-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ObY8MTkVCscrq6vHgGB+2ooRizofJtQLgJ/jxk771XerxjGHK/laaMeUVRpcHN8D F7nopgnP7kNstYyXZKoaLA== 0000203248-95-000015.txt : 19951121 0000203248-95-000015.hdr.sgml : 19951121 ACCESSION NUMBER: 0000203248-95-000015 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950927 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN UNION CO CENTRAL INDEX KEY: 0000203248 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 750571592 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06407 FILM NUMBER: 95576342 BUSINESS ADDRESS: STREET 1: 504 LAVACA ST 8TH FL CITY: AUSTIN STATE: TX ZIP: 78701 BUSINESS PHONE: 5124775852 DEF 14A 1 Southern Union Company 504 Lavaca Street, Eighth Floor Austin, Texas 78701 September 29, 1995 Dear Stockholder: You are cordially invited to attend the Annual Meeting of Stockholders of Southern Union Company to be held at 2:00 p. m. (Central Standard Time) on Tuesday, November 7, 1995 in the eighth floor atrium of the Company's offices at Lavaca Plaza, 504 Lavaca Street, Austin, Texas. A notice of the meeting, a proxy and a proxy statement containing information about the matters to be acted upon are enclosed. In addition to the specific matters to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the stockholders. Whether or not you plan to attend the meeting on November 7, 1995 please mark, sign and date the enclosed proxy and return it in the envelope provided (which requires no postage if mailed in the United States) so that your shares will be represented. Your prompt cooperation will be appreciated. On behalf of the Board of Directors, Sincerely, GEORGE L. LINDEMANN Chairman of the Board and Chief Executive Officer Southern Union Company 504 Lavaca Street, Eighth Floor Austin, Texas 78701 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held November 7, 1995 To the Holders of Common Stock of SOUTHERN UNION COMPANY: NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stock- holders (the "Meeting") of Southern Union Company, a Delaware corporation (the "Company"), will be held in the eighth floor atrium of the Company's office at Lavaca Plaza, 504 Lavaca Street, Austin, Texas, on Tuesday, November 7, 1995 at 2:00 p. m. (Central Standard Time) for the purpose of considering and acting upon: (i) the election of four persons to serve as the Class II directors until the 1998 Annual Meeting of Stockholders or until their successors are duly elected and qualified; (ii) a proposed increase in employee contributions subject to Company matching from two percent to five percent under the Southern Union Company Supplemental Deferred Compensation Plan; and (iii) such other business as may properly come before the Meeting or any adjourn- ment or postponement thereof. The Board of Directors is not aware of any other business to come before the Meeting. The Board of Directors has fixed September 22, 1995, as the record date (the "Record Date") for the determination of stock- holders entitled to notice of, and to vote at, the Meeting and any adjournment or postponement thereof. Only holders of record of the Company's common stock, par value $1.00 per share ("Common Stock"), at the close of business on the Record Date are entitled to vote on all matters coming before the Meeting or any adjourn- ment or postponement thereof. A complete list of stockholders of record entitled to vote at the Meeting will be maintained in the Company's offices at 504 Lavaca Street, Eighth Floor, Austin, Texas 78701, for ten days prior to the Meeting. Whether or not you plan to attend the Meeting in person, please mark, execute, date and return the enclosed proxy in the envelope provided (which requires no postage if mailed within the United States). Should you attend the Meeting in person you may, if you wish, withdraw your proxy and vote your shares in person. By Order of the Board of Directors, DENNIS K. MORGAN Secretary Austin, Texas September 29, 1995 Southern Union Company 504 Lavaca Street, Eighth Floor Austin, Texas 78701 ------------------- PROXY STATEMENT ------------------- The accompanying proxy, to be mailed to stockholders together with the Notice of Annual Meeting and this Proxy Statement on or about October 2, 1995, is solicited by Southern Union Company (the "Company") in connection with the Annual Meeting of Stock- olders to be held on November 7, 1995 (the "Meeting"). A proxy may be revoked by a stockholder at any time prior to its exercise by executing and returning another proxy bearing a later date, by giving written notice of revocation to the Secretary of the Company, or by attending the Meeting and voting in person. All properly executed, unrevoked proxies received before the Meeting will be voted in accordance with the directions of the stockholders. When no direction has been given by a stockholder returning a signed proxy, the proxy will be voted FOR ALL NOMINEES named in this proxy statement for election as directors and FOR the proposed increase in employee contributions subject to Company matching from two percent to five percent under the Southern Union Company Supplemental Deferred Compensation Plan. Proxies should NOT be sent by stockholders to the Company but to Continental Stock Transfer & Trust Company, the Company's Registrar and Transfer Agent, at 2 Broadway, New York, New York 10275-0491. September 22, 1995, has been set as the record date (the "Record Date") for determination of stockholders entitled to notice of and to vote at the Meeting. Holders of the Company's common stock, $1.00 par value (the "Common Stock"), at the close of business on the Record Date will be entitled to one vote per share on all proper business brought before the Meeting. With respect to the election of directors, holders of Common Stock have cumulative voting rights, which entitle each stockholder to that number of votes which equals the number of shares held multiplied by the number of directors to be elected. The Bylaws of the Company provide that any stockholder who intends to so cumulate votes must give written notice to the Secretary of the Company no later than ten (10) days after the date on which notice of the Meeting was first sent to stockholders. On the Record Date, there were outstanding and entitled to vote 11,518,622 shares of Common Stock. The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock entitled to vote at the Meeting will constitute a quorum. Proxies submitted that contain abstentions or broker non-votes will be deemed present at the Meeting for purposes of determining the presence of a quorum. In all matters other than the election of directors, the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the subject matter shall constitute shareholder action. Accordingly, an abstention other than with respect to the election of a director has the same effect as a negative vote. Directors are elected by a plurality of the votes of shares present in person or represented by proxy and entitled to vote in the election. ELECTION OF DIRECTORS The Board of Directors of the Company is divided into three classes, each of which serves a staggered three-year term. The terms of the Class II directors expire at the Meeting. The Class III directors will serve until the 1996 Annual Meeting of Stock- holders and the Class I directors will serve until the 1997 Annual Meeting of Stockholders. Aaron I. Fleischman, Kurt A. Gitter, Adam M. Lindemann and George Rountree, III (the "Nominees") are the Class II directors standing for election for a three-year term of office expiring at the 1998 Annual Meeting of Stockholders or when their successors are duly elected and qualified. The Company is informed that each of the Nominees is