SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
NEW JERSEY RESOURCES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD
WALL, NEW JERSEY 07719
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PROXY STATEMENT AND
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 21, 2004
------------------------
The Annual Meeting (the "Meeting") of Shareholders of New Jersey Resources
Corporation (the "Company") will be held at 10:30 a.m., Wednesday, January 21,
2004, at the Robert B. Meyner Reception Center at the PNC Bank Arts Center, Exit
116 on the Garden State Parkway, Holmdel, New Jersey 07733, for the following
purposes:
1. To elect five directors to the Board of Directors for terms
expiring in 2007.
2. To approve the action of the Audit Committee of the Board of
Directors in retaining Deloitte & Touche LLP as auditors for the fiscal
year ending September 30, 2004.
3. To transact any other business that may properly be brought before
the Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 12,
2003, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Meeting. Accordingly, only shareholders of record
at the close of business on that date will be entitled to vote at the Meeting.
A copy of the Company's Annual Report for fiscal 2003 is being mailed
concurrently with this proxy material to all shareholders of record.
A cordial invitation is extended to you to attend the Meeting. If you do
not expect to attend the Meeting, please vote by telephone, the Internet, or
sign, date and return the enclosed proxy promptly to the Secretary in the
enclosed envelope. Please refer to the enclosed Proxy Card for instructions
about the use of each of these options.
OLETA J. HARDEN
Secretary
Wall, New Jersey
December 19, 2003
PROXY STATEMENT
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NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD
WALL, NEW JERSEY 07719
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ANNUAL MEETING OF SHAREHOLDERS
JANUARY 21, 2004
This proxy statement sets forth certain information with respect to the
accompanying proxy to be used at the Annual Meeting (the "Meeting") of
Shareholders of New Jersey Resources Corporation (the "Company"), or at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. The Board of Directors of the Company
(the "Board") solicits this proxy and urges you to vote immediately.
The Company's Annual Report for fiscal year 2003 has been mailed to the
Company's shareholders, or is being mailed together with this proxy statement.
The 2003 Annual Report is not incorporated into this proxy statement and shall
not be considered a part of this proxy statement or soliciting materials.
This proxy statement and the accompanying proxy materials are being mailed
to shareholders on or about December 19, 2003.
PLACE OF ANNUAL MEETING
The Board has designated the Robert B. Meyner Reception Center at the PNC
Bank Arts Center, Exit 116 on the Garden State Parkway, Holmdel, New Jersey
07733, as the place of the Meeting. The Meeting will be called to order at 10:30
a.m., local time, on Wednesday, January 21, 2004.
VOTING OF SECURITIES AND SHAREHOLDER INFORMATION
The proxies solicited by this proxy statement vest in the proxy holders
voting rights with respect to the election of directors (unless the shareholder
marks the proxy to withhold that authority) and on all other matters voted upon
at the Meeting. As provided by New Jersey law, if you abstain from or withhold
your vote (whether directly or through your broker), your shares will not be
included in the total number of votes cast, and therefore will have no effect on
the vote. For purposes of determining the votes cast with respect to any matter
presented for consideration at the Meeting, only those votes cast "for" or
"against" are included. Abstentions and broker non-votes are counted only for
the purpose of determining whether a quorum is present at the Meeting. A
majority of the shares outstanding on the record date will constitute a quorum
for purposes of the Meeting.
Whether you vote by telephone, Internet or by mail, you may later revoke
your proxy at any time before it is exercised by: (i) submitting a properly
signed proxy with a later date; (ii) voting by telephone or the Internet at a
later time, or (iii) voting in person at the Annual Meeting. See the enclosed
Proxy Card for instructions.
Only holders of record of the Company's outstanding Common Stock at the
close of business on December 12, 2003 are entitled to notice of and to vote at
the Meeting. At the close of business on December 12, 2003, there were
27,383,317 outstanding shares of Common Stock. Each share is entitled to one
vote. No person, to the knowledge of the Company, based upon filings with the
Securities and Exchange Commission, held beneficially 5% or more of the
Company's Common Stock as of December 12, 2003.
The following table sets forth, as of December 12, 2003, the beneficial
ownership of equity securities of the Company of each of the directors and each
of the executive officers of the Company listed in the Summary Compensation
Table below, and of all directors and executive officers of the Company as a
group. The shares owned by all such persons as a group constitute approximately
4% of the total shares outstanding.
AMOUNT AND NATURE OF
TITLE OF BENEFICIAL
NAME SECURITY OWNERSHIP(1)(2)
---- ------------ ---------------------------------
Nina Aversano............................................... Common Stock 19,563 shares -- Direct
Lawrence R. Codey........................................... Common Stock 11,156 shares -- Direct
Leonard S. Coleman.......................................... Common Stock 25,973 shares -- Direct
10 shares -- Indirect(3)
Laurence M. Downes.......................................... Common Stock 310,469 shares -- Direct
2,898 shares -- Indirect
R. Barbara Gitenstein....................................... Common Stock 219 shares -- Direct
Oleta J. Harden............................................. Common Stock 73,851 shares -- Direct
104 shares -- Indirect
Alfred C. Koeppe............................................ Common Stock 200 shares -- Direct
Dorothy K. Light............................................ Common Stock 28,067 shares -- Direct
70 shares -- Indirect
Glenn C. Lockwood........................................... Common Stock 116,632 shares -- Direct
Joseph P. Shields........................................... Common Stock 79,916 shares -- Direct
18 shares -- Indirect
J. Terry Strange............................................ Common Stock 1,436 shares -- Direct
William H. Turner........................................... Common Stock 11,925 shares -- Direct
Gary W. Wolf................................................ Common Stock 21,165 shares -- Direct
George R. Zoffinger......................................... Common Stock 37,321 shares -- Direct
450 shares -- Indirect(3)
300 shares -- Indirect
All Directors and Executive Officers as a Group............. Common Stock 1,095,046 shares -- Direct
4,145 shares -- Indirect
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(1) Information as to the amount and nature of beneficial ownership not within
the knowledge of the Company has been furnished by each individual.
(2) Includes shares subject to currently exercisable options or any options
exercisable within the next 60 days, deferred stock units ("Units") in the
Directors' fee deferral plan or officers deferral plan, and performance
units awarded pursuant to the Employee and Outside Director Long-Term
Incentive Compensation Plan ("LTIP Units"), if any, as follows: Ms.
Aversano -- 15,750 options and 1,171 Units; Mr. Codey -- 8,250 options and
813 Units; Mr. Coleman -- 20,250 options and 4,541 Units; Mr.
Downes -- 263,522 options, 30,260 Units, and 6,317 LTIP Units; Mrs.
Harden -- 51,134 options, 9,313 Units and 2,527 LTIP Units; Mrs.
Light -- 18,750 options and 1,171 Units; Mr. Lockwood -- 96,459 options,
10,534 Units and 3,159 LTIP Units; Mr. Shields -- 66,375 options, 6,647
Units and 1,895 LTIP Units; Mr. Strange -- 1,000 options; Mr.
Tarney -- 45,000 options, 6,830 Units and 1,895 LTIP Units; Mr.
Turner -- 8,250 options and 2,600 Units; Mr. Wolf -- 18,750 options and 918
Units; Mr. Zoffinger -- 18,750 options and 6,216 Units; and all directors
and executive officers as a group 865,557 options, 111,884 Units and 23,753
LTIP Units.
(3) Messrs. Coleman and Zoffinger disclaim beneficial ownership of these
securities.
