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You are urged to sign and date the enclosed form of proxy and return it promptly in the enclosed self addressed, stamped envelope. Should
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Your vote is important.16, 2015
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TO BE HELD FEBRUARY 3, 2014
1, 2016
Annual Meeting. A list of shareholders entitled to vote at the annual meetingAnnual Meeting will be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours for a period of ten days before the meeting at the Company’s offices at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, and at the time and place of the meeting during the whole time of the meeting.
Electronic Notice and Mailing
Notice of the Company’s annual meeting was mailed on or about December 23, 2013 to all shareholders as
Those shareholdersdate, 4,750,645 common shares were issued and outstanding. Each common share is entitled to vote may vote their shares via the Proxy Card by mail following the instructions printed on the Proxy Card.
From the date of the mailing of the Notice of Annual Meeting of Shareholders until the conclusion of the annual meeting, all of the proxy materials will be accessible on the Company’s web site at www.rgcresources.com.
Revocability of Proxies
Shareholders who execute proxies may revoke them by giving written notice to our Corporate Secretary any time before such proxies are voted. Attendance at the annual meeting shall not have the effect of revoking a proxy unless the shareholder so attending shall, in writing, so notify the Secretary of the annual meeting at any time prior to the voting of the proxy at the annual meeting.
Other Matters
The Board does not know of any matter that is expected to be presented for consideration at the annual meeting, other than the election of directors, the ratification of the selection of Brown, Edwards & Company, L.L.P. as the independent registered accounting firm for the 2014 fiscal year, and a shareholder advisory vote on the compensation of our named executive officers. However, if other matters properly come before the annual meeting, the persons named in the accompanying proxy intend to vote thereon in accordance with their judgment.
Solicitation Expenses
We will bear the cost of the annual meeting and the cost of soliciting proxies, including the cost of mailing any proxy materials. In addition to solicitation by mail, our directors, officers and regular employees (who will not be specifically compensated for such services) may solicit proxies by telephone or otherwise. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward proxies and proxy material to their principals, and we will reimburse them for their expenses.
The annual report to shareholders and the 2013 Annual Report on Form 10-K are not proxy soliciting materials.
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Voting Procedures; Abstentions; Broker Voting
All proxies received pursuant to this solicitation will be voted except as to matters where authority to vote is specifically withheld and, where a choice is specified as to the proposal, they will be voted in accordance with such specification. If no instructions are given, the persons named in the proxy solicited by the Board intend to vote FOR the nominees for election of our directors listed herein, FOR the ratification of Brown, Edwards & Company, L.L.P. as the independent registered accounting firm for the fiscal year ending September 30, 2014, and FOR the approval of the compensation of our named executive officers.
one vote. A majority of the common shares outstanding entitled to vote on the record date, or at least 2,375,323 common shares, whether present in person or represented by proxy, will constitute a quorum for the transaction of business at the annual meeting and any adjournment or postponement thereof. Abstentions and broker non-votes (which occur with respect to any proposal when a broker holds shares of a customer in its name and is not permitted to vote on that proposal without instruction from the beneficial owner of the shares and no instruction is given) will be counted as present or represented for purposes of establishingAnnual Meeting. Less than a quorum formay adjourn the transaction of business.
Abstentions and broker non-votes will have no effect on the election of directors, which is by plurality of the votes cast in person or by proxy. Brokers may vote their shares in favor of directors so long as they have voting instructions from the beneficial owners of the shares.
Advisory approval of the compensation of our named executive officers requires the affirmative vote of the holders of a majority of the common shares present in person or represented by proxy and entitled to vote on the matter at the annual meeting. Abstentions from voting on this proposal will have the same effect as a vote against this proposal. Brokers may vote their shares on this proposal so long as they have voting instructions from the beneficial owners of the shares. Broker non-votes will not be treated as votes cast on this matter, and therefore will not have any effect on determining the outcome. As disclosed later in this proxy statement, this vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board of Directors.
Ratification of the appointment of Brown, Edwards & Company, L.L.P. as our independent registered public accounting firm requires the affirmative vote of the holders of a majority of the common shares present in person or represented by proxy and entitled to vote on the matter at the annual meeting. Abstentions from voting on this proposal will have the same effect as a vote against this proposal. Broker non-votes will not be treated as votes cast on this matter, and therefore will not have any effect on determining the outcome.
The Company’s Annual Report to Shareholders for the year ended September 30, 2013 is being sent to all shareholders concurrently with this Proxy Statement. The Annual Report is not to be consideredelected by a partplurality of the proxy solicitation material.
Voting Securities
The Company will appoint onevotes of the shares present or more inspectors to act as a Committee on Credentialsrepresented by proxy at the Annual Meeting and entitled to makevote on the election of directors. The three nominees receiving the most “For” votes will be elected.
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Nancy Howell Agee
Mrs. Agee is the President & CEO of Carilion Clinic which is the largest employer in our utility service area. In this position, Mrs. Agee has extensive experience in the issues that affectcoal marketing and product acquisition business for 40 years. Mr. Smith has been a director of the regionCompany since 1990 and the economic and political challenges that impact Company operations. She brings to the Board her distinctive perspectiveholds a Masters of customer service, employee development, and fiscal responsibility. Mrs. Agee represents both Carilion Clinic and RGC Resources, Inc. in the communities we serve through her involvement in a variety of corporate and service Boards. She has extensiveArts from Hollins University.
J. Allen Layman has beenCompany's President and Chief Executive Officer and was involved in the executive management of the Company beginning in 1992. Mr. Williamson holds an MBA from the College of William and Mary. Mr. Williamson is a member of the RGC Resources, Inc. Boardboards of Directors for over 20 years and has been nominated for reelection. The Governance and Nominating Committee has renominated Mr. Layman this year specifically due to his long standing professional experience and demonstrated commitment as a Resources Board member. Mr. Layman has served in many capacities within the Board and the committee structure, including the Audit, Compensation, and Governance and Nominating Committees. He has an excellent attendance record for full Board meetings and committee meetings and comes to the meetings demonstrating his attention to details in the financial statements and pre-meeting materials. Mr. Layman has an in depth knowledge of regulated public utilities and brings an understandingdirectors of the regulatory environment inBank of Botetourt, Inc., a local bank, where he serves as chairman of its nominating and corporate governance committee, Optical Cable Corporation, a publicly held optical fiber manufacturer, where he serves as the Commonwealth of Virginia to the Board. His historical knowledge of utility regulation and legislation is very valuable to the other Board members and management of Resources and provides a perspective that only his experience can provide. Mr. Layman has also served on the Board of Directors through various management successions and provides long standing institutional knowledge.
Mr. Layman is currently a private investor, but was formerly the CEO of a regulated telecommunications company in the region. He has knowledge of utility accounting, ratemaking, and all aspects of public utility operations. Mr. Layman is focused on the financial performancechairman of the company while maintaining a balanced perspective with regard to customer serviceaudit committee and operational performance. He and his family have lived and worked in the Company’s service area for several generations providing him with a unique perspective on customer and marketing issues in our service area. Mr. Layman continues to demonstrate commitment to RGC Resources, Inc. and the economic enhancement of the region in which the company provides service. He is also considered to be independent within the meaning of the rules governing companies listed on NASDAQ. Mr. Layman’s professional qualifications and regulatory knowledge will benefit the Resources board.
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Raymond D. Smoot, Jr. has been a member of the RGC Resources, Inc. Boardnominating and corporate governance committee, Luna Innovations Incorporated, a publicly held technology company, where he serves as chairman of Directors since 2005the audit committee and has been nominated for reelection. The Governancea member of the of the nominating and Nominating Committee has renominated Dr. Smoot this year specifically due to his broad professionalgovernance committee, and Corning Natural Gas Holding Corporation, a publicly held natural gas distribution company located in the state of New York, where he serves as chairman of the audit committee and a member of the compensation committee.