willing, if elected, to serve as a director; however, if any of them should decline or become unable to serve as a director for any reason, votes will be cast instead for a substitute nominee designated by the Board of Directors or, if none is so designated, will be cast according to the judgment of the person or persons voting the proxy. If cumulative voting is in effect at the Meeting, unless authority is withheld, the persons named in the enclosed proxy will allocate the votes represented by such proxy in the manner they deem proper in their best judgment. Pursuant to the Company's Bylaws, any stockholder entitled to vote at a meeting called for the election of directors may nomi- nate candidates for election as directors if written notice is delivered to the Company's Secretary at least 45 days before an annual meeting (which was September 25, 1995 for the Meeting) or no later than ten days after the date of the notice of a special meeting. Accordingly, no stockholder may make additional nomina- tions at the Annual Meeting. The notice must include certain information about the nominating stockholder and the nominees. Certain persons are also disqualified from serving as directors. A copy of the relevant Bylaw provisions may be obtained from the Company's Secretary. As of the date hereof, no stockholder has nominated any person to serve as a director of the Company. The following pages contain information concerning the Nominees and the directors whose terms of office will continue after the meeting. Nominees Class II - Term expires in 1998 Aaron I. Fleischman has been Senior Partner of Fleischman and Walsh, L.L.P., a Washington, D.C. law firm specializing in regu- latory, corporate-securities and litigation matters for telecom- munications and regulated utility companies since 1976. Mr. Fleischman is also a director of Citizens Utilities Company. Age: 56. Kurt A. Gitter, M.D. has been an ophthalmic surgeon in private practice in New Orleans, Louisiana, since 1969. He has also been a Clinical Professor of Ophthalmology at Louisiana State Univer- sity since 1978 and an assistant professor of ophthalmology at Tulane University since 1969. From 1986 to 1993 Mr. Gitter served as Chief of Ophthalmology at Touro Infirmary. Mr. Gitter has been a Director of the Company since June 1995. Age: 58. Adam M. Lindemann has been a securities analyst for Oppenheimer & Company since November 1994. Previously during 1994, he was a corporate finance associate with Perry Partners, a money manage- ment firm. From May 1992 until 1994 he was primarily engaged in private investments. Prior to May 1992, he had been Vice President - Corporate Development of Metro Mobile CTS, Inc. ("Metro Mobile") and President of Vision Energy Resources, Inc., a wholly owned subsidiary of Metro Mobile primarily engaged in the distribution of propane. Adam M. Lindemann is the son of George L. Lindemann, Chairman of the Board and Chief Executive Officer of Southern Union. Age: 34. George Rountree, III has been an attorney in private practice in Wilmington, North Carolina where he has been a senior partner in the firm of Rountree & Seagle since its formation in 1977. Age: 62. THE BOARD RECOMMENDS A VOTE FOR ALL NOMINEES TO SERVE AS CLASS II DIRECTORS. Directors Continuing in Office Class I - Term expires in 1997 John E. Brennan has been Vice Chairman of the Board of Southern Union since February 1990. Mr. Brennan devotes only a small part of his business time to the Company. Mr. Brennan has been pri- marily engaged in private investments since May 1992. Prior to May 1992, Mr. Brennan had been President and Chief Operating Officer of Metro Mobile. Age: 49. Frank W. Denius has been a director of Southern Union since 1976 and previously served as a director from 1955 to 1975. Since February 1990, Mr. Denius has been Chairman Emeritus of the Com- pany. Mr. Denius was Chairman of the Board and President of the Company from 1986 until February 1990 and Chief Executive Officer from 1985 until February 1990. Since February 1990, Mr. Denius has been engaged primarily in the private practice of law in Austin, Texas. Mr. Denius is also a director of TCC Industries. Age: 70. Roger J. Pearson has been an attorney in private practice in Stamford, Connecticut for more than the past five years. He has been of counsel to the firm of Neville, Shaver, Kelly & McLean since 1991. Mr. Pearson was First-Selectman (Mayor) of Green- wich, Connecticut from 1983 to 1985. Mr. Pearson has been a Director of the Company since January 1992. Age: 49. Class III - Term expires in 1996 George L. Lindemann has been Chairman of the Board and Chief Executive Officer of Southern Union since February 1990. He has been Chairman of the Executive Committee of the Board of Directors since March 1990. Mr. Lindemann does not devote his full business time to the Company. He was Chairman of the Board and Chief Executive Officer of Metro Mobile from its formation in 1983 through April 1992. He has been President and a director of Cellular Dynamics, Inc., the managing general partner of Activated Communications Limited Partnership, a private invest- ent business, since May 1982. Age: 59. Peter H. Kelley has been President and Chief Operating Officer of Southern Union since February 1990, President and Chief Operating Officer of Southern Union Gas Company ("Southern Union Gas"), a division of the Company, since October 1990, and Chief Executive Officer of Missouri Gas Energy ("MGE"), a division of the Com- pany, since December 1993. From December 1993 to September 1995, Mr. Kelley was also President of MGE. Prior to joining the Com- pany, he had been an officer of Metro Mobile since 1986. Mr. Kelley is also a director of Texas Commerce Bank, N.A. -- Austin. Age: 48. Dan K. Wassong has been the President, Chief Executive Officer and a director of Del Laboratories, Inc., a manufacturer of cosmetics, toiletries and pharmaceuticals, for more than the past five years. Mr. Wassong is also a director of Moore Medical Corporation. Age: 65. With the exception of Messrs. Denius, Gitter and Pearson as described above, each of the above-named directors and Nominees first became a director of the Company in February 1990. EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS Executive Officers of the Company are elected by the Board to serve at the pleasure of the Board or until their successors are elected and qualified. Generally, officers are reelected annually by the Board. The following Executive Officers of the Company are not directors. C. Thomas Clowe, Jr. has been President and Chief Operating Officer of MGE since September 1995. Prior to joining the Com- pany, Mr. Clowe served as Chairman of the Board, President and Chief Executive Officer of Central Freight Lines, Inc. from 1990 until 1995. Age: 62. Ronald J. Endres has been Senior Vice President - Finance and Administration since October 1990 and Chief Financial Officer since October 1989. He has been a Senior Vice President since April 1987. Previously, Mr. Endres held other financial and operating positions with the Company since June 1969. Mr. Endres was President of Southern Union Gas from January 1986 until October 1990. Age: 51. David J. Kvapil has been Vice President - Controller since July 1993 and Controller since August 1992. Prior to joining the Company in 1992, Mr. Kvapil was with the accounting firm of Coopers & Lybrand L.L.P. Age: 40. Dennis K. Morgan has been Vice President - Legal and Secretary since April 1991 and a Vice President since January 1991. Previously, he held various legal positions with Southern Union Exploration Company, a former oil and gas subsidiary of the Company. Age: 47. Donald A. Scovil has been Senior