2
ELECTION OF DIRECTORS
[ITEM (1) ON PROXY CARD]
ITEM 1
The Board of Directors currently consists of thirteen members divided into
three classes with overlapping three-year terms. In accordance with the
Company's policy on the age limitations for directors, Mr. Joe B. Foster and
Mrs. Hazel Gluck are retiring from the Board of Directors after ten years of
service and nine years of service, respectively, effective as of the date of the
Meeting, and are not being replaced at this time. We thank them for their
outstanding service to the Company. Because of these retirements, subsequent to
the Meeting, the Board of Directors will consist of eleven members.
Five individuals have been nominated for election as directors at the
Meeting, each to serve for three-year terms expiring 2007 and each until their
respective successors are elected and have qualified. Each of the nominees is
currently serving as a director of the Company. With the exception of Dr.
Gitenstein and Mr. Koeppe, the newest members of the Board, the other nominees
have each been previously elected by the Company's shareholders at least once.
There were no nominee recommendations from shareholders or group of
shareholders. Unless otherwise indicated on a proxy, the proxy holders intend to
vote the shares each proxy represents for all of the nominees for election as
directors.
The affirmative vote of a plurality of the shares of the Company's Common
Stock, present or represented by proxy and voted at the Meeting, is required for
the election of directors.
Proxies solicited by the Board will be voted in favor of the nominees
listed below, unless otherwise specified in the proxy. While it is not
anticipated that any of the nominees will be unable to serve, if any should be
unable to serve, the proxy holders reserve the right to substitute any other
person approved by the Board of Directors.
NOMINEES FOR ELECTION AS
DIRECTORS WITH TERMS EXPIRING IN 2007
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
[CODEY PHOTO] Retired. Formerly President & Chief Operating Officer, Public
Lawrence R. Codey Service Electric & Gas Company from September 1991 through
Director since 2000 February 2000. Director, The Trust Company of New Jersey, a
Age 59 financial institution, United Water Resources, Inc., a utility
holding company with subsidiaries providing water and wastewater
services, Horizon Blue Cross Blue Shield of New Jersey, a health
care insurance provider and Sealed Air Corporation, a
manufacturer and seller of food and specialty packaging materials
and systems.
3
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
[DOWNES PHOTO] Chairman of the Board of Directors of the Company since September
Laurence M. Downes 1996 and President and CEO of the Company since July 1995; First
Director since 1995 Vice Chairman and Director, American Gas Association and
Age 46 Chairman, New Jersey Commission on Higher Education.
[GITENSTEIN PHOTO] President, The College of New Jersey since 1999; Executive
R. Barbara Gitenstein Vice President and Provost, Drake University from 1995 to
Director since 2003 1998 and Trustee, ING Funds, a mutual funds and variable
Age 55 annuities company.
[KOEPPE PHOTO] President and Chief Operating Officer, Newark Alliance, a
Alfred C. Koeppe non-profit organization whose mission is to improve the city
Director since 2003 of Newark, NJ; President and Chief Operating Officer from
Age 57 March 2000 to October 2003 and Senior Vice
President -- Corporate Services from 1996 to 2000, Public
Service Electric and Gas Company; Director, Horizon Blue
Cross Blue Shield of New Jersey and a member of the Board of
Governors of the National Conference.
[TURNER PHOTO] Senior Partner, Summus Limited, a consulting firm
William H. Turner specializing in the financial services industry, since
Director since March 2000 September 2002. Chairman from September 1999 to September
Age 63 2002, and President from August 1997 to September 2002, PNC
Bank, N.A., New Jersey and Northeast Region; President and
Chief Executive Officer from 1996 to 1997, and currently
Director, Franklin Electronic Publishers, an electronics
reference products company; retired as Vice Chairman, Chase
Bank in 1996; Director, Standard Motor Products, Inc., an
automotive replacement parts company, and Volt Information
Sciences, Inc., a staffing services, telecommunications and
information solutions company. Chairman, Atlantic Health
System; Chairman, PNC Bank Regional Advisory Council;
Trustee, NJN Foundation and Trinity College, and President,
Montclair Art Museum.
4
DIRECTORS WITH TERMS EXPIRING IN 2005
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
[AVERSANO PHOTO] President and CEO, Aversano Consulting, L.L.C., providing
Nina Aversano consulting services to companies in the telecommunications
Director since 1998 industry since June 2002; Advisor and Executive Vice President,
Age 58 Worldwide Field Operations, Apogee Networks, a content building
and service creation software company, from May 2001 through
March 2002; President, North America Global Service Provider
Division, Lucent Technologies, a designer, developer and
manufacturer of telecommunications systems, software and
products, from 1993 to December 2000, formerly AT&T Network
Systems Division; and Director, ADVA Optical Networks, a German
based telecommunications equipment supplier.
[COLEMAN PHOTO] Senior Advisor since November 1999 and formerly President,
Leonard S. Coleman National League of Professional Major League Baseball Clubs
Director since 1995 from March 1994 to that time; Director, Aramark Corporation,
Age 54 a food service and uniform sales and rentals company,
Cendant Corp., a car rental and leasing, hotel and real
estate franchise company, H. J. Heinz Company, a
manufacturer and marketer of processed food products,
Omnicom Group, Inc., an advertising holding company, Owens
Corning Corp., a glass and plastics manufacturing company,
Churchill Downs, Inc., operator of thoroughbred horse race
tracks, Electronic Arts, Inc., a creator, marketer and
distributor of entertainment software and Member, PNC Bank
Regional Advisory Council.
[LIGHT PHOTO] CEO, Alden Enterprises, LLC, since January 1996, a
Dorothy K. Light consulting company; Corporate Vice President and Secretary
Director since 1990 from June 1990 to July 1995, The Prudential Insurance
Age 66 Company of America; former Trustee and Chair, Milkweed
Editions, a publishing company, and former Trustee and
Chair, Save the Patient, a non-profit educational
organization.
5
DIRECTORS WITH TERMS EXPIRING IN 2006
NAME AND PERIOD
SERVED AS DIRECTOR BUSINESS EXPERIENCE DURING PAST FIVE YEARS AND OTHER AFFILIATIONS
------------------ -----------------------------------------------------------------
[STRANGE PHOTO] Retired. Vice Chair and Managing Partner of U.S. Audit Practice,
J. Terry Strange from 1996 to 2002 and Global Managing Partner of Audit Practice
Director since from 1998 to 2002, KPMG, LLP, an independent accounting firm;
January 2003 Director, Compass Bancshares, a financial institution,
Age 59 BearingPoint, a business consulting, systems integration and
managed services firm, Group 1 Automotive, Inc., automobile
dealer franchises and collision service centers, financing,
insurance & service contracts.
[WOLF PHOTO] Senior Partner, Cahill Gordon & Reindel LLP, a law firm, for more
Gary W. Wolf than five years.
Director since 1996
Age 65
[ZOFFINGER PHOTO] President and CEO, New Jersey Sports & Exposition Authority since
George R. Zoffinger March 2002; President & CEO, Constellation Capital Corp., from
Director since 1996 March 1998 to March 2002, a financial services company; President
Age 55 & CEO, Value Property Trust, a publicly owned real estate
investment trust from 1995 to February 1998; Director, Commercial
Federal Bancorp, NTL, Inc., a United Kingdom cable company, New
Jersey Alliance for Action, and New Jersey World Trade Council;
Trustee and Chairman, New Brunswick Development Corporation.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE PROPOSED NOMINEES FOR THE BOARD OF DIRECTORS
INFORMATION ABOUT THE BOARD
During fiscal 2003, there were ten meetings of the Board of Directors. Each
director attended more than 75% of the combined meetings of the Board of
Directors and the committees on which he or she served during the year. The
Company encourages all directors to attend the Company's annual shareholders'
meeting if at all possible. Eleven of the twelve directors at the time attended
the Company's annual shareholders meeting in 2003.