Dr. Smoot is currently employed by the Virginia Tech Foundation (the “Foundation”) which has significant real estateoperating expertise, and business operationsalong with his public company board experiences in our region. From 2003 through 2012, he was the CEO & Secretary-Treasurer for the Virginia Tech Foundationcorporate governance, strategic planning and is currentlycompliance, make him a Senior Fellow for the Foundation. Dr. Smoot has extensive financial and investment knowledge that has been developed by his long-standing career with Virginia Tech in a variety of senior management roles as well as in his capacity as a former Chairman of the Investment Committee for the Virginia Retirement System. He has demonstrated the ability for managing sensitive issues for large institutions that are frequently in the public eye. Dr. Smoot is also the Chairman of the Stellar-One Corporation, a major banking corporation in the region. In his role as bank director he has helped to lead two significant mergers. Dr. Smoot provides a specialized perspective on shareholder issues that complements the expertisevaluable member of our other Board members and maintains a keen focus on the importance of increasing shareholder value. Like our other nominees, Dr. Smoot is also considered to be independent within the meaning of the rules governing companies listed on NASDAQ. The Governance and Nominating Committee believes that Dr. Smoot brings valuable knowledge to the Resources Board.
Approval of Nominees
Approval of the nominees requires the affirmative vote of a plurality of the votes cast at the annual meeting. Unless authorization is withheld, the persons named as proxies will vote for the election of the nominees named above. Each nominee has agreed to serve if elected. In the event any nominee unexpectedly is unable to serve, the proxies will be voted for such other person as the Board may designate. If any of the nominees should become unable or unwilling to serve as a director, the persons named in the proxy intend to vote for the election of such substitute nominee for director as the Board may recommend. It is not anticipated that any of the nominees will be unable or unwilling to serve as a director. Proxies cannot be voted for a greater number of persons than the number of nominees.
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The present principal occupation and employment during the past five years and the office, if any, held with the Company are set forth opposite the name of each nominee and director:
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NOMINEES FOR DIRECTOR
CLASS B DIRECTORS (Currently serving until 2014 Annual Meeting with a three year term)
Nancy Howell Agee Age 61 | 2005 | President & CEO, Carilion Clinic; President & COO, Carilion Clinic2010-2011; COO/ Executive Vice President, Carilion Clinic 2007-2010; Director, Hometown Bank. | 2011 | |||
J. Allen Layman Age 61 | 1991 | Private Investor. | 2003 | |||
Raymond D. Smoot, Jr. Age 66 | 2005 | Senior Fellow, Virginia Tech Foundation, Inc.; CEO & Secretary-Treasurer, Virginia Tech Foundation, Inc. 2003-2012.; Chairman, StellarOne Corporation; Chairman StellarOne Bank; Director, Carilion Clinic. | 2012 |
DIRECTORS CONTINUING IN OFFICE
CLASS A DIRECTORS (Serving until 2016 Annual Meeting)
Abney S. Boxley, III Age 55 | 1994 | President & CEO, Boxley Materials Company (Construction materials); Chairman Valley Financial Corporation and Valley Bank; Director, Carilion Clinic. | 1988 | |||
S. Frank Smith Age 65 | 1990 | Vice President-Industrial Sales, Alpha Coal Sales Company, LLC; Vice President Eastern Sales, Market Analysis and Research, Alpha Coal Sales Company, LLC 2007-2009. | 2009 | |||
John B. Williamson, III Age 59 | 1998 | Chairman, President & CEO, RGC Resources, Inc.; Director, Botetourt Bankshares, Inc.; Director, Optical Cable Corporation; Director, Luna Innovations Corporation; Director, Corning Natural Gas Company. | 2003 |
CLASS C DIRECTORS (Serving until 2015 Annual Meeting)
Maryellen F. Goodlatte Age 61 | 2001 | Attorney and Principal, law firm of Glenn, Feldmann, Darby & Goodlatte. | 1983 | |||
George W. Logan Age 68 | 2002 | Principal, Pine Street Partners, LLC; Faculty, University of Virginia Darden Graduate School of Business; Director of Valley Financial Corporation. | 1993 |
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AS THE
meeting.
Approval of Proposal 2
Approval of this proposal will require the affirmative vote of holders of a majority of the common shares present in person or represented by proxy and entitled to vote on such matter at the annual meeting.
2015.
We encourage you to closely review this information before voting to approve or disapprove the compensation of our named executive officers. The Report of the Compensation Committee of the Board of Directors describes and explains our executive compensation policies and practices and the process that was used by the Compensation Committee of the Board of Directors to reach its decisions on the compensation of the named executive officers for fiscal 2013. It also contains a discussion and analysis of each of the primary components of our executive compensation program - the base salary and incentive awards.
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Generally, in this Proxy Statement we disclose information about the compensation of the CEO, CFO plus the top three most highly compensated executive officers for the end of the last completed fiscal year. Consequently, most of the information presented in the compensation tables is backward-looking. Also, we disclose in the compensation tables all elements of executive compensation separately. Because of this, we encourage you to read the footnotes and narrative descriptions which accompany each compensation table in order to understand any non-cash items.
In reviewing our executive compensation disclosure, we would like to call your attention to the following highlights:
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The Board of Directors regularly reviews best practices in corporate governance and executive compensation and, in fiscal 2013, the Compensation Committee reviewed the executive compensation structure to ensure that Company practices are reasonable and appropriate for executive compensation.
Statement.
Approval of Proposal 3
Approval of this proposal will require the affirmative vote of holders of a majority of the common shares present in person or represented by proxy and entitled to vote on such matter at the annual meeting.
executive compensation of the named executive officers as disclosed in this proxy statement pursuant
to the compensation disclosure rules of the Security and Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 27, 2013, certain information regarding the beneficial ownership of the common shares of the Company by each director, named executive officer, and certain beneficial owners and by all directors, named executive officers, and certain beneficial owners as a group. Unless otherwise noted in the footnotes to the table, the named persons have sole voting and investment power with respect to all outstanding shares of common stock shown as beneficially owned by them.
Name of Beneficial Owner | Shares of Common Stock Beneficially Owned as of 11/27/131 | Percent of Class | ||||||
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Nancy Howell Agee | 9,3312 | < 1% | ||||||
Abney S. Boxley, III | 19,266 | < 1% | ||||||
John S. D’Orazio | 18,7533 | < 1% | ||||||
Maryellen F. Goodlatte | 12,687 | < 1% | ||||||
J. Allen Layman | 37,668 | <1% | ||||||
Dale P. Lee | 3,0593 | <1% | ||||||
George W. Logan | 53,774 | 1.14% | ||||||
Paul W. Nester | 5,4693 | <1% | ||||||
S. Frank Smith | 36,523 | <1% | ||||||
Raymond D. Smoot, Jr. | 18,5084 | <1% |
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statement.
Robert L. Wells, II | 5,0613 | <1% | ||||||
John B. Williamson, III | 84,748 | 1.80% | ||||||
Anita G. Zucker | 247,458 | 5.25% | ||||||
All Named Beneficial Owners | 552,305 | 11.72% |
It is the Company’s policy that all directors should attend the annual meeting of the Company’s shareholders. All of the directors serving on the Board of Directors at the time attended the annual meeting of shareholders in 2013.
Director Independence:The Board of Directors has affirmatively determined that all of the current directors, other than John B. Williamson, III, are “independent” of the Company within the meaning of the rules governing companies listed on NASDAQ. For a director to be “independent” under the NASDAQ rules, the Board of Directors must affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company.
The Board of Directors has adopted the following categorical standards of independence to assist it in determining whether a director has a material relationship with the Company. The following relationships between a director and the Company will not be considered material relationships that would preclude a finding by the Board of Directors that the director is independent under the NASDAQ rules:
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2015. Consistent with the NASDAQ rules, a majority of the Company’s non-management directors meetmet at least once each quarter without management present. The role of presiding director for each such executive session of directors is filled by the ChairAll of the directors serving on the Board at the time attended the Annual Meeting of shareholders in 2015.
