SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
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Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
THE LACLEDE GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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/X/ No fee required.
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[THE LACLEDE GROUP Logo]
Notice of
ANNUAL MEETING
OF SHAREHOLDERS
and
PROXY STATEMENT
JANUARY 29, 2004
[THE LACLEDE GROUP Logo]
720 OLIVE STREET
ST. LOUIS, MISSOURI 63101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME 10:00 a.m. on Thursday, January 29, 2004
PLACE Marriott Pavilion Hotel
One Broadway
St. Louis, Missouri
ITEMS OF BUSINESS 1. TO ELECT THREE MEMBERS OF THE BOARD OF DIRECTORS for
three-year terms.
2. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP as
our independent auditors for the 2004 fiscal year.
3. TO TRANSACT SUCH OTHER BUSINESS as may properly come
before the meeting and any adjournment or postponement.
RECORD DATE You can vote if you are a common shareholder of record on
December 1, 2003.
ANNUAL REPORT Our 2003 annual report was mailed together with this proxy
statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE VOTE IN ONE OF THREE WAYS: (1) USE THE TOLL FREE
TELEPHONE NUMBER SHOWN ON YOUR PROXY CARD; (2) VISIT THE WEB-SITE SHOWN
ON YOUR PROXY CARD TO VOTE VIA THE INTERNET; OR (3) MARK, SIGN, DATE AND
PROMPTLY RETURN THE PROXY CARD IN THE ENCLOSED, PRE-ADDRESSED, POSTAGE
PAID ENVELOPE. IF YOUR SHARES ARE HELD BY A BROKER, BANK OR NOMINEE, IT
IS IMPORTANT THAT YOU GIVE THEM YOUR VOTING INSTRUCTIONS.
By the order of the Board of Directors,
December 22, 2003 MARY CAOLA KULLMAN
Secretary
TABLE OF CONTENTS
ITEM PAGE
---- ----
Information about the Annual Shareholders Meeting.............................1
Annual Meeting Admission......................................................1
Voting Matters................................................................1
Section 16(a) Beneficial Ownership Reporting Compliance.......................2
Corporate Governance..........................................................2
Proposal 1--Election of Directors.............................................3
The Board of Directors and Committees of the Board............................5
Audit Committee Report........................................................6
Fees of Independent Auditor...................................................7
Policy Regarding the Approval of Independent Auditor Provision of
Audit and Non-Audit Services................................................7
Compensation of Directors.....................................................7
Beneficial Ownership of Laclede Group Common Stock............................9
Summary Compensation Table...................................................10
Option Grants in Fiscal 2003.................................................11
Total Options Exercised in Fiscal 2003 and Year-End Value....................11
Long-Term Incentive Plans--Awards in Last Fiscal Year........................11
Pension Plan.................................................................12
Other Plans..................................................................13
Compensation Committee Report Regarding Executive Compensation...............14
Performance Graph............................................................16
Proposal 2--Ratification of Appointment of Independent Public
Accountants................................................................17
Other Matters................................................................17
Appendix A--Audit Committee Charter.........................................A-1
PROXY STATEMENT
OF
THE LACLEDE GROUP, INC.
720 OLIVE STREET
ST. LOUIS, MO 63101
INFORMATION ABOUT THE ANNUAL SHAREHOLDERS MEETING
This proxy statement is furnished to solicit proxies by the Board of
Directors of The Laclede Group for use at the annual meeting of its
shareholders to be held on January 29, 2004 and at any adjournment or
postponement thereof. The meeting will be held at the Marriott Pavilion
Hotel, One Broadway, St. Louis, Missouri at 10:00 a.m. The Company
expects to mail this and the annual report for 2003 on or about December
22, 2003.
Effective October 1, 2001, The Laclede Group became the parent
company of Laclede Gas Company. Accordingly, to the extent information in
this proxy statement relates to the fiscal years ended September 30, 2001
and earlier, that information is reported for Laclede Gas Company and not
The Laclede Group.
ANNUAL MEETING ADMISSION
If you are a shareholder of record, you may attend the annual meeting
by checking in with The Laclede Group representatives at the desk outside
the meeting room. If your shares are held in the name of a bank, broker
or other holder of record and you plan to attend the meeting, you must
show personal identification and proof of ownership of The Laclede Group
common stock, such as a bank or brokerage account statement, at the desk.
VOTING MATTERS
WHO CAN VOTE
Holders of record of The Laclede Group common stock at the close of
business on December 1, 2003 are entitled to receive this proxy statement
and to vote at the meeting. As of November 1, 2003 there were 19,114,923
shares of The Laclede Group common stock outstanding. You are entitled to
one vote for each share owned of record on that date.
HOW YOU CAN VOTE
Your vote is very important. There are three convenient voting
methods:
Voting by Telephone. You can vote your shares by telephone by calling
the toll free telephone number on your proxy card. Telephone voting is
available 24 hours a day. If you vote by telephone, you should not return
your proxy card. Telephone voting facilities for shareholders of record
will close at 11:59 p.m. on January 28, 2004.
Voting by Internet. You can also vote via the Internet. The web site
for Internet voting is on your proxy card, and voting is available 24
hours a day. If you vote via the Internet, you should not return your
proxy card. Internet voting facilities for shareholders of record will
close at 11:59 p.m. on January 28, 2004.
Voting by Mail. If you choose to vote by mail, mark your proxy card,
date and sign it, and return it in the pre-addressed, postage paid
envelope provided.
If you participate in The Laclede Group dividend reinvestment and
stock purchase plan or in the Company Stock Fund of the Laclede Gas Wage
Deferral Savings Plan, Salary Deferral Savings Plan, or MoNat. Wage
Deferral Savings Plan, your proxy card will include the shares registered
in your own name as well as those shares held for you in such plan. If
you do not give voting instructions for shares owned by you through the
plan, none of your shares in the plan will be voted. If you participate
in the Company Stock Fund of the Employees' Profit Sharing and Salary
Deferral Plan of SM&P Utility Resources, Inc. and you
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do not specify your voting instructions, the trustee of the plan trust
will vote your shares in the same proportion as the shares for which
voting instructions have been received. To allow sufficient time for
voting by the administrators and trustee of the plans, your voting
instructions must be received by January 26, 2004.
If you hold your shares through a broker, bank or other holder of
record, please follow their directions for providing voting instructions.
HOW YOU MAY REVOKE OR CHANGE YOUR VOTE
You can revoke your proxy at any time before it is voted at the
meeting by:
* sending timely written notice of revocation to the corporate
secretary;
* submitting another timely proxy by telephone, Internet or paper
ballot; or
* attending the annual meeting and voting in person. If your shares
are held in the name of a bank, broker or other holder of record,
you must obtain a proxy executed in your favor from the holder of
record to be able to vote at the meeting.
OTHER VOTING MATTERS
All shares that have been properly voted and not revoked will be
voted at the annual meeting in accordance with your instructions. If you
sign your proxy card but do not give voting instructions, the shares
represented by that proxy will be voted by those named in the proxy card
as recommended by the Board of Directors.
If any other matters are properly presented at the annual meeting for
consideration, the persons named in the enclosed proxy card will have the
discretion to vote on those matters for you. As of the date this proxy
statement was printed, we do not know of any other matter to be raised at
the annual meeting.
HOW VOTES ARE COUNTED
Each share of common stock represents one vote. As provided in The
Laclede Group bylaws, a majority of the shares entitled to vote at the
annual meeting, present in person or represented by proxy, will
constitute a quorum for the meeting.
* The three director nominees receiving the greatest number of votes
will be elected;
* The affirmative vote of holders of a majority of shares
participating in the voting is required for ratification of the
appointment of independent public accountants. Abstentions and
"broker non-votes" will not be counted as participating in the
voting, and will therefore have no effect.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers to file reports of holdings and
transactions in The Laclede Group shares with the Securities and Exchange
Commission and the New York Stock Exchange. Based on our records and
information, in fiscal year 2003 our directors and executive officers met
all applicable Securities and Exchange Commission reporting requirements.
CORPORATE GOVERNANCE
We continue to monitor developments in the corporate governance area
and review our processes, procedures and policies in light of any
developments. During the past year, the focus has been upon the
Sarbanes-Oxley Act of 2002, Securities and Exchange Commission rules and
New York Stock Exchange listing standards.