6
BOARD STANDARDS OF INDEPENDENCE
The Board has determined that each member of the Board, other than the
Chief Executive Officer (CEO), must be "independent" and have no relationships
with the Company. The standards set by the Board are more stringent than the
definition of "independence" set forth in the New York Stock Exchange listing
standards. With the exception of Mr. Downes, the Chairman of the Board and CEO,
each member of the Board has been determined to be independent in accordance
with the adopted standards.
NON-MANAGEMENT DIRECTORS
The non-management members of the Board meet without management present at
each regularly scheduled meeting of the Board. The non-management director
meetings are chaired by the lead director, Mr. Lawrence R. Codey. Any shareowner
wishing to communicate with the non-management directors on an anonymous basis
may do so by calling Ethicspoint, Inc., an unaffiliated toll-free hotline
service at 1-866-384-4277 or via E-mail at ethicspoint.com. Ethicspoint, Inc.
will then notify the lead director or another designated representative of the
non-management directors. A copy of the Board's Corporate Governance Guidelines
is available on the Company's website at njliving.com under the caption
"Investor Relations".
CODE OF BUSINESS CONDUCT AND ETHICS
The Board of Directors has adopted a Code of Business Conduct and Ethics
governing the Company's CEO and senior financial officers, as required by the
Sarbanes-Oxley Act and SEC regulations and a code for all senior management as
required by the New York Stock Exchange rules. Our Codes govern such matters as
conflicts of interest, use of corporate opportunity, confidentiality, compliance
with law and the like. A copy of both Codes of Conduct are available on the
Company's website at njliving.com under the caption "Investor Relations".
INFORMATION ABOUT THE BOARD'S COMMITTEES
AUDIT COMMITTEE
The Audit Committee consists of Nina Aversano, Lawrence R. Codey, J. Terry
Strange (Committee Chair) William H. Turner and Gary W. Wolf. Mr. Strange has
been determined by the Board to be the Audit Committee financial expert, as such
term is defined by the SEC Regulation S-K Item 401(h)(2). Each member of the
Audit Committee is independent, under the standards set by the Board, which are
more stringent than the standards set by the New York Stock Exchange. In
addition, each Audit Committee member satisfies the audit committee independence
standards under the Sarbanes-Oxley Act of 2002. The Audit Committee met thirteen
times during fiscal 2003 for the purpose of overseeing management's
responsibilities for accounting, internal controls and financial reporting. The
Committee also selects and approves the independent public accounting firm to
serve as the Company's auditors for each fiscal year, approves the retention of
such firm for any other purposes, and approves the audit and non-audit fees the
Company pays to such firm. The functions and responsibilities of the Committee
are described in the "Report of the Audit Committee" set forth below. A copy of
the Audit Committee Charter is attached as Appendix "A" and is also available on
the Company's website at njliving.com under the caption "Investor Relations".
EXECUTIVE COMMITTEE
The Executive Committee consisted during fiscal 2003 of Lawrence R. Codey
(Committee Chair), Leonard S. Coleman, Laurence M. Downes, Joe B. Foster, Hazel
S. Gluck and J. Terry Strange. During the interval between meetings of the Board
of Directors, the Executive Committee is authorized under the Company's By-Laws
to exercise all the powers of the Board of Directors in the management of the
Company, unless specifically directed otherwise by the Board or otherwise
proscribed by law. This Committee did not meet during fiscal 2003.
7
FINANCIAL POLICY COMMITTEE
The Financial Policy Committee, which consisted of Lawrence R. Codey,
Leonard S. Coleman (Committee Chair), Dr. R. Barbara Gitenstein, Hazel S. Gluck,
J. Terry Strange and William H. Turner during fiscal 2003, met three times
during fiscal 2003 to review and make recommendations to the Board concerning
financing proposals, dividend guidelines, capital and operating budgets and
other corporate financial and pension matters.
LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE
The Leadership Development and Compensation Committee, which consisted
during fiscal 2003 of Nina Aversano, Joe B. Foster (Committee Chair), Dorothy K.
Light, Gary W. Wolf and George R. Zoffinger, met twice during fiscal 2003 to
oversee the performance and qualifications of senior management, and to
interpret, implement and administer the annual compensation and benefits of all
elected officers of the Company and its subsidiaries. See the "Report of the
Leadership Development and Compensation Committee", below, regarding the factors
considered by the Committee in its review of executive compensation. Each member
of the Leadership Development and Compensation Committee is "independent" under
the standards set by the Board, which are more stringent than the standards set
by the New York Stock Exchange. A copy of the Leadership Development and
Compensation Committee Charter can be found on the Company's website at
njliving.com under the caption "Investor Relations".
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
The members of the Nominating/Corporate Governance Committee during fiscal
2003 were Leonard S. Coleman, Joe B. Foster, Hazel S. Gluck (Committee Chair),
Dorothy K. Light, Gary W. Wolf and George R. Zoffinger, and this Committee met
six times in fiscal 2003. Each member of the Nominating/Corporate Governance
Committee is independent under the standards set by the Board, which are more
stringent than the standards set by the New York Stock Exchange. The purpose of
the Committee is to assess the corporate needs for an effective Board and then,
using those assessments, make recommendations to the Board regarding Board
composition, size, additional skills and talents needed. The Committee
recommends to the Board the nominees for election as directors, and considers
performance of incumbent directors to determine whether to nominate them for
re-election. The Nominating/Corporate Governance Committee will consider
qualified nominations for directors recommended by shareholders. Recommendations
should be sent to New Jersey Resources Corporation, Office of the Secretary,
1415 Wyckoff Road, P.O. Box 1464, Wall, New Jersey 07719. Any nomination for
director should be received by the Secretary on or before September 5, 2004.
Nominees will be required to bring the skills and talents and have the knowledge
and expertise at the time needed to assure that the composition, structure and
operation of the Board serve the best interest of the Company and its
shareholders. The Nominating/Corporate Governance Committee has a written
charter available on the Company's website at njliving.com under the caption
"Investor Relations".
AUDIT COMMITTEE REPORT
In accordance with the Audit Committee Charter, the Audit Committee assists
the Board in fulfilling its responsibility for oversight of the integrity of the
accounting, auditing and financial reporting practices of the Company. During
the fiscal year ended September 30, 2003, the Audit Committee met thirteen
times, and the Audit Committee discussed the interim financial information
contained in the Company's Quarterly Reports on Form 10-Q with the Chief
Financial Officer and the independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on their independence consistent with Independence Standards Board
Standard No. 1 "Independence Discussions with Audit Committees," discussed with
the auditors relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence. The Audit Committee also
discussed with management, the internal auditors and the independent auditors
the quality and adequacy of the Company's internal controls and the internal
audit functions, organization,
8
responsibilities, budget and staffing. The Audit Committee reviewed with both
the independent and the internal auditors their audit plans, audit scope, and
identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors
all communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Audit Committee also discussed the results of the
internal audit examinations.
The Audit Committee reviewed the audited financial statements of the
Company as of and for the fiscal year ended September 30, 2003, with management
and the independent auditors. Management has the responsibility for the
preparation of the Company's financial statements and the independent auditors
have the responsibility for the audit of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included by incorporating by reference
in its Annual Report on Form 10-K for the fiscal year ended September 30, 2003,
for filing with the Securities and Exchange Commission. The Audit Committee also
recommended the reappointment of the independent auditors and the Board
concurred in such recommendation.