Name and Age | Year In Which First Elected As Director | Business Experience | Year in Which Assumed Principal Occupation |
CLASS A DIRECTORS (Currently serving until 2016 Annual Meeting) | |||
Abney S. Boxley, III Age 57 | 1994 | See disclosure in Proposal No. 1 above. | 1988 |
S. Frank Smith Age 67 | 1990 | See disclosure in Proposal No. 1 above. | 2014 |
John B. Williamson, III Age 61 | 1998 | See disclosure in Proposal No. 1 above. | 2014 |
CLASS B DIRECTORS (Serving until the 2017 Annual Meeting) | |||
Nancy Howell Agee Age 63 | 2005 | President, CEO & Director, Carilion Clinic; President & COO Carilion Clinic 2010-2011; COO & Executive Vice President, Carilion Clinic 2007-2010; Director, Hometown Bank; and Director, Virginia Tech Carilion School of Medicine. As the CEO of the largest employer in the Company's service area and her active leadership and participation in the community, Mrs. Agee is a valuable Board member. | 2011 |
J. Allen Layman Age 63 | 1991 | Private Investor and Director, Bank of Fincastle. A former CEO, Mr. Layman's utility and regulatory experience makes him a valuable Board member. | 2003 |
Raymond D. Smoot, Jr. Age 68 | 2005 | Senior Fellow, Virginia Tech Foundation, Inc.; CEO & Secretary, Virginia Tech Foundation, Inc. 2003-2012; Chairman, Union Bankshares Corporation; and Director, Carilion Clinic. Dr. Smoot's professional experience and public company board experience make him a valuable Board member. | 2012 |
CLASS C DIRECTORS (Serving until the 2018 Annual Meeting) | |||
John S. D'Orazio Age 55 | 2014 | President, CEO & Director, RGC Resources, Inc. & Roanoke Gas Company. President and CEO, Roanoke Gas Company 2012-2014; Vice President & COO, Roanoke Gas Company 2003-2012. Mr. D'Orazio provides the Board with in-depth knowledge of the Company's operation, business strategy, risks and economic climate as well as extensive utility industry experience. | 2014 |
Maryellen F. Goodlatte Age 63 | 2001 | Attorney and Principal, law firm of Glenn, Feldmann, Darby & Goodlatte. Mrs. Goodlatte's experiences as an attorney in the Company's service area, in addition to her leadership as chair of the Governance and Nominating Committee, make her a valuable member of the Board. | 1983 |
George W. Logan Age 70 | 2002 | Principal, Pine Street Partners, LLC; Faculty, University of Virginia Darden Graduate School of Business. Mr. Logan's board governance and financial expertise as well as his professional business experiences make him a valuable Board member. | 1993 |
COMBINED CHIEF EXECUTIVE OFFICER AND CHAIRMAN ROLE
The Board leadership structure is currently composed of a combined Chairman of the Board of Directors and Chief Executive Officer, an independent Audit Committee Chairman, an independent Governance and Nominating Committee Chairman, and an independent Compensation Committee Chairman. Mr. Williamson is the Company’s President, Chief Executive Officer and Chairman of the Board, and he was appointed by the Company as President and Chief Executive Officer in 1999. After careful consideration of Mr. Williamson’s strong leadership since he joined the Company, the Board determined it appropriate for the Chairman and the CEO to be the same individual. In making this determination, the Board also considered the relative size of the Company, the size of the Board and the fact that all remaining members of the Board are independent. The Board
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has historically believed that having the roles combined enhanced the ability to provide insight and direction on important strategic initiatives to both management and the Board and increases the likelihood that the Company acts with a common purpose. Mr. Williamson and the Board announced a senior officer succession plan in October 2012 and Mr. Williamson is expected to step down from the CEO role in 2014, resulting in a separation of the CEO and Chairman roles in future years. The Company’s overall corporate governance policies and practices have adequately addressed any governance concerns raised by the dual CEO and Chairman role in the past. In addition, the Board determined that thereGeorge W. Logan and Raymond D. Smoot, Jr. are other members of the executive management team that are well versedaudit committee financial experts under applicable SEC rules. The following table summarizes each committee.
Committee | Members | Responsibilities | Independence |
Compensation | S. Frank Smith, Chair | Assists the Board in fulfilling its oversight responsibilities relating to the compensation of the Company's directors and executive officers. | Each Member is Independent |
Nancy Howell Agee | |||
Abney S. Boxley, III | |||
J. Allen Layman | |||
Audit | Raymond D. Smoot, Jr., Chair | Reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks. It also reviews the Company’s policies for risk assessment and steps management has taken to control significant risks, except those delegated by the Board to other committees. | Each Member is Independent |
Abney S. Boxley, III | |||
George W. Logan | |||
S. Frank Smith | |||
Governance and | Maryellen F. Goodlatte, Chair | Responsible for the oversight of a broad range of issues surrounding the composition and operation of the Board, including identifying individuals qualified to become Board members, recommending nominees for Board election, and recommending to the Board governance principles. It also provides assistance to the Board in the areas of committee member selection and rotation practices, evaluation of the overall effectiveness of the Board, and consideration of developments in corporate governance practices. | Each Member is Independent |
Nominating | Nancy Howell Agee | ||
George W. Logan | |||
J. Allen Layman | |||
THE BOARD’S ROLE IN RISK OVERSIGHT
Risk Oversight
The Board recognizes the importance of effective risk oversight in running a successful business and in fulfilling its fiduciary responsibilities to the Company and its shareholders. While the Chairman and Chief Executive Officer and other members of the senior leadership team are responsible for the day-to-day management of risk, the Board is responsible for ensuring that an appropriate culture of risk management exists within the Company and for setting the right “tone at the top,” overseeing the aggregate risk profile, and assisting management in addressing specific risks, such as strategic and competitive risks, financial risks, brand and reputation risks, legal risks, regulatory risks, and operational risks. matters.
The Board exercises its oversight responsibility for risk both directly and through its three standing committees. Throughout the year, the Board and each committee spend a portion of their time reviewing and discussing specific risk topics. The full Board is kept informed of each committee’s risk oversight and related activities through regular oral reports from the committee chairs, and committee meeting minutes are available for review by all directors. Strategic, operational and competitive risks also are presented and discussed at the Board’s quarterly meetings, and more often as needed. On at least an annual basis, the Board conducts a review of our long-term strategic plans and members of senior management report on our top risks and the steps management has taken or will take to mitigate these risks. In addition, at each quarterly meeting, or more often as necessary, the Board is updated on material legal and regulatory matters. On a regular basis between Board meetings, our Chairman, President and Chief Executive Officer provides written reports to the Board on the critical issues we face and recent developments in each of our principal operating areas. These reports include a discussion of business risks as well as a discussion regarding enterprise risk.
The Audit Committee is responsible for reviewing the framework by which management discusses our risk profile and risk exposures with the full Board and its committees. The Audit Committee meets regularly with our Chief Financial Officer, independent auditor, and other members of senior management to discuss our major financial risk exposures, financial reporting, internal controls, credit and liquidity risk, compliance risk, and key operational risks. The Audit Committee meets regularly in separate executive sessions with the Chief Executive Officer, independent auditors, as well as with committee members only, to facilitate a full and candid discussion of risk and other issues.
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The Compensation Committee is responsible for overseeing human capital and compensation risks, including evaluating and assessing risks arising from our compensation policies and practices for all employees and ensuring executive compensation is aligned with performance. The Compensation Committee also is charged with monitoring our incentive and equity-based compensation plans, including employee pension and benefit plans. No member of the Compensation Committee was an officer or employee of the Company or any subsidiary of the Company during the previous fiscal year. There are no interlock relationships as defined in the applicable SEC rules.
Board.
Director Nominations
The Governance and Nominating Committee sets forthestablishes the process by which candidates are selected for possible inclusion in the recommended slate of director nominees are selected.nominees. The Board does not currently prescribe any minimum qualifications for director candidates. Consistent withGovernance and Nominating Committee has a charter, which is available on the criteria for the selection of directors approved by the Board, theCompany's website at www.rgcresources.com. The Governance and Nominating Committee will take into account the Company’s current needs and the qualities needed for Board service, including experience and achievement in business, finance, technology or other areas relevant to the Company’s activities; reputation, ethical character and maturity of judgment; diversity of viewpoints, backgrounds and experiences; absence of conflicts of interest that might impede the proper performance of the responsibilities of a director;director responsibilities; independence under SEC and NASDAQ rules; service on other boards of directors; sufficient time to devote to Board matters; and the ability to work effectively and collegially with other Board members; and diversity. In considering the diversity of candidates, the Committee considers an individual’s background, professional experience, education and skill, race, gender and/or national origin.members. In the case of incumbent directors whose terms of office are set to expire, the Governance and Nominating Committee will review such directors’ overall service to the Company during their term,
The nominations policy is intended to provide a flexible set of guidelines foran unaffiliated third party under the effective functioningsame or similar circumstances and the extent of the Company’srelated person’s interest in the transaction.
