau is a beneficiary or
contingent beneficiary of such trusts.
(4) Includes indirect beneficial ownership of 5,431 shares owned by
children of Bradford J. Faxon, and as to which Bradford J. Faxon
has shared voting and investment power.
(5) Includes 23,378 shares owned by Liselotte R. Lull and 21,651
shares owned by Robert E. Lull.
(6) Includes 2,000 shares owned by spouse, who has sole voting
and investment power over such shares. Also includes 6,994
shares held in two trusts, of which Donald R. Patnode is
co-trustee.
(7) Includes 4,154 shares owned jointly with Sherry Robinson.
(8) Aggregate record or imputed beneficial ownership, with sole or
shared voting or investment power.
Election of Directors. (Proposal No. 1) It is the intention of the
persons named in the enclosed proxy to vote the shares represented by the
proxy to fix the number of directors at five and to elect the nominees listed
below to serve until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified. In the event of a vacancy in the
list of nominees, an event which the Board of Directors does notanticipate,
the holders of the proxies will vote for the election of a nominee acceptable
to the remaining nominees. The directors must be elected by a plurality of
votes cast. The following is a brief description of each nominee, including
his principal employment or professional experience for the past five years.
Thomas K. Barry, 56, Chairman of the Board of Directors since 1993,
President of the Company since 1983, Chief Executive Officer since 1984. A
Director since 1983 and Chairman of the Executive Committee. Son of
J. Edward Barry, Consultant to the Company.
Thomas H. Bilodeau, 59, Vice President - Finance, Medical &
Environmental Coolers, Inc. since 1990. A Director since 1984 and a member
of the Compensation and Audit Committees.
Bradford J. Faxon, 63, Senior Consultant of Southern Union Gas Company
since 2001, former President of Fall River Gas Company 1986-2001. A Director
since 1984, Chairman of the Compensation Committee and a member of the
Executive and Audit Committees.
Donald R. Patnode, 73, Retired; former President of Industrial Filters
and Equipment Corporation 1989-1994. A Director since 1964, Chairman of the
Audit Committee and a member of the Compensation Committee.
Kenneth J. Robinson, 57, Executive Vice President since 1992.
Joined the Company in 1978 as an accountant and most recently served as
Financial Vice President and Treasurer for 4 years. A Director since 2000 and
a member of the Executive Committee.
Board of Directors and Committees. The Board of Directors has a
standing Audit Committee, of which Messrs. D.R. Patnode, B.J. Faxon and
T.H. Bilodeau are the members. The function of the Audit Committee is to
recommend the selection of independent auditors, review the plan and results
of the independent audit and approve each professional service provided by
the independent auditors. The Audit Committee had two meetings in 2001.
The members of the Audit Committee meet the independence standards of
Sections 303.01(B) (2) (a) and (3) of the New York Stock Exchange's listing
standards.
Audit Committee Report
(1)
To the Board of Directors of Corning Natural Gas Corporation:
The Audit Committee of Corning Natural Gas Corporation ("Corning")
has reviewed and discussed Corning's audited financial statements for the
year ended September 30, 2001. In addition, we have discussed with Deloitte
& Touche LLP, Corning's independent auditing firm, the matters required to be
discussed byCodification of Statement of Auditing Standards No. 61.
The Committee also has received the written disclosures and the
letter from Deloitte & Touche LLP required by Independence Standards Board
Standard No. 1, and we have discussed with Deloitte & Touche LLP such firm's
independence. We have also discussed with Corning's management and the
auditing firm such other matters and received such assurances from them as
we deemed appropriate.
As a result of our review and discussions, we have recommended to
the Board of Directors the inclusion of Corning's audited financial statements
in the annual report for the year ended September 30, 2001, on Form 10-KSB.
The Audit Committee of Corning Natural Gas Corporation
Donald R. Patnode, Chairman
Bradford J. Faxon
Thomas H. Bilodeau
The Board of Directors also has a standing Compensation
Committee, of which Messrs. D.R. Patnode, B.J. Faxon and T.H. Bilodeau are
the members. This committee met once during 2001. This committee
reviews officer performance and duties and decides upon appropriate
remuneration.