J. Terry Strange, Chair William H. Turner
Nina Aversano Gary W. Wolf
Lawrence R. Codey
Dated: November 18, 2003
The "Audit Committee Report" above shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
REMUNERATION OF DIRECTORS
Directors who are not officers of the Company or its subsidiaries are
compensated as follows: (1) each Director receives an annual retainer of
$24,800, of which $8,000 is paid in Company common stock; (2) each Director
receives a fee of $1,000 for each Board and committee meeting attended, except
for Audit Committee meetings, for which a fee of $1,500 is paid and (3) the
chairs of the Audit and Executive Committees receive an annual retainer of
$10,000 and the chairs of all other Board committees receive an annual retainer
of $5,000. Directors also receive, at the time they are first elected to the
Board, a one-time award of 200 shares and options to purchase 5,000 shares of
the Company's common stock pursuant to the Employee and Outside Director
Long-Term Incentive Compensation Plan (the "Long-Term Plan"). An additional
award of options to purchase 1,500 shares of the Company's common stock is made
annually. Directors who are also officers of the Company or its subsidiaries do
not receive additional compensation for serving on the Board. All directors are
reimbursed for any out-of-pocket expenses incurred in attending Board or
committee meetings.
REMUNERATION OF EXECUTIVE OFFICERS
The following "Leadership Development and Compensation Committee Report"
and "Comparison of Five Year Cumulative Total Return" graph shall not be deemed
incorporated by reference by any general statement incorporating this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The Leadership Development and Compensation Committee (the "Committee") of
the Board of Directors consists of five non-employee directors who are
independent of the Company under the standards set by the Board, which are more
stringent than standards set by the New York Stock Exchange.
9
The Committee's executive compensation philosophy is designed to attract,
energize, reward and retain qualified executive personnel who will provide
superior results over the long-term and enhance the Company's position in a
highly competitive market. The Committee reviews the performance of the officers
of the Company and its subsidiaries, and makes recommendations to the Board with
respect to the compensation and benefit programs that are applicable to these
officers. The Committee also has oversight of certain of the Company's employee
benefit plans.
The Committee uses a national compensation consultant to review competitive
compensation levels of senior executives in the industry. Through this process,
the Committee identifies the competitive compensation levels, both with respect
to base salary and overall executive compensation packages among the Company's
peers. Many, but not all of the compensation peer companies are contained in the
Standard and Poor's Utilities Index used in the performance graph on page 15.
The Committee compares this external data to the base salary and other
compensation provided to senior Company executives. In this fashion, the
Committee is able to establish both individual compensation levels and target
performance levels under the Company's Officer Incentive Compensation Plan (the
"Incentive Plan").
Compensation levels set for each executive officer are based upon
marketplace compensation information, the Committee's judgment and performance
against established goals. Individual performance is measured in several
specific areas, including the development and execution of annual operating
plans, strategic plans, leadership qualities, staff development, change in
leadership responsibilities and the individual's specific contributions to
corporate objectives which have a significant and positive impact on the
Company. Performance of the subsidiary companies is measured by comparing actual
achievements to financial and strategic objectives in their annual operating
plans. Company performance is reviewed to ensure consistency with the overall
corporate vision, mission and strategies. In making compensation decisions for
2003, the Committee reviewed executive accomplishments in total energy
deliveries, number of new customers, cost of adding a new customer, earnings,
expenses, return on equity, operating and net income, total shareholder return
and the Company's assumption of a leadership role in energy-related businesses.
The Committee has established three programs providing for direct
compensation of executive officers: the Base Salary Program, the Incentive Plan
and the Long-Term Plan. The structure of the total executive compensation
package is such that when the Company achieves its target annual business
objectives, the Company's senior executives receive a level of compensation
approximately equivalent to the median compensation paid to similar executive
positions in the marketplace.
BASE SALARY PROGRAM
In setting the base salary level of each executive officer, the Committee
considers the base salaries of executive officers in comparable positions in
similar companies. The Committee also considers the executive's experience
level, time and placement in grade and the actual performance of the executive.
Changes in compensation are directly dependent upon individual and Company
performance.
INCENTIVE PLAN
Under the Incentive Plan, officers and certain key employees of the Company
and New Jersey Natural Gas Company ("NJNG"), a wholly-owned subsidiary of the
Company, designated by the Committee, may receive additional cash compensation
based upon the Committee's thorough evaluation of the Company's performance
against a series of performance objectives. The Committee believes that variable
at-risk compensation, both annual and long-term, should make up a significant
part of an executive's compensation and that the amount of this compensation
component opportunity should increase with increasing levels of responsibility.
Awards under the Incentive Plan are based upon a percentage of the base salary
of each eligible Incentive Plan participant during the year. Threshold, target
and maximum incentive award levels are established annually by the Committee for
each award group.
10
Individual awards are payable based on the attainment of a portfolio of
goals including earnings, customer satisfaction and leadership. Incentive award
levels provide payments that are at approximately market median when target
results are achieved.
LONG-TERM PLAN
The Long-Term Plan provides for the award of stock options, (the "Stock
Options"), performance units (the "Performance Units"), or restricted stock (the
"Restricted Stock") to designated employees. The Committee believes that
Performance Units, each unit of which is equal to a share of Common Stock, and
Restricted Stock awards provide executives a strong incentive to create earnings
that could be the foundation for the payment of dividends and as a focus on
stock price appreciation. As the value of the Company's stock is generally
considered the strongest indicator of overall corporate performance, awards of
Stock Options, which allow the executive to benefit by appreciation in stock
price, and the performance-based Performance Units and Restricted Stock provide
strong incentives to executives by relating a portion of their compensation to
the future value of the Company's stock. Additionally, the use of stock-based
compensation encourages individuals to act as owners/managers and is an
important means of fostering a mutual interest between management and
shareholders. Share ownership guidelines were established for Directors and
executives in fiscal 2003, specifying by position an expected level of stock
ownership to be achieved over a five-year period.
In fiscal 2003, the Committee made two-year awards under the Long-Term Plan
in the form of Performance Units and Stock Options. Performance Units were
valued at fair market value of Company stock at the time of grant. The
Performance Units will only vest upon (i) the attainment of a schedule of
performance goals related to total shareholder return as measured against a peer
group and (ii) additional service beyond the point when the goal is reached. The
higher the ranking of the Company among the peer group, the greater the number
of Performance Units that will be earned, up to a maximum of 150% of target. No
Performance Units will vest if the Company does not perform in at least the top
half of the peer group. Stock Options were also granted with an exercise price
equal to fair market value at the time of grant. Awards made to executives under
the long-term plan are calibrated to position total remuneration at
approximately the 60th percentile of the competitive marketplace if all awards
vest.
CEO COMPENSATION
Mr. Downes' calendar 2003 base salary was $500,000, positioned at
approximately the median level for comparable companies. The incentive award of
$300,000 made to Mr. Downes for achievements in fiscal 2003 reflects results
that overall exceeded the specific 2003 targets. The Committee awarded Mr.
Downes 60,000 Stock Options and 16,000 Performance Units (at target).
US INCOME TAX LIMITS ON DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code (the "Code") provides that
executive compensation in excess of $1 million will not be deductible for
purposes of corporate income tax, unless it is performance-based compensation
and is paid pursuant to a plan meeting certain requirements of the Code. The
Committee has relied and intends to continue to rely on performance-based
compensation programs. The Committee expects that such programs will fulfill
future corporate business objectives. The Committee currently anticipates that,
to the extent practicable and in the Company's best interest, such programs will
be designed to satisfy the requirements of Section 162(m) with respect to the
deductibility of compensation paid. The Committee recognizes, however, that
there may be business considerations that dictate that compensation be paid that
is not deductible under Section 162(m).