Annual Director Retainer | $ | 17,000 | |
Additional Annual Retainer - Board Chair | 12,000 | ||
Additional Annual Retainer - Audit Committee Chair | 8,000 | ||
Additional Annual Retainer - Other Committee Chair | 3,000 | ||
Attendance - each Board of Directors Meeting | 1,500 | ||
Attendance - each Committee Meeting | 1,500 | ||
Attendance - Board or Committee Meeting by telephone | 800 | ||
Committee meeting held on the same day as Board meeting | 800 |
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Any shareholder wishing to nominate persons for election as directors at an annual meeting must deliver to the Secretary of the Company at the Company’s principal officeon a monthly basis is paid in Roanoke, Virginia a written noticeshares of common stock of the shareholder’s intention to make such a nomination. The shareholder generally is required to furnishCompany restricted under the notice at least 120 days before the first anniversaryterms of the preceding year’s annual meeting.Restricted Plan ("Restricted Stock"). The notice must include the following information: (1) such information regarding each proposed nominee as would be required to be disclosed under SEC rules and regulations in solicitations of proxies for the election of directors in an election contest or otherwise; (2) the written consent of each proposed nominee to serve as a director of the Company; and (3) as to the shareholder giving the notice and the beneficial owner, if any, of common shares on whose behalf the nomination is made, (a) the name and address of record of such shareholder and the name and address of such beneficial owner, (b) the class and number of shares of Restricted Stock is calculated each month based on the Company’s capital stock that are owned beneficially and of record by such shareholder and such beneficial owner, (c) a representation thatclosing sales price on the shareholder is a holder of recordfirst business day of the Company’s capital stock entitledmonth of Resources’ common shares on the NASDAQ Global Market. A participant can, subject to vote at such meeting and intends to appear, in person or by proxy, at the meeting to propose such nomination and (d) a representation whether the shareholder or the beneficial owner, if any, intends or is part of a group that intends to (i) deliver a proxy statement or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee or (ii) otherwise solicit proxies for shareholders in support of such nomination. The Company may require any proposed nominee to furnish such other information as the Company may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Company.
COMMITTEE REPORTS
Reportapproval of the Compensation Committee, elect to receive up to 100% of the retainer fee for the fiscal year in Restricted Stock. Such election cannot be revoked or amended during the fiscal year.
Name | Fees paid in cash | Fees paid in Restricted Stock2 | Total | |||
Nancy Howell Agee | $ 15,100 | $ 16,667 | $ 31,767 | |||
Abney S. Boxley, III | 28,633 | 8,333 | 36,966 | |||
Maryellen F. Goodlatte | 23,967 | 9,667 | 33,634 | |||
J. Allen Layman | 25,800 | 6,667 | 32,467 | |||
George W. Logan | 18,200 | 16,667 | 34,867 | |||
S. Frank Smith | 29,967 | 9,667 | 39,634 | |||
Raymond D. Smoot, Jr. | 33,200 | 9,600 | 42,800 | |||
John B. Williamson, III1 | 22,900 | 7,733 | 30,633 |
the annual retainer fees paid to
Name | Percent if Greater than 40% |
Nancy Howell Agee | 100% |
Abney S. Boxley, III | 50% |
Maryellen F. Goodlatte | 50% |
George W. Logan | 100% |
S. Frank Smith | 50% |
Name | Shares of Restricted Stock | |
Nancy Howell Agee | 10,660 | |
Abney S. Boxley, III | 10,618 | |
Maryellen F. Goodlatte | 9,027 | |
J. Allen Layman | 22,593 | |
George W. Logan | 16,229 | |
S. Frank Smith | 12,780 | |
Raymond D. Smoot, Jr. | 12,361 | |
John B. Williamson, III | 375 |
Name and Age | Period Position Held | Position and Experience |
John S. D'Orazio, 55 | February 2014 to present | President & CEO - Resources, Roanoke Gas |
October 2012 to February 2014 | President & CEO - Roanoke Gas | |
January 2003 to September 2012 | Vice President & COO - Roanoke Gas | |
Paul W. Nester, 41 | February 2015 to present | Vice President, Treasurer, Secretary & CFO |
May 2012 to January 2015 | Vice President, Treasurer & CFO | |
March 2010 to April 2012 | CFO, UXB International | |
Carl J. Shockley, Jr., 50 | October 2012 to present | Vice President, Operations - Roanoke Gas |
May 2012 to September 2012 | Director, Operations - Roanoke Gas | |
August 2009 to April 2012 | Director, Human Resources | |
Robert L. Wells, II, 51 | February 2005 to present | Vice President, Information Technology |
Name of Beneficial Owner | Common Shares Beneficially Owned as of 11/25/151 | Percent of Class |
Nancy Howell Agee2 | 12,737 | <1% |
Abney S. Boxley, III | 20,812 | <1% |
John S. D’Orazio3 | 31,024 | <1% |
Maryellen F. Goodlatte | 14,615 | <1% |
J. Allen Layman | 39,914 | <1% |
George W. Logan | 56,509 | 1.2% |
Paul W. Nester3 | 15,239 | <1% |
Dale L. Parris3 | 8,000 | <1% |
Carl J. Shockley, Jr.3 | 10,761 | <1% |
S. Frank Smith | 53,027 | 1.1% |
Raymond D. Smoot, Jr.4 | 21,269 | <1% |
Robert L. Wells, II3 | 11,735 | <1% |
John B. Williamson, III | 86,332 | 1.8% |
Anita G. Zucker | 297,692 | 6.3% |
c/o The Inter Tech Group, 4838 Jenkins Ave. | ||
North Charleston, SC 29405 | ||
All current directors and executive officers (as a Group - 12 Persons) | 373,974 | 7.9% |
Executive Summary
This Compensation Discussion and Analysis focuses on the material elements of our executive compensation program in effect for the 2013 fiscal year. It also provides an overview of our executive compensation philosophy and why we believe the program is appropriate for the Company and its shareholders. Finally, weWe also discuss the Compensation Committee’s methodology for determining appropriate and competitive levels of compensation for the named executive officers. Details of compensation paid to the named executive officers can be found in the tables that follow.
Our executive compensation program is intended to align our named executive officers’ interests with those of our shareholders by rewarding performance that meets or exceeds
Compensation Philosophy and Objectives
Dale L. Parris.
The Role of the Committee:
12
The Role of Executives:The Company’s CEO is actively involved in the executive compensation process. Historically, theThe CEO reviews the performance of each of the named executive officers, (otherother than his own, performance) and, within the defined program parameters, recommends to the Compensation Committee base salary increases and incentive awards for such individuals. He provides the Compensation Committee with financial performance goals for the Company that are used to link pay with performance. The CEO also provides his review to the Compensation Committee with respect to the executive compensation program’s ability to attract, retain and motivate the level of executive talent necessary to achieve the Company’s business goals. The CEO develops the recommended base salary and proposed incentive awards for each of the named executives, exclusive of his own. He works with the Compensation Committee to determine if the proposed compensation package is sufficient to attract, retain, and motivate the Company’s executive team and potential new executive team hires. The CEO attends the meetings of the Compensation Committee but does not participate in the Committee executive sessions.
The Compensation Committee believes that the goals of the total compensation program for named executive officers should be designed to attract, motivate and retain key talent, to promote the long-term success of the Company, and to balance these objectives with a strong link to shareholder return and other measures of performance that drive total shareholder return.
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13
elements.