The Board consists of nine directors, seven of whom the Board
determined to be independent. In determining the independence of
directors, the Board used its Corporate Governance Guidelines that
reflect the New York Stock Exchange standards of independence for board
members, except the Board chose to
2
retain the five-year "cooling-off periods" for all relationships, which
is longer than the New York Stock Exchange three-year cooling-off period.
The Corporate Governance Committee chair leads the executive sessions of
the Board, which are held at least quarterly. Subject to the dollar
limits in the New York Stock Exchange independence standards, the Board
does not consider material Laclede Gas Company's provision of natural gas
service to any director or immediate family member of the director or
director-related company pursuant to Laclede Gas Company's tariffed
rates.
The Board has Corporate Governance Guidelines and each of the
Corporate Governance, Compensation and Audit Committees has a charter.
Recently, the Board approved amendments to its Corporate Governance
Guidelines, Compensation Committee Charter and Audit Committee Charter to
meet the corporate governance standards of the New York Stock Exchange.
All of these documents, as well as the charters of the Corporate
Governance Committee, Code of Business Conduct, Financial Code of Ethics
and other related documents are available in the investor services
section of our website, www.thelacledegroup.com under "corporate
governance." As required, the Audit Committee Charter is also attached to
this proxy as Appendix A. All of the members of the Corporate Governance
Committee, Compensation Committee and Audit Committee are independent and
the chair of the Audit Committee meets the audit committee financial
expert requirements.
Shareholders who desire to communicate with the outside directors
should send correspondence addressed to Corporate Governance Committee
Chair, c/o The Laclede Group, Inc., 720 Olive Street, Room 1517,
St. Louis, MO 63101. All appropriate shareholder correspondence is
forwarded directly to the Corporate Governance Committee Chair. The
Company does not, however, forward sales or marketing materials or
correspondence not clearly identified as shareholder correspondence.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, consisting of
three directors each. Three directors will be elected at the annual
meeting to serve for a three-year term expiring at our annual meeting in
the year 2007. Dr. Givens, Mrs. Van Lokeren and Mr. Yaeger, the directors
whose terms will expire on January 29, 2004, will stand for reelection.
The persons named in the enclosed proxy card intend to vote proxies FOR
the election of the three nominees listed below for terms expiring in
2007. If any nominee becomes unavailable for any reason before the
meeting, which is not anticipated, the proxies received for that nominee
will be voted for a person to be selected by our Board of Directors.
INFORMATION ABOUT THE NOMINEES AND DIRECTORS
NOMINEES FOR NEW TERM EXPIRING IN 2007:
DR. HENRY GIVENS, JR., 70, has been president of Harris-Stowe State
College for the last 24 years. He is advisory director of the regional
U.S. Bank National Association.
The Laclede Group director since: 2000
Laclede Gas director: 1992 - 2001
MARY ANN VAN LOKEREN, 56, has been Chairman and Chief Executive Officer
of Krey Distributing Co., an Anheuser-Busch wholesaler, since December
1986. She is a director of Commerce Bancshares, Inc., Masco Corporation
and D&K Healthcare Resources, Inc.
The Laclede Group director since: 2000
Laclede Gas director: 1992 - 2001
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DOUGLAS H. YAEGER, 54, has been Chairman of the Board, President and
Chief Executive Officer of The Laclede Group since October 26, 2000. He
has been Laclede Gas' Chairman of the Board since January 28, 1999, Chief
Executive Officer since January 1, 1999 and President since December 1,
1997. He is a director of First Banks, Inc.
The Laclede Group director since: 2000
Laclede Gas director since: 1998
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THESE NOMINEES AS DIRECTORS.
DIRECTORS WITH TERM EXPIRING IN 2005:
ROBERT C. JAUDES, 69, retired as Laclede Gas' Chief Executive Officer on
January 1, 1999 and as Chairman of the Board on January 28, 1999. He
served as Laclede Gas' Chairman of the Board and Chief Executive Officer
from January 1994 until his retirement. Mr. Jaudes was an employee of
Laclede Gas from 1955 to December 31, 1998.
The Laclede Group director since: 2000
Laclede Gas director: 1983 - 2001
W. STEPHEN MARITZ, 45, has been Chairman of the Board of Maritz Inc.
since February 2001 and Chief Executive Officer since November 1998.
Maritz Inc. provides performance improvement, marketing research and
travel services on a global basis. Previously, he served as Vice Chairman
from July 1994 to February 2001 and President from April 1997 to February
2001.
The Laclede Group director since: 2000
Laclede Gas director: 1999 - 2001
ROBERT P. STUPP, 73, is and since December 31, 1990 has been the
President and Chief Executive Officer of Stupp Bros., Inc. Stupp Bros.
has (1) two operating divisions: Stupp Bridge Company of Bowling Green,
Kentucky, fabricator of steel highway and railroad bridges; and Stupp
Corporation of Baton Rouge, Louisiana, producer of custom-made electrical
resistance welded pipe for oil and gas transmission; and (2) three
subsidiaries: Hammerts Iron Works, Inc. of St. Louis, Missouri,
fabricator of structural steel; Bayou Coating L.L.C. of Baton Rouge,
Louisiana, provider of applicators for steel line pipe; and Midwest Bank
Centre of St. Louis, Missouri, a Missouri bank and member of the FDIC and
Federal Reserve systems. Mr. Stupp currently serves, and has served since
1960, as a senior executive officer of one or more of those entities. He
is a director of Stupp Bros., Inc.
The Laclede Group director since: 2000
Laclede Gas director: 1990 - 2001
DIRECTORS WITH TERM EXPIRING IN 2006:
ARNOLD W. DONALD, 48, is Chairman of the Board of Merisant Company, a
global corporation that manufactures and markets a variety of tabletop
sweetener products with sales in over 100 countries. He has been Chairman
of the Board since Merisant's formation in March 2000 and served as its
CEO from March 2000 to June 2003. From January 1998 to March 2000 he was
Senior Vice President of Monsanto Company in St. Louis, Missouri and was
responsible for Monsanto's growth, globalization and technology
initiatives. He is a director of Crown Cork & Seal Company, Inc., Oil-Dri
Corporation of America, Belden, Inc., Carnival Corporation and The Scotts
Company.
The Laclede Group director since: 2003
4
C. RAY HOLMAN, 61, is retired Chairman of the Board of Mallinckrodt Inc.,
provider of medical products. He was Chairman from October 1994 to
December 2002, CEO to October 2000 and President from December 1992 to
December 1995 of Mallinckrodt, Inc. He is a director of RehabCare Group.
The Laclede Group director since: 2000
Laclede Gas director: 1994 - 2001
WILLIAM E. NASSER, 64, was CEO of SouthWest NanoTechnologies, Inc., a
privately held specialty chemical firm manufacturing single wall carbon
nanotubes for a broad array of specialty products until November 2003. He
served as Chairman of Enchira Biotechnology Corp. from April 1998 to
January 2003. He was President and Chief Executive Officer of Enchira
from April 1998 to June 1999. He retired as Chairman of the Board, Chief
Executive Officer and President of Petrolite Corporation in November
1995. He had served in that capacity since February 1992.
The Laclede Group director since: 2000
Laclede Gas director: 1994 - 2001
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The standing committees of the Board of Directors as of September 30,
2003, included the Audit Committee, the Compensation Committee and the
Corporate Governance Committee. The Company uses its Corporate Governance
Committee, along with its other responsibilities, to identify and
recommend to the Board director nominees with qualifications set forth in
the Corporate Governance Guidelines after considering the independence,
knowledge, experience and capabilities represented on the Board. The
Company normally does not pay any third party a fee to assist in this
process.
During the 2003 fiscal year, there were six meetings of our Board of
Directors. All directors attended 75% or more of the aggregate number of
meetings of the Board and applicable Committee meetings. It is the
Company's policy to strongly encourage our Board members to attend the
annual meeting of shareholders. At the last annual meeting, all then
current directors were in attendance.