Vice President - Planning since October 1990. He was Vice President - Controller of Southern Union Gas from 1984 until October 1990. Previously, Mr. Scovil held other financial positions with the Company since 1978. Age: 46. THE BOARD OF DIRECTORS The Board of Directors has an Executive Committee, composed of Messrs. George Lindemann (Chairman), Brennan and Kelley. The Executive Committee held one meeting and acted by unanimous written consent on six occasions during fiscal year 1995. During the intervals between meetings of the Board of Directors, this committee has the authority to, and may exercise all of the powers of, the Board of Directors in the management of the busi- ness, property and affairs of the Company in all matters that are not required by statute or by the Company's Certificate or Bylaws to be acted upon by the Board of Directors. This committee must exercise such authority in such manner as it deems to be in the best interests of the Company and consistent with any specific directions of the Board of Directors. The Board of Directors has an Audit Committee, currently composed of Messrs. Pearson (Chairman) and Rountree. The Audit Committee met three times during fiscal year 1995. This committee has the duties of recommending to the Board of Directors the appointment of independent auditors, reviewing their charges for services, reviewing the scope and results of the audits performed, reviewing the adequacy and operation of the Company's internal audit function, and performing such other duties or functions with respect to the Company's accounting, financial and operating controls as deemed appropriate by it or the Board of Directors. The Board of Directors has a Long-Term Stock Incentive Plan Com- mittee which may consist of no fewer than two directors. The committee is currently composed of Messrs. Rountree (Chairman) and Pearson who have the authority to make all decisions regarding: (i) the granting of awards under the Company's 1992 Long-Term Stock Incentive Plan (the "1992 Plan"); (ii) eligibility of employees to receive awards under the 1992 Plan; and (iii) interpretation of the 1992 Plan. To serve on the Plan Committee a director may not receive any awards under the 1992 Plan during the prior year, and cannot currently be eligible to receive any awards under the 1992 Plan. The Board of Directors held two meetings and acted by unanimous written consent on ten occasions during fiscal year 1995. Except for Mr. Aaron I. Fleischman, who was unable to attend one meeting of the Board of Directors, all directors attended all of the meetings of the Board and committees on which they served that were held in fiscal year 1995 while they were directors and a member of any such committee. Compensation for each director is $20,000 per year, payable in quarterly installments, except for: Mr. George Lindemann (who receives $200,000 per year as Chairman of the Board and Chief Executive Officer of the Company and Chairman of the Executive Committee); Mr. Brennan (who receives $80,000 per year as Vice Chairman of the Board of the Company and a member of the Executive Committee); Mr. Kelley (who receives no compensation as a director in addition to his compensation as a full-time executive officer and employee of the Company and its divisions and subsidiaries); and the chairman and each other mem- ber of the Audit Committee of the Company's Board of Directors, who receive $30,000 and $25,000 per year, respectively. Members of the Board of Directors also are reimbursed for travel expenses incurred in connection with Company business, including attendance at meetings of the Board of Directors and its committees. The Board of Directors has a Directors' Deferred Compensation Plan which is designed to attract and retain well-qualified individuals to serve as outside directors and to enhance the identity of their interests and the interests of stockholders. Participation in the Directors' Deferred Compensation Plan is optional and is subject to an irrevocable election to satisfy the requirements of the exemption from the short-swing profit rules of the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended. Under the Directors' Deferred Compensation Plan, each director who is not also an employee of the Company may choose to defer all or any percentage of his or her director's fees and invest such deferred amount in Common Stock, if an appropriate irrevo- cable written election to defer is made at least six months prior to the beginning of the year to which such deferral applies. The Directors' Deferral Plan requires the Company to make a matching contribution of 50% of the first 7% of the participant's total director's fees, to the extent deferred. A participating director is 100% vested with respect to the amount of director's fees that he elects to defer and any related income, gains and losses. The Company's matching contributions do not vest until the participating director either has completed five (5) years of service as a director or dies while serving as a director. Deferred amounts may not be withdrawn by a partici- pant until (i) thirty (30) days after such time as the director either retires or ceases to be a director of the Company; or (ii) with the permission of the Board in the event of an unforeseeable emergency arising from events beyond the control of the partici- pant which results in severe financial hardship. The Directors' Deferred Compensation Plan operates under pro- cedures set forth in such plan. No discretion regarding adminis- tration of the Directors' Deferred Compensation Plan is vested in the Board, any committee of the Board, or any officer or director of the Company. The Board may terminate, suspend or amend the Directors' Deferred Compensation Plan; provided that, certain material amendments must be submitted for stockholder approval to the extent necessary for the Directors' Deferred Compensation Plan to satisfy the requirements of the exemption from the short- swing profit rules of the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended. Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, each director and executive officer of the Company was required to report in a timely manner to the Securities Exchange Commission on Form 3, Form 4 and/or Form 5 any change to his or her beneficial ownership of the Company's Common Stock, or derivative interests therein, that occurred during the Company's fiscal year ended June 30, 1995. During the said fiscal year, there was one late filing made pursuant to Section 16(a): Dan K. Wassong, a director of the Company, reported the purchase in December 1994 of 1,000 shares of the Company's Common Stock on a Form 4 on January 13, 1995, three days after the January 10, 1995 deadline for the filing of such form. The Company is aware of no other reporting violation under Section 16(a) by its directors, executive officers or securities holders. SECURITY OWNERSHIP The following table sets forth the number of all shares of the Company's Common Stock beneficially owned by each director, by each executive officer named in the management compensation tables and related footnotes (see "Management Compensation"), by each person known by the Company to beneficially own 5% or more of the Company's outstanding Common Stock, and by all directors and executive officers as a group on September 22, 1995, unless otherwise indicated in the footnotes. Each of the following per- sons and members of the group had sole voting and investment power with respect to the shares shown unless otherwise indicated in the footnotes. Percent of Name of Beneficial Owner Number Of Shares Held Class - - ---------------------------- --------------------- ---------- George L. Lindemann 1,665,053(1)(2) 14.41% Adam M. Lindemann 999,553(2) 8.68% George Lindemann, Jr. 999,553(2) 8.68% 11950 Maidstone Drive Wellington, Florida 33414 Sloan N. Lindemann 999,553(2) 8.68% 800 Fifth Avenue New York, New York 10022 John E. Brennan 180,111(3) 1.55% Frank W. Denius 11,570(4) * Aaron I. Fleischman 148,142(5) 1.28% Kurt A. Gitter, M.D. 66,479 * Peter H. Kelley 74,736(6) * Roger J. Pearson 8,543(7) * George Rountree, III 20,369(8) * Dan K. Wassong 9,690 * Eugene N. Dubay 45,766(9) * Ronald J. Endres 65,640(10) * Dennis K. Morgan 6,701(11) * Lee M. Bass 604,208(12)(13) 5.25% 201 Main Street Fort Worth, Texas 76102 Sid R. Bass Management Trust(14) 604,208(12)(15) 5.25% 201 Main Street Fort Worth, Texas 76102 Snyder Capital Management, Inc.