Benchmarking:
competitive. The Company compares both its levels of executive compensation and its financial performance, for executive compensation purposes, to a comparison group consisting of two sets of companies – one set for other gas companies and one set of local companies. The companies that make up the Company’s peer group wereis selected based on six primary criteria:
1. |
2. |
3. |
4. |
5. |
6. |
consists of:
Optical Cable Corporation
Unitil Corporation
Valley Financial Corporation
Optical Cable Corporation
Valley Financial Corporation
Compensation Elements
The Company believes that it is necessary to provide short-term compensation incentives because these provide immediate benefit, paid in cash on the achievement of immediate results, thereby promoting the achievement of the established short-term goals. The Company providesbenchmark data.
program, we determined that we did not need to consider changing our overall approach to executive compensation.
14
Based in part on the executive compensation benchmarking and the target levels for base salary set forth above, the Board, acting on the recommendation of Compensation Committee set the named executive officer’sofficers’ base salaries for 2013. The base salaries for the named executives for 2012 and 2013 are as follows:
Executive Officer | 2012 Base Salary | 2013 Base Salary | ||||||
| ||||||||
John B. Williamson, III
| 349,577 | 255,920 | ||||||
Paul W. Nester
| 52,500 (partial year) | 146,350 | ||||||
John S. D’Orazio
| 174,856 | 223,248 | ||||||
Dale P. Lee
| 144,668 | 148,344 | ||||||
Robert L. Wells, II | 135,866 | 138,548 |
2015.
Name | Year | Salary | Options Award1 | Bonus | Change in Pension Value2 | All Other Compensation | Total | ||||||
John S. D'Orazio | 2015 | $ 325,353 | $ 24,600 | $ 76,900 | $ 106,405 | $ 36,418 | $ 569,676 | ||||||
President & CEO | 2014 | 272,557 | 22,150 | 38,000 | 140,043 | 41,087 | 513,837 | ||||||
2013 | 223,248 | 28,280 | 26,500 | 10,662 | 35,215 | 323,905 | |||||||
Paul W. Nester | 2015 | 184,867 | 19,680 | 30,000 | 17,370 | 28,862 | 280,779 | ||||||
VP, Treasurer, | 2014 | 166,229 | 17,720 | 23,000 | 19,390 | 26,403 | 252,742 | ||||||
Secretary & CFO | 2013 | 146,350 | 20,200 | 6,500 | 9,984 | 18,843 | 201,877 | ||||||
Robert L. Wells, II | 2015 | 161,957 | 12,300 | 27,000 | 77,973 | 33,766 | 312,996 | ||||||
VP, | 2014 | 149,320 | 11,075 | 22,000 | 88,103 | 31,337 | 301,835 | ||||||
Information Technology | 2013 | 138,548 | 12,120 | 20,000 | (15,149 | ) | 28,154 | 183,673 | |||||
Carl J. Shockley, Jr.3 | 2015 | 148,743 | 14,760 | 27,800 | 74,310 | 29,887 | 295,500 | ||||||
VP - Operations, | 2014 | — | — | — | — | — | — | ||||||
Roanoke Gas Co. | 2013 | — | — | — | — | — | — | ||||||
Dale L. Parris | 2015 | 109,751 | 12,300 | 25,200 | 67,570 | 65,736 | 280,557 | ||||||
Vice President, | 2014 | 155,816 | 11,075 | 19,000 | 99,895 | 19,942 | 305,728 | ||||||
Retired | 2013 | 148,344 | 12,120 | 19,400 | 10,627 | 23,829 | 214,320 |
Name | Target | Maximum | Paid1 | |||
John S. D’Orazio | $ 74,000 | $ 174,000 | $ 76,900 | |||
Paul W. Nester | 32,500 | 55,000 | 30,000 | |||
Robert L. Wells, II | 25,500 | 46,000 | 27,000 | |||
Carl J. Shockley | 28,500 | 49,000 | 27,800 | |||
Dale L. Parris | 25,500 | 46,000 | 25,200 |
Name | Year | 401(K) matching contribution | Insurance Premiums | Medical Benefits | Post Retirement Medical & Life Insurance Benefits | Other | Total | |||||||
John S. D'Orazio | 2015 | $ 13,541 | $ 1,299 | $ 16,584 | $ 690 | $ 4,304 | $ | 36,418 | ||||||
President & CEO | 2014 | 15,528 | 1,285 | 16,638 | 7,636 | — | 41,087 | |||||||
2013 | 12,350 | 1,391 | 14,854 | 6,620 | — | 35,215 | ||||||||
Paul W. Nester | 2015 | 10,743 | 1,393 | 16,726 | — | — | 28,862 | |||||||
VP, Treasurer | 2014 | 8,312 | 1,303 | 16,788 | — | — | 26,403 | |||||||
Secretary & CFO | 2013 | 7,318 | 1,351 | 10,174 | — | — | 18,843 | |||||||
Robert L. Wells, II | 2015 | 9,514 | 1,098 | 16,546 | 5,288 | 1,320 | 33,766 | |||||||
Vice President, | 2014 | 8,566 | 1,045 | 16,878 | 4,848 | — | 31,337 | |||||||
Information Technology | 2013 | 7,927 | 1,094 | 15,034 | 4,099 | — | 28,154 | |||||||
Carl J. Shockley, Jr. | 2015 | 7,437 | 1,034 | 16,726 | 4,690 | — | 29,887 | |||||||
VP - Operations | 2014 | — | — | — | — | — | — | |||||||
2013 | — | — | — | — | — | — | ||||||||
Dale L. Parris1 | 2015 | 5,429 | 647 | 10,161 | — | 49,499 | 65,736 | |||||||
Vice President, | 2014 | 7,791 | 1,075 | 11,076 | — | — | 19,942 | |||||||
Retired | 2013 | 7,417 | 1,144 | 15,094 | 174 | — | 23,829 |
Name | Number of Unexercised Options | Option Exercise Price | Option Expiration Date | |
John S. D‘Orazio | 5,000 | $ 21.60 | Dec 4, 2024 | |
5,000 | 18.95 | Dec 6, 2023 | ||
5,400 | 19.01 | Apr 1, 2023 | ||
Paul W. Nester | 4,000 | 21.60 | Dec 4, 2024 | |
4,000 | 18.95 | Dec 6, 2023 | ||
5,000 | 19.01 | Apr 1, 2023 | ||
Robert L. Wells, II | 2,500 | 21.60 | Dec 4, 2024 | |
1,500 | 18.95 | Dec 6, 2023 | ||
3,000 | 19.01 | Apr 1, 2023 | ||
Carl J. Shockley, Jr. | 3,000 | 21.60 | Dec 4, 2024 | |
3,000 | 18.95 | Dec 6, 2023 | ||
3,000 | 19.01 | Apr 1, 2023 | ||
Dale L. Parris | 2,500 | 21.60 | Dec 4, 2024 | |
2,500 | 18.95 | Dec 6, 2023 | ||
3,000 | 19.01 | Apr 1, 2023 |
Name | Number of Shares Acquired on Exercise | Value Realized Upon Exercise | |
John S. D‘Orazio | 1,600 | $ 4,304 | |
Robert L. Wells, II | 1,000 | 1,320 |
Name | Years of Credited Service1 | Present Value of Accumulated Benefit2 | Payment During Last Fiscal Year | ||
John S. D’Orazio | 23 | $ 755,217 | $ | — | |
Paul W. Nester | 4 | 46,744 | — | ||
Robert L. Wells, II | 30 | 549,329 | — | ||
Carl J. Shockley, Jr. | 30 | 386,398 | — | ||
Dale L. Parris | 17 | 503,304 | 2,430 |
(1) | 1.2% of the participant's average compensation for the highest consecutive sixty months of service multiplied by years of credited service up to thirty years, |
(2) | 0.65% of the participant's average compensation for the highest consecutive sixty months of service in excess of covered compensation (generally defined as the average of Social Security wage bases over a participant's assumed working lifetime) multiplied by years of credited service up to thirty years, and |
(3) | the participant's balance, if any, from the Company's former profit sharing plan. |
Each of the named executives
II, except that their agreements have three-year terms
.The Company also provides Mr. Williamson a membership in the Shenandoah Club which is used for Company functions and provides a convenient location in the downtown Roanoke area to meet with other local business and civic leaders.