The Audit Committee assists the Board of Directors in fulfilling the
Board's oversight responsibilities with respect to the quality and
integrity of the financial statements, financial reporting process, and
systems of internal controls. The Audit Committee also assists the Board
in monitoring the independence and performance of the independent
auditors, the internal audit department and the operation of ethics
programs. The Audit Committee is composed of independent directors, as
defined by New York Stock Exchange listing standards, and operates under
a written charter adopted by the Board of Directors. The members of the
Committee at fiscal year end were Dr. Henry Givens, Jr., C. Ray Holman
(chairman and audit committee financial expert), W. Stephen Maritz and
Mary Ann Van Lokeren. The Committee met seven times in fiscal year 2003.
The charter for the Audit Committee is attached to this proxy statement
as Appendix A.
The Compensation Committee assists the Board in the discharge of its
responsibility relative to the compensation of the Company's Chief
Executive Officer and other senior executives, reviews and makes
recommendations to the Board relative to the Company's incentive
compensation and equity-based plans, and makes recommendations to the
Board regarding director compensation. The Committee members at fiscal
year end were Arnold W. Donald, C. Ray Holman, William E. Nasser and
Robert P. Stupp (chairman). The Committee met two times in fiscal year
2003. Each current Committee member is independent.
The Corporate Governance Committee considers and makes
recommendations to the Board relative to corporate governance and the
Board's corporate governance principles, as well as assists the Board in
identifying individuals qualified to become Board members, and recommends
to the Board director nominees. The Committee will consider nominees to
the Board recommended by shareholders. To be considered by the Committee,
shareholders should make their submission to the Committee by the
September 30 preceding the annual meeting. The submission should include
the proposed candidate's name, age, business address, residence address,
principal occupation or employment for the previous five years, and
5
class or series and number of shares of the Company's capital stock owned
beneficially or of record. In considering a potential nominee for the
Board, shareholder(s) should note that under the Board's Corporate
Governance Guidelines a majority of the Board should be independent, as
defined in the Guidelines. Further, the candidates should evidence
personal characteristics of the highest personal and professional ethics,
integrity and values; an inquiring and independent mind and practical
wisdom and mature judgment; broad training and experience at the
policy-making level in business, government, education or community
organizations; expertise that is useful to the Company and complementary
to the background and experience of other Board members; willingness to
devote required amount of time to carrying out the duties and
responsibilities of Board membership; commitment to serve on Board over a
period of several years to develop knowledge about the Company, its
strategy and its principal operations; willingness to represent the best
interests of all constituencies and objectively appraise management
performance and involvement in activities or interests that do not create
a conflict with the director's responsibilities to the Company. The
submissions should be addressed to Corporate Governance Committee Chair,
c/o The Laclede Group, 720 Olive Street, St. Louis, MO 63101.The
Committee members at fiscal year end were C. Ray Holman, W. Stephen
Maritz, William E. Nasser (chairman) and Robert P. Stupp. Since its
formation as the Corporate Governance Committee, the Committee met once
in fiscal year 2003. Each current Committee member is independent as
defined in our guidelines and as defined by the New York Stock Exchange's
listing standards.
AUDIT COMMITTEE REPORT
The primary function of the Audit Committee is oversight. Management
is responsible for the preparation, presentation and integrity of the
Company's financial statements. Management is also responsible for
maintaining appropriate accounting and financial reporting practices and
policies as well as internal controls and procedures designed to provide
reasonable assurance that the Company is in compliance with accounting
standards and applicable laws and regulations. The independent auditors
are responsible for planning and performing an independent audit of the
financial statements in accordance with generally accepted accounting
standards and to issue a report thereon. The Audit Committee is
responsible for overseeing the conduct of these activities by Company
management and the independent auditors.
In this context, the Audit Committee has reviewed and discussed the
audited financial statements for fiscal year 2003 with management and the
independent auditors, Deloitte & Touche LLP. The committee has also
discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with
Audit Committees), as amended.
Deloitte & Touche LLP has provided the committee with the written
disclosures and letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and the committee
discussed with the independent auditors that firm's independence.
Based on the reviews and discussions referred to above, the committee
recommended to the board of directors that the audited financial
statements referred to above be included in the Annual Report on Form
10-K for the year ended September 30, 2003.
Audit Committee
C. Ray Holman, Chairman
Henry Givens, Jr.
W. Stephen Maritz
Mary Ann Van Lokeren
6
FEES OF INDEPENDENT AUDITOR
The following table displays the aggregate fees for professional
audit services for the audit of the financial statements for the fiscal
years ended September 30, 2003 and 2002 and fees billed for other
services during those periods by the Company's principal accounting firm,
Deloitte & Touche LLP. Certain amounts for 2002 have been reclassified to
conform to the 2003 presentation.
2003 2002
-------- --------
Audit fees(1).................................... $232,000 $210,000
Audit related fees(2)............................ 59,000 112,600
Tax fees(3)...................................... 31,500 6,700
All other fees(4)................................ 84,300 40,900
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Total............................................ $406,800 $370,200
======== ========
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(1) Audit fees consisted of audit work performed in the preparation of
financial statements as well as work generally only the independent
auditors can reasonably be expected to provide, such as statutory audits.
(2) Audit related fees consisted primarily of audits of employee benefit plans
and, in 2002, matters related to the acquisition of SM&P Utility
Resources, Inc.
(3) Tax fees consisted primarily of assistance with matters related to the
formation of the holding company, the acquisition of SM&P as well as tax
compliance and reporting.
(4) All other fees in 2002 consisted primarily of auditor comfort letters and,
in 2003, consisted of initial Sarbanes-Oxley Section 404 review.
Since April 2003, when the Audit Committee adopted the pre-approval
policy described below, the Audit Committee pre-approved under that
policy all fees, which on a fiscal year basis represent all of the "Audit
related fees," 27% of the "Tax fees" and 95% of its "All other fees" in
fiscal year 2003.
POLICY REGARDING THE APPROVAL OF INDEPENDENT AUDITOR PROVISION OF AUDIT
AND NON-AUDIT SERVICES
Consistent with Securities and Exchange Commission requirements
regarding auditor independence, the Audit Committee recognizes the
importance of maintaining the independence, in fact and appearance, of
our independent auditors. To this end, the Audit Committee has adopted a
policy to pre-approve all audit and permissible non-audit services
provided by the independent auditor. Under the policy, the Committee or
its designated member must pre-approve services prior to commencement of
the specified service. The decision of the designated member will be
reported to the Audit Committee at its next meeting. The requests for
pre-approval are submitted to the Audit Committee or its designated
member by both the independent auditor and the Company's Chief Financial
Officer with a joint statement as to whether in their view the request is
consistent with the Securities and Exchange Commission's rules on auditor
independence. At each Committee meeting, the Audit Committee reviews a
report summarizing the services, including fees, provided by the
independent auditor; a listing of pre-approved services provided since
its last meeting; and a current projection presented similar to that
included in this proxy statement, of the estimated annual fees to be paid
to the independent auditors.
COMPENSATION OF DIRECTORS
RETAINER AND FEES
Directors who are not employees of The Laclede Group receive a
monthly retainer fee of $1,500. Also, during fiscal year 2003, all
directors received a fee of $2,000 for each Board meeting attended
personally, and $1,000 for each Board meeting attended via telephone
conference call. Prior to February 1, 2003, directors received fees of
$500 for each committee meeting attended personally, and $250 for each
committee meeting attended via telephone conference call; thereafter, the
fee for each committee meeting was $1,000 and $500 if attended via
teleconference. Each chairman of a committee of the Board received an
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additional $2,500 annual fee, except the audit committee chair who
received a $4,500 retainer. Under the deferred income plan described on
page 13, the directors may defer up to 100% of their fees and retainers.
NON-EMPLOYEE DIRECTOR PLANS
Messrs. Holman, Nasser, Givens, Stupp and Mrs. Van Lokeren
participate in a retirement plan for non-employee directors. This plan
was amended in November 2002 so that no participants are allowed in the
plan who were not already vested prior to November 1, 2002. Thus, Messrs.