(16) 636,574(16) 5.53% 350 California Street Suite 1460 San Francisco, California 94104 All Directors and Executive Officers as a group (15 in group) 3,310,991(17) 27.96% - - ---------------------------- (1) Of these shares: 738,008 are owned by Mr. Lindemann including approximately 892 vested shares held by the Southern Union Savings (401(k)) Plan and 727 vested shares held through the Southern Union Company Supplemental Deferred Compensation Plan; 890,820 shares owned by his wife, Dr. F.B. Lindemann; and 36,225 shares of common stock Mr. Lindemann is entitled to purchase upon the exer- cise of presently exercisable stock options pursuant to the Company's 1992 Long-Term Stock Incentive Plan (the "1992 Plan"). Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensa- tion." A total of 1,633,761 shares held by Mr. and Mrs. Lindemann and their three children have been pledged to Activated Communications Limited Partnership ("Activated"). Activated, which is owned and managed by or for the benefit of the Lindemanns, provided the funds used to purchase such shares. Mr. Lindemann is the Chairman of the Board and President, and Mrs. Lindemann is a director of the sole general partner of Activated. (2) This information regarding direct share ownership by mem- bers of the Lindemann family was obtained from and is re- ported herein in reliance upon a Schedule 13D (as amended through November 4, 1994) filed by Adam M. Lindemann, Dr. F.B. Lindemann, George L. Lindemann, George Lindemann, Jr. and Sloan N. Lindemann. Except as described in Note (1), each member of the Lindemann family disclaims bene- ficial ownership of any shares owned by any other member of the Lindemann family. Accordingly, except as described in Note (1), the numbers of shares set forth in the table were obtained from said Schedule 13D and reflect only such individual's direct ownership. (3) Of these shares, approximately 437 vested shares are held by the Southern Union Savings (401(k)) Plan , 357 vested shares are held through the Southern Union Company Supple- mental Deferred Compensation Plan, 1,865 shares are owned by his wife, 78,246 are held in two separate trusts for the benefit of members of his family and 77,175 represent shares that Mr. Brennan is entitled to purchase upon the exercise of presently exercisable stock options granted to him pursuant to the Company's 1982 Stock Option Plan (the "1982 Plan") and the 1992 Plan. Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensation - Stock Options." (4) Includes 5,250 shares that The Effie and Wofford Cain Foundation, in which Mr. Denius is a Director, own and approximately 1,040 vested shares allocated to Mr. Denius pursuant to the Southern Union Company Directors' Deferred Compensation Plan. Mr. Denius disclaims beneficial owner- ship of those shares held by the Foundation since he does not have a pecuniary interest in or control the Founda- tion's assets. (5) Includes: 39,375 shares that Fleischman and Walsh, L.L.P., in which Mr. Fleischman is Senior Partner, is entitled to purchase upon exercise of a warrant; approximately 2,011 vested shares allocated to Mr. Fleischman pursuant to the Southern Union Company Directors' Deferred Compensation Plan; and 39,309 shares owned by the Fleischman and Walsh, L.L.P. 401(k) Profit Sharing Plan ("F&W Plan") for which Mr. Fleischman is a trustee and a beneficiary. Mr. Fleischman disclaims beneficial ownership of those shares held by the F&W Plan in which he does not have a pecuniary interest. (6) Includes 61,425 shares that Mr. Kelley is entitled to purchase upon the exercise of presently exercisable stock options granted pursuant to the 1982 Plan and the 1992 Plan. Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensation." Such number also includes: approximately 4,869 vested shares held by the Southern Union Savings (401(k)) Plan; 274 vested shares held through the Southern Union Stock Pur- chase Plan; and 1,776 vested shares held through the Southern Union Company Supplemental Deferred Compensation Plan (the "Supplemental Plan"). (7) Includes 6,737 shares owned jointly by Mr. Pearson and his father. (8) Includes: 542 shares owned by his wife; and approximately 2,439 vested shares allocated to Mr. Rountree pursuant to the Directors' Deferred Compensation Plan. (9) Includes 40,950 shares Mr. Dubay is entitled to purchase upon the exercise of presently exercisable stock options pursuant to the 1982 Plan and the 1992 Plan. Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensation." Such number also includes: approximately 1,257 vested shares held through the Southern Union (401(k)) Savings Plan; and 1,821 vested shares held through the Supplemental Plan. In September 1995, Mr. Dubay tendered his resignation to the Company. (10) Includes 58,275 shares Mr. Endres is entitled to purchase upon the exercise of presently exercisable stock options pursuant to the 1982 Plan and the 1992 Plan. Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensation." Such number also includes: approximately 2,650 vested shares held through the Southern Union (401(k)) Savings Plan; and 1,455 vested shares held through the Supplemental Plan. (11) Includes 4,725 shares Mr. Morgan is entitled to purchase upon the exercise of presently exercisable stock options pursuant to the 1992 Plan. Such number excludes options to acquire shares of common stock that are not exercisable within sixty days of the date hereof. See "Management Compensation." Such number also includes: approximately 1,350 vested shares held through the Southern Union (401(k)) Savings Plan; and approximately 626 vested shares held through the Supplemental Plan. (12) Does not include 51,975 (representing less than 1% of the common stock outstanding) owned by BEPCO International, Inc., which is owned in equal parts by Lee M. Bass, Sid R. Bass and two other persons. Neither Lee M. Bass nor Sid R. Bass is a director or officer of BEPCO International, Inc. This information, the information set forth in note (14) and the number of shares owned by Lee M. Bass and Sid R. Bass Management Trust set forth in the table were obtained from and is reported herein in reliance upon a Schedule 13D filed by Sid R. Bass, Lee M. Bass, Sid R. Bass Management Trust and BEPCO International, Inc., as adjusted for the stock dividend and split since the date of such reports. (13) Does not include shares reported to be held by Sid R. Bass Management Trust. See notes (12), (14) and (15). (14) Sid R. Bass Management Trust is a Revocable Trust under Texas law for which Sid R. Bass, Lee M. Bass and one other person are trustees. See note (12). (15) Does not include shares reported to be held by Lee M. Bass. See notes (12) and (13). (16) This information was obtained from and is reported herein in reliance upon a Schedule 13G filed by Snyder Capital Management, Inc., as adjusted for the stock dividend and split since the date of such reports. (17) Excludes options