The Board of Directors does not have a standing nominating
committee, or any committee performing similar functions.
The Board of Directors met five times in 2001. Each Director
attended more than 75% of the aggregate number of meetings of the Board
and committees on which he served during the year.
At the most recent annual meeting of stockholders of the Company,
held on February 6, 2001, out of a total of 460,000 shares entitled to vote at
the meeting, 444,804 shares (96.7% of the total) were actually voted at the
meeting with respect to the election of Directors. Nominees proposed for
election by the Board of Directors were elected by requisite vote at such
meeting. Each nominee received an affirmative vote of over 99% of the votes
cast.
Section 16 (a) Beneficial Ownership Reporting Compliance. Based
solely on a review of Forms 3, 4 and 5 (and amendments thereto) furnished to
the Company pursuant to Rule 16a-3(e) under the Securities Exchange Act of
1934 (the "Exchange Act") during and with respect to its most recent fiscal
year, as well as written representations furnished to the Company by
reporting persons, all persons subject to Section 16 of the Exchange Act
with respect tothe Company have filed on a timely basis all reports required
by Section 16 (a) of the Exchange Act during the most recent fiscal year.
Cash Compensation of Executive Officers. The following table sets
forth the compensation paid or accrued by the Company and its subsidiary
during the fiscal years ended September 30, 1999, September 30, 2000 and
September 30, 2001 to the Company's Chief Executive Officer and to each
Executive Officer whose aggregate cash compensation exceeded $100,000.
Although only principal capacities are listed, the compensation figures
include all compensation received in any capacity, including directorships, for
services rendered during the fiscal years indicated.
SUMMARY COMPENSATION TABLE
Annual Compensation (1)
Name and Other
Principal Position Year Salary (2) Bonus Compensation
Thomas K. Barry 2001 $182,310 --- $12,500
President and Chief 2000 171,839 --- 12,500
Executive Officer 1999 162,483 --- 12,500
Kenneth J. Robinson 2001 $129,750 --- $12,000
Exec. Vice President 2000 123,428 --- ---
1999 115,017 --- ---
(1) The Company did not pay any long-term compensation
to its Chief Executive Officer or to its other executive
officers during the fiscal years ended September 30, 2001,
2000, and 1999.
(2) The amounts in this column include the aggregate of cash
contributions received and matching contributions made by the
Company on behalf of the named executive officers to the
Company's 401(k) Savings Plan (the "Savings Plan").
(3) Consists of director's fees paid to the named executive officers
by the Company and its subsidiary.
A description of the executive officers, other than Mr. Thomas K.
Barry and Mr. Kenneth J. Robinson, for whom a description is provided above,
is set forth below.
Thomas S. Roye (age 47) is Vice President - Administration. Mr.
Roye has served 10 years in his current position and was previously Assistant
Treasurer & Assistant Secretary. He has prior utility experience and an
accounting education and has been employed by the Company since 1978.
Russell S. Miller (age 38) is Vice President - Operations. Mr. Miller
was employed on a part-time basis in 1987. He joined the Company on a full-
time basis in 1990 as a draftsman. Since 1993 he has served as Coordinator
of Gas Supply and was promoted to his current position at the beginning of
2000.
Stanley G. Sleve (age 51) is Vice President - Business Development.
Mr. Sleve began employment with the Company in January, 1998 primarily to
secure and develop new business. Mr. Sleve has had twenty-four years of
project, client and construction management experience with engineering
and architectural service firms.
Gary K. Earley (age 47) is Treasurer. Mr. Earley has been a
practicing accountant since 1976. He joined the Company in 1987 as an
accountant in the rates and regulations department and has served as
Treasurer for the past 10 years.
Phyllis J. Groeger (age 60) is Corporate Secretary. Mrs. Groeger has
been employed since 1973 in a number of positions advancing to Assistant
Secretary in 1986 and has been Secretary of the Company for the past 14
years.