Donald and Maritz do not participate in the plan. Pursuant to the plan,
the participant, or his or her designated beneficiary, would, following
the discontinuance of the participant's service as a director (or
following the participant's attaining 65 years of age, if the participant
is not at least 65 years old at the time of such discontinuance of
service), receive an annual retirement payment amount equal to a
percentage (the "applicable percentage") of the annual Board retainer fee
at the time of such participant's discontinuance of service. The
applicable percentage is 10% for each of the first ten years of service
of such participant as a director. The annual payments to the retired
participant continue until that participant's death, but if that
participant dies before receiving at least ten annual payments, then that
participant's designated beneficiary, during that beneficiary's lifetime,
receives the remainder of the first ten annual payments that the deceased
participant would have received.
Since 1990, the Company has had a restricted stock plan for
non-employee directors. In January 2003 shareholders approved the plan
with amendments. Under this plan, each new non-employee director,
including one who is elected to the Board at a time other than an annual
meeting of shareholders, receives an initial grant of 800 shares of
restricted stock. Annually thereafter, each non-employee director who is
not a participant in the retirement plan for non-employee directors will
receive on the annual meeting date an additional grant of 350 shares for
service rendered during the year preceding the annual meeting, while each
non-employee director who is a participant in the retirement plan for
non-employee directors will receive an annual grant of 200 shares on the
annual meeting date for the prior year's service. A total of 50,000
shares of common stock are available for grants under the plan until its
expiration on November 1, 2012. Shares for grants under the plan are
purchased on the open market by the trustee and held in trust by the
trustee for the account of the non-employee director participants until
they are vested. Any shares that are forfeited shall be available for
future grants. Participants receive cash dividends declared and paid on
the Company's common stock and may vote the shares awarded even while the
shares are restricted. Restricted shares may not be sold, pledged or
otherwise transferred, except in accordance with the terms of the plan.
Shares vest depending on the participant's age entering the plan and
years of service as a director. In January 2003, Messrs. Holman, Nasser
and Mrs. Van Lokeren each received a grant of 200 non-vested shares; Dr.
Givens received a grant of 100 vested shares and 100 restricted shares;
and Mr. Stupp received a grant of 200 vested shares. Mr. Maritz received
a grant of 350 non-vested shares and Mr. Donald received a grant of 800
non-vested shares.
8
BENEFICIAL OWNERSHIP OF LACLEDE GROUP COMMON STOCK
The table below shows as of October 1, 2003 the number of shares of
our common stock beneficially owned by (i) Stupp Bros., Inc., 3800 Weber
Road, St. Louis, MO 63125, the only person or entity who, as of October
1, 2003, is known to beneficially own 5% or more of common stock, (ii)
each director and director nominee, (iii) each named executive officer
listed in the Summary Compensation Table, and (iv) all directors,
nominees and executive officers as a group.
AMOUNT AND NATURE OF OWNERSHIP
SOLE VOTING SHARED VOTING
AND/OR AND/OR
INVESTMENT INVESTMENT PERCENT
BENEFICIAL OWNER POWER POWER TOTAL OF CLASS
---------------- ----------- ------------- --------- --------
B. C. Cooper.............................. 200 -0- 200 *
A. W. Donald.............................. 800(1) -0- 800 *
H. Givens, Jr............................. 3,000 -0- 3,000 *
C. R. Holman.............................. 3,600(1) -0- 3,600 *
R. C. Jaudes.............................. 15,976 11,339(2) 27,315 *
W. S. Maritz.............................. 1,750(1) -0- 1,750 *
W. E. Nasser.............................. 3,600(1) -0- 3,600 *
K. J. Neises.............................. 556 -0- 556 *
M. C. Pendergast.......................... 1,451 -0- 1,451 *
R. E. Shively............................. -0- -0- -0- *
R. P. Stupp............................... 6,032 1,155,000(3) 1,161,032 6.07%
M. A. Van Lokeren......................... 4,000(1) -0- 4,000 *
D. H. Yaeger.............................. 5,462 -0- 5,462 *
Stupp Bros., Inc.......................... 1,155,000(3) -0- 1,155,000 6.04%
All directors and executive officers
(19) as a group......................... 1,221,172 6.39%
---------
(1) Includes restricted, nonvested shares granted under the Restricted Stock
Plan for Non-Employee Directors, as described in more detail on page 8.
(2) Owned jointly with spouse.
(3) Stupp Bros., Inc. owns these 1,155,000 shares. Mr. Stupp is a Director and
Executive Officer of Stupp Bros., Inc. and has a one-third interest in a
voting trust that controls 100% of the stock of Stupp Bros., Inc.
* Less than one percent.
9
SUMMARY COMPENSATION TABLE
The table that follows presents information about compensation for
the chief executive officer and four other most highly compensated
executive officers, as defined by the Securities and Exchange Commission,
of the Company and its subsidiaries for the last three fiscal years.
LONG-TERM
COMPENSATION
-----------------------
AWARDS
ANNUAL COMPENSATION ---------- PAYOUTS
-------------------------------------- SECURITIES ----------
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS(2) COMPENSATION(4) OPTIONS PAYOUTS(5) COMPENSATION(6)
--------------------- ---- -------- -------- --------------- ------- ---------- ---------------
D. H. Yaeger 2003 $457,150 $159,300 -0- $40,000 98,443 11,987
Chairman of the Board, 2002 419,400 25,000 15,000 -0- 95,093 9,527
President and CEO 2001 386,667 -0- 16,000 -0- 82,542 9,205
K. J. Neises 2003 271,967 72,300 -0- 15,000 46,565 33,709
Executive Vice President-- 2002 254,833 -0- -0- -0- 45,309 25,902
Energy & Administrative 2001 235,833 -0- -0- -0- 39,865 19,339
Services
R. E. Shively 2003 246,333 39,900 -0- 15,000 10,050 1,301
Senior Vice President-- 2002 240,000 50,000(3) 96,078 -0- 7,538 501
Business & Services 2001 171,304 -0- -0- -0- -0- 139,167
Development
B. C. Cooper 2003 216,433 26,400 -0- 10,000 -0- 1,781
Chief Financial Officer
M. C. Pendergast 2003 145,000 26,500 -0- 6,000 -0- 6,611
Vice President--Associate 2002 137,458 -0- -0- -0- -0- 5,574
General Counsel 2001 129,486 -0- -0- -0- -0- 5,296
---------
(1) Mr. Shively first joined the Company in January 2001 and Mr. Cooper first
joined the Company in September 2002.
(2) Fiscal year 2003 was a transition period wherein four executive officers
received a cash bonus awarded in January 2003 based upon their
accomplishments in fiscal year 2002 prior to the implementation of the new
management bonus plan, and one awarded in October 2003 under the new
management bonus plan, based on fiscal year 2003 results. Under the new
plan, the Compensation Committee will assess bonus plan performance
immediately following the close of the fiscal year in October.
(3) This bonus reflects an employment bonus payable upon Mr. Shively's
completion of one year of service with the Company.
(4) The amounts in this column reflect fees paid to Mr. Yaeger for attendance
at Board of Directors and Board committee meetings. Effective October 1,
2002, these fees are no longer paid to directors who are also officers of
the Company. For Mr. Shively, this column includes a $96,078 gross-up
payment in fiscal year 2002 for taxes on his living and relocation
expenses and fees incurred in fiscal year 2001.
(5) The amounts in this column reflect dividend equivalents paid under the
incentive compensation plan to the named executive officer during the
three most recent fiscal years. For a more detailed discussion of the
plan, see the Long-Term Incentive Plan Table and discussion beginning on
page 11.
(6) For 2003 this column includes (a) above-market interest on deferrals under
the deferred income plan described on page 11 (Mr. Yaeger, $-0-; Mr.
Neises, $7,774; Mr. Cooper, $-0-; Mr. Shively, $-0-; and Mr. Pendergast,
$-0-); (b) above-market interest on deferrals under the deferred income
plan II described on page 13 (Mr. Yaeger, $4,000; Mr. Neises, $17,986; Mr.
Cooper, $987; Mr. Shively, $1,180; and Mr. Pendergast, $-0-); (c) matching
contributions under the salary deferral savings plan, which was
established under Section 401(k) of the Internal Revenue Code (Mr. Yaeger,
$7,866; Mr. Neises, $7,828; Mr. Cooper, $673; Mr. Shively, $-0-; and Mr.
Pendergast $6,490); and (d) the Company-paid premiums for supplemental
travel and accident insurance for accidental death or dismemberment with
benefits of up to $250,000 (approximately $121 for each named executive
officer).