15
Summary Compensation Table
Name | Year | Salary ($) | Bonus | Stock Award | Options Award | Non-equity Incentive Compensation ($) | Change in Pension Value ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
John B. Williamson, III | 2013 | 255,920 | — | — | — | 67,000 | 48,579 | 29,165 | 400,664 | |||||||||||||||||||||||||||
Chairman, President | 2012 | 349,577 | — | — | — | 120,000 | 183,140 | 68,384 | 721,101 | |||||||||||||||||||||||||||
& CEO | 2011 | 337,577 | — | — | — | 94,000 | 89,095 | 133,764 | 654,436 | |||||||||||||||||||||||||||
John S. D’Orazio | 2013 | 223,248 | — | — | 28,280 | 26,500 | 10,662 | 35,215 | 323,905 | |||||||||||||||||||||||||||
President & CEO | 2012 | 174,856 | — | — | — | 36,000 | 157,131 | 67,798 | 435,785 | |||||||||||||||||||||||||||
Roanoke Gas Co. | 2011 | 163,121 | — | — | — | 28,000 | 64,148 | 26,782 | 282,051 | |||||||||||||||||||||||||||
Paul W. Nester | 2013 | 146,350 | — | — | 20,200 | 6,500 | 9,984 | 18,889 | 201,923 | |||||||||||||||||||||||||||
Vice President, | 2012 | 52,500 | — | — | — | — | — | 2,813 | 55,313 | |||||||||||||||||||||||||||
Treasurer & CFO | 2011 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Dale P. Lee | 2013 | 148,344 | — | — | 12,120 | 19,400 | 10,627 | 23,829 | 214,320 | |||||||||||||||||||||||||||
Vice President & | 2012 | 144,668 | — | — | — | 29,000 | 99,781 | 22,561 | 296,010 | |||||||||||||||||||||||||||
Secretary | 2011 | 139,667 | — | — | — | 22,000 | 46,221 | 21,171 | 229,059 | |||||||||||||||||||||||||||
Robert L. Wells, II | 2013 | 138,548 | — | — | 12,120 | 20,000 | (15,149) | 28,154 | 183,673 | |||||||||||||||||||||||||||
Vice President, Infor- | 2012 | 135,866 | — | — | — | 25,000 | 126,848 | 27,128 | 314,842 | |||||||||||||||||||||||||||
mation Technology | 2011 | 127,588 | — | — | — | 18,000 | 48,569 | 24,348 | 218,505 |
Other Compensation Table
Name | Year | 401(K) Matching Contribution ($) | Insurance Premiums ($) | Medical Benefits ($) | Post Retirement Medical Benefits ($) | Other ($) | Total ($) | |||||||||||||||||||||
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John B. Williamson, III | 2013 | 12,751 | 1,391 | 14,914 | 109 | — | 29,165 | |||||||||||||||||||||
Chairman, President & | 2012 | 12,683 | 1,426 | 13,845 | 130 | 40,300 | 68,384 | |||||||||||||||||||||
CEO | 2011 | 12,149 | 1,371 | 12,773 | 136 | 107,335 | 133,764 | |||||||||||||||||||||
John S. D’Orazio | 2013 | 12,350 | 1,391 | 14,854 | 6,620 | — | 35,215 | |||||||||||||||||||||
President & CEO | 2012 | 12,228 | 1,342 | 13,605 | 6,926 | 33,697 | 67,798 | |||||||||||||||||||||
Roanoke Gas Co. | 2011 | 7,565 | 1,220 | 12,533 | 5,464 | — | 26,782 |
16
Name | Year | 401(K) Matching Contribution ($) | Insurance Premiums ($) | Medical Benefits ($) | Post Retirement Medical Benefits ($) | Other ($) | Total ($) | |||||||||||||||||||
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Paul W. Nester | 2013 | 7,318 | 1,351 | 10,174 | 46 | — | 18,889 | |||||||||||||||||||
Vice President, | 2012 | 1,458 | — | 1,355 | — | — | 2,813 | |||||||||||||||||||
Treasurer & CFO | 2011 | — | — | — | — | — | — | |||||||||||||||||||
Dale P. Lee | 2013 | 7,417 | 1,144 | 15,094 | 174 | — | 23,829 | |||||||||||||||||||
Vice President & | 2012 | 7,234 | 1,275 | 13,845 | 207 | — | 22,561 | |||||||||||||||||||
Secretary | 2011 | 6,978 | 1,208 | 12,773 | 212 | — | 21,171 | |||||||||||||||||||
Robert L. Wells, II | 2013 | 7,927 | 1,094 | 15,034 | 4,099 | — | 28,154 | |||||||||||||||||||
Vice President, Infor- | 2012 | 8,043 | 1,119 | 13,665 | 4,301 | — | 27,128 | |||||||||||||||||||
mation Technology | 2011 | 7,271 | 1,041 | 12,773 | 3,263 | — | 24,348 |
Grants of Plan-Based Awards
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Paid ($) | |||||||||||
| ||||||||||||||||
John B. Williamson, III
| 2/4/13
| 0
|
| 97,000
|
|
| 224,000
|
|
| 67,000
|
| |||||
John S. D’Orazio
| 2/4/13
| 0
|
| 35,000
|
|
| 65,000
|
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| 26,500
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Paul W. Nester
| 2/4/13
| 0
|
| NA
|
|
| NA
|
|
| 6,500
|
| |||||
Dale P. Lee
| 2/4/13
| 0
|
| 22,000
|
|
| 42,000
|
|
| 19,400
|
| |||||
Robert L. Wells, II | 2/4/13 | 0 | 22,000 | 42,000 | 20,000 |
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Outstanding Equity Awards Table at Fiscal Year End
There are no outstanding equity awards for any of the named executives at the end of the fiscal year.
Option Exercises and Stock Vested
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17
Pension
The following table shows the accumulated benefits related to the Retirement Plan for the named executives as of September 30, 2013:
Name
| Plan Name | Number of Years of Credited Service
| Present Value of Accumulated Benefit ($)
| Payment During Last Fiscal Year ($)
| ||||||
| ||||||||||
John B. Williamson, III
| Employee Retirement Plan
| 22
|
| 813,231
|
| —
| ||||
John S. D’Orazio
| Employee Retirement Plan
| 21
|
| 508,769
|
| —
| ||||
Paul W. Nester
| Employee Retirement Plan
| 1
|
| —
|
| —
| ||||
Dale P. Lee
| Employee Retirement Plan
| 16
|
| 335,839
|
| —
| ||||
Robert L. Wells, II | Employee Retirement Plan | 30 | 383,253 | — |
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Estimated Potential Payment Upon upon a Change in Control
As discussed above, all
Name | Severance Payment | Benefit Plans1 | ||
John S. D’Orazio | $ 389,438 | $ 42,343 | ||
Paul W. Nester | 219,338 | 34,968 | ||
Robert L. Wells, II | 239,000 | 34,378 | ||
Carl J. Shockley, Jr. | 188,282 | 34,250 |
| ||||
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Note: Mr. Nester’s calculation is based on less than five years of data.
Compensation of Directors
Committee
Directors’ fees are set by the Compensation Committee has reviewed and approved bydiscussed with management the section entitled "Compensation, Discussion and Analysis" in this Proxy Statement. The Compensation Committee recommended to the Board of Directors after the Committee considers the competitive market for directors and fee levels provided by comparable companies both within the utility industry and companiesthat said section be included in the geographic area. Directors of the Company received an annual retainer for their service as directors of $16,000 in fiscal 2013. In addition, Directors receive fees for attending meetings of the Resources’ Board of Directors and of Committees of the Board. The chair of the Audit Committee receives an additional $6,000 annually, and the chairs of the other committees receive an additional $2,000 annually. Mr. Williamson is not compensated for attendance at Board and Committee meetings and does not receive the annual retainer for his service as a Board member. The schedule of fees paid to directors for each meeting attended is as follows:
Board of Directors Meeting | $ | 1,400 | ||
Board of Directors Meeting – by telephone | $ | 700 | ||
Governance & Nominating Committee | $ | 1,400 | ||
Audit Committee | $ | 1,400 | ||
Compensation Committee | $ | 1,400 | ||
Attendance at any committee meeting by telephone | $ | 700 |
However, the fee for any committee meeting held the same day as a Board meeting is $700.