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries, nor does any executive officer of the
Company serve as an officer, director or member of a compensation committee of
any entity whose executive officer or director is a director of the Company.
LEADERSHIP DEVELOPMENT & COMPENSATION COMMITTEE:
Joe B. Foster, Chair George R. Zoffinger
Nina Aversano Gary W. Wolf
Dorothy K. Light
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION AWARDS
COMPENSATION -----------------------
----------------- LTIP UNIT ALL OTHER
SALARY BONUS AWARD(S)** OPTIONS** COMPENSATION***
NAME AND PRINCIPAL POSITION YEAR* ($) ($) (#) (#) ($)
--------------------------- ----- ------- ------- ----------- --------- ---------------
Laurence M. Downes.................... 2003 486,154 250,000 16,000 60,000 4,000
Chairman, CEO and President 2002 437,711 220,000 0 0 4,000
2001 396,923 160,000 5,000 100,000 3,400
Glenn C. Lockwood..................... 2003 207,231 54,000 6,000 30,000 6,217
Senior Vice President & 2002 197,269 58,000 0 0 5,318
Chief Financial Officer 2001 188,654 50,000 2,500 50,000 5,387
Oleta J. Harden....................... 2003 196,400 50,490 6,000 30,000 5,892
Senior Vice President, 2002 183,723 54,000 0 0 5,160
General Counsel & Secretary 2001 172,019 45,000 2,000 30,000 5,161
Joseph P. Shields..................... 2003 193,077 125,000 6,000 30,000 5,375
Senior Vice President, 2002 172,269 75,000 0 0 5,168
Energy Services, NJNG 2001 160,961 52,000 1,500 40,000 4,829
Wayne K. Tarney....................... 2003 179,170 45,401 2,700 16,000 5,792
President, NJR Home Services 2002 175,088 49,000 0 0 5,253
Company 2001 168,308 45,000 1,500 40,000 5,049
---------------
* For fiscal year ended September 30.
** Represents a share of Common Stock.
*** Represents the Company's matching contributions under the Employees'
Retirement Savings Plan (the "Savings Plan").
12
OPTION GRANTS IN 2003 FISCAL YEAR
INDIVIDUAL GRANTS
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF SECURITIES TOTAL OPTIONS VALUE AT ASSUMED
UNDERLYING OPTIONS GRANTED TO EXERCISE ANNUAL RATES OF STOCK
GRANTED EMPLOYEES IN PRICE EXPIRATION PRICE APPRECIATION FOR
NAME (#) FISCAL YEAR ($/SH) DATE OPTION TERM
---- -------------------- ------------- -------- ---------- -----------------------
5% 10%
($) ($)
--- ---
Laurence M. Downes..... 60,000 22.2% 31.49 1/14/13 1,188,225 3,011,212*
Glenn C. Lockwood...... 30,000 11.1% 31.49 1/14/13 594,112 1,505,606
Oleta J. Harden........ 30,000 11.1% 31.49 1/14/13 594,112 1,505,606
Joseph P. Shields...... 30,000 11.1% 31.49 1/14/13 594,112 1,505,606
Wayne K. Tarney........ 16,000 5.9% 31.49 1/14/13 316,860 802,990
---------------
* The stock options granted to Mr. Downes in fiscal 2003 would produce the
pre-tax gain of $3,011,212 shown in the table above only if the Company's
stock price rises to $81.68 per share before Mr. Downes exercises the stock
options. Based on the number of shares of Company stock outstanding at the end
of 2003, such an increase in the Company's stock price would produce a
corresponding aggregate pre-tax gain of approximately $1,366,824,000 for the
Company's shareholders. In other words, Mr. Downes' potential gain from stock
options granted in 2003 would equal two-tenths of one percent (.2%) of the
potential gain to all shareholders resulting from the assumed future stock
price increases.
AGGREGATED OPTION EXERCISES IN 2003 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED
IN-THE-MONEY
SHARES NUMBER OF OPTIONS
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT FISCAL
EXERCISE REALIZED AT FISCAL YEAR-END YEAR-END
NAME (#) ($) (#) ($)
---- ----------- -------- ------------------- ------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
Laurence M. Downes.......... 10,257 158,877 263,522/285,000 3,156,239/2,450,753
Glenn C. Lockwood........... 1,302 21,678 96,459/67,500 1,090,165/463,001
Oleta J. Harden............. 2,601 43,480 51,134/52,500 616,452/332,401
Joseph P. Shields........... 0 0 66,375/60,000 715,469/397,701
Wayne K. Tarney............. 0 0 45,000/46,000 432,426/334,001
13
LTIP UNIT AWARDS IN 2003 FISCAL YEAR*
NUMBER OF LTIP
UNITS AWARDED PERFORMANCE PERIOD
NAME (#) UNTIL PAYOUT
---- -------------- ------------------
Laurence M. Downes....................................... 16,000 10/01/05
Glenn C. Lockwood........................................ 6,000 10/01/05
Oleta J. Harden.......................................... 6,000 10/01/05
Joseph P. Shields........................................ 6,000 10/01/05
Wayne K. Tarney.......................................... 2,700 10/01/05
---------------
* LTIP Units, which represent a share of Common Stock, were awarded pursuant to
the Long-Term Plan on 1/15/03. The LTIP Units will only vest if the Company's
total shareholder return ranks in the 50th percentile as measured against its
peer group. The higher the Company's ranking, the greater the LTIP Units that
will be earned, up to a maximum of 150% of the grant, plus an equivalent
number of units that reflect accrued reinvested dividends on the total
("Possible Total"). If the performance goal is met, each executive will
receive 50% of the Possible Total on 10/01/05. The remaining 50% will be paid
out on 10/01/06 if the executive is still employed by the Company.
14
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
[FIVE-YEAR TOTAL RETURN GRAPH]
9/98 9/99 9/00 9/01 9/02 9/03
($) ($) ($) ($) ($) ($)
The Company 100 117.28 124.35 140.96 163.52 185.69
Company Peer Group** 100 94.79 107.89 110.94 110.51 130.83
S&P Utilities 100 98.30 140.84 105.41 68.19 83.48
S&P 500 100 127.76 144.69 106.26 84.54 105.15
---------------
* Assumes $100 invested on September 30, 1998, in the Company stock, the S&P
Utilities Index and the S&P 500 Index. Cumulative total return includes
reinvestment of dividends.
** The twenty-four companies in the Company Peer Group noted above are as
follows: AGL Resources, Inc., Atmos Energy Corporation, Cascade Natural Gas
Corporation, Chesapeake Utilities Corp., NiSource, Inc., Consolidated Edison
Energy, Inc., Dominion Resources, Inc., Energy East Corporation, Keyspan
Energy Corp., Laclede Gas Co., Nicor, Inc., Northwest Natural Gas Co., NUI
Corporation, Oneok, Inc., PP&L Resources, Inc., Peoples Energy Corporation,
Piedmont Natural Gas Co., Inc., Public Service Enterprise Group, Inc., Scana
Corp., SEMCO Energy, Inc., Sempra Energy, South Jersey Industries, Inc.,
Vectren Corp., and Washington Gas Light Co. The Company includes the
performance of the Company Peer Group, because the Company Peer Group has a
higher percentage of natural gas utility and combination natural gas and
electric utility companies operating in the same region as the Company and
having comparable size and market capitalization to that of the Company, as
compared with the S&P Utilities Index.