Compensation Pursuant to Plans. The Company has entered into
separate supplemental benefits agreements with Thomas K. Barry and
Kenneth J. Robinson (collectively, the "Supplemental Benefits Agreements"),
which provide that the officer covered thereby and retiring after the age of
62 is entitled to receive monthly payments equal to 35% of such officer's
monthly salary at retirement for either life or 180 months, which ever is
longer. Such amount payable shall increase by 4% annually on the
anniversary date of such officer's retirement. Retirement benefits otherwise
available upon retirement at age 62 under the Supplemental Benefits
Agreements arereduced cumulatively by 4% for each year prior to age 62 in
which the covered officer retires; provided, however, that an officer covered
under a Supplemental Benefits Agreement receives no retirement benefits
thereunder in the event that such officer retires before age 55. Furthermore,
the Supplemental Benefits Agreements provide that in the event that an
officer covered by a Supplemental Benefits Agreement dies prior to
retirement,such officer's designated beneficiary is entitled to receive
monthly payments equal to 50% of such officer's monthly salary at death for
180 months.
Eligibility to enter into a Supplemental Benefits Agreement, or
equivalent thereof, is based upon employee performance, service and value to
the Company; such eligibility is determined on an individual basis by the Board
of Directors. Currently, such executive officers (as discussed, above) are the
only employees of the Company covered by a Supplemental Benefits
Agreement, and no payments have been made to date under such
agreements. The Supplemental Benefits Agreements are in addition to the
amounts shown in the Summary Compensation Table and are not subject to
limitation. As of September 30, 2001 the estimated annual benefits payable
under a Supplemental Benefits Agreement upon retirement at the normal
retirement age for Mr. K.J. Robinson are $52,521 and for Mr. T.K. Barry are
$65,800.
The Company also maintains the Corning Natural Gas Corporation
Employees Savings Plan (the "Savings Plan"). All employees of the Company
who work for more than 1,000 hours per year and who have completed one
year of service may enroll Savings Plan at the beginning of each calendar
quarter. Under the Savings Plan, participants may contribute up to 15% of
their wages. For non-union employees the Company will match one-half of the
participant's contributions up to a total of 3% of the participant's wages.
Company matching contributions vest in the participants at a rate of 20% per
year and become fully vested after five years. All participants may select one
of ten investment plans, or a combination thereof, for their account.
Distribution of amounts accumulated under the Savings Plan occurs upon the
termination of employment or death of the participant. The Savings Plan also
contains loan and hardship withdrawal provisions. During the fiscal year
ended September 30, 2001, no amounts were distributed to executive officers
under the Savings Plan. The amounts accrued under the Savings Plan by
Messrs. T.K. Barry and K.J. Robinson in fiscal 2001 are included in the
compensation figures in the table on Page 5.
Compensation of Directors. The current annual Director's
compensation is $5,000. In addition, Directors are paid $300 for each Board
meeting attended. Additionally, the chairmen of the Board's Executive, Audit
and Compensation committees and those directors who serve on more than
one committee receive an annual fee of $1,500 for such services. Committee
members other than the chairmen are paid $1,000 annually for their services,
subject to the limitation that no committee chairman or member receive more
than $1,500 annually for such services regardless of the number of
committees on which he serves.
As allowed by New York law, the Company currently has in effect an
insurance policy, with an effective date of June 1, 2001, with National Union
Fire Insurance Company for the indemnification of officers and directors at an
annual premium cost of $ 38,000.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements. The Company has entered into an
employment contract with each of Mr. T.K. Barry and Mr. K.J. Robinson.