18
Director Compensation
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-equity Incentive Plan Compensation | Change in Pension Value and Non- qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||
| ||||||||||||||||||||
Nancy Howell Agee
|
| 14,400
|
|
| 16,000
|
| —
| —
| —
| —
|
| 30,400
|
| |||||||
Abney S. Boxley, III
|
| 25,100
|
|
| 8,000
|
| —
| —
| —
| —
|
| 33,100
|
| |||||||
Maryellen F. Goodlatte
|
| 20,700
|
|
| 9,000
|
| —
| —
| —
| —
|
| 29,700
|
| |||||||
J. Allen Layman
|
| 13,700
|
|
| 16,000
|
| —
| —
| —
| —
|
| 29,700
|
| |||||||
George W. Logan
|
| 13,700
|
|
| 16,000
|
| —
| —
| —
| —
|
| 29,700
|
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S. Frank Smith
|
| 26,100
|
|
| 9,000
|
| —
| —
| —
| —
|
| 35,100
|
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Raymond D. Smoot, Jr.
|
| 15,100
|
|
| 21,667
|
| —
| —
| —
| —
|
| 36,767
|
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John B. Williamson, III | �� | — | — | — | — | — | — |
Employee Retirement Plan
Resources has in effect a noncontributory Employee Retirement Plan. The costs of benefits under the Plan, which are borne by Resources, are computed actuarially and defrayed by earnings from the Plan’s investments and/or Resources’ annual contributions. The Plan generally provides for the monthly payment, at normal retirement age 65, of the greater of (a) the participant’s accrued benefit as of December 31, 1988 under the formula then in effect or (b) the sum of one twelfth of (1) plus (2) minus (3) as follows:
Early retirement with reduced monthly benefits is available at age 55 after ten years’ service. Provisions also are made for vesting of benefits after five years of service and for disability and death benefits. All employees who have completed one year of service to the Company and are credited with at least 1,000 hours of service in a Plan year are eligible to participate in the Plan. At age 65, for Plan purposes, Mr. Williamson would have 28 credited years of service while Mr. D’Orazio and Mr. Wells will have the maximum of 30 credited years of service. Ms. Lee and Mr. Nester will have 23 and 27 years of credited service, respectively.
The compensation covered by the Plan includes the total of all amounts paid to a participant by the Company for personal services reported on the participant’s federal income tax withholding statement (Form W-2), up to certain statutory limits. For plan years beginning January 1, 2013 and 2014 these earnings are limited to $255,000 and $260,000, respectively.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company has three equity compensation plans.
Restricted Stock Plan for Outside Directors
The Board of Directors of the Company implemented the Restricted Stock Plan for Outside Directors effective January 27, 1997. This Plan is applicable to not more than 200,000 shares of Resources’ common shares unless additional shares are authorized by shareholders.
19
Under this Plan, a minimum of 40 percent of the monthly retainer fee paid to each non-employee director of Resources is paid in common shares (“Restricted Stock”). The number of shares of Restricted Stock is calculated each month based on the closing sales price of Resources’ common shares on the NASDAQ Global Market on the first business day of the month. Beginning in fiscal 1998, a participant can, subject to approval of the Board, elect to receive up to 100% of the retainer fee for the fiscal year in Restricted Stock. Such election cannot be revoked or amended during the fiscal year.
The shares of Restricted Stock of Resources issued under this Plan will vest only in the case of a participant’s death, disability, retirement (including not standing for reelection to the Board), or in the event of a change in control of Resources. There is no option to take cash in lieu of stock upon vesting of shares under this Plan. The Restricted Stock may not be sold, transferred, assigned or pledged by the participant until the shares have vested under the terms of this Plan. At the time the Restricted Stock vests, a certificate for vested shares will be delivered to the participant or the participant’s beneficiary.
The shares of Restricted Stock will be forfeited to Resources by a participant’s voluntary resignation during his term on the Board or removal for cause as a director.
Key Employee Stock Option Plan of RGC Resources, Inc.
The Company has a Key Employee Stock Option Plan, which is intended to provide the Company’s executive officers and other key employees with long-term incentives and future rewards tied to the price of Resources’ common shares over time.
This Plan requires each option’s exercise price per share to equal the fair value of the Company’s common shares as of the date of the grant. Under the terms of this Plan, the options become exercisable six months from the grant date and expire ten years subsequent to the grant date. There were 18,000 shares granted in 2013 to the named officers, excluding Mr. Williamson, based on the Committee’s assessment of the appropriate allocation of options among the officer group and implementation of the Board’s management succession plan.
RGC Resources, Inc. Stock Bonus Plan
Under the Stock Bonus Plan, executive officers are encouraged to own a position in the Company’s common shares equal to at least 50% of the value of their annual salary. To promote this policy, this Plan provides that all officers with stock ownership positions below 50% of the value of their annual salaries must, unless approved by the Committee, receive no less than 50% of any performance incentive in the form of Company common shares. Incentive amounts, if any, for a fiscal year will generally be determined in the January following that fiscal year end. The Company is authorized to grant up to 50,000 shares of its common shares under the Stock Bonus Plan.
Proxy Statement.
Board of Directors of Resources:
Committee:
The Audit Committee of the Board of Directors (the “Audit Committee”) meets a minimum of four times annually with Resources’ Chief Financial Officer, the Company’s independent registered accounting firm, Brown, Edwards, & Company, L.L.P. (“Brown, Edwards”), and certain appropriate officers of Resources. The basic functions ofits charter, the Audit Committee include reviewingmet four times in fiscal 2015 with the Company's management and Brown Edwards to review significant financial information, reviewingand accounting procedures andmatters, internal controls and the appointment of independent auditors. The Board of Directors has determined that George W. Logan and Raymond D. Smoot, Jr. areBrown Edwards' audit committee financial experts and are independent, as determined under applicable rules adopted by the Securities and Exchange Commission.
The Audit Committee is composed of independent directors and operates under a written charter adopted by the Board of Directors. Each member of the Audit Committee is “independent” under the applicable rules of the NASDAQ Stock Market.
20
results.
the effectiveness of the Company's internal controls over financial reporting. In this context, the Audit Committee has met and held discussions with management and Brown Edwards. Management representedEdwards to review and discuss the Audit Committee that the Company’sSeptember 30, 2015 consolidated financial statements were prepared in accordance with generally acceptedincluding a discussion of the acceptability and quality of the accounting principles, and the Audit Committee has reviewed and discussedreasonableness of critical accounting policies, the consolidated auditedclarity of the disclosures in the financial statements with management and Brown, Edwards. The Audit Committee discussed with Brown, Edwardssuch other matters as are required to be discussed by AU Section 380, (Communication with Audit Committees), which includes, among other things:
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Brown, Edwards also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board Rule 3526 regarding the independent accountant’s communications with the Audit Committee concerning independenceunder standards established by the SEC and the PCAOB.
Based on the Audit Committee’s discussion with management andPCAOB requirements, regarding Brown Edwards, the Audit Committee’s review of the representation of management regarding the audited financial statements, and the report of the independent registered accounting firm to the Audit Committee, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, for filing with the Securities and Exchange Commission.
Edwards' independence. The Audit Committee has also reviewed the non-audit services provided by Brown Edwards and determined that such services did not impact independence.
The Audit Committee met four times in fiscal year 2013 and each meeting included an executive session with the independent auditors. A copy of the Audit Committee Amended and Restated Charter can be found at Resources’ website www.rgcresources.com.