granted pursuant to the 1982 Plan and the 1992 Plan to acquire shares of common stock that are not presently exercisable or do not become exercisable within sixty days of the date hereof. Includes approximately 26,949 vested shares held through certain Company benefit and deferred savings plans for which certain executive officers and directors may be deemed beneficial owners, but excludes shares which have not vested under the terms of such plans. * Indicates less than one percent (1%). MANAGEMENT COMPENSATION The following table sets forth the remuneration paid by the Company and its subsidiaries (i) to the Chairman of the Board and Chief Executive Officer and (ii) to each of the four most highly compensated key executive officers of the Company for the years indicated: Summary Compensation Table Secur- ities Other Under- All Name and Annual lying Other Principal Compen- Options Compen- Position Year* Salary Bonus sation(1) SARs(2) sation(3) - - ------------- ----- -------- ------- --------- ------- --------- George L. Lindemann Chairman of 1995 $166,017 $ -- $380,000 -- 5,870 the Board 1994 115,787 -- -- 39,375 2,127 and Chief 1993 110,024 -- -- -- -- Executive Officer Peter H. Kelley President 1995 338,900 -- -- -- 36,618(4) and Chief 1994 274,998 -- -- 39,375 6,713 Operating 1993 261,520 -- -- -- 3,865 Officer Eugene N. Dubay(5) Executive 1995 178,584 9,000 -- -- 2,048 Vice 1994 169,765 75,149 220,000 15,570 45,366(6) President 1993 153,870 9,378 -- -- 4,636 and Chief Operating Officer -- Missouri Gas Energy Ronald J. Endres Senior Vice 1995 199,751 26,096 -- -- 5,051 President - 1994 184,302 80,654 -- 23,625 9,073 Finance and 1993 176,147 1,585 -- -- 4,805 Administra- tion and Chief Finan- cial Officer Dennis K. Morgan Vice 1995 118,560 21,127 -- -- 5,006 President - 1994 108,602 55,567 -- 7,875 6,411 Legal and 1993 104,450 853 -- -- 3,873 Secretary - - -------------------------- * Compensation in 1995 and 1994 reflects the twelve months ended June 30 while compensation in 1993 reflects the year ended December 31. (1) Includes for the years indicated the difference between the price paid by the individual for common stock of the Com- pany purchased from the Company upon the exercise of stock options and the fair market value of such common stock. (2) No Stock Appreciation Rights were granted in 1995, 1994 or 1993. (3) Company matching provided through the Southern Union (401(k)) Savings Plan and the Southern Union Company Sup- plemental Deferred Compensation Plan. (4) Includes $27,761 for forgiveness of debt by the Company. See "Certain Relationships." (5) In September 1995 Mr. Dubay resigned as Executive Vice President and Chief Operating Officer of Missouri Gas Energy. (6) Includes moving expenses for relocation from Texas to Missouri. OPTION GRANTS IN 1995 There were no stock options granted during 1995 to the persons named in the Summary Compensation Table. OPTIONS/SARS EXERCISED IN 1995 AND 1995 YEAR-END VALUES The following table provides information regarding the exercise of stock options by each of the named executive officers and the value of unexercised "in-the-money" options as of June 30, 1995. Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options at Options at Fiscal Year End Fiscal Year End Shares Exercisable/ Exercisable/ Acquired Unexercisable(1) Unexercisable(2) ---------------- ---------------- on Value Exer- Unexer- Exer- Unexer- Name Exercise Realized cisable cisable cisable cisable - - ------------ -------- -------- ------- ------- ------- ------- George L. Lindemann 50,400 $380,000 36,225 70,875 $248,448 $352,761 Peter H. Kelley * * 61,425 70,875 515,568 365,203 Eugene N. Dubay * * 40,950 37,800 370,960 233,840 Ronald J. Endres * * 58,275 44,100 534,988 236,959 Dennis K. Morgan * * 4,725 11,025 25,964 40,895 - - --------------------- * No options were exercised during the year ended June 30, 1995 by the named executive officer. (1) The securities underlying unexercised options have been adjusted to reflect the 5% stock dividend distributed on June 30, 1994 to stockholders of record on June 14, 1994 and the three for two stock split distributed as a 50% stock dividend on March 9, 1994 to stockholders of record on February 23, 1994. (2) Based on a closing price on June 30, 1995 of 18 1/8 per share as reported by the New York Stock Exchange. RETIREMENT BENEFITS The following table reflects the combined benefits available from Plans A and B, described below and the non-qualified plan. PENSION PLAN TABLE Years of Service ------------------------------------------------ Remuneration 15 20 25 30 35 - - ------------ -------- -------- -------- -------- -------- $ 125,000 $ 40,400 $ 53,867 $ 53,867 $ 54,605 $ 63,705 150,000 49,775 66,367 66,367 66,605 77,705 175,000 59,150 78,867 78,867 78,867 91,705 200,000 68,525 91,367 91,367 91,367 105,705 225,000 77,900 103,867 103,867 103,867 109,200 250,000 87,275 109,200 109,200 109,200 109,200 300,000 106,025 109,200 109,200 109,200 109,200 400,000 109,200 109,200 109,200 109,200 109,200 450,000 109,200 109,200 109,200 109,200 109,200 500,000 109,200 109,200 109,200 109,200 109,200 The Company sponsors two retirement Income Plans. "Plan B" covers all employees of Missouri Gas Energy and "Plan A" covers all employees other than employees of Missouri Gas Energy, Lavaca Realty Company or Mercado Gas Services, Inc. In both plans, benefits are based upon average annual basic earnings for the five highest consecutive years in the applicable period. All officers, except for Mr. Dubay, are presently covered by Plan A. Mr. Dubay was previously covered by Plan A, but is presently covered by Plan B. However, after application of the non- ualified supplemental plan, Mr. Dubay's combined benefits are generally on the same basis as the other officers. Basic earnings, as defined by Plan A, was redefined in December of 1989 to include W-2 earnings minus certain defined exclusions. Effective December 31, 1989, the Plan A formula was modified to conform with the requirements of the Tax Reform Act of 1986, as amended, and the plan no longer integrates with Social Security. In order to retain the previous benefit levels for selected highly compensated employees, a separate Non-Qualified Plan was established. As of June 30, 1995, Messrs. Lindemann, Kelley, Dubay, Endres and Morgan were credited with 5, 5, 13, 26 and 14 years of service, respectively. Benefits are computed on the basis of a lifetime annuity with a ten-year certain payment period commencing at age 65. With respect to the Non-Qualified Plan benefits, certain offsets are included in the formula for estimated Social Security benefits. Those offsets have been reflected in the amounts presented in the table. The maximum compensation considered in the Qualified Plan is $150,000. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN- CONTROL ARRANGEMENTS All executive officers of the Company serve at the discretion of the Board of Directors. Generally, the executive officers are appointed to their position by the Board annually. The Company has an agreement with Mr. Kelley that upon certain occurrences, the outstanding balance on his promissory note due to the company will be canceled and deemed paid in full. These occurrences include, among other items, termination of employment other than for cause, diminution in base salary or a change-in- control of the Company. See "Certain Relationships." COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors of the Company does not have a separate compensation committee. Except with respect to the 1992 Plan, which is administered by the Board's Long-Term Stock Incentive Plan Committee, all decisions regarding management compensation are made by the full Board of Directors of the Company. Directors Brennan, George Lindemann and Kelley, who are also executive officers of the Company, participated in deliberations of the Board of Directors concerning compensation for members of management but did not participate in Board votes as to compen- sation for themselves. See "Certain Relationships." BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION The Board of Directors closely aligns the total compensation of the executive officers with the profitability of the Company. Merit increases to the base salaries for the officer group have been moderate in comparison to industry standards. The Southern Union 1992 Long-Term Stock Incentive Plan was introduced in order to focus the attention of management on the long-term improvement of stockholder value. The Company's 1995 short-term incentive plan was aligned with each officer's and manager's compensation to directly reflect the desired short-term marketing and profitability goals of the Com- pany applicable to such officer or manager. By balancing the use of short- and long-term incentive and adequate base salary, the Board of Directors believes it has been and will continue to be able to recruit the talent needed to manage the Company, retain the talents of current management and align the successes of the Company and management. The factors and criteria utilized by the Board of Directors includes the assessment of comparable information from other utilities and similarly-sized operations. It is the philosophy of the Company's Board to set the base salaries of executive officers at an amount lower than the average of a financial peer group of other mid-sized natural gas local distribution companies ("LDCs"), with opportunities to earn above the average based on excellent individual and corporate performance. This peer group includes neighboring and other similarly sized LDCs which share operating and financial characteristics with the Company. The Board believes the performance on which executive officer compen- sation is based should be assessed both on an annual basis and also over a longer period of time to ensure that executive officers work to support both the Company's current objectives as well as its strategic objectives. The Board of Directors regularly reviews the Chief Operating Officer's recommended base salary merit increases, cash incentive plan and stock option plan awards for the Company's other execu- tive officers. Base salary merit increase and cash incentive award recommendations, if any, are primarily based on corporate operating and financial performance, as well as on executive officers' individual performance, for the prior fiscal year. Merit increases are also based on a review of peer group base salaries and executive officers' individual contributions to the Company's strategic objectives. Stock option recommendations, if any, are primarily based on executive officers' individual per- formance during the prior fiscal year, but also relate to per- formance judgments as to the past contributions of the individual executive officers and judgments as to their individual contribu- tions to the Company's strategic objectives. The Board of Directors then determines compensation for such executive officers, in light of (a) the Company's actual performance as compared to its corporate financial goals for the prior fiscal year, (b) individual executive officers' actual performance as compared to their individual goals supporting the Company's financial and operating objectives, (c) the Company's executive officer compensation levels relative to its peer group and (d) periodic reports from independent compensation consultants regarding the compensation competitiveness of the Company. The Board of Directors also reviews the above types of compensation for the Chief Executive Officer with the assistance of the Company's human resources staff and recommends adjustments as deemed appropriate based on the above compensation review criteria and its expectation as to his future contributions in leading the Company. Neither the Chairman of the Board and Chief Executive Officer nor the President and Chief Operating Officer were included in the Short-Term Incentive Plan for 1995. The Executive Vice President - - - Chief Operating Officer - Missouri Gas Energy, the Senior Vice President - Finance and Administration and Chief Financial Officer, and the Vice President - Legal and Secretary had the ability to obtain short-term incentive awards for 1995. The Long-Term Stock Incentive Plan Committee considers all aspects of compensation provided to the executive officers prior to determining appropriate awards to be given under the 1992 Plan to each executive. The 1992 Plan was approved at the annual meeting of stockholders held on May 12, 1993. Under the 1992 Plan, options to purchase 819,000 shares may be granted to officers and key employees at prices not less than the market value on the date of grant. Options granted under the 1992 Plan are exercisable for periods of ten years from the date of grant or such lesser period as may be designated for particular options, and become exercisable after a specified period of time from the date of grant in cumulative annual installments. The 1992 Plan also allows for the granting of stock appreciation rights, dividend equivalents, performance shares and restricted stock. In 1993, the Board of Directors established the Supplemental Plan. The Supplemental Plan as revised on June 14, 1995 by the Board of Directors, is designed to encourage greater ownership of Company shares by highly compensated employees by increasing the Company matching contribution, and to provide employee benefits similar to the benefits such employee would have received under the Southern Union (401(k)) Savings Plan if not for the existence of certain limitations that are set forth in the Internal Revenue Code of 1986, as amended (the "Code"), relating to "highly com- pensated employees" as defined in the Code. Under the Supplemen- tal Plan, an eligible employee may defer up to 5% of his or her annual compensation (salary and bonus) through payroll deductions (the "Employee Contributions"). In addition, the Supplemental Plan as revised requires the Company to make a 50% matching con- tribution on Employee Contributions up to a maximum of 5% (up from 2%) of the participant's annual compensation. The Employee Contributions, together with the Company's matching contribu- tions, are invested by the Supplemental Plan's trustee in shares of Common Stock. See "Proposal to Increase Employee Contribu- tions Subject To Company Matching From Two Percent To Five Percent Under the Southern Union Company Supplemental Deferred Compensation Plan." A participant is at all times 100% vested with respect to the amount of his or her Employee Contributions and to the income, gains and losses with respect to such contributions. The Com- pany's matching contributions and any income, gains and losses with respect to such matching contributions vest at a rate of 20% per year beginning with the date that the participant has com- pleted two years of service with the Company. A participant is fully vested with respect to such amounts upon either completing six (6) years of service with the Company or if the participant dies while employed by the Company. Employee Contributions and the Company's matching contributions that are vested may not be withdrawn by a participant until (i) thirty (30) days after such time the participant is no longer an employee of the Company, or (ii) with the permission of the Company's benefits committee in the event of an unforeseeable emergency arising from events beyond the