Under the terms of such employment contracts, each officer is compensated
for his duties as an officer and director with such salary as is determined from
time to time by the Board of Directors. The term of each officer's employment
contract is for a rolling three year period, unless earlier terminated by an act
of either the Company or such officer. Each officer's employment contract
further provides that upon any change in control of the Company leading to
the termination of such officers employment with the Company, the Company
shall pay such officer three times his then-present annual salary and
reimbursement of payments for excise tax, if any, required under Section
4999 of the Internal Revenue Code. The Employment Contracts also provide
for payment to such officer, upon his retirement, of amounts that, when
combined with payments under the pension plan, would provide such officer
a total pension benefit, as specified in the Company's pension plan, as if the
limitations on pension plan payments under Internal Revenue Code Sections
415(b) and (e) did not apply. Payment of such amounts and downward
adjustments of such amounts are made under the same terms as specified in
the pension plan. Such contracts also require the Company's continued
provision of health care benefits to such officer after retirement, except
when the officer is terminated for cause. Additionally, the Company has
entered into a contract with each of Mr. T.K. Barry and Mr. K.J.Robinson
whereby the Company has agreed to transfer ownership of a paid-up
insurance policy on the life of such officer upon a change of control of the
Company.
Auditors. KPMG Peat Marwick LLP, Certified Public Accountants of
Rochester, New York, served as the Company's independent auditors for a
portion of the fiscal year ended September 30, 2000. As set forth in the Forms
8-K and 8-K/A filed with the SEC on April 25, 2000 and May 30, 2000,
respectively, onApril19, 2000 the Company dismissed KPMG Peat Marwick
LLP as its independent accountant. The decision to change auditors was
approved by the Board of Directors.
In connection with the audits of the two fiscal years ended
September 30, 1999 and 1998, and through the date of termination
(April 19, 200)), there were no disagreements with KPMG Peat Marwick LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not
resolved to their satisfaction would have caused them to make reference
in connection with their opinion to the subject matter of the disagreement.
The audit reports of KPMG Peat Marwick LLP on the consolidated
financial statements of the Company and subsidiary as of and for the years
ended September 30, 1999 and 1998 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified as to uncertainty, audit scope,
or accounting principles.
The Company requested that KPMG Peat Marwick LLP furnish it with
a letter addressed to the SEC stating whether or not it agrees with the
statements contained above. A copy of that letter, dated May 8, 2000 has
been filed as Exhibit 16 to the Form 8-K/A.
The Company engaged Deloitte & Touche LLP, Certified Public
Accountants of Rochester, New York, as its new principal accountants as of
April 19, 2000. The decision to engage Deloitte & Touche LLP was approved
by the Board of Directors.
In connection with the audits of the past two fiscal years, there
were no disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements if not resolved to their satisfaction
ould have caused them to make reference in connection with their opinion to
the subject matter of the disagreement.
Deloitte & Touche LLP, who have been selected as auditors for the
Company for the ensuing fiscal year, have no direct or indirect financial
interest in the Company or its subsidiaries in the capacity of promoter,
underwriter, voting director, officer or employee. A representative of Deloitte
& Touche LLP will be present at the annual meeting, with the opportunity to
make a statement if such representative desires to do so, and will be
available to respond to appropriate questions.
The following table sets forth the fees incurred by the Company for
the services of Deloitte & Touche LLP in the past year. The Audit Committee
has considered whether the provision of non-audit services is compatible
with maintaining Deloitte & Touche LLP's independence.
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees
$45,000 $0 $11,500
Other Matters. Except for the matters set forth above, the Board of
Directors knows of no matters which may be presented to the meeting, but if
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote such proxy in
accordance with their judgment in such matters.
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY.
By Order of the Board of Directors,
PHYLLIS J. GROEGER, Secretary
Annual Report
A copy of the Company's 2001 Annual Report to Shareholders
accompanies this Proxy Statement, but does not constitute part of the
proxy solicitation materials.
Persons whose proxies are solicited by the Board of Directors of the
Company may obtain, without charge, a copy of the Company's Annual Report
on Form 10-KSB, including the financial statements and schedules thereto,
required to be filed with the Securities and Exchange Commission for the
Company's most recent fiscal year. The report will be furnished upon request
made in writing to:
Thomas K. Barry
Chairman of the Board of Directors
Corning Natural Gas Corporation
330 W. William Street
P.O. Box 58
Corning, New York 14830
(1)
The information contained in the Audit Committee Report shall not be
deemed to be "soliciting material", or deemed "filed" with the Commission as
provided in Regulation S-B 228.206 (c).