Principal Accountant Fees and Services
auditor. The following table sets forth the aggregate fees billed or expected to be billed by Brown Edwards for the years ended September 30, 20132015 and 2012:
2013 | 2012 | |||||||||
| ||||||||||
Audit Fees | $ | 153,749 | $ | 150,466 | ||||||
All Other Fees | 78,936 | 72,786 | ||||||||
| ||||||||||
Total Fees | $ | 232,685 | $ | 223,252 | ||||||
|
21
2014:
2015 | 2014 | ||||||
Audit Fees | $ | 148,600 | $ | 152,302 | |||
All Other Fees | 99,813 | 90,326 | |||||
Total Fees | $ | 248,413 | $ | 242,628 |
Audit-Related Services:None.
2014.
All OtherThe
the SEC.
Board of Directors of Resources:
Committee:
The Governance and Nominating Committee (the “Governance Committee”)
The Governance Committee met once during fiscal year 2013 and2015 with all members in attendance.
The Governance Committee, in consultation with the CEO, is responsible for identifying individuals qualified to become board members and recommending to the Board individuals for nomination as members of the Board. The Governance Committee is also charged with making recommendations to the Board regarding the optimum size of the Board and the committee composition.
In evaluating current members and new candidates, the Governance Committee considers the needs of the Board and the Company in light of the current mix of skills and attributes of Directors. In addition to requiring that Directors possess integrity and character, the Governance Committee’s evaluation includes an assessment of various factors including, education, business experience, financial and accounting expertise, age, diversity, reputation, civic involvement, judgement, and knowledge of matters impacting public utilities. The Governance Committee also takes into consideration the ability of an individual to devote adequate time to board and committee matters and whether the individual will satisfy the NASDAQ requirements for director independence. When considering current board members for nomination for re-election, the Governance Committee also considers board contributions and performance as well as meeting attendance.
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The Governance Committee, in addition to consulting with the Chairman of the Board and CEO, may seek the input of others, including members of the Board and management, to identify director candidates. In addition, the Governance Committee may use the services of consultants or a search firm, although it has not done so in the past. The Governance Committee will consider recommendations by shareholders of qualified director candidates for possible nomination. Shareholders who wish to recommend qualified director candidates should write to the Company’s Corporate Secretary at P.O. Box 13007, Roanoke, VA 24030. Recommendations should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. In addition, the recommendation must identify the recommending shareholder as a shareholder of the Company, and indicate the number of shares owned and whether the shares are held of record or through a bank, broker, or other nominee. If the shares are held by a bank, broker, or other nominee, the recommendation must also be accompanied by an account statement or other acceptable identifying documentation dated within 30 days of the date of thethis recommendation.
Board of Directors of Resources:
Committee:
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
Shareholders may communicate with Directors individually
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on its reviewCorporate Secretary.
OTHER MATTERS
Management does not know of any matters to be presented at the Annual Meeting of Shareholders other than the election of directors, the ratification of Brown, Edwards, and the advisory vote on executive compensation. However, if any other matters properly come before the meeting, proxies received pursuant to this solicitation will be voted thereon in the discretion of the proxy holders.
TRANSACTIONS WITH RELATED PERSONS
The Company’s Board has adopted a written policy for the approval of transactions with related persons. The policy requires Audit Committee approval or ratification of transactions which involve more than $120,000 in which the Company is a participant and in which a Company director, nominee for director, executive officer, greater than 5% shareholder, or an immediate family member of any of the foregoing persons has a direct or indirect material interest. In reviewing the related party transaction, the Audit Committee will, after reviewing all material information regarding the transaction, take into account, among other factors it deems appropriate, whether the 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. The policy includes standing pre-approval for the following related person transactions:
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There are no transactions with related persons to report for fiscal 2013.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act, shareholder proposals to be included in the proxy statement for the Company’sbut brought before an annual meeting of shareholders in 2015 must be received by the Secretary of the Company at the Company’s offices at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016 no later than August 22, 2014. The submission by a shareholder of a proposal for inclusion in the proxy statement is subject to regulation by the SEC.
Notice of proposals by shareholders to be brought before any annual or special meeting generally must be delivered to the Corporate Secretary of the Company notno less than sixty (60)60 days norand no more than ninety (90)90 days prior to the meeting; provided, however, in the event that less than seventy (70) days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting or such public disclosure was made. The noticeannual meeting. Such notices under the bylaws must include the following information: (1)(a) a brief description of the business desired to be brought before the meeting the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Company’s bylaws, the language of the proposed amendment), the reasons for conductingbringing such business atbefore the meetingmeeting; and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made, and (2)(b) as to the shareholder giving the notice, and the beneficial owner, if any, of common shares on whose behalf the proposal is made, (a)(i) the name and address, of recordas they appear on the Company’s books, of such shareholder, and(ii) the name and address of such beneficial owner, (b) the class and number of shares of the Company’s capital stock whichCompany that are owned beneficiallyof record and of recordbeneficially by such shareholder, and (iii) any material interest of such beneficial owner, (c)shareholder in such business other than the shareholder's interest as a representation that the shareholder is a holder of record of the Company’s capital stock entitled to vote at such meetingCompany.
Resources’ Bylaws limit the business that may be transacted at a meeting of shareholders to that specified in the notice of the meeting, those otherwise properly presented by the Board of Directors and those presented by a shareholder of record of Resources who provided notice in writing to the President not less than sixty days nor more than ninety days prior to the meeting. Proposals not meeting the requirements of the Bylaws will not be entertained at the shareholders’ meeting.
Any shareholder wishing to nominate persons for election as directors at an annual meeting must deliver to the Secretary of the Company at the Company’s principal office in Roanoke, Virginia a written notice of the shareholder’s intention to make such a nomination. The shareholder generally is required to furnish the notice at least 120 days before the first anniversary of the preceding year’s annual meeting. The notice must include the following information: (1) such information regarding each proposed nominee as would be required to be disclosed under SEC rules and regulations in solicitations of proxies for the election of directors in an election contest or otherwise; (2) the written consent of each proposed nominee to serve as a director of the Company; and (3) as to the shareholder giving the notice and the beneficial owner, if any, of common shares on whose behalf the nomination is made, (a) thesame last name and address and to individuals with more than one account registered at our transfer agent with the same address, unless contrary instructions have been received.
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such nomination and (d) a representation whether the shareholder or the beneficial owner, if any, intends or is part of a group that intends to (A) deliver a proxy statement or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee or (B) otherwise solicit proxies for shareholders in support of such nomination. The Company may require any proposed nominee to furnish such other information as the Company may reasonably require determining the eligibility of such proposed nominee to serve as a director of the Company.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
If you and other residents at your mailing address own common shares through a broker or bank in “street name,” your broker or bank may have sent you a notice that your household will receive only one annual report to shareholders and proxy statement for each company in which you hold shares through that broker or bank. The practice of sending only one copy of an annual report to shareholders and proxy statement or a Notice of Internet Availability is known as “householding.” If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If the foregoing procedures apply to you, you may revoke your consent to householding at any time by sending your name,applicable, the name of your brokerage firm and your account number to the Company at P.O. Box 13007, Roanoke, VA 24030. In any event, if you did not receive an individual copy of the Company’s annual report to shareholders or this proxy statement, and wish to do so, the Company will send a copy to you if you address your written request to the Company at P.O. Box 13007, Roanoke, VA 24016, Attention: Secretary. If you are receiving multiple copies of the annual report to shareholders and proxy statement, you can request householding by contacting the Company in the same manner. The Company encourages you to participate in this program. It will reduce the volume of duplicate information received at your household, as well as reduce the Company’s expense.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the form of proxy and Proxy Statement will be paid by Resources. Resources hired Laurel Hill Advisory Group, L.L.C., a proxy solicitation firm, to assist in soliciting proxies for a fee of $6,000 plus reasonable expenses. Resources will request banks and brokers to solicit their customers who beneficially own common shares of Resources listed in the names of nominees and will reimburse said banks and brokers for the reasonable out of pocket expense of such solicitation. In addition to the use of the mail, solicitation may be made by employees of Resources by any and all means available.
Resources’
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ANNUAL MEETING OF SHAREHOLDERS OF
RGC RESOURCES, INC.
February 3, 2014
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice
are available at http://www.rgcresources.com/proxy/index.html
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
i Please detach along perforated line and mail in the envelope provided.i
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