15
RETIREMENT PLANS
The following table sets forth estimated annual benefits payable upon
retirement (including amounts attributable to the Plan for Retirement Allowances
for Non-Represented Employees (the "Retirement Allowance Plan") and any other
defined benefit supplementary or excess pension award plans) in specified
compensation and years of service classifications, and assumes a reduction of
approximately 10% which is applied to married employees in order to provide the
spouse a survivor's annuity of 50% of the employee's reduced retirement benefit:
PENSION PLAN TABLE
YEARS OF CREDITED SERVICE
COMPENSATION 10 15 20 25 30 35 40 45
------------ ------- -------- -------- -------- -------- -------- -------- --------
$150,000............. $19,984 $ 29,976 $ 39,968 $ 49,960 $ 59,952 $ 69,944 $ 78,381 $ 86,819
175,000............. 23,696 35,545 47,393 59,241 71,089 82,938 92,781 102,625
200,000............. 27,409 41,113 54,818 68,522 82,227 95,931 107,181 118,431
225,000............. 31,121 46,682 62,243 77,804 93,364 108,925 121,581 134,238
250,000............. 34,834 52,251 69,668 87,085 104,502 121,919 135,981 150,044
275,000............. 38,546 57,820 77,093 96,366 115,639 134,913 150,381 165,850
300,000............. 42,259 63,388 84,518 105,647 126,777 147,906 164,781 181,656
325,000............. 45,971 68,957 91,943 114,929 137,914 160,900 179,181 197,463
350,000............. 49,684 74,526 99,368 124,210 149,052 173,894 193,581 213,269
375,000............. 53,396 80,095 106,793 133,491 160,189 186,888 207,981 229,075
400,000............. 57,109 85,663 114,218 142,772 171,327 199,881 222,381 244,881
425,000............. 60,821 91,232 121,643 152,054 182,464 212,875 236,781 260,688
450,000............. 64,534 96,801 129,068 161,335 193,602 225,869 251,181 276,494
475,000............. 68,246 102,370 136,493 170,616 204,739 238,863 265,581 292,300
500,000............. 71,959 107,938 143,918 179,897 215,877 251,856 279,981 308,106
525,000............. 75,671 113,507 151,343 189,179 227,014 264,850 294,381 323,913
For the five executives named in the Summary Compensation Table,
compensation covered by the Retirement Allowance Plan equals their 5-year
average Base Salary.
The number of years of credited service at normal retirement for the named
executive officers are as follows:
YEARS OF
NAME CREDITED SERVICE
---- ----------------
Laurence M. Downes..................................... 37
Oleta J. Harden........................................ 30
Glenn C. Lockwood...................................... 38
Joseph P. Shields...................................... 39
Wayne K. Tarney........................................ 10
Benefits are computed on a straight life, annuity basis. The benefits
listed in the above table are not subject to deduction for Social Security or
other amounts.
To the extent benefits that would otherwise be payable to an employee under
the Company's Savings Plan exceed the specified limits on such benefits imposed
by the Code, the Company intends to pay such excess benefits to the employee at
the time the employee receives payment under the Retirement Allowance Plan.
These excess benefit payments would be made from the general funds of the
Company. As of September 30, 2003, two employees, Messrs. Downes and Lockwood,
were eligible for excess benefit payments.
16
The Company has supplemental retirement agreements ("Supplemental
Retirement Agreements") with Messrs. Downes, Lockwood, Shields and Tarney, and
Ms. Harden and certain other officers not named in the Summary Compensation
Table, payable over a five-year period commencing with retirement at age 65. At
projected retirement, the total maximum amounts currently payable to Messrs.
Downes, Lockwood, Shields and Tarney, and Ms. Harden under their respective
Supplemental Retirement Agreements would be $250,000 for Mr. Downes and $125,000
for each of the remaining four officers named in the Summary Compensation Table.
CHANGE OF CONTROL ARRANGEMENTS
Under the Long-Term Plan, in the event of a Change of Control (as defined
in the Long-Term Plan) of the Company, the Board may, among other things,
accelerate the entitlement to outstanding benefits awarded thereunder.
Pursuant to the Supplemental Retirement Agreements of Messrs. Downes,
Lockwood, Shields and Tarney, and Ms. Harden, in the event of a change of
control of the Company, the right to the amounts payable to each of them
thereunder becomes immediately vested and such amounts are immediately payable
in the event of a subsequent termination of employment for any reason. Change of
Control of the Company is defined in the Supplemental Retirement Agreements as a
reportable change of control under the proxy rules of the SEC, including the
acquisition of a 30% beneficial voting interest in the Company, or a change in
any calendar year in such number of directors as constitutes a majority of the
Board, unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
year.
The Company has entered into agreements with each of the 5 executives named
in the Summary Compensation Table that provide each such executive certain
rights in the event that his or her employment with the Company is terminated
within three years following the occurrence of a Change of Control (i) by the
Company without "Cause" (i.e., conviction of a felony, gross neglect, willful
malfeasance or willful gross misconduct which has had a material adverse effect
on the Company or repeated material willful violations of the executive's duties
which result in material damage to the Company) or (ii) by the executive for
"Good Reason" (e.g., due to a material breach of the agreement by the Company,
including, without limitation, a material adverse change in executive's position
or responsibilities or a reduction of the executive's compensation). Subject to
the limitation described below, upon either such termination of employment, the
executive will receive three times, in the case of Mr. Downes, and two times, in
all other cases, the sum of (x) his or her then annual base salary and (y) the
average of his or her annual bonuses with respect to the last three calendar
years ended prior to the Change of Control. The agreements further provide that,
if any such executive is subject to the so-called "golden parachute" excise tax
imposed under Section 4999 of the Code, the Company shall make an additional
payment to the executive in an amount sufficient to place the executive in the
same after-tax position as if no such excise taxes had been imposed. For
purposes of these agreements, a "Change of Control" generally means (i) the
acquisition by any person of beneficial ownership of securities representing 25%
or more of the combined voting power of the Company's securities; (ii) within
any 24-month period, the persons who were directors of the Company immediately
before such period (the "Incumbent Directors") and directors whose nomination or
election is approved by two-thirds of the Incumbent Directors and directors
previously approved by the Incumbent Directors ceasing to constitute a majority
of the Board or (iii) the shareholders of the Company approve a merger,
consolidation, share exchange, division, sale or other disposition of all or
substantially all of the assets of the Company, as a result of which the
shareholders of the Company immediately prior to such event do not hold,
directly or indirectly, a majority of the Voting Power (as defined in such
agreements) of the acquiring or surviving corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Apart from the delivery of gas service to any Director or executive officer
living in the Company's service territory, the Company does not engage in
transactions with its directors or executive officers.