10
OPTION GRANTS IN FISCAL 2003
This table shows all options to purchase our stock granted to each of
our named executive officers in 2003 and the present value at the date of
grant calculated using the binomial option pricing model. These options
were granted under the Equity Incentive Plan approved by shareholders at
the meeting in January 2003.
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE PRESENT
NAME GRANTED(1) FISCAL YEAR PRICE DATE VALUE(2)
---- ---------- ------------- -------- ---------- ------------------
D. H. Yaeger................. 40,000 18.0% $23.27 2/5/13 $173,200
K. J. Neises................. 15,000 6.8% $23.27 2/5/13 $ 64,950
R. E. Shively................ 15,000 6.8% $23.27 2/5/13 $ 64,950
B. C. Cooper................. 10,000 4.5% $23.27 2/5/13 $ 43,300
M. C. Pendergast............. 6,000 2.7% $23.27 2/5/13 $ 25,980
---------
(1) Options vest in four equal annual installments, beginning on February 6,
2004.
(2) Calculated using binomial option pricing model with assumed 25%
volatility, 4% risk-free rate, 5.7% dividend yield and 96 month expected
life of options.
TOTAL OPTIONS EXERCISED IN FISCAL 2003 AND YEAR-END VALUE
This table gives information for options exercised by each of the
named executive officers in fiscal 2003 and the value (stock price less
exercise price) of the remaining options held by those executives at
year-end, using the average ($27.325) of the high and low trading price
of our common stock on September 30, 2003.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT 9/30/03 AT 9/30/03
SHARES ACQUIRED VALUE -------------------------- --------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- --------------- -------- ----------- ------------- ----------- -------------
D. H. Yaeger................. -0- -0- -0- 40,000 -0- $162,200
K. J. Neises................. -0- -0- -0- 15,000 -0- $60,825
R. E. Shively................ -0- -0- -0- 15,000 -0- $60,825
B. C. Cooper................. -0- -0- -0- 10,000 -0- $40,550
M. C. Pendergast............. -0- -0- -0- 6,000 -0- $24,330
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Under the long-term incentive plan, each participant may be granted a
certain number of share units that are credited with quarterly dividend
equivalent payments and an annual deferred compensation amount. The
persons entitled to participate in the plan and the number of share units
awarded to the participants is determined by the Compensation Committee
and approved by the Board of Directors. Because the shareholders approved
the equity incentive plan at the January 2003 annual meeting, the Board
determined not to make any awards under this incentive plan. Those who
had share units under the long-term incentive plan continue to receive
dividend equivalent payments and earn an annual deferred compensation
amount.
The amount of dividend equivalent payments made to the named
executive officers during the last fiscal year is disclosed in the "LTIP
Payouts" column in the Summary Compensation Table. In addition, each year
a deferred compensation adjustment is made with respect to each share
unit outstanding at the end of the most recent fiscal year in an amount
equal to the increase or decrease in the per share consolidated retained
earnings for that year. During the fiscal year ended September 30, 2003,
each share unit was credited $.48 as a deferred compensation amount. A
participant forfeits all rights to the share units if his employment is
11
terminated for any reason other than retirement, death, disability or
resignation by the participant after a hostile change in control of the
Company.
For each share unit awarded to a participant prior to January 26,
1995, the participant or the participant's spouse, as the case may be, is
entitled to receive all dividend equivalent payments and deferred
compensation adjustments on each share unit during the participant's
lifetime, and, after the participant's death, during the lifetime of the
participant's spouse, regardless of the participant's age at retirement.
For each share unit awarded after January 26, 1995, the participant or
the participant's spouse is only entitled to receive the dividend
equivalent payments and deferred compensation amounts if the participant
retired after age 65 or retired before age 65 but, based on the
participant's age at the time of the award, was employed by the Company
after the date of the award of the share unit for the number of years set
forth below:
NUMBER OF YEARS OF SERVICE
AGE AT REQUIRED FOLLOWING THE
DATE OF AWARD DATE OF SUCH AWARD
------------- --------------------------
61 and older.............. 2
55-60..................... 4
54 and under.............. 5
PENSION PLAN
The table below shows estimated annual benefits payable at a normal
retirement date under the employees' retirement plan and the supplemental
retirement benefit plan.
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
YEARS OF SERVICE
AVERAGE FINAL ----------------------------------------------------
COMPENSATION 15 20 25 30 35
------------- -- -- -- -- --
$150,000................................. $ 43,378 $ 57,837 $ 72,296 $ 86,755 $101,215
200,000................................. 59,128 78,837 98,546 118,255 137,965
250,000................................. 74,878 99,837 124,796 149,755 174,715
300,000................................. 90,628 120,837 151,046 181,255 211,465
350,000................................. 106,378 141,837 177,296 212,755 248,215
400,000................................. 122,128 162,837 203,546 244,255 284,965
450,000................................. 137,878 183,837 229,796 275,755 321,715
500,000................................. 153,628 204,837 256,046 307,255 358,465
550,000................................. 169,378 225,837 282,296 338,755 395,215
600,000................................. 185,128 246,837 308,546 370,255 431,965
"Average final compensation" is the greater of: (a) the annual
average of the highest compensation for 36 consecutive calendar months
during the participant's last 120 months of service; and (b) the annual
average of the highest compensation for three consecutive calendar years
during the participant's last ten calendar years of service. Compensation
used for pension formula purposes is the type of compensation included as
"Salary" and "Bonus" in the Summary Compensation Table.
Benefits shown in the table (the calculation of which, in some cases,
takes into account the portion of average final compensation in excess of
Social Security covered compensation, and, in other cases, is calculated
after the deduction of Social Security offset amounts) assume retirement
at age 65, the years of service shown, continued existence of the current
plans without substantial change and payment in the form of a single life
annuity. Years of service as of September 30, 2003 for the persons named
in the Summary Compensation Table are as follows: D. H. Yaeger, 12 years;
R. E. Shively, 2 years; K. J. Neises, 19 years; B. C. Cooper, 1 year; and
M. C. Pendergast, 9 years.
12
OTHER PLANS
EXECUTIVE SALARY PROTECTION PLAN
The executive salary protection plan entitles the designated
beneficiaries of a participating executive officer to receive certain
payments upon the executive officer's death. The amount of the payment is
determined based upon the annual salary of the executive officer, whether
the executive officer was actively employed or retired and the age of the
executive officer, all as of the time of the executive officer's death.
MANAGEMENT CONTINUITY PROTECTION PLAN
The management continuity protection plan entitles the participating
officer to receive a lump sum payment if the executive officer's
employment is terminated for any reason (other than death, disability or
for actions involving moral turpitude) within 42 months, in the case of
most officers, or 54 months, in the case of the president and any
executive vice president, after a change in control of the Company. Each
of the named executive officers, except Mr. Yaeger, participates in the
plan. The amount of the payment is determined by multiplying the
officer's average annual compensation for the five-year period preceding
the termination by two, but the payment can be reduced depending upon the
period of time that the officer remained employed following the change in
control, and the number of months until the officer would attain the age
of 65. Under the plan, a "change in control" is deemed to have occurred
when any person becomes a beneficial owner, directly or indirectly, of
the Company's outstanding securities representing:
* more than 50% of the voting power of the Company; or
* at least 30% but not more than 50% of the voting power of the
Company and a majority of the outside members of the Board of
Directors determine that a change in control has occurred.