control of the participant which results in severe financial hardship. The Supplemental Plan is operated under procedures set forth in the plan, and is administered by the Company's benefits committee. The Board of Directors may terminate, suspend or amend the Supplemental Plan; provided that, certain material amendments must be submitted for stockholder approval to the extent necessary for the Supplemental Plan to satisfy the requirements of the exemption from the short-swing profit rules of the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended. In determining the compensation structure for the Chairman of the Board and Chief Executive Officer consideration was given to the fact that Mr. Lindemann does not devote his full business time to the business of the Company. Accordingly, the Board of Directors believes that it has concentrated, and intends to continue to concentrate, the bulk of Mr. Lindemann's compensation on long- term incentives such as stock option grants which are directly attributable to increasing stockholder value. By: The Board of Directors(1) George L. Lindemann Peter H. Kelley Frank W. Denius Roger J. Pearson Aaron I. Fleischman George Rountree, III Adam M. Lindemann Dan K. Wassong John E. Brennan - - ------------------------ (1) Director Kurt A. Gitter, M.D., joined the Board in June 1995 and so did not participate in any Board deliberations as to executive compensation during fiscal year 1995 other than the proposed revision in benefits provided under the Supplemental Plan. See "PROPOSAL TO INCREASE EMPLOYEE CONTRIBUTIONS SUBJECT TO COMPANY MATCHING FROM TWO PERCENT TO FIVE PERCENT UNDER THE SOUTHERN UNION COMPANY SUPPLEMEN- TAL DEFERRED COMPENSATION PLAN." COMPANY PERFORMANCE CHART The following performance graph compares the performance of the Company's common stock to the Standard & Poor's 500 Stock Index ("S & P 500") and to an index of peer companies developed by the American Gas Association ("AGA"). The comparison assumes $100 was invested on June 30, 1990 in the Company's Common Stock and in the S & P 500 Index. The comparison also assumes that $100 was invested in the AGA Index on December 31, 1989 and held for a period of five years ending December 31, 1994. December 31 information was the most recent date that data was available for the AGA Index. The AGA annual return from 1989 to 1994 is reflected in the performance chart on the 1990 to 1995 data points, respectively. Each case assumes reinvestment of dividends. Comparison of Five-Year Cumulative Total Return (Southern Union, AGA, Peer Group and S&P 500) 1990 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- ---- Southern Union 100 67 76 105 149 153 AGA Peer Group 100 101 123 147 170 155 S&P 500 Index 100 104 114 126 124 152 The AGA peer group index is comprised of AGA member companies classified by Edward D. Jones and Co. as gas distribution com- panies. Each component company was included in the index in proportion to its market capitalization as determined on the last trading day of the calendar year in each of the years from 1989 to 1994. PROPOSAL TO INCREASE EMPLOYEE CONTRIBUTIONS SUBJECT TO COMPANY MATCHING FROM TWO PERCENT TO FIVE PERCENT UNDER THE SOUTHERN UNION COMPANY SUPPLEMENTAL DEFERRED COMPENSATION PLAN As of June 14, 1995, the Board of Directors approved a revision to the Southern Union Company Supplemental Deferred Compensation Plan (the "Supplemental Plan"). The Supplemental Plan was adopted on June 15, 1993, by the Executive Committee of the Board and approved by the Stockholders at the 1994 Annual Meeting. The Supplemental Plan was designed to provide employee benefits simi- lar to the benefits such employee would receive under the Southern Union (401(k)) Savings Plan if not for the existence of certain limitations that are set forth in the Internal Revenue Code of 1986, as amended (the "Code"), relating to "highly compen- sated employees" as defined in the Code. Under the Supplemental Plan, an eligible employee may defer up to 5% of his or her annual compensation (salary and bonus) through payroll deductions (the "Employee Contributions"). In addition, the Supplemental Plan requires the Company to make a matching contribution. Such Employee Contributions, together with the Company's matching con- tribution, are invested by the Supplemental Plan's trustee in shares of Common Stock. The Company desires to encourage greater ownership of Company Common Stock by its highly compensated employees, and to provide additional benefits beyond what would be available in the Southern Union (401(k)) Savings Plan. To accomplish this, the Board proposes to increase the Company matching contribution from its current matching of $.50 per $1.00 contributed for the first two percent (2%) of salary deferred pursuant to the Supplemental Plan, to $.50 per $1.00 contributed for the first five percent (5%) deferred pursuant to the Supplemental Plan. A participant is at all times 100% vested with respect to the amount of his or her Employee Contributions and to the income, gains and losses with respect to such contributions. The Com- pany's matching contributions and any income, gains and losses with respect to such matching contributions vest at a rate of 20% per year beginning with the date that the participant has com- pleted two years of service with the Company. A participant is fully vested with respect to such amounts upon either completing six (6) years of service with the Company or if the participant dies while employed by the Company. Employee Contributions and the Company's matching contributions that are vested may not be withdrawn by a participant until (i) thirty (30) days after such time the participant is no longer an employee of the Company, or (ii) with the permission of the Company's benefits committee in the event of an unforeseeable emergency arising from events beyond the control of the participant which results in severe financial hardship. The Supplemental Plan is operated under procedures set forth in the plan, and is administered by the Company's benefits com- mittee. The Board of Directors may terminate, suspend or amend the Supplemental Plan; provided that, certain material amendments must be submitted for stockholder approval to the extent neces- sary for the Supplemental Plan to satisfy the requirements of the exemption from the short-swing profit rules of the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934, as amended. The foregoing description is qualified in its entirety by the text of the Supplemental Plan. A copy of the Supplemental Plan is available without charge upon written request to the Secretary of the Company. Southern Union Company Supplemental Deferred Compensation Plan The following table sets forth the dollar value of all Company matching contributions during the fiscal year ended June 30, 1995 and since the inception of the Supplemental Plan to June 30, 1995. The table also sets forth the number of shares contributed by the Company as matching contributions under the Supplemental Plan during the fiscal year ended June 30, 1995 and since the inception of the Supplemental Plan to June 30, 1995. Dollar Value ($) Number of Shares ---------------- ---------------- During During Fiscal Fiscal Year Since Year Since Ended Plan Ended Plan June 30, Incep- June 30, Incep- Name and Position 1995 tion 1995 tion George L. Lindemann Chairman of the Board and Chief Executive Officer 1,776 2,273 97 125 Peter H. Kelley President and Chief Operating Officer 3,685 6,380 199 352 Eugene N. Dubay Executive Vice President and Chief Operating Officer -- Missouri Gas Energy 2,086 5,747 109 317 Ronald J. Endres Senior Vice President -- Finance and Administration, and Chief Financial Officer 2,463 4,950 132 273 Dennis K. Morgan Vice President -- Legal and Secretary 1,767 3,936 94 217 All Executive Officers 14,677 28,064 789 1,548 All Directors Who Are Not Executive Officers * * * * All Employees Who Are Not Executive Officers 16,140 33,092 867 1,826 - - ------------------- * Only employees of the Company are eligible to participate. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE INCREASE IN EMPLOYEE CONTRIBUTIONS SUBJECT TO COMPANY MATCHING FROM TWO PERCENT TO FIVE PERCENT UNDER THE SOUTHERN UNION SUPPLE- MENTAL DEFERRED COMPENSATION PLAN. CERTAIN RELATIONSHIPS In April 1992 Southern Union advanced $375,980 to Peter H. Kelley, President, Chief Operating Officer and a Director of Southern Union, to enable him to repay certain funds borrowed by him from his previous employer in connection with his departure from his previous employer and relocation to become an executive officer of the Company. In May 1995 the note was restructured calling for 359 monthly payments of approximately $1,909 and a balloon payment of $147,746. The restructuring is evidenced by a renewal promissory note, bearing an annual percentage interest rate equal to 7.4%. At the time of restructuring, the outstanding balance on the note was $369,434, to which Mr. Kelley made a $50,000 principal payment and $27,761 was forgiven by the Company. See "Management Compensation." On October 4, 1993, Southern Union's Board of Directors approved and ratified payments by the Company to Activated Communications, Inc. ("Activated") for use by the Company of Activated's office space in New York City. Chairman George L. Lindemann and Vice Chairman John E. Brennan control and operate, and Director Adam M. Lindemann has a beneficial interest in, Activated; none of the foregoing Directors participated in such Board action. Total payments to Activated in 1995, 1994 and 1993 were approxi- mately $251,000, $125,000 and $187,000, respectively. Director Fleischman is Senior Partner of Fleischman and Walsh, L.L.P., which provides legal services to the Company and certain of its subsidiaries. For the fiscal year ended June 30, 1995, the total amount paid by the Company to Fleischman and Walsh, L.L.P. for legal services was $597,000. STOCKHOLDER PROPOSALS In order for any stockholder proposal to receive consideration for inclusion in the Company's Proxy Statement for its 1996 Annual Meeting of Stockholders, such proposals must be received by June 30, 1996, at the Company's offices at 504 Lavaca Street, Eighth Floor, Austin, Texas 78701, Attention: Dennis K. Morgan, Secretary. The Company's Bylaws set forth certain other require- ments with respect to new or other business proposed to be brought before the Meeting by a stockholder and with respect to any nomination by a stockholder for election as a Director of any person other than the Nominees selected by the Board of Directors. INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. has served as the Certified Public Accountants of the Company for the fiscal year ended June 30, 1995. Representatives of Coopers & Lybrand L.L.P. are expected to be present at the Meeting, and to be given an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions. The Audit Committee of the Board of Directors of the Company presently expects to recommend to the Board, and the Board is expected to approve, the selection of Coopers & Lybrand L.L.P. to serve as the Company's Certified Public Accountants for the fiscal year ending June 30, 1996. OTHER BUSINESS The Board of Directors is not aware of any matter other than the matters described above to be presented for action at the Meeting. However, if any other proper items of business should come before the Meeting, it is the intention of the person or persons acting under the enclosed form of proxy to vote in accordance with their best judgment on such matters. MISCELLANEOUS The Company will pay the expenses of this proxy solicitation. In addition to solicitation by mail, some of the officers and regu- lar employees of the Company may solicit proxies personally or by telephone. Should management of the Company deem it necessary, the Company may also retain the services of a proxy solicitation firm to aid in the solicitation of proxies for which the Company will pay a fee of approximately $10,000 plus reimbursement for certain expenses. The Company will request brokers and other fiduciaries to forward proxy-soliciting material to the bene- ficial owners of shares which are held of record by them, and the Company may reimburse them for certain reasonable out-of-pocket expenses incurred by them in connection therewith. The Company's Annual Report to Stockholders for the fiscal year ended June 30, 1995, which report includes financial statements and the Company's 1995 Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as filed with the Securities and Exchange Commission, is being mailed along with this Notice of Annual Meeting and Proxy Statement to all holders of record of the Company's Common Stock as of the close of business on the Record Date. Any stockholder who has not received a copy of such 1995 Annual Report may obtain a copy by writing to the Secretary of the Company. Such 1995 Annual Report is not to be treated as part of the proxy solicitation materials or as having been incorporated herein by reference. By Order of the Board of Directors, DENNIS K. MORGAN Secretary Austin, Texas September 29, 1995 BACK PAGE PROXY CARD (FRONT) PROXY Southern Union Company PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OR SOUTHERN UNION COMPANY FOR THE NOVEMBER 7, 1995 ANNUAL MEETING OF STOCKHOLDERS The undersigned hereby appoints, GEORGE L. LINDEMANN, JOHN E. BRENNAN, and PETER H. KELLEY, or any one, two or all three of them, with power of substitution in each, proxies for the undersigned, to represent the undersigned and to vote all the Common Stock of the Company which the undersigned would be entitled to vote, as fully as the undersigned could vote and act if personally present, at the Annual Meeting of Stockholders to be held on November 7, 1995 at 2:00 p.m. Central Standard Time, in the eighth floor atrium of the Company's offices at Lavaca Plaza, 504 Lavaca Street, Austin, Texas or at any adjournment thereof. The Proxies are authorized to vote in their discretion upon all matters properly brought before the meeting, including any matter of which Management was not aware a reasonable time before the solicitation of this proxy. 1. Election of the following nominees as Class II Directors AARON I. FLEISCHMAN, KURT A. GITTER, M.D., ADAM M. LINDEMANN and GEORGE ROUNTREE, III. For All Nominees Withheld for All Nominees ---- ---- Withheld for the following only (write the name of the nominee(s) on the space below) - - ----------------------------------------------------------------- 2. Proposal to increase employee contributions subject to Company matching from two percent to five percent under the Southern Union Company Supplemental Deferred Compensation Plan. FOR AGAINST ABSTAIN ---- ---- ---- PROXY CARD (BACK) The shares represented by this proxy will be voted as directed by the stockholder. If no direction is given when the duly executed proxy is returned, such shares will be voted "FOR" all Nominees and "FOR" proposal 2. Date , 1995 ----------------- ---------------------------- Signature ---------------------------- Signature Please mark, date and sign as your name(s) appear(s) to the left and return in the enclosed envelope. If acting as an executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name, by duly authorized officer. If shares are held jointly, each shareholder named should sign. -----END PRIVACY-ENHANCED MESSAGE-----