17
APPOINTMENT OF AUDITORS
[ITEM (2) ON PROXY CARD]
ITEM 2
The Board intends to vote the shares represented by the proxies for
approval of the appointment of Deloitte & Touche LLP (unless otherwise indicated
on proxy) as independent public accountants (auditors) to report to the
shareholders on the financial statements of the Company for the fiscal year
ending September 30, 2004. Each professional service performed by Deloitte &
Touche LLP during fiscal 2003 was approved in advance and the possible effect on
the auditors' independence was considered by the Audit Committee. The Audit
Committee has retained Deloitte & Touche LLP to report to the shareholders on
the financial statements of the Company for the fiscal year ending September 30,
2004, subject to the approval of the shareholders at the Meeting. Although
submission of the appointment of independent public accountants to shareholders
is not required by law, the Board of Directors, consistent with its past policy,
considers it appropriate to submit the selection of auditors for shareholder
approval. Representatives of Deloitte & Touche LLP are expected to be present at
the Meeting with the opportunity to make a statement if they desire to do so and
to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented by proxy, and voted at the Meeting
is required for the approval of this item. The Board has not determined what
action it would take if the shareholders do not approve the selection of
Deloitte & Touche LLP, but would reconsider its selection if the shareholders'
action so warrants.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPOINTMENT OF DELOITTE & TOUCHE LLP
OTHER MATTERS
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the fiscal years ended September
30, 2003, and 2002 by the Company's principal accounting firm, Deloitte & Touche
LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte & Touche") are shown in the following table:
FISCAL YEAR ENDED
SEPTEMBER 30,
-------------------
2003 2002
-------- --------
Audit Fees(a)............................................... $474,100 $415,560
Audit-Related Fees(b)....................................... 34,400 --
-------- --------
Total Audit and Audit-Related Fees.......................... 508,500 415,560
Tax Fees(c)................................................. 47,375 72,765
All Other Fees.............................................. -- --
-------- --------
Total Fees........................................ $555,875 $488,325
======== ========
---------------
(a) Includes fees for audits of Company and subsidiary annual financial
statements, and reviews of Company financial statements included in the
Company's Quarterly Reports on Form 10-Q.
(b) Includes fees for Sarbanes-Oxley readiness training provided for the fiscal
year ended September 30, 2003.
(c) Includes fees for the review of the federal tax return of New Jersey
Resources Corporation and its subsidiaries for each of the two fiscal years
ended September 30, 2003 and 2002 as well as certain tax consultations in
2002.
18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
The Company believes that all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder)
were complied with during fiscal 2003.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies, including clerical work, printing, and
postage will be paid by the Company. Proxies may be solicited personally, or by
mail, telephone, facsimile, internet or telegraph, by officers and other regular
employees of the Company, but the Company will not pay any compensation for such
solicitations. In addition, the Company has agreed to pay The Altman Group, Inc.
a fee of $5,000 plus reasonable expenses for proxy solicitation services. The
Company will also reimburse brokers and other persons holding shares in their
names or in the names of nominees for their expenses for sending material to
beneficial owners and obtaining proxies from beneficial owners.
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2005 Annual
Meeting must be received by the Company on or before September 5, 2004 to be
considered for inclusion in the Company's Proxy Statement and for consideration
at that meeting. Shareholders submitting such proposals are required to be the
beneficial owners of shares of the Company's Common Stock amounting to at least
$2,000 in market value and to have held such shares for at least one year prior
to the date of submission.
Shareholder proposals submitted to the Company outside the processes of
Rule 14a-8 of the Exchange Act (i.e., the procedures for placing a shareholder
proposal in the Company's proxy materials) with respect to the Company's 2005
annual meeting of shareholders will be considered untimely if received by the
Company after October 29, 2004. Accordingly, the proxy with respect to the
Company's 2005 annual meeting of shareholders will confer discretionary
authority to vote on any shareholder proposals received by the Company after
such date.
OTHER BUSINESS
The Board does not know of any other business that may be brought before
the Meeting. However, if any other matters should properly come before the
Meeting or at any adjournment thereof, it is the intention of the persons named
in the accompanying proxy to vote on such matters as they, in their discretion,
may determine.
By Order of the Board of Directors
OLETA J. HARDEN
Secretary
Dated: December 19, 2003
19
APPENDIX A
AUDIT COMMITTEE CHARTER
The By-Laws of New Jersey Resources Corporation (together with its
subsidiaries, the "Company") in Article IV, Section 2 require the Board of
Directors ("Board") to appoint an Audit Committee ("Committee") composed of at
least three independent directors. The primary purposes of the Committee are (a)
to assist the Board in its oversight of (1) the integrity of the Company's
financial statements; (2) the Company's compliance with legal and regulatory
requirements; (3) the independent auditor's qualifications and independence; and
(4) the performance of the Company's internal audit function and independent
auditors, and (b) to prepare the report that SEC rules require to be included in
the Company's annual Proxy Statement. The By-Laws also require the Audit
Committee to (1) retain the Company's independent auditors; (2) review the plan
and scope of annual and other independent audits; (3) consult with the
independent auditors regarding audit results and financial statements (including
compliance with disclosure requirements); (4) oversee the adequacy of the system
of internal accounting control; (5) oversee the effectiveness of the internal
audit function (including reviewing and consulting with the internal auditors
with respect to internal audit results and recommendations); and (6) take such
other action as may be required by regulation or law.
The Board, acting in accordance with the By-laws and in furtherance
thereof, has adopted this Audit Committee Charter:
GENERAL
The Committee shall be appointed by the Board on an annual basis, and the
Board shall designate a Chairperson from among its members. All Committee
nominations are the responsibility of the Nominating/Corporate Governance
Committee comprised of independent directors. In accordance with the rules of
the New York Stock Exchange ("NYSE"), and the Composition/Expertise and
Independence Requirements thereof, and of the Securities and Exchange Commission
("SEC"):
- Each member shall be financially literate or must become financially
literate within a reasonable time after being appointed to the Committee.
In addition, at least one member shall be an audit committee financial
expert, as defined by the SEC. The Board shall determine whether the
members meet these criteria.
- The "Corporate Governance Guidelines" of the Company set forth the
requirements for a director to be considered independent from management
and the Company. In addition, Committee members shall meet the
requirements with respect to independence imposed by the rules of the
NYSE.
- No Committee member may simultaneously serve on the audit committees of
more than three public companies, unless the Board determines that such
simultaneous service does not impair the Committee member's ability to
effectively serve on the Committee and such determination is disclosed in
the Proxy Statement.
The head of the Internal Auditing Department of the Company ("head of
Internal Audit") shall report directly to the Chief Executive Officer of the
Company and to the Committee. The Committee shall have direct access to the
independent auditors.
MEETINGS
The Committee shall hold at least four regular meetings a year, and any
additional meetings that may be requested by a Committee member, the Board, the
Chief Executive Officer or the independent auditors.
In addition to Committee members, meetings shall normally be attended by
representatives of the independent auditors; the Chief Executive Officer, the
Chief Financial Officer and the Chief Accounting Officer of the Company; the
chief financial officer of New Jersey Natural Gas Company; and the head of
Internal Audit. Other persons, including officers and employees of the Company,
may be asked to attend at
A-1
the Committee's discretion. The Secretary of the Company shall attend the
meetings of the Committee to record the minutes thereof. For a portion of each
meeting, the Committee shall meet separately with the independent auditors, the
head of Internal Audit, the Chief Executive Officer, and other management
personnel the Committee deems appropriate. Non-members may be excused from any
meeting, or portion of any meeting, of the Committee upon the request of the
Committee Chairperson.
The Committee shall report to the Board any issues that arise with respect
to the quality or integrity of the Company's financial statements, the Company's
compliance with legal or regulatory requirement, the performance and
independence of the Company's independent auditors, and the performance of the
internal audit function.
INDEPENDENT AUDITORS
The Committee shall be directly responsible for the appointment (subject,
if applicable, to shareholder ratification), termination, compensation, and
oversight of the work of any registered public accounting firm engaged
(including resolution of disagreements between management and the Board
regarding financial reporting) by the Company for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services for
the Company. Each such registered public accounting firm shall report directly
to the Committee. All auditing and non-auditing services provided to the Company
by any such auditor shall be preapproved by the Committee.
The Committee shall:
- Discuss with management the selection or replacement of the independent
auditors; review with the independent auditors, prior to their audit, the
scope of their examination; review any non-audit services to be provided
by independent auditors and consider the possible effect, if any, of
these services on the independence of the independent auditors; review
with the independent auditors the estimated fees to be paid for the work
performed; evaluate at least annually, the independent auditor's
qualifications and performance, including an evaluation of the lead
partner of the independent auditor.