DEFERRED INCOME PLAN II
Directors, officers and certain key employees may defer income under
the deferred income plan II in years in which the Board of Directors from
time to time determines to open up the plan to allow deferrals during one
or more succeeding annual periods and to allow new participants in the
plan. Participants were allowed to make deferrals during the 2003
calendar year and will also be allowed to make deferrals during the 2004
calendar year. During each deferral period, a non-employee director
participant may defer up to 100% of fees and retainers and an employee
participant may defer up to 15% of his or her annual salary (excluding
incentive compensation). The deferrals, along with earnings thereon at
rates not to exceed the greater of: (i) six to nine percent per annum,
depending on the circumstances; and (ii) the annual corporate bond rates
specified in Moody's Investors Service plus one to three percent per
annum depending on the circumstances, form the basis for certain benefits
payable to the participant upon retirement, death or disability before
retirement, or termination before age 55. In the event a participant,
following a change in control, terminates his or her status as a director
or employee for good reason, or is terminated without cause, such
participant is entitled to receive a lump sum benefit in the amount equal
to the greater of: (i) the present value of the account balance under the
plan to which the participant would be entitled if he or she had
continued to make deferrals during the remainder of the annual deferral
period and if he or she had terminated his or her status as a director or
employee after reaching normal retirement age (for this purpose, age 70
for all directors, and age 65 for all other participants); and (ii) the
amount of the participant's account balance. Prior to this plan, there
was a deferred income plan (Deferred Income Plan I) that was closed to
participation after 1990. The Deferred Income Plan I had similar terms
except the earnings on deferrals could not exceed the greater of (i)
twelve percent per annum and (ii) the annual corporate bond rates
specified in Moody's Investors Services plus four percent per annum.
SEVERANCE BENEFITS AGREEMENT
Mr. Yaeger has a separate severance benefits agreement that provides
him with certain benefits payable upon the termination of his employment.
The agreement is set to expire in March 2004. This agreement supersedes
the management continuity protection plan and any provision of any other
plan that is inconsistent with the agreement.
13
Under the severance benefit agreement, if, prior to a change in
control of the Company, Mr. Yaeger's employment is terminated without
cause or if he resigns for good reason, he is entitled to receive the
following benefits:
* a lump sum payment equal to 18 times his then monthly base salary;
* a lump sum payment equal to the present value of the pension
benefits under the retirement plan and supplemental retirement
benefit plan;
* a lump sum payment equal to the present value of any vested
post-retirement benefits;
* full retiree coverage under the health insurance plan and other
welfare benefit plans as if he had retired as of the date of
termination; and
* a payment equal to the amount of any excise tax (and income tax on
these additional amounts) paid by Mr. Yaeger on any excess
parachute payments.
If, after a change in control of the Company, Mr. Yaeger's employment
is terminated without cause or he resigns for any reason, he is entitled
to receive the following benefits:
* a lump sum payment equal to 36 times his then monthly base salary,
reduced according to the number of months beyond six full calendar
months after the change in control that he remained employed;
* a lump sum payment equal to the present value of the pension
benefits under the retirement plan and supplemental retirement
benefit plan;
* a lump sum payment equal to the present value of any
post-retirement benefits, with all benefits being treated as if
they were fully vested;
* full retiree coverage under the health insurance plan and other
welfare benefit plans as if he had retired as of the date of
termination; and
* a payment equal to the amount of any excise tax (and income tax on
these additional amounts) paid by Mr. Yaeger on any excess
parachute payments.
If Mr. Yaeger's employment is terminated for cause at any time before
or after a change in control, he will not be entitled to any benefits
under the severance benefit agreement. If Mr. Yaeger dies while the
agreement is still in effect, the agreement will terminate except as to
any amounts that may have become payable as a result of the termination
of his employment before his death.
In consideration of the benefits granted to Mr. Yaeger under the
agreement, he is restricted from competing with the Company under certain
circumstances and from disclosing confidential information concerning the
Company.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S OR LACLEDE GAS' FILINGS UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT
INCORPORATE THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE COMPENSATION
REPORT REGARDING EXECUTIVE COMPENSATION, PERFORMANCE GRAPH AND AUDIT
COMMITTEE REPORT CONTAINED IN THIS PROXY STATEMENT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT REGARDING EXECUTIVE COMPENSATION
The compensation committee of the Board of Directors ("Committee")
administers the executive compensation program and assists the Board in
its responsibility relative to the compensation of the Chief Executive
Officer (CEO) and other officers. After review and approval by the
Committee, all material issues relating to executive compensation are
submitted to the Board for consideration and approval, with CEO
compensation approved by the independent members of the Board.
The philosophy of the Committee is that the CEO and other officers
should be compensated at levels designed to attract, motivate, and retain
talented executives who are capable of leading the Company in achieving
its business objectives in an environment of increasing complexity,
competition, and change; to promote and reward excellent performance; and
to encourage management development.
14
In September 2002, the Committee recommended, and the Board approved,
three programs, which are discussed below: (1) an improved base salary
program; (2) a new management bonus plan; and (3) a new equity incentive
plan. These programs were the result of a comprehensive review during
fiscal year 2002 of the Company's compensation programs by the Committee,
with the assistance of an outside consultant, to better link executives'
interests with those of shareholders as well as to attract, retain and
motivate those employees upon whose judgment, initiative and effort the
Company depends for its continued success, growth and development. In
January 2003, the Company's shareholders approved the equity incentive
plan.
BASE SALARY
Base salaries are reviewed on a regular basis and may be adjusted
annually. They may also be adjusted to recognize promotions and
assignment of increased responsibilities. With regard to the CEO and
officers, the Committee considers: (1) the CEO's recommendations as to
compensation for all other officers; (2) the scope of responsibility,
experience and individual performance; (3) internal fairness and equity
among positions held by each officer; (4) general cognizance of pay
practices of major companies within the St. Louis region as well as
within the industry for executives of comparable responsibility; and (5)
corporate performance. Evaluation of corporate performance in fiscal year
2002 took into account the significant effects of weather and other
unusual events on the Company's earnings per share and other financial
and operating results as compared to corporate budgeted levels as well as
specific accomplishments. Under the new base salary program, which took
effect October 1, 2002, the Committee approves the salaries of officers
based on the individual's achievement of predetermined individual
performance objectives, market-based salary ranges and a matrix that
establishes potential salary increases dependent upon the executive's
placement within the salary grade as well as the executive's level of
performance. The base salaries of officers were adjusted effective
February 1, 2003.
MANAGEMENT BONUS PLAN
The new management bonus plan's inaugural year was based on fiscal
year 2003 performance. This plan allows officers and select key
contributors the opportunity to earn cash bonuses based on the attainment
of corporate goals as well as individual business objectives. The award
guidelines will phase in over a three-year period. For fiscal year 2003,
the Committee approved the corporate and individual performance
objectives with associated thresholds and pre-set ranges for
approximately 27 employees. For 2003, the key performance indicators for
the corporate objectives were based on earnings per share, the customer
satisfaction ranking derived from an annual survey by J. D. Power &
Associates and the aggregate attainment level of all participants'
individual objectives. The Committee assessed the extent to which the
corporate objectives and individual objectives were met and determined
the level of bonuses, which were awarded in October 2003.
In January 2003, prior to the implementation of the new management
bonus plan mentioned above, four executives were awarded cash bonuses
based on their fiscal year 2002 accomplishments. Fiscal year 2003 was a
transition period wherein these four key contributors received one cash
bonus based on their fiscal year 2002 achievements and one based on
fiscal year 2003 results. Under the new plan, the Committee will assess
bonus plan performance immediately following the close of the fiscal year
in October.
EQUITY INCENTIVE PLAN
The Committee also decided to award non-qualified stock options
("NQSOs") under the equity incentive plan, which was approved by
shareholders on January 30, 2003, to executives and other key personnel.
The NQSOs have a ten-year term and vest in equal installments over four
years, although the options may vest earlier if a participant is
terminated without cause within two years after a change in control. On
February 5, 2003, the Committee granted NQSOs to purchase 221,500 shares
to 51 participants.
CEO COMPENSATION
In determining the total compensation package of the CEO for 2003,
the Committee considered the CEO's performance in meeting goals and
objectives, awards granted to the CEO in prior years and awards granted
to other CEOs at comparable companies. In January 2003, the Committee
reviewed the Company's performance in fiscal year 2002, noting Mr.
Yaeger's leadership in: (1) the successful settlement of the rate
15
case filed in 2002 that included a rate design to reduce the
weather-sensitivity of the Company's utility earnings, (2) the
development and implementation of risk management strategies at the gas
utility to deal with the volatility of gas prices, (3) modifications
successfully made to maintain adequate gas supplies in a tumultuous
natural gas trading and marketing environment, (4) the integration of
SM&P Utility Resources, Inc., and (5) the ongoing commitment to implement
best practices in corporate governance. In January 2003, the Board of
Directors, after considering the various factors and accomplishments
described above, granted Mr. Yaeger an increase in base salary, a cash
bonus and awarded him NQSOs for 40,000 shares under the equity incentive
plan. Under the new management bonus plan, Mr. Yaeger was awarded a cash
bonus based on fiscal year 2003 performance in October 2003.
