February 20, 1997
Mr. Mann next stated that the Compensation Committee had
concluded that, in light of Mr. Kennedy's continuation of service as an
executive of the Company beyond his 65th birthday, it would be appropriate to
provide recompense to him for the possibly adverse retirement benefit-related
consequences of such extended service. In other words, the Compensation
Committee recommends that the Board adopt resolutions to accomplish the
following three things with respect to the benefits that Mr. Kennedy or his wife
shall receive directly or indirectly from the Company, i.e., under the National
Fuel Gas Company and Participating Subsidiaries' Executive Retirement Plan
("ERP"), the National Fuel Gas Company Retirement Plan ("RP"), and otherwise.
The first two resolutions would provide that Mrs. Kennedy
shall not be prejudiced should Mr. Kennedy die while employed by the Company.
Currently, if Mr. Kennedy died while employed by the Company, Mrs. Kennedy's RP
and ERP benefits together would equal 50% of Total Benefit Base (as that term is
defined in the ERP) minus a Social Security offset. On the other hand, if Mr.
Kennedy had already retired before he died, he could have selected a 100 percent
joint and survivor annuity, under both plans, or a 100% joint and survivor
annuity under the RP and a lump sum benefit under the ERP. The difference to
Mrs. Kennedy would be substantial. Therefore, if Mr. Kennedy should subsequently
die while employed by the Company, Company-provided retirement benefits to Mrs.
Kennedy should be computed based on the assumption that Mr. Kennedy had retired
on the first of the month most recently preceding his death. Mrs. Kennedy would
then be permitted to choose to receive (i) a total retirement benefit from all
sources (RP and otherwise) equivalent to what she would have received had Mr.
Kennedy then chosen a 100% joint and survivor annuity with respect to his
benefit base under the ERP plus RP, with herself as survivor, and then died, or
(ii) a total retirement benefit from all Company sources equal to the lump sum
equivalent of the portion of such benefit that was not to be provided under the
RP, as determined under the provisions of the ERP, plus an amount equivalent to
what she could have received under the RP had her benefits been paid in the form
of a 100% joint and survivor annuity thereunder.
The next two resolutions would provide for an actuarial
increase respecting the total retirement benefits that Mr. Kennedy would have
obtained had he retired on September 1, 1996. This is appropriate as his delayed
retirement effectuates a reduction in the time period during which he will
receive those benefits. His retirement benefit increments earned after that date
would not be actuarially increased for late retirement. This actuarial increase
would benefit Mrs. Kennedy as well, if Mr. Kennedy should die while employed by
the Company.
The next resolution would eliminate the ERP's Social Security
offset, once Mr. Kennedy retires, until the earliest of his death, attainment of
age 70, or his actual commencement of receipt of Social Security benefits. This
is appropriate because current expectations are that Mr. Kennedy will not
actually receive any Social Security benefits until he reaches age 70, due to
the operation of the Social Security earnings limit, in light of his anticipated
continued service on this Board of Directors, and in light of his other
anticipated earnings.
WHEREUPON, upon motion duly made by Mr. Mann, and seconded by
Mr. Schofield, the following resolutions were unanimously adopted, except that
Mr. Kennedy abstained from the discussion and voting with respect thereto:
RESOLVED: That the Company shall, through the plans
described below and otherwise, pay retirement
benefits to Mrs. Bernard J. Kennedy if Mr.
Kennedy should die while employed with the
Company, based upon the assumption that Mr.
Kennedy had instead retired on the most recently
preceding first of the month. She shall have two
choices in receiving survivors benefits under all
Company retirement programs:
(i) receipt of an amount equivalent to what
she would have received under the
National Fuel Gas Company and
Participating Subsidiaries Executive
Retirement Plan ("ERP") and the National
Fuel Gas Company Retirement Plan ("RP")
had Mr. Kennedy retired, selected a 100%
joint and survivor annuity with herself
as survivor, and then died, or
(ii)receipt of an amount equivalent to what
she would have received under the ERP
had Mr. Kennedy retired, chosen a lump
sum form of benefit with respect to all
amounts that he could have received
under the ERP and then had given such
amounts to her, plus an amount
equivalent to what she could have
received under the RP had Mr. Kennedy
retired, selected a 100% joint and
survivor annuity with herself as
survivor, and then died; and it is
FURTHER RESOLVED: That the amounts determined pursuant to the above
---------------- the above resolution shall be paid from the RP to
the extent possible consistent with its
then-existing terms, and otherwise shall be paid
pursuant to the terms of the ERP, or the above
resolution, but always consistent with the
principle that Mrs. Kennedy shall not be
prejudiced (or rewarded) by virtue of Mr.
Kennedy's death while employed, in comparison to
the 100% joint and survivor annuity with herself
as survivor, or lump sum benefits, (as the case
may be) that Mr. Kennedy could have selected had
he retired as of the first of the month before
his death; and it is
FURTHER RESOLVED: That, upon his retirement (or, in the event of
---------------- his death while employed by the Company, for the
benefit of his wife), Mr. Kennedy shall receive
an actuarial increase (which shall be computed
based upon the most recently published actuarial
table that is generally accepted by American
actuaries and reasonably applicable to the ERP
and RP, and a 6% per annum rate of interest) in
the benefits that he had accrued under the ERP
and RP at September 1, 1996, to reflect his late
retirement (i.e., his retirement after September
1, 1996), because such late retirement reduces
the period of time over which his retirement
benefits will actually be paid; and it is
FURTHER RESOLVED: That said actuarially increased benefits shall
---------------- be paid in the same form as the
benefits to be paid pursuant to the ERP; and it
is
FURTHER RESOLVED: That Mr. Kennedy's benefits under the KRP
---------------- (but not any survivor benefits thereunder) shall
be temporarily modified so that they shall not
reflect any Social Security-related offset
thereunder, until the earliest of his death,
attainment of age 70 (or such other age at which
the Social Security "earnings limit" ceases to
apply) or his commencement of receipt of Social
Security benefits; and it is
FURTHER RESOLVED: That the above resolutions shall have effect
---------------- notwithstanding any lesser benefits or contrary
provisions set forth in the ERP and the RP; and
it is
FURTHER RESOLVED: That the Chairman of the Compensation Committee
---------------- of the Board of Directors and the officers of the
Company are hereby authorized and empowered to
enter into memoranda and agreements on behalf of
the Company and to take such other actions and
execute such other documents as may be necessary
or appropriate to effectuate the purposes and
intents of the foregoing resolutions.