- Ensure the rotation of the lead audit partner at least every five years
and otherwise as required by law.
- Ensure that the independent auditors submit on a periodic basis a formal
written statement delineating all relationships between the independent
auditors and the Company; discuss with the independent auditors any such
relationships or any services that may impact on the objectivity and
independence of the independent auditors and take appropriate action in
response to such report to satisfy itself of such independence.
- Discuss with the independent auditors such other matters and take such
other action, including discussions with respect to the independent
auditors' responsibility under generally accepted auditing standards; any
audit problems and management's response; significant accounting
policies; proposed audit adjustments not recorded, if any; unusual
transactions; significant audit adjustments; other information in
documents containing audited financial statements; disagreements of the
independent auditors with management; the Company's consultation with
other accountants; major issues discussed with management prior to
retention of the independent auditors; any "management" or "internal
control" letter issued, or proposed to be issued, by the audit firm to
the Company; the responsibilities, budget and staffing of the Company's
internal audit function; and difficulties encountered in performing an
audit.
- Ensure hiring policies of the Company address employees or former
employees of the independent auditor.
- At least annually, obtain and review a report by the independent auditor
describing: the firm's internal quality-control procedures; any material
issues raised by the most recent internal quality-control review, or peer
review, of the 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
A-2
the firm, and any steps taken to deal with any such issues; and (to
assess the auditor's independence) all relationships between the
independent auditor and the Company.
- Present conclusions with respect to the independent auditor to the Board.
FINANCIAL STATEMENT MATTERS
The Committee shall:
- Oversee the quarterly and annual reporting of the Company by reviewing
the work of management and the independent auditors.
- Review and discuss with management and the independent auditors all
annual and other audited financial statements, quarterly financial
statements, and the Company's disclosures under "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
- Discuss earnings press releases, as well as financial information and
earnings guidance provided to analysts and rating agencies (i.e.,
discussion of the types of information to be disclosed and the type of
presentation to be made). The Committee need not discuss in advance each
earnings release or each instance in which the Company may provide
earnings guidance.
- Review major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and major
issues as to the adequacy of the Company's internal controls and any
special audit steps adopted in light of material control deficiencies.
- Receive from management, on a timely basis, advice of significant current
financial reporting issues and practices.
- Review analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments made
in connection with the preparation of the financial statements, including
analyses of the effects of all material alternative Generally Accepted
Accounting Principles ("GAAP") methods on the financial statements.
- Review the effect of regulations and accounting initiatives, as well as
any off-balance sheet structures, on the financial statements of the
Company.
- Discuss with management and the independent auditors their qualitative
judgments about the appropriateness of accounting policies, principles
and financial disclosure practices used or proposed to be adopted.
- Make such recommendations to the Board as the Committee deems appropriate
with respect to the inclusion of the audited financial statements in the
Company's Annual Report on Form 10-K for the last fiscal year for filing
with the SEC.
OTHER MATTERS
The Company shall provide the Committee appropriate funding, as determined
by the Committee, to pay (i) compensation to any accounting firm engaged for the
purpose of preparing or issuing an audit report or performing other audit review
or attest services for the Company; (ii) compensation to any legal, accounting
or other advisor the Committee shall retain and (iii) ordinary administrative
expenses of the Committee that are necessary or appropriate in carrying out its
duties.
The Committee shall:
- Oversee the internal audit function of the Company including (a) the
planned scope of the internal audit work, (b) findings of the internal
auditors and related management actions, (c) the adequacy of the staffing
of the internal audit function, (d) the adequacy and effectiveness of the
internal accounting controls and compliance with the Foreign Corrupt
Practices Act, (e) the adequacy, effectiveness and compliance with the
Code of Conduct of the Company, (f) the effectiveness of the electronic
data
A-3
processing procedures and controls and related security programs, and (g)
review the independent auditors' letter to management, and other
comments, if any, regarding the system of internal accounting controls
and review any management response thereto.
- Review major issues, if any, arising from an assessment of the adequacy
of the Company's internal controls and any special audit steps adopted in
light of material control deficiencies.
- Discuss policies with respect to risk assessment and risk management,
including guidelines and policies to govern the risk assessment and risk
management process, as well as the Company's major financial risk
exposures and the steps management has taken to monitor such risk
exposures.
- Discuss with the Chief Executive Officer and Chief Financial Officer any
significant deficiencies in the design and operation of internal
controls, any material weaknesses in internal controls and matters of
fraud as contemplated by Section 302 of the Sarbanes-Oxley Act of 2002.
- Prepare a report to shareholders as required by the SEC to be included in
the Proxy Statement.
- As it deems necessary to carry out its duties, obtain advice and
assistance from outside legal, accounting or other advisors.
- Establish formal procedures for receiving and handling complaints.
Specifically, the Committee establishes procedures for (a) the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and (b) the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
- Perform an annual performance evaluation of the Committee.
- Reassess the adequacy of this Charter and the Internal Audit Department
Charter on an annual basis.
- Review such other matters as the Committee shall determine from time to
time, within the scope of its responsibilities, and make such
recommendations to the Board with respect thereto as the Committee deems
appropriate.
A-4
SKU 2510-PS-04
DETACH HERE
PROXY
NEW JERSEY RESOURCES CORPORATION
1415 WYCKOFF ROAD, WALL, NJ 07719
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2004 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Oleta J. Harden and Gary W. Wolf, with full
power of substitution, proxy to represent the undersigned at the Annual Meeting
of Shareholders of New Jersey Resources Corporation to be held at 10:30 a.m.,
local time, on Wednesday, January 21, 2004, at the Robert B. Meyner Reception
Center at the PNC Bank Arts Center, Exit 116 on the Garden State Parkway,
Holmdel, New Jersey 07733 and at any adjournment thereof, and thereat to vote
all of the shares of stock which the undersigned would be entitled to vote, and,
if applicable, hereby directs the trustee(s) of the employee benefit plan(s)
shown on the reverse side of this card to vote the shares of stock allocated to
the account of the undersigned.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
NEW JERSEY RESOURCES CORPORATION
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
VOTE-BY-INTERNET [COMPUTER GRAPHIC] VOTE-BY-TELEPHONE [PHONE GRAPHIC]
OR
LOG ON TO THE INTERNET AND GO TO CALL TOLL-FREE
HTTP://WWW.EPROXYVOTE.,COM/NJR 1-877-PRX-VOTE (1-877-779-8683)
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZNJR41
2510
[ X ] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED "FOR" ALL NOMINEES FOR
ELECTION AS DIRECTED AND "FOR" THE PROPOSALS REFERRED TO HEREIN.
FOR AGAINST ABSTAIN
2. To approve the retention of Deloitte & [ ] [ ] [ ]
1. Election of Directors Touche LLP as auditors for the fiscal year
NOMINEES: (01) Lawrence R. Codey, (02) Laurence M. ending September 30,2004.
Downes, (03) R. Barbara Gitenstein, (04)
Alfred C. Koeppe, (05) William H. Turner
FOR WITHHELD
ALL [ ] [ ] FROM ALL 3. To transact any other business that may properly be brought
NOMINEES NOMINEES before the meeting or any adjournment or adjournments thereof.
[ ]
----------------------------------------------
For all nominee(s) except as written above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
In case of joint owners, each owner should sign. When signing in a
fiduciary or representative capacity, please give full title as such.
Proxies executed by a corporation should be signed in full corporate
name by duly authorized officer.
Signature: Date: Signature: Date:
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