Compensation Committee
Robert P. Stupp, Chairman
Arnold W. Donald
C. Ray Holman
William E. Nasser
PERFORMANCE GRAPH
The following performance graph compares the performance of The
Laclede Group's common stock to the Standard & Poor's 500 Stock Index and
to the Standard & Poor's Utilities Index for The Laclede Group's last
five fiscal years. The graph assumes that the value of the investment in
The Laclede Group's common stock and each index was $100 at September 30,
1998, and that all dividends were reinvested. The information contained
in this graph is not necessarily indicative of future performance.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
LACLEDE GAS COMPANY, S&P 500, AND S&P UTILITIES
[GRAPH]
1998 1999 2000 2001 2002 2003
Laclede $100.00 $104.52 $105.96 $124.41 $127.73 $156.22
S&P 500 $100.00 $127.80 $144.78 $106.24 $ 84.48 $105.08
S&P Utilities $100.00 $ 98.23 $140.82 $105.28 $ 68.00 $ 83.41
16
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee,
recommends that you ratify the appointment of Deloitte & Touche LLP,
certified public accountants, to audit the books, records and accounts of
The Laclede Group and its subsidiaries for the fiscal year ending
September 30, 2004. It is expected that a representative of Deloitte &
Touche LLP will be present at the annual meeting, will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS
OTHER MATTERS
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF SHAREHOLDERS
Under the rules of the Securities and Exchange Commission,
shareholder proposals intended to be included in the proxy statement for
the annual meeting of shareholders in January 2005 must be received by
the corporate secretary of The Laclede Group at its principal office at
720 Olive Street, St. Louis, Missouri 63101 by August 24, 2004.
Also, the procedures to be used by shareholders to recommend nominees
to the Corporate Governance Committee are outlined on page 2 of this
proxy statement. If a shareholder seeks to nominate a person or make a
shareholder proposal from the floor of the annual meeting in January
2005, notice must be received by the corporate secretary at the Company's
principal executive offices no later than November 28, 2004 and not
before October 29, 2004 (not less than 60 days nor more than 90 days
prior to January 27, 2005). Also, such proposal must be, under law, an
appropriate subject for shareholders action to be brought before the
meeting.
The chairman of the Board may refuse to allow the transaction of any
business or to acknowledge the nomination of any person, not made in
compliance with the procedures set forth in the bylaws of The Laclede
Group.
PROXY SOLICITATION
We will pay the expense of soliciting proxies. Proxies may be
solicited on our behalf by officers or employees in person or by
telephone, electronic transmission or facsimile transmission. We have
hired Morrow & Co. to assist us in the solicitation of proxies for a fee
of $6,000 plus expenses for those services.
17
APPENDIX A
THE LACLEDE GROUP, INC.
AUDIT COMMITTEE CHARTER
(AS AMENDED BY THE BOARD OF DIRECTORS ON JULY 24, 2003)
PURPOSE
The principal purpose of the Audit Committee is to assist the Board
of Directors in fulfilling the Board's oversight responsibilities with
respect to the quality and integrity of the Company's financial
statements, financial reporting process, and systems of internal controls
regarding finance, accounting, legal and regulatory compliance. The
Committee also assists the Board in monitoring the independence and
performance of the Company's independent auditors, the performance of the
Internal Audit department and the operation of ethics programs as
established by management and the Board.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access
to the independent auditors as well as all books, records, facilities and
personnel of the Company. The Audit Committee has the ability to retain,
at the Company's expense, special legal, accounting or other consultants
or experts it deems necessary in the performance of its duties.
COMPOSITION
The Audit Committee shall consist of at least three (3) Directors.
Members of the Committee shall be appointed annually by the Chairman of
the Board of Directors subject to the approval of the full Board of
Directors. Committee members shall satisfy the Audit Committee member
requirements of the New York Stock Exchange, Inc. and the federal
securities laws, as such requirements are interpreted by the Board of
Directors in its business judgment, including that: 1) each member is
independent of management and the Company and free from any relationship
that would interfere with the exercise of independent judgment as a
Committee member, 2) each member is financially literate, or shall become
financially literate within a reasonable period of time after appointment
to the Committee, 3) at least one member shall be an audit committee
financial expert in accordance with the rules and regulations of the
Securities and Exchange Commission and 4) at least one member (who may
also serve as the audit committee financial expert) has accounting or
related financial management expertise, as defined by the New York Stock
Exchange Listing Standards. The duly appointed members of the Audit
Committee shall serve until replaced. The Chief Executive Officer of the
Company and/or his or her representative may participate in meetings but
is not a voting member.
QUORUM
A majority of the members of the Committee shall constitute a quorum.
MEETINGS
The Committee shall meet at least four times per year and at such
other times as the Committee deems necessary, upon the call of the
Chairman of the Board or the Chairman of the Audit Committee. The
Chairman of the Audit Committee will establish the agenda for each
meeting. Appropriate members of management and representatives of the
independent auditing firm retained by the Company will be invited to
attend meetings of the Committee as requested by the Audit Committee
Chairman. At least twice each year, management, the independent auditors
and the Company's senior internal audit executive will each meet
separately in executive session with the Committee to discuss any matters
that the Committee or any of these groups believes should be discussed.
RESPONSIBILITIES OF THE AUDIT COMMITTEE
The primary function of the Audit Committee is oversight. The
Company's management is responsible for the preparation, presentation and
integrity of the Company's financial statements. Management is also
responsible for maintaining appropriate accounting and financial
reporting practices and policies as well as internal controls and
procedures designed to provide reasonable assurance that the Company is
in
A-1
compliance with accounting standards and applicable laws and regulations.
The independent auditors are responsible for planning and performing a
proper audit of the Company's annual financial statements. The
independent auditors are also responsible for performing reviews of the
Company's quarterly financial statements prior to the filing of each
quarterly report with the Securities and Exchange Commission (SEC) on
Form 10-Q. The Committee is responsible for overseeing the conduct of
these activities by the Company's management and the independent
auditors.
In fulfilling the Audit Committee's responsibilities hereunder, it is
recognized that members of the Committee are not, and do not represent
themselves to be, accountants or auditors by profession or experts in the
fields of accounting or auditing. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and prepared in accordance
with generally accepted accounting principles. As such, the Committee is
not providing any expert or special assurances as to the Company's
financial statements or any professional certification as to the
independent auditors' work. Each member of the Audit Committee shall be
entitled to rely on (i) the integrity of those persons and organizations
within and outside of the Company from which it receives information and
(ii) the accuracy of the financial and other information provided to the
Committee by such persons or organizations absent actual knowledge to the
contrary (which shall be promptly reported to the Board of Directors).
In carrying out its oversight responsibilities, the Committee shall
perform the following functions:
OVERSIGHT OF THE INDEPENDENT AUDITORS
A. Directly appoint, retain, compensate, evaluate, and terminate the
Company's independent auditors; and recommend to the Board of
Directors a public accounting firm to be placed in nomination for
shareowner ratification as the Company's independent auditors for
the ensuing year.
B. Instruct the independent auditors that they are ultimately
accountable to the Board of Directors and Audit Committee.
C. Review the scope and staffing of the annual audit of the Company's
financial statements.
D. Review the fees paid to the independent auditors for audit and
other significant non-audit services. Consider whether the
provision of these other non-audit services is compatible with
maintaining the independent auditors' independence.
E. Pre-approve all audit services and permitted non-audit services to
be performed by the Company's independent auditors and establish
policies and procedures related to the engagement of the
independent auditor for such services.
F. Receive the independent auditors' annual written statement of
independence delineating the relationships between the independent
auditors and the Company consistent with Independence Standards
Board Statement No. 1; discuss with the independent auditors the
scope of any relationships or services disclosed in the annual
statement of independence that may impact the independent
auditors' objectivity and independence; and if so determined by
the Audit Committee, recommend that the Board of Directors take
appropriate action in response to the independent auditors'
statement to satisfy the Board of the auditors' independence.
G. Receive and review annually reports from the independent auditors
describing (a) the independent auditor's internal quality-control
procedures and any material issues raised by the most recent
internal quality-control review, or peer review, of the
independent auditing firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried out
by the firm, and any steps taken to deal with any such issues, and
(b) other required reports from the independent auditor; and (c)
all relationships between the independent auditor and the Company.
H. Review with the independent auditor any audit problems or
difficulties and management's response.
A-2
OVERSIGHT OF THE INTERNAL AUDITORS
A. Review and approve the scope of the annual audit plan, adequacy of
resources and organizational structure of the internal audit
department.
B. Review the appointment and replacement of the senior internal
audit executive.
C. Review, as appropriate, significant reports prepared by the
internal audit department together with management's response and
follow-up to these reports.
D. Discuss with the Company's General Counsel those legal and
regulatory matters involving the Company that may have a material
impact on the Company's financial statements.
OVERSIGHT OF MANAGEMENT'S FINANCIAL REPORTING PROCESS
A. Review the results of the annual audit of the Company's financial
statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," with management, the independent auditors
and internal auditors prior to filing or distribution. Discuss the
nature of any significant changes, adjustments, reclassifications,
or disclosures proposed by the independent auditors and the
judgment of the independent auditors concerning the quality of the
Company's accounting principles and underlying financial
estimates.
B. Review with financial management and the independent auditors the
Company's quarterly financial results, including the Company's
disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" prior to the filing
of Form 10-Q. The Chairman of the Committee may represent the
entire Committee for purposes of this review.
C. Discuss earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies.
The Chairman of the Committee may represent the entire Committee
for purposes of this review. These requirements may be met with
general discussions of the types of information to be disclosed
and the type of presentation to be made. Advance discussions prior
to each earnings release or analyst presentation is not required.
D. Discuss with the CEO, CFO, and independent auditors any matters
brought to the attention of the Committee by the CEO/CFO as
required pursuant to their certifications under SEC Exchange Act
Rules 13a-14 and 15d-14. These matters would include 1) any
significant deficiencies in the design or operations of internal
controls which could adversely affect the Company's ability to
record, process, summarize, and report financial data and have
identified for the Company's independent auditors any material
weaknesses in internal controls; and 2) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls.
E. Discuss certain matters, if any, required to be communicated to
the Committee by the independent auditors in accordance with
Statement on Auditing Standards No. 61.
F. Obtain from the independent auditors assurance that the audit was
conducted in a manner consistent with the procedures set forth in
Section 10A of the Securities Exchange Act of 1934, as amended.
G. In consultation with management, the independent auditors and the
internal auditors, consider the adequacy and integrity of the
Company's financial reporting processes and internal controls.
Discuss policies with respect to risk assessment and risk
management, as well as significant financial risk exposures and
actions that management has taken to monitor, control, and report
such exposures. Review significant findings prepared by the
independent auditors and the internal audit department together
with management's responses.
H. Based upon the reviews and discussions with management, the
independent auditors and internal auditors, recommend to the Board
of Directors whether the audited financial statements should be
included in the Company's annual Form 10-K.
A-3
OTHER DUTIES AND RESPONSIBILITIES
A. Annually review, with the assistance of the internal auditors, the
Company's Code of Business Conduct and report on such review to
the Company's full Board of Directors.
B. Prepare the Audit Committee report required by the rules of the
SEC to be included in the Company's annual proxy statement to
shareholders.
C. Conduct an annual performance self-evaluation of the Audit
Committee. Annually review and reassess the adequacy of the Audit
Committee Charter and recommend any proposed changes to the Board
of Directors for approval. Ensure that the Audit Committee Charter
is published in the Company's proxy at least every three years in
the accordance with SEC regulations.
D. Establish policies and procedures for the receipt, retention, and
treatment of complaints from Company employees regarding the
Company's accounting, internal accounting controls, or auditing
matters, as well as for confidential, anonymous submissions by
Company employees of concerns regarding questionable accounting or
auditing matters.
E. Establish policies related to the hiring of employees or former
employees of the Company's independent auditor.
F. Perform such other functions as assigned by law, the Company's
charter or bylaws, or the Board of Directors.
G. Report to the Board of Directors after each Audit Committee
meeting.
A-4
The Laclede Group, Inc.
720 Olive Street
Saint Louis, Missouri, 63101
December 19, 2003
To our shareholders:
We are pleased to invite you to our annual meeting of shareholders to be
held on January 29, 2004 at 10:00 a.m. at the Marriott Pavilion Hotel, One
Broadway, St. Louis, Missouri.
Every vote is important. You can vote in one of three ways: use the toll-
free number shown on your proxy card, visit the website shown on your proxy
card to vote via the Internet, or mark, sign, date and promptly return the
proxy card in the enclosed postage-paid envelope. We ask that you please vote
your proxy--even if you plan to attend the meeting.
At this year's meeting, we are seeking your vote for the election of three
directors and the ratification of appointment of independent accountants. Both
of these proposals are described in the enclosed proxy statement.
If you plan on attending the meeting and you are a shareholder of record,
you may attend the annual meeting by checking in with our representatives at
the desk outside the meeting room. If your shares are held in the name of a
bank, broker or other holder of record and you plan to attend the meeting,
you must show proof of ownership of our common stock at the desk.
We thank you in advance for your vote this year.
Sincerely,
/s/ Douglas H. Yaeger
Douglas H. Yaeger
Chairman of the Board, President
And Chief Executive Officer
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THE LACLEDE GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 29, 2004
YOUR VOTE IS IMPORTANT!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mary C. Kullman, Barry C. Cooper, Douglas H.
Yaeger, and each of them, as the undersigned's proxies (with power of
substitution), to represent and to vote at the annual meeting of shareholders
of The Laclede Group, Inc. to be held January 29, 2004 at 10:00 a.m., at the
Marriott Pavilion Hotel, One Broadway, St. Louis, Missouri, and at any
adjournment(s) or postponement(s) thereof, subject to the directions designated
below.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED "FOR" PROPOSALS 1 AND 2 AND IN THEIR DISCRETION, THE PROXIES
ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
COMMENTS:
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(If you noted any comments above, please mark the
corresponding box on the reverse side.)
(TO BE SIGNED ON REVERSE SIDE)
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[THE LACLEDE GROUP LOGO] VOTE BY INTERNET-www.proxyvote.com
THE LACLEDE GROUP, INC. Use the Internet to transmit your voting
C/O UMB BANK - NA instructions and for electronic delivery
928 GRAND BOULEVARD, 13TH FLOOR of information up until 11:59 P.M.
KANSAS CITY, MO 64106 Eastern Time the day before the cut-off
date or meeting date. Have your proxy
card in hand when you access the web
site and follow the instructions to
obtain your records and to create an
electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
P.M. Eastern Time the day before the
cut-off date or meeting date. Have your
proxy card in hand when you call and
then follow the instructions.
Your Internet and telephone votes
authorize the named proxies to vote your
shares to the same extent as if you
marked, signed, dated and returned the
proxy card.
VOTE BY MAIL
Mark, sign, and date your proxy card and
return it in the postage-paid envelope we
have provided or return it to The Laclede
Group, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
IF YOU VOTE BY INTERNET OR TELEPHONE,
PLEASE DO NOT RETURN YOUR PROXY BY MAIL.
THANK YOU FOR YOUR VOTE
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
LACGRP KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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THE LACLEDE GROUP, INC.
1. Election of directors: 01) Dr. Henry Givens, Jr. FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
02) Mary Ann Van Lokeren
/ / / / / /
03) Douglas H. Yaeger
To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.
----------------------------------------------------
FOR AGAINST ABSTAIN
VOTE ON PROPOSAL
2. Ratification of the appointment of Deloitte
& Touche LLP as independent auditors. / / / / / /
Please date and sign exactly as your name
appears. If shares are held by joint tenants,
both must sign. If signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by an authorized officer. If a partnership,
sign in partnership name by authorized person.
For comments, please check this box and
write them on the back where indicated. / /
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (JOINT OWNERS) Date
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APPENDIX
Page 16 of the printed proxy statement contains a Stock Performance
Graph. The information contained within the graph is presented in a tabular
